What happens when the government stops buying Covid-19 vaccines?

WASHINGTON — The federal government has distributed Covid-19 vaccines and treatments for free so far, but most likely, the handouts won’t last forever.

At some point, Covid-19 vaccines and treatments will be bought and sold just like other drugs and medical products. But big questions loom about how and when the transition will happen, about how bumpy it will be.

The issue has gained urgency in recent weeks as Congress has been reluctant to provide the Biden administration with any additional funds to combat the Covid-19 pandemic. That means the government is out of money to purchase more vaccines, oral antivirals, and therapeutics, not to mention next-generation vaccines and therapies tailored to particular variants.

advertisement

The chief executives of both Pfizer and Moderna have also begun to face questions from investors about how they plan to sell their Covid-19 products through regular health care system channels. They say they’ve started the planning process to rely less on the federal government.

Before the government steps out of the highly unusual role it has played in buying and giving out Covid-19 medicines, a whole lot of regulatory planning and coordinating with pharmacies, providers, and companies that ship and buy medical products has to happen first. And once the transition happens, it means products to fight the pandemic will be subject to all the problems evident in other disease areas — like possible price gaming by drugmakers or inequitable access to potentially lifesaving treatments.

advertisement

Even if Covid-19 vaccines and medicines transition to a more normal business model, some experts are concerned that the demands of mitigating deaths during a global pandemic are anything but normal.

“This isn’t business as usual. We have lost over 1 million people,” said Ingrid Katz, an associate professor at Harvard Medical School who studies global health and vaccine equity. “We need to be sure we are removing as many barriers to vaccine access as possible, and putting equity at the forefront of any proposal on the table.”

The White House did not respond to a request for comment.

How could the transition affect vaccine access?

Right now, pharmacies and health care providers get vaccines and therapeutics for free. They get paid by insurers and, until recently, the federal government, to actually put the shots in people’s arms. Because they are getting the vaccine for free, the federal government expects them to give people who want Covid-19 vaccine a shot, even if they are uninsured.

The federal government used to allow providers to submit bills for administering vaccines to uninsured patients, but funding for that program ran out in March.

“Right now, nobody is paying for the uninsured. The government is putting a gun to pharmacies’ heads, saying, ‘You have to do this for nothing.’ That’s not exactly a fair state of business,” Kurt Proctor, senior vice president of strategic initiatives at the National Community Pharmacists Association.

If the vaccines stop coming for free from the federal government, the problem could get worse.

Normally, if patients can’t pay for their medications at a pharmacy, they may not be able to receive them. It’s unclear what would happen in the future if an uninsured person wanted a Covid-19 vaccine but couldn’t pay.

Public health experts have warned that if a transition to paying for vaccines through normal channels happens, the federal government needs to make sure cost isn’t a barrier to vaccine uptake.

“We want to make sure the vaccine is accessible to everyone. You have to make sure when you make that shift, there’s a safety-net infrastructure in place,” said Claire Hannan, the executive director of the Association of Immunization Managers.

There are some existing programs that could help shoulder the burden of increasing access to Covid-19 vaccines, like the Centers for Disease Control and Prevention’s Vaccines for Children program, and a separate program that provides vaccines for uninsured adults as long as funding is available.

Congress has imposed cost-sharing protections for Covid-19 tests, vaccines, and therapeutics for people with insurance, too, but some of those protections are set to expire when the federal health department formally decides to end its public health emergency declaration.

Could prices go up?

If Covid-19 vaccines and therapeutics are ever bought and sold like other vaccines and medicines, it’s possible that drugmakers will choose to raise their prices.

Moderna is in a particularly interesting spot, as White House documents show that even if Congress gives the Biden administration more money to buy vaccines, it may not order any more of Moderna’s.

“This is a 100% private market in the fall and the company will be ready for that,” Moderna CEO Stéphane Bancel said to investors in early May.

A Covid-19 vaccine sold on the commercial market could be more profitable for the company than selling to the government, Bancel said. The government has been buying Moderna’s vaccines for $16.50 per dose, he told Yahoo Finance, but he expects Medicare reimbursement to be $60 for the vaccine alone in the future.

