Moderna lands US COVID-19 vaccine contract worth up to $8bn

Earlier this month, Moderna said it had priced its COVID-19 vaccine mRNA-1273 at up to $37 dose in the low-volume deals it had struck at that time. An earlier report in the Financial Times​ said Moderna was aiming to price its vaccine at up to $60 per two-dose course.

The US government has extracted a lower price from Moderna. Initially, the government will pay the mRNA specialist $1.2 billion for 100 million doses. Moderna will receive a further $300 million if it wins emergency or regular approval for itrs vaccine by the end of January.

If Moderna gets vaccines to the US government in time to receive incentive payments for timely shipping, it will receive $1.5 billion for the production and delivery of 100 million doses.

At $1.5 billion, the deal prices the vaccine at $15 a dose or $30 a course. Factoring in the almost $1 billion the government previously gave Moderna to support development of mRNA-1273 brings the per dose price up to $25.

The deal also gives the government an option to buy an additional 400 million doses in batches of 100 million doses over the first half of next year, suggesting the US could acquire a significant share of the 500 million to 1 billion doses Moderna aims to make annually. Moderna is charging $16.50 per dose in that extension phase of the agreement.

If the government takes up all its options, Moderna could generate sales of more than $8 billion from the vaccine in the US alone in the next 12 months. However, Moderna has been unable to command such volumes and a significant price premium.

At $12 to $25, the per-dose price is toward the upper end of what the US government is paying for other vaccines. Last month, the US government agreed to provide Sanofi and GlaxoSmithKline with up to $2.1 billion to support development and manufacturing of their vaccine, securing itself a supply of 100 million doses in the process.

The $21 a dose implied by the Sanofi-GSK deal is higher than the amount the government is set to pay BioNTech and Pfizer, Novavax, Johnson & Johnson and AstraZeneca for vaccines. Those players have US government contracts that work out at per-dose prices ranging from $4 to $19.50.

Many of the per-dose prices factor in government investments in development. Only the agreement with BioNTech and Pfizer is a straight purchase. The other companies will use some of the money to develop the vaccines and otherwise prepare them for commercialization, meaning the real per-dose price is lower than the above-quoted figures.

That suggests the US government may be able to source the vaccines for a lower price if it needs to keep vaccinating people for years to come to keep the coronavirus in check. However, companies will also likely seek to generate larger profits from their vaccines in that endemic scenario.

AstraZeneca has vowed to sell its vaccine at-cost during the pandemic. Once the pandemic is over, the vaccine may be priced based on its value to healthcare systems. Moderna also plans to adopt different pricing strategies in the pandemic and endemic stages of the coronavirus crisis.