A lab technician at the Pfizer factory inspects Paxlovid tablets as they move during production.
Thomas Hansmann / Pfizer
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Thomas Hansmann / Pfizer
A lab technician at the Pfizer factory inspects Paxlovid tablets as they move during production.
Thomas Hansmann / Pfizer
The US is spending about $530 per 5-day course of Pfizer’s COVID-19 pill, Paxlovid. But the contract for the first 10 million doses of the drug will allow the government to get a lower price if one of the few other rich countries gets a better deal on the drug.
It’s part of a deal that appears to be more beneficial to the federal government as a whole than COVID-19 vaccine contracts. Robin Feldman, a professor at the University of California Hastings College of the Law who focuses on the pharmaceutical industry and drug policy.
“I think this contract reflects the change in the national mood over time,” she said. “So with a vaccine and some treatment on the shelves, the nation is less panicky. US government officials feel less back in the corner, more bargaining power.”
The contract includes a buyback clause, which means that in the event of an urgent need to revoke Paxlovid’s license to use, Pfizer will buy back the unexpired courses of treatment from the federal government.
Federal government gets price matching guarantee
The contract also includes something called most-favored-nation pricing. It’s like buying a product at a store with the right price, such as Target or Best Buy. If one of the other six rich countries, such as Japan or Germany, received a lower price for Paxlovid, the US could boost the government with a similar price.
“Getting the most-favoured-nation clause is great for the buyer,” says Feldman. “Because buyers can make deals early, ensure product flow, and don’t have to worry that they’re being squeezed. Because prices can drop over time.”
(“Most Favored Nation” sounds familiar because the Trump administration proposed testing it to gradually reduce the price of drugs in Medicare Part B over seven years. The Medicare and Medicaid Centers later. cancel the plan, citing concerns about access issues and the COVID-19 pandemic.)
NPR obtained the Paxlovid contract after filing a request for public records.
James Love, director of global public interest advocacy group Knowledge Ecology International, was shocked to see this price clause in the Paxlovid contract obtained by NPR. He says governments often can’t even get this kind of provision when they pay for research on a drug.
“Here they said, ‘Well, we didn’t even pay for the R&D, but we still want the reference price,'” he said. “And they got it.”
In contrast, Pfizer’s vaccine contract explicitly states its per-dose price – around $20 – cannot be used as a reference price, allowing the company to charge more later: “This price will not be as the basis for pricing under any separate government contract between Pfizer and HHS, the Department of Defense, or any other Department or agency of the Government at the request of the most favored customer, the countries are preferential treatment or any other specific terms of the contract or program.”
Paxlovid tablets are packaged at the Pfizer factory.
Thomas Hansmann / Pfizer
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Thomas Hansmann / Pfizer
Paxlovid tablets are packaged at the Pfizer factory.
Thomas Hansmann / Pfizer
However, the most favorable countries clause in the Paxlovid contract is extremely limited, Feldman said.
“Canada, France, Germany, Italy, Japan, United Kingdom. That’s it,” she said. “If Pfizer sells drugs at a lower price to Belgium, that doesn’t help us at all.”
Since the government pays Paxlovid as each incremental order is issued and shipped, it can negotiate a lower Paxlovid price anytime between now and September, when the contract says last doses of the drug. will be released under the contract.
Paxlovid production is expected to increase in the spring
Original contract, November 17, 2021, offers a product release schedule with most of the medication coming in spring and summer 2022. In fact, more than half are expected to happen in the final two months of the 10-month contract period. month.
It shows how Pfizer is still scaling Paxlovid production. For December, it only plans to release 50,000 courses. But in March, it’s expected to be 400,000. And in September, it expects to release 3.25 million courses.
Since the contract was signed, Pfizer and the government have increased their production targets and doubled orders to 20 million treatments. So 10 million treatments were scheduled for delivery in September and are expected to arrive by the end of June. 10 million additional treatments will be completed by the end of September.
The Biden administration did not respond to NPR’s questions around how this would affect the initial release schedule.
Pfizer declined to comment on contract specifics, but said it will begin supply chain preparation and Paxlovid production in early 2021.
Pfizer spokesman Steven Danehy told NPR in an email: “We are constantly looking for ways to improve processes, processes, and extend supply chains – including expanding internal and external networks, products and services. raw material production and pelletizing capacity”. “Through this work, we have increased [global] projected from 50 million courses to 120 million – our work, of course, was never done. However, we have never and will never sacrifice product quality or patient safety to ensure effectiveness. We are confident in our ability to supply Paxlovid. “
According to federal data, Pfizer seems to be on track to achieve its goals. So far, the government has been able to distribute 265,000 Paxlovid courses.