The United States government has enormous leverage and purchasing power when negotiating with drugmakers for vaccines and therapeutics, and the insurers and groups that purchase medical supplies on behalf of hospitals have comparatively less.

Companies that buy medical supplies for hospitals are expecting relatively effective negotiations for vaccines, since there are two competing products that are essentially interchangeable — at least for now, until variant-specific vaccines emerge, said Healthcare Supply Chain Association President and CEO Todd Ebert. With therapeutics, insurance companies will have less leverage, as Pfizer’s oral antiviral has dominated the market.

Even if negotiation brings down prices somewhat, any price increase would still increase patients’ insurance premiums and force taxpayers to pay more through Medicare and Medicaid, said Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology. The profit incentives would also be misaligned, Gruber contends, because it’s impossible for drugmakers to capture the full societal benefit of people choosing to be vaccinated.

“Should there be a transition? The answer is no. The government should be paying for the vaccine. The private market isn’t going to get it right,” Gruber said.

What about products that haven’t been fully approved?

Stakeholders and experts who spoke with STAT broadly agreed that the transition to commercial purchasing likely can’t happen until the Food and Drug Administration grants full approval for products. Right now, the primary, two-dose series of the Moderna and Pfizer Covid-19 vaccines are fully approved, but vaccines for children, booster doses, oral antivirals, and most other treatments only have emergency authorizations.

Karen Midthun, a principal at Greenleaf Health and a former director of the FDA’s Center for Biologics Evaluation and Research, said it may take some time before full approval happens for all of the products.

“Commercial sale can only happen for licensed and approved products,” Midthun said.

If there are some products sold commercially under full approval, and others bought by the government that are only available under emergency authorization, it could be complicated for pharmacists unless there’s some way to distinguish between the products that might otherwise be identical, said Proctor, of the community pharmacists association.

Even if all the products in general use now gain full approval, it’s possible new products — such as vaccines tailored to different variants — would be approved under emergency authorization, further complicating the purchasing dynamics.

If Congress wanted to change the law to allow more availability of authorized products, lawmakers could do so by allowing Medicare and Medicaid to cover products that lack full FDA approval to facilitate access, a group of experts wrote for the Brookings Institution.

If purchasing fully transitions to the private market, the experts wrote for Brookings, it also makes it less likely that the United States would be able to secure supplies of any new and innovative products before they’re actually authorized — a hallmark of the federal government’s approach so far that has guaranteed the United States vaccines and therapeutics before much of the rest of the world.

Who’s going to be negotiating, if the U.S. government doesn’t do it?

If the federal government isn’t doing it, negotiating over Covid-19 vaccines and therapeutics would likely work like it does for other medications.

Companies that distribute drugs would actually purchase and send the products around the country at the price that manufacturers set, but insurers, middlemen called pharmacy benefit managers, and companies that buy medical products for hospitals will actually be in charge of negotiating final payment for the products.

“It probably won’t surprise you, but we have been assessing and surmising about this situation since before the first vaccines were granted [emergency use authorization] status,” said Chip Davis, the president and CEO of the Healthcare Distribution Alliance.

It’s also possible some state governments would be interested in buying some vaccines and therapeutics as well, but they would be in competition with other states, and it’s likely not all states could afford to buy the same products.

When the transition to commercial purchasing happens, purchasers in the United States would also be competing with the governments of foreign countries. Katz of Harvard said she doesn’t expect that more fractured purchasing power would make negotiating power so weak that there would be problems with access domestically.

“It’s hard to imagine that the United States would be outbid,” Katz said.

It’s still entirely unclear if or when a transition to commercial purchasing could happen. The federal government still expects to have more than 100 million doses of the Moderna and Pfizer vaccines on hand for a fall second booster campaign.

Whether it’s a clean break in federal government purchasing or a gradual process, a seamless transition will be deeply complicated, from reimbursement policy, to ensuring equity, to logistics, to cost negotiations, said Sara Roszak, senior vice president of health and wellness strategy and policy at the National Association of Chain Drug Stores. And then, once a change happens, it will take significant effort to communicate to patients.

“We cannot underestimate the planning necessary. This is a massive undertaking that should not be undertaken lightly or hastily,” Roszak said.