June 15, 2021

from research to the vial, understanding the price of a vaccine

How much does a vaccine really cost? Based on a study by Imperial College London, the deputy for La France insoumise François Ruffin rose up on Twitter : the selling price of the Pfizer vaccine, he writes, is much higher than the cost of production. Producing a dose of the Pfizer vaccine costs between 60 cents (0.50 euro cents), while the European Union pays 24 dollars (19.50 euros).

Can we conclude, on the sole basis of this study, that this margin « gave Big Pharma », as outraged by Mr. Ruffin, like other proponents of patent release on vaccines?

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In fact, it is difficult to sum up what a vaccine really costs to produce it alone. What are we talking about exactly? Why is the selling price not the same across the globe? And how much does this vaccination ultimately cost a state like France? Decryption of the price of a vaccine, from production to distribution, including purchase, using the example of Pfizer’s vaccine.

The cost of producing the vaccine for Pfizer

The figures cited by MP François Ruffin therefore come from research carried out at Imperial College London by a laboratory specializing in systems engineering. This study was published in December 2020 in the journal Vaccine.

In the table below (second column), the average production cost for a dose of Pfizer (which contains 30 micrograms of active ingredient) is in fact 61 cents. It costs $ 2.02 for a dose of competing vaccine Moderna (which contains 100 micrograms). The last three columns relate to another messenger RNA (mRNA) vaccine, Curevac; Imperial College’s since-abandoned self-amplified RNA vaccine project; and an imaginary vaccine, using the same technology, but improved.

Table taken from Imperial College study on the cost of messenger RNA vaccines

A Pfizer-BioNTech vaccine would cost 88 cents and a Moderna vaccine at $ 2.29

These costs take into account the raw materials at the current price (without taking into account a possible rise in prices) and the means of production making it possible to obtain the active principle of the drug. Product finishing costs (bottles, packaging, quality control, etc.) are not included. Weekly Economic Alternatives, who had relayed this study among the first, asked the chemical engineering department of Imperial College London to run its models again. “We can estimate that the fill-finish part of a messenger RNA vaccine costs 27 cents per 10-dose vial”, calculates Professor Nilay Shah, who heads this department. Ultimately, a Pfizer-BioNTech vaccine would cost 88 cents and a Moderna vaccine at $ 2.29.

But the calculation of the price of a vaccine does not stop there. The researcher behind the study at Imperial College, Zoltan Kis, explains to the World : “The final price of the vaccine will include other elements such as R&D costs [recherche et développement], clinical trials, distribution, intellectual property and legal fees, etc. There is also a profit margin to add to the selling price: indeed, some of these companies have invested billions of dollars in the development of mRNA vaccine platform technology over the past decade. “

Pharmaceutical and medical innovation is mainly based on an economic model financed by patents. By protecting their discoveries with these patents, laboratories can use them exclusively for a theoretical period of twenty years. It is only after this deadline that the patent is lifted and allows other laboratories to develop generic drugs with the same formula, sold at cost prices.

Pfizer-BioNTech and Moderna mRNA vaccines are based in part on earlier patents

Pfizer-BioNTech and Moderna’s mRNA vaccines, which hit the market in less than a year, are based in part on earlier patents. In particular a technology designed by the University of Pennsylvania to manufacture a messenger RNA harmless to the organism, the patent of which was filed in 2005. The two laboratories each paid $ 75 million to be able to use it.

The innovative technique of stabilizing the spike protein is also the result of public research, and as such subject to a user license, which could represent up to $ 1.8 billion for the US state, according to a study by the University of New York. Developed by NIH researchers in 2016, this technique involves adding a pair of amino acids (proline) to the coronavirus spike protein in order to stabilize its shape and make it significantly more recognizable by antibodies. For the moment, only Pfizer would have agreed to pay these user fees, understands the New York Times (the amount is not known). For the American daily, if the government does not force other pharmaceutical companies to pay it these royalties, it is perhaps to then force them to share their know-how with other companies.

