We now have a pretty good idea how much COVID-19 vaccines will cost Uncle Sam. Last week, The U.S. government announced a deal with Pfizer (NYSE: PFE) and BioNTech (NASDAQ: BNTX) to buy 100 million doses of the two partners' lead coronavirus vaccine candidate for $1.95 billion. That translates to a price tag of $19.50 per dose.
But Moderna (NASDAQ: MRNA) is considering pricing its COVID-19 vaccine at more than 50% higher than Pfizer's price tag for its vaccine, according to a report in the Financial Times. Will Moderna be able to get away with such a higher price?
Rumor has it...
The Financial Times reported that anonymous sources said that Moderna intends to seek a price of between $50 and $60 per course for its COVID-19 vaccine candidate, mRNA-1273. Each course includes two doses, so that range translates to a price per dose of $25 to $30.
However, Moderna apparently intends to try to obtain this price only for the U.S. and other countries with larger economies. It's uncertain what price the biotech will attempt to get for its coronavirus vaccine in developing nations.
Keep in mind, though, that at this point all we have to go on are the anonymous sources cited by the Financial Times. Moderna hasn't officially revealed what price it hopes to get for mRNA-1273. The company is in discussions with various governments about potential supply deals.
There's also another important caveat regardless of what price Moderna snags for mRNA-1273: The vaccine has to win regulatory approvals first (or at least receive Emergency Use Authorization from the FDA). Moderna kicked off its phase 3 study of mRNA-1273 last week. It will be at least a few months before the results from that study are available.
It's not surprising that there was an almost immediate backlash against Moderna's reported price range for mRNA-1273. The main reason why the biotech caught flak is that the U.S. government has invested a lot of money in Moderna's COVID-19 vaccine program.
In April, the Biomedical Advanced Research and Development Authority (BARDA) awarded up to $483 million to Moderna to advance the development of mRNA-1273. Last month, BARDA added another $472 million in funding for Moderna's COVID-19 vaccine program.
That's a total of $955 million in federal funding commitments that Moderna has received so far. Yet the company reportedly wants to charge as much as 50% more for its coronavirus vaccine than Pfizer is getting -- and Pfizer didn't take any government money to develop its vaccine.
If you think that caused some fuming in Washington, D.C., you're right. Rep. Jan Schakowsky (D-Illinois) released a statement to Barron's that accused Moderna of "contemplating how to turn [its] federal funding into sky-high profits." Should Moderna snag $30 per dose in the U.S., you can bet that the controversy will only intensify.
Following the laws
But back to our original question: Can Moderna get away with charging so much more than Pfizer? The answer is maybe.
Consider that Sanofi and GlaxoSmithKline will receive up to $2.1 billion from the U.S. government to develop their COVID-19 vaccine candidate and supply 100 million doses. At first glance, it might look as if the two drugmakers will make $21 per dose. However, since some of the funding targets assisting with clinical trials and manufacturing scale-up, the actual price tag per dose is even higher. It could even be within the range that Moderna is reportedly seeking.
The bottom line is that coronavirus vaccine pricing will almost certainly follow the laws of supply and demand. Moderna's mRNA-1273 is one of only six COVID-19 vaccine candidates in late-stage testing. Three of those six are being developed by Chinese drugmakers and are highly unlikely to win supply deals in the United States.
Moderna's clinical results from previous studies make mRNA-1273 especially promising. With the possibility of vaccine supplies below what will be needed globally and the near-certainty of high demand as the pandemic continues, Moderna just might be able to get $30 per dose or close to it.
If it can do so, Moderna would only have to score agreements to supply 500 million doses worldwide at that price to generate sales of $15 billion. That seems attainable. And it's why the biotech stock could go even higher after soaring close to 300% so far this year.
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