Beating back the coronavirus pandemic increasingly looks to be a long-term project. New, more transmissible strains that reduce the potency of vaccines will likely require repeat immunizations or updated shots to be fully tamed.
Drugmakers are now drawing up their response. As a first step, they plan to test whether additional boosters of authorized vaccines will be enough to protect against new strains, or whether they'll need to adjust for mutations from the original SARS-CoV-2 virus that jumped into humans one year ago.
Rather than a one-time emergency, coronavirus vaccine development could become a more enduring business, with Pfizer CEO Albert Bourla recently suggesting shots may be given annually, as they are with influenza. The possibility raises important implications about how the vaccines will be paid for and distributed.
The first round of vaccinations in many countries, including the U.S., have been pre-purchased by governments, an arrangement that puts a ceiling on the revenue companies anticipate as well as the prices they charge. As COVID-19 prevention evolves into a long-term public health priority, however, insurers will probably pay for continuing immunizations, changing how the money flows.
"We do think it's likely there will need to be more shots given and that there will be a need to do next-generation vaccines," Vamil Divan, an analyst at Mizuho Securities USA, said. “[Drugmakers] are sort of expecting there to be a longer-lasting [business] opportunity."
Last week, Pfizer underscored both points, revealing its expectation of $15 billion in coronavirus vaccine revenue this year and hinting at post-pandemic prices higher than the current $19.50 a dose it charges.
"That's not a normal price, like we typically get for a vaccine — $150, $175 per dose," Pfizer's CFO Frank D'Amelio said in a call with Wall Street analysts. "Let's go beyond a pandemic pricing environment, the environment we're currently in: Obviously, we're going to get more on price."
The other authorized vaccine in the U.S., from Moderna, costs $30 for a two-dose regimen, or $15 a dose.
Drugmakers charge roughly $17 to $26 per dose for the yearly flu vaccines, according to data from the Centers for Disease Control and Prevention. Prices are higher for shots needed less frequently, like Pfizer's Prevnar, which is sold to the U.S. government at $144 a dose.
Even after vaccination programs expand throughout the world, coronavirus variants could drive new waves of infection. Public health officials are in a race against time against mutations found in South African and in Brazil that may reduce the potency of vaccines from Moderna and partners Pfizer and BioNTech.
In many countries, however, vaccinating the population will be a task of many months, if not years. Continued virus spread will provide millions of opportunities for mutations even if the wealthy nations get their outbreaks under control. Should global travel resume, vaccine-resistant viruses could then find their way back around the world.
Israel could provide a case study in how well a single nation can respond through a single round of vaccinations and border restrictions, according to Ronny Gal, an analyst at Bernstein Research. The country closed its international airport to keep variants at bay, and has extended vaccination appointments to people as young as 18.
The U.S., by contrast, remains open to international travelers who test negative for COVID-19, and state vaccination programs have yet to expand meaningfully beyond older adults, essential workers and people with high-risk medical conditions.
Boosters and variant-specific vaccines, therefore, may be necessary in countries struggling to reach broad population coverage and control the flow of asymptomatic carriers of variant viruses.
Moderna and Pfizer have outlined their plans to address the likely next phase of the pandemic. First, they are researching the addition of a third dose of their current vaccines after a period of months, reasoning that these shots are effective in neutralizing new variants if immunity is maintained at a high level.
Additionally, they are beginning work on designing vaccines specific to the mutations in the variants first found in South Africa and Brazil, which alter the makeup of the key "spike" protein their vaccines target. The messenger RNA that both shots rely on to stimulate immunity is more easily changed than the technology used in other types of vaccines, making it likely that a new version could move into clinical testing fairly rapidly.
Defeating COVID-19, therefore, could for the next few years look a lot more like the global effort to prevent seasonal influenza, which requires annual shots. It's no surprise that both Moderna and Pfizer have proposed using the mRNA platform to also create flu shots, raising the possibility the two could be combined into one annual vaccine.
As the doses pre-purchased under Operation Warp Speed run out, the responsibility for buying shots for subsequent rounds of vaccination could shift to private and public insurance companies, potentially forcing both into uncomfortable discussions about price.
Payers in many cases are required to cover vaccines. That limits their ability to use value-based pricing models that tie a drug's price to its performance, a tool insurers can use to reach deals with drugmakers, said Michael Sherman, chief medical officer with Harvard Pilgrim Health Care.
"It's such a public health crisis that nobody is asking about the cost," Sherman said. "I think there generally is an expectation that they'll be priced fairly. That creates some pressure in terms of the price."
But he cautioned Pfizer shouldn't expect to be able to command the prices D'Amelio hinted at last week.
"When it's a public health emergency and when it's pretty much [a vaccine] for everyone it makes it hard for them to charge anything even close to that," Sherman said. Higher prices in particular would hit state and federal budgets hard because of the number of people covered by Medicare and Medicaid needing vaccination.
Even if drugmakers can't charge the same prices of some of their other vaccines, the pandemic is still likely to be one of the biggest businesses of the next few years. Bernstein's Gal forecasts the minimum cost for vaccines and drugs to be in the $40 billion range globally. And that's in a best case scenario in which the currently circulating strains are suppressed and a booster won't be necessary until 2023.
"In the worst case, you could see this [becoming a] $20 billion [annual] business for a long period of time," he said.