Once a vaccine has been developed, mandatory clinical trials are also an expensive phase. For phase 3, the last before going to market, Pfizer may have spent at least $ 300 million (€ 246 million). As proof, old figures but commonly mentioned, which estimate at 7,000 dollars (5,747 euros) per patient on average the cost of a phase 3 trial for the laboratory. However, Pfizer brought together more than 43,000 participants for this large-scale trial, and trials are continuing, especially among younger people.

The price negotiated by the European Union

Some laboratories sell their vaccine at cost price, such as Johnson & Johnson and AstraZeneca (which was obliged to do so by the University of Oxford until the end of the pandemic), or between 2 and 7 euros per dose from the material first until packaging. Conversely, Pfizer negotiated different prices with each interlocutor. The price of one of its doses thus ranges from the cost price for certain low-income countries (around 5.50 euros for the African Union) to nearly 23 euros for Israel, which wanted to ensure a rapid supply.

Pfizer negotiated different prices with each interlocutor: around 5.50 euros for the African Union to nearly 23 euros for Israel

For the European Union, the price was revised in April to 19.50 euros, according to indiscretions of the Bulgarian Prime Minister, Boïko Borissov, reported by the Euractiv site. This price increases by a quarter the price conceded since January (15.50 euros – the price of 12 euros sometimes mentioned corresponded to a price including a deduction linked to an advance from the European Commission). Indeed, the pharmaceutical giant felt it was time to return to a situation closer to the usual balance, reflected in prices, between supply and demand.

The “normal” price for a new vaccine varies between 150 and 175 dollars (123 and 144 euros) per dose, had recalled the chief financial officer of Pfizer, Frank D’Amelio, in early February, in an exchange with investors. He was referring, with this range, to vaccines which will take several years to be profitable by the laboratory – when an influenza vaccine, already designed in broad outline and sold every year, can be marketed for around ten euros.

This favorable relationship to Pfizer between supply and demand is reinforced by the effectiveness that mRNA vaccines seem to show against variants and the appearance of new strains in India or Brazil, which should support demand, which has just come from be increased tenfold by the extension of vaccination to adolescents and children.

Read also: Behind the scenes of contracts between the EU and pharmaceutical groups on Covid-19 vaccines

The expenditure incurred by France

The European Commission, which negotiates on behalf of the twenty-seven EU countries, and has in particular placed an order for more than 2 billion doses of Pfizer, may be required to pay down payments to the laboratory in order to provide additional funding to research and production. But, ultimately, it is each state that pays its invoice to Pfizer or Moderna, once delivered.

In France, vaccines will cost Social Security more than 4.6 billion euros this year, warned the Alert Committee on the evolution of health insurance spending (Cadam), on 1is June. “This sum includes 3.2 billion euros of exceptional allocation to Public Health France, which allow it to cover all the vaccine needs of the 2021 campaign. To this certain expenditure, there is added 1.4 billion euros of expenditure on the organization of the vaccination campaign, with an assumption of a coverage rate of 70% of the population ”, details the Cadam.

Included in these organizational expenses are the salaries of doctors (440 euros per half-day) and liberal nurses (220 euros) mobilized in vaccinodromes in addition to health personnel with civil servant status. But they do not include the functioning of the vaccination centers, currently supported by the local communities. Between the staff, the medical equipment, the fitting out and the maintenance of the premises… the cost is around 75,000 euros per month, for example calculated the city of Asnières-sur-Seine, in Hauts-de- Seine.

The state could reimburse part of it, suggested Emmanuel Macron. Proof that the executive, even if it must review its calculations, has already set the cost-benefit ratio in favor of the vaccine, it is the Minister Delegate in charge of public accounts himself, Olivier Dussopt, who declared: “We will never be watching the cost of vaccination, it is the best possible investment for the French and for businesses. “

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