US government agrees to pay Pfizer US$1.95 billion for 100 million doses of COVID-19 vaccine

US government agrees to pay Pfizer US$1.95 billion for 100 million doses of COVID-19 vaccine
Source: Reuters

On Wednesday, the United States government released a statement announcing a US$1.95 billion dollar contractual agreement with pharmaceutical company Pfizer Inc. and German biotechnology company BioNTech SE to obtain 100 million doses of a COVID-19 vaccine.

Both companies will have to first complete a large Phase 3 clinical trial, set to begin this month, to test the effectiveness of the vaccine in protecting individuals against the virus.

If the trial is successful, the companies expect to receive emergency use authorization by the Food and Drug Administration (FDA) as early as October 2020.

By the end of 2020, the companies expect to manufacture at least 100 million doses, subject to regulatory approval. The doses will be received by the US government for US$1.9 billion, or US$20 per dose, as per the agreement.

“Depending on success in clinical trials, today’s agreement will enable the delivery of approximately 100 million doses of this vaccine to the American people,” Health Secretary Alex Azar said in the statement.

The agreement also gives the US the rights to order up to 500 million more doses of the vaccine.

The vaccines are expected to be provided to Americans free of cost.

“We’ll price our potential vaccine consistent with the urgent global emergency that we’re facing,” John Young, the Chief Business officer of Pfizer, said at a House Committee on Energy and Commerce hearing on Tuesday, adding, “A vaccine is meaningless if people are unable to afford it.”

Executives from five other vaccine manufacturing companies also participated in the hearing.

Following the announcement on Wednesday, Pfizer’s shares rose by five percent in premarket trading. BioNTech’s shares also rose by five percent.

The agreement is part of the Trump administration’s Operation Warp Speed initiative to secure COVID-19 vaccines for Americans.

Under the agreement, the administration provided US$1.2 billion to British-Swedish drug company AstraZeneca to make Oxford University’s COVID-19 vaccine.

The administration also provided US$483 million to Massachusetts biotech company Moderna for its vaccine development.

AstraZeneca recently released data indicating that the participants who were administered the Oxford vaccines in its early trials were able to develop neutralizing antibodies similar to those found in COVID-19 survivors, with only minor side effects.

However, Pfizer received no funding for its vaccine development. It will only receive payment by the US government for its doses and distribution, provided the vaccine is approved.

Young stated in the House Committee on Energy and Commerce hearing that the company refused federal funding in order to skip time on contractual negotiations.

“We didn’t accept the federal government funding solely for the reason that we wanted to be able to move as quickly as possible with our vaccine candidate into the clinic.”

Dr. Albert Bourla, Pfizer’s Chairman and CEO, said in the statement that “We’ve been committed to making the impossible possible by working tirelessly to develop and produce in record time a safe and effective vaccine to help bring an end to this global health crisis.”

Bourla went on to add, “We made the early decision to begin clinical work and large-scale manufacturing at our own risk to ensure that product would be available immediately if our clinical trials prove successful and an Emergency Use Authorization is granted. We are honored to be a part of this effort to provide Americans access to protection from this deadly virus.”

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