In what was an enraging spectacle, Moderna CEO Stephane Bancel testified before the Senate Health, Education, Labor and Pensions Committee Wednesday and defended his company’s decision to more than quadruple the price of its Covid vaccine to around $130. His testimony served as the latest illustration of how major pharmaceutical companies exploit the public by happily soaking up taxpayer money — and then gouging them in their bid for exorbitant profits.
It costs Moderna $2.85 to manufacture a vaccine dose. The U.S. government has been paying Moderna between $15 and $26 a dose, and then distributing it to the public for free. But with President Joe Biden ending the national emergency designation for Covid in May, Moderna will soon be selling its vaccines directly to the public.
The bottom line is the de facto affordability of their vaccine will be at Moderna’s mercy.
Moderna’s CEO said that its massive price hike is necessary in order to deal with falling demand. Also, he argued that distribution of vaccines will become more complex, without the government buying doses en masse. Among other things, Moderna anticipates eating more of the costs of unused doses going forward.
On that basis, Moderna is setting a price point that is extraordinarily high for a life-saving form of medicine. While people with health insurance may not have to pay out of pocket for the vaccine, the tens of millions of uninsured people in America may find themselves choosing between being inoculated against Covid and paying other bills. Moderna claims it’s developing financial assistance programs for the uninsured, but it’s unclear what that assistance will look like, how long it would last, and if it would require the kind of tedious paperwork likely to deter low-income people from cashing in. The bottom line is the de facto affordability of their vaccine will be at Moderna’s mercy. And, ultimately, setting a price tag of well over $100 for the vaccine is guaranteed to nudge some people away from getting their first dose or getting boosters, shots that could dramatically reduce their likelihood of death or long Covid.
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It’s appalling on its face that a life-saving form of medicine that needs wide distribution to most effectively protect the global public would be made so expensive. But it’s particularly offensive given the help Moderna received from the public it’s now deciding to gouge.
Moderna collaborated with scientists at the National Institutes of Health to invent its vaccine. The U.S. government provided over $2 billion to Moderna for research and development, and spent around $10 billion on procurement. That taxpayer investment did wonders. It helped save countless lives and allowed people to begin returning to normality during a raging pandemic. It not only helped Moderna develop a world-class vaccine, it made Moderna and its shareholders rich. The Covid vaccine is Moderna’s only product on the market, and, since 2020, the company has made over $20 billion in profit. Moderna’s board of directors approved of a nearly $1 billion golden parachute for Bancel last year.
As Amy Maxmen of the Council on Foreign Relations has argued, one practical solution to this problem is for the U.S. government to add conditions to its massive investments in pharmaceutical companies: making those companies either direct some of their profits back to the government, making them agree to regulated pricing schemes for the discoveries made with public funding, or by revoking their intellectual property exclusivity. (Moderna has made a one-off $400 million payment to the NIH for borrowing a molecular technique and will apparently grant it “low single-digit royalties” on future sales of its COVID vaccine. But it is still fighting the NIH over a patent.)
Sen. Bernie Sanders of Vermont put it well: “The taxpayer investment in Moderna was to protect the health of the American people, not to turn a handful of corporate executives into multibillionaires.” He’s right. The government invested in this vaccine to save the maximum number of lives. But in an attempt to maximize profits, Moderna is likely to drive down the number of people who get the vaccine and serve as an impediment to public health.