Why are there such large differences in the prices of coronavaccins?

Oops, mistake. In fact, the prices of vaccines had to be kept secret; the European Commission agreed with the pharmaceuticals. But thanks to a tweet by Eva De Bleeker, the Belgian Secretary of State for the Budget and Consumer Protection, the amounts are now on the streets.

This shows significant differences between the six vaccines included in the purchase programme. Health economists point out that the price of all vaccines is quite reasonable, especially when compared to vaccines against other diseases. But still: how can the cheapest vaccine cost almost ten times less than the most expensive?

Pharmaceuticals Pfizer and Moderna, the two most expensive vaccines, are now being applied for approval in Europe, while the vaccine from Sanofi and GSK was not effective enough at the initial stages of the research. There is, as always, so there is a risk that the development of a vaccine spoke runs.

But the financial risk is much higher with corona vaccines than with other vaccines, says health economist Xander Koolman of the Vrije Universiteit Amsterdam: โ€œNormally, the development of a vaccine takes up to ten years. All the steps, from research to production, are then followed one after the other. Now it‘s happening simultaneously. So the vaccine is already being produced, while it is not yet clear whether it works.โ€

On the other hand, the possible revenues are also much higher, says health economist Maarten Postma of the University of Groningen: โ€œThese are very large volumes. This is unprecedented, because potentially the whole world needs to be vaccinated.โ€

Risk Spread

In order to mitigate the risk, governments have already agreed with the pharmaceutical companies Advance Purchase Agreements (APA) at an early stage. In other words, if a vaccine gets it to the market, governments are given an agreed number of doses. If a vaccine does not work, pharmaceuticals will still receive (part of) the development costs.

So, if there are ten vaccines, the total cost of which is 10 billion, but five vaccines fail, it actually costs EUR 2 billion per vaccine.

Satisble Price

Xander Koolman: โ€œWhen the APAs were agreed, you didn’t know which vaccines would work and which ones wouldn‘t. Now it seems that most of them are actually on the market. No one expected that.โ€ This means that the development costs per successful vaccine are lower.

And so competition has increased and prices have been created that Koolman calls โ€œvery reasonableโ€: โ€œIn the health economy, we look not at what costs, but at value. In the case of a corona vaccine, the value is very high, because it is important for the whole world economy.โ€ Maarten Postma also calls the prices โ€œcertainly not exorbitantโ€: โ€œA vaccine against meningococci B costs 40 euros and against pneumococci it can cost up to 80 euros.โ€

The vaccines have been developed very quickly. That raises questions about the safety.CCEIT on 3 explains how it is:

If you look at the value, the Netherlands would also have given a thousand euros per vaccinated person, Koolman thinks: โ€œ17 billion euros for all vaccinations is an acceptable amount if society can reopen.โ€

In addition, Koolman does not think it entirely right to look only at what a pharmaceutical company ultimately charges for the vaccine. The exact terms from the APAs are not known. It may well be that governments were willing to bear more risk in the case of one vaccine if they were to pay a lower price per dose delivered, he says. โ€œThe price you see here is the tip of the iceberg, but we don’t know how much the part that is underwater.โ€

‘Very, very marginal profit’

That also says spokesman Jan-Willem the Lord of Pfizer: โ€œPfizer has invested EUR 2 billion of equity in development. Our CEO Albert Bourla expects us to make a very, very marginal profit on the vaccine at this stage. This also contributes to continuing to invest in new medicines and vaccines. Because nine times out of ten have failed to develop new drugs.โ€

The Lord says that the technology used by Pfizer for the vaccine also plays a part in how the price came about. The vaccine is a so-called MRNA vaccine: โ€œFor this, production sites need to be adapted and built, and storage requires different logistics from other vaccines.โ€ The Pfizer vaccine is stored at a temperature of -70. Specially developed dry ice packaging is used for transport. Other vaccines can be stored at -20 or refrigerated temperature.

The Netherlands starts vaccination on 8 January, later than other countries. GGD Director Sjaak de Gouw explains why:

In addition, the AstraZeneca vaccine was developed by the University of Oxford. Who agreed thatvaccine at the cost will be delivered as long as the pandemic lasts. After that, they can raise the price.

When all vaccines are on the market, prices will continue to shift anyway, says Maarten Postma: โ€œGenerally, vaccines are always cheaper. But it also has to show how all coronavaccins work.โ€

For example, the Pfizer vaccine, better than the Astrazeneca vaccine, may prevent vaccinated people from getting sick, but they can continue to transmit the virus. While that of AstraZeneca works better against the latter.

Postma: โ€œBecause the need is high now, we pay for what the pharmaceuticals ask for. But soon the quality of the experience with the vaccines will determine the price. If something works better, it also justifies a higher price.โ€