As the Covid-19 pandemic relief fund is set to run out, the Biden administration is preparing to shift the burden for payment for Covid vaccines to consumers and health insurers, a move analysts say is likely to generate additional revenue for vaccine makers.
On August 30th, the Department of Health and Human Services is holding a meeting with stakeholders, including vaccine makers like Pfizer (PFE), BioNTech (BNTX), Johnson & Johnson (JNJ) and Novavax (NVAX), as well as makers of antiviral therapies, such as Gilead Sciences (GILD) and Merck (MRK).
Overall, Covid stocks were mixed on the news, although Pfizer and J&J both added more than 1%, rising to $49.15 and $169.31 respectively. Moderna and Novavax lost 2.6% each, closing at $146.10 and $36.22 respectively. Biontech and Gilead barely gained a fraction.
It is likely to take months for the government to transition payments off to consumers. The upcoming meeting is likely to begin to hash out the details of insurance coverage and reimbursement, as well as how to handle uninsured consumers and the financially underprivileged.
It marks a key turning point in the shift from an official medical emergency, to the mere control of a normal endemic pathogen. It will also have some impact on products which are currently approved for emergency use, but which do not yet have regular full approval.
In particular, Medicare and Medicaid do not cover emergency-use products. Vaccines from Novavax and Johnson and Johnson, as well as Pfizer and Merck’s antiviral therapies, Paxlovid and Lagevrio still lack full approval, and are only licensed for emergency use. Pfizer and BioNTech’s Covid vaccine, Comirnaty, are similarly, only licensed for use on people 12 and older. Moderna’s vaccine is only licensed for adults.
However once the vaccines are being paid for by insurers, vaccine makers are likely to raise the prices considerably, and those costs will be passed on to consumers through insurance premiums. That could dramatically increase profits for vaccine makers, even as the pandemic fears fade, if employers and governments continue to mandate vaccinations for workers and citizens.
Companies which make Covid-19 vaccines and treatments have reported more than $91 billion in collective world-wide sales as of Q2, since the pandemic began. The biggest seller was Pfizer and Biontech’s Comirnaty vaccine, which has generated more than $59 billion in sales. Pfizer’s antiviral Paxlovid has made an additional $9.7 billion. Moderna has sold more than $28 billion in Covid-shots.
One fly in the ointment is that recent data examined by analysts indicates both Moderna and Pfizer will see dramatic reductions in sales in 2023. However much of that will depend on the upcoming round of boosters, which the companies hope to customize for the new B.A.4 and B.A.5 Omicron subvariants. In addition, it is not clear to what degree formal institutions like government agencies and businesses will mandate that employees, customers, and citizens are required to take the boosters.
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