Moderna CEO faces Sen. Sanders in COVID-19 vaccine pricing hearing Wednesday
Moderna (MRNA) CEO Stéphane Bancel will join a panel in front of the Senate Health, Education, Labor and Pensions Committee (HELP) Wednesday to discuss the company's decision to raise its COVID-19 vaccine list-price up to $130 once it hits the commercial market this fall.
Sen. Bernie Sanders (D-VT), who chairs the committee, sent a letter to Bancel in January asking the company to halt its price increase. In February, a staff report identified Moderna among 10 companies that benefitted from government purchases during the pandemic and reported a total of $102 billion in total revenue for 2021 — a 137% increase from the prior year.
"The purpose of the recent taxpayer investment in Moderna was to protect the health and lives of the American people, not to turn a handful of corporate executives and investors into multi-billionaires,” Sanders wrote to Bancel.
Moderna president Stephen Hoge defended the new price tag for the vaccine in an exclusive interview with Yahoo Finance, saying that the company was entering unchartered waters, jumping from a government-funded market to a commercial market. And that's for it's first-ever commercial product. No company has ever faced such a shift, he said.
"This has literally never happened before. And so what we are trying to do, as one of the many manufacturers in the space, is to pick a price we think reflects the value of the vaccine ... but also reflects the complexity of moving from this pandemic market to a commercial market," Hoge said.
It isn't the only company to do so. Rival Pfizer (PFE) also indicated a $110 - $130 range for its list price.
But the raising of the price for a commercial market, which Moderna says is a result of the government not paying for doses, will not impact most individuals. In a clarification statement last month, Moderna said the vaccine will remain free at pharmacies and doctor's offices for insured individuals, and those who are not covered can get it free via the company's patient assistance program.
"There is zero out of pocket cost for any person in the United States this fall," Hoge said.
Unlike the pandemic, when governments have supply contracts in place for millions of doses, the commercial market brings uncertainty. The U.S. government contracted a total of 566 million doses for roughly $30 per dose from Moderna, and has taken on the responsibility of distribution as well as discarding of expired or unused doses — all costs that will be shifted to Moderna. In addition, Moderna now has manufacturing costs of single dose vials instead of the standard multiple-dose vials during the pandemic.
"It's not like we get to make exactly the right number of doses. We've got to make a lot, to make sure that if...we have really good demand, that we're able to serve it," Hoge said.
So any unused product becomes a loss for the company — a concern going into the Fall as booster uptake has waned.
But lawmakers have been focused on Moderna, because of the two major players, it benefited more from the government's help and investment early on in developing the vaccine.
That is the stance Sen. Bernie Sanders (D-VT), who leads the HELP committee, took in a recent letter to Bancel.
Sanders noted the nearly $2.5 billion investment Moderna received through the Trump administration's Operation Warp Speed. That included $1.5 billion to help manufacture and distribute the first batch of 100 million doses, as well as $954 million to help with development and clinical phase trials.
By comparison, Pfizer, a pharmaceutical giant, said it invested $2 billion of its own money to co-develop its vaccine with partner BioNTech (BNTX). The company did receive the largest initial supply contract, $1.95 billion, for its vaccine from Operation Warp Speed.
But Moderna contends it took into account the taxpayer support, with offering a discounted price to the government during the pandemic, and discounts on other vaccines, Hoge said.
"We think we've paid that back, and then some, already, as a result of the discounts that we offered over the last two to three years," he said.
Hoge also pointed to other vaccines that range in price from $70 per dose, like flu — which is also provided to the public at no cost — and other vaccines that can cost upwards of $200.
"I think we're well within that range," Hoge said, adding that the coronavirus market is a brand new market with a handful of — at most three — players.
Before the pandemic, Moderna was a small biotech. In 2019, the company had $1.3 billion cash on hand, compared to the more than 300% jump to $4 billion at the end of 2020.
The company ended 2022 with $18 billion cash on hand. But Sanders is also focused on the company executives who received bonuses as a result of government purchased doses, as well as investments by the government from development through manufacturing of the product. Over time, including overseas, Moderna has also built out its own manufacturing partnerships.
But the government relationship precedes the pandemic, when Moderna had been working on the mRNA technology for other potential uses in coordination with the National Institutes of Health (NIH).
Even after the COVID-19 vaccine was successfully produced, and after all the government investment, Moderna was engaged in a dispute with NIH about who owns the vaccine patent rights. But the company eventually abandoned the patent fights and paid the NIH a licensing fee of $400 million for a part of the mRNA technology used in the vaccine, to be shared by researchers and partners.
It has been widely reported that three NIH researchers in particular — John Mascola, Barney Graham and Kizzmekia Corbett — helped advance work from SARS and MERS into the code that was shared with Moderna to develop the vaccine. And that relationship started a few years prior, as the company had been working with NIH since 2016 to develop the mRNA platform.
In SEC filings in 2020, Moderna acknowledged the close relationship with NIH, including that NIH would be running the clinical trial. And most recently, the company announced it had abandoned the patent.
"Moderna has permanently abandoned certain patent applications relating to mRNA-1273 that were the subject of discussions with the NIH," Moderna said in a statement.
"Our abandonment of the patent applications means that going forward no one using the claimed technology will ever be required to pay for it. We value our relationship with NIH and will continue to look for opportunities to collaborate further as we move forward in developing new mRNA vaccines and treatments," the company said.
But, on the flip side, the company sued Pfizer and BioNTech last year, accusing the duo of copying technology that Moderna used to make its COVID-19 vaccine. The lawsuits were filed in the U.S., U.K., Germany, and the Netherlands. The U.K. is the only one to set a date, recently announcing April 2024 for the trial.
Follow Anjalee on Twitter @AnjKhem
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance