Drug vials If a COVID-19 vaccineyields a price of, say, $500 a course, vaccinating the entirepopulation would bring a company over $150 billion, almost all ofit profit. (Photo: Shutterstock)

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Yes, of course, Americans' health is priceless, and reining in adeadly virus that has trashed the economy would be invaluable.

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But a COVID-19 vaccine will have an actual price tag. And giventhe prevailing business-centric model of American drug pricing, itcould well be budget breaking, perhaps making it unavailable tomany.

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Related: Cost for Gilead's remdesivir treatment forCOVID-19? $2,340

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The last vaccine to quell a global viral scourge was the polioinoculation, which ended outbreaks that killedthousands and paralyzed tens of thousands each year in the UnitedStates. The March of Dimes Foundation covered the nominal drug costfor a free national vaccination program.

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It came in the mid-1950s, before health insurance for outpatientcare was common, before new drugs were protected by multiplepatents, before medical research was regarded as a way to becomerich. It was not patented because it was not considered patentableunder the standards at the time.

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Now we are looking for viral deliverance when drug developmentis one of the world's most lucrative businesses, ownership of drugpatents is disputed in endless court battles, and monopoly poweroften lets manufacturers set any price, no matter howextraordinary. A new cancer treatment can cost a half-milliondollars, and old staples like insulin have risen manifold in priceto thousands of dollars annually.

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And the American government has no effective way to fightback.

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Recent vaccines targeting more limited populations, such as ameningitis B vaccine for college students and the shingles vaccinefor older adults, have a retail cost of $300 to $400 for a fullcourse.

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If a COVID-19 vaccine yields a price of, say, $500 a course,vaccinating the entire population would bring a company over $150billion, almost all of it profit.

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Dr. Kevin Schulman, a physician-economist at the StanfordGraduate School of Business, called that amount "staggering." ButKatherine Baicker, dean of the University of Chicago Harris Schoolof Public Policy, said that from society's perspective "$150billion might not be an unreasonable sum" to pay to tame anepidemic that has left millions unemployed and cost the economytrillions.

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Every other developed country has evolved schemes to set ornegotiate prices, while balancing cost, efficacy and social good.The United States instead has let business calculations drive drugprice tags, forcing us to accept and absorb ever higher costs. Thatfeels particularly galling for treatments and vaccines againstCOVID-19, whose development and production is being subsidized andincentivized with billions in federal investment.

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When AZT, the first effective drug for combating the virus thatcauses AIDS, was introduced in 1992, it was priced at up to $10,000 a year or about $800 a month. It was the mostexpensive prescription drug in history, at that time. The price waswidely denounced as "inhuman."Today that price gets you some drugs for toenail fungus.

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Investors already smell big money for a COVID-19 vaccine.

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The market cap of Moderna, a small Boston-area company that haspartnered with the National Institutes of Health in the vaccinerace, has tripled sinceFeb. 20, to $23 billion from $7 billion, turning its chiefexecutive into an overnight billionaire. While Moderna's vaccine isregarded as a strong contender, the company has never brought a successful drug to market.

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Manufacturers have traditionally claimed that only the lure ofwindfall profits would encourage them to take the necessary risks,since drug development is expensive and there's no way of knowingwhether they're putting their money on a horse that will finishfirst, or scratch.

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More recently they have justified high prices by comparing themwith the costs they would prevent. Expensive hepatitis C drugs,they say, avoid the need for a $1 million liver transplant. Nomatter that the comparison being made is to the highly inflatedcosts of treating disease in American hospitals.

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Such logic would be disastrous if it were applied to asuccessful COVID vaccine. COVID-19 has shut down countlessbusinesses, creating record-high unemployment. And the medicalconsequences of severe COVID-19 mean weeks of highly expensiveintensive care.

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"Maybe the economic value of the COVID vaccine is a trillion —and even if the expense to the company was a billion, that's 1,000times return on investment," said Schulman. "No economic theorywould support that."

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In 2015, the Senate Finance Committee came up with a simplerexplanation for high drug prices. After reviewing 20,000 pages ofcompany documents, it found that Gilead Sciences had what thecommittee's ranking Democratic member, Ron Wyden of Oregon,called "a calculated scheme for pricing and marketing itshepatitis C drug based on one primary goal, maximizingrevenue."

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In setting prices, drugmakers rarely acknowledge theconsiderable federal funding and research that have helped developtheir products; they have not offered taxpayer-investors financialpayback.

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The Biomedical Advanced Research and Development Authority, afederal agency known as BARDA, is giving Moderna up to $483 million for late-stage development ofits vaccine.

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The basic science that has allowed the small company to move sorapidly was developed with a huge prior infusion of federal money to comeup with a treatment for diseases like Zika.

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Francis Collins, the head of the National Institutes of Health,has said the government has some intellectual property rights.Moderna seems to dispute that view, saying it is "not aware of any I.P. thatwould prevent us from commercializing" a COVID-19 vaccine.

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Likewise, AstraZeneca, a top competitor, has received a BARDApromise of up to $1.2 billion for commercializing a productderived from research at the University of Oxford.

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There is no simple, direct mechanism for regulators orlegislators to control pricing. Our laws, in fact, favor business:Medicare is not allowed to engage in price negotiations formedicines covered by its Part D drug plan. The Food and DrugAdministration, which will have to approve the manufacturer'svaccine for use as "safe and effective," is not allowed to considerproposed cost. The panels that recommend approval of new drugsgenerally have no idea how they will be priced.

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"The idea that we would allow ourselves to be held hostage in anemergency is mind-boggling," said David Mitchell, head of Patients for Affordable Drugs, an advocacy group.

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That's why a bipartisan coalition in the House recently proposedtwo new bills to prevent "price gouging" for "taxpayer fundedCOVID-19 drugs" to ensure affordable pricing.

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The exact mechanisms for enacting the provisions therein — suchas requiring manufacturers to reveal their development costs —remain unclear. The industry has previously protected developmentdata as a trade secret. The bills would also require "reasonablepricing clauses" be included in agreements between drug companiesand agencies funding their work. They propose waiving exclusivelicenses for COVID-19 drugs, allowing competitors to sell the sameproducts as long as they pay the patent holder royalties.

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Other countries, such as Britain, take a more head-on approach:a national body does a cost-benefit analysis regarding the price atwhich a new drug is worth being made available to its citizens.Health authorities then use that information to negotiate with adrugmaker on price and to develop a national reimbursementplan.

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We could, too, but would need to consider mechanisms outside ofour current box — at least for this national emergency.

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The federal government could, for example, invoke anever-before-used power called "march-inrights," through which it can override a patent holder's rightsif it doesn't make its medicines "available to the public onreasonable terms." (Unfortunately, in already-signed agreements with BARDA, some drugmakers have explicitly watereddown or eliminated that proviso.)

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We could, alternatively, allow Medicare to negotiate drug prices— a proposal that has been raised by politicians and beaten back byindustry again and again. We would then need to restrict markup fora COVID-19 vaccine for the private market. Otherwise, we'd get thekinds of results emerging from the COVID testing industry, whereMedicare pays $100 for the test but some labs charge insurers over$2,000.

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There is already reason to worry that our deliverance from thecoronavirus will cost us plenty. BARDA paid AztraZeneca up to $1.2billion toward development, production and delivery of itscandidate vaccine, in order to secure 300 million doses in October.Britain paid the equivalent of $80 million to secure 100 million dosesin September — one-fifth of what the United States governmentagreed to pay per dose.

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Baicker, the public policy school dean, thinks public scrutinywill prevent outrageous pricing. The industry has made variouspledges, trying to balance corporate citizenship against makingeager investors happy: Astra Zeneca has promised 1 billion doses for low- andmiddle-income countries. Johnson & Johnson says it would makethe COVID-19 vaccine available on a "not for profit basis" at $10for "emergency pandemic use."

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We've heard such offers before. Pharmaceutical companiesroutinely provide coupons to cover patient copayments for expensivedrugs so that we don't squawk when they charge our insurancecompany tens of thousands for the medicine, driving up premiumsyear after year. A naloxone injector to reverse heroin overdoses isgiven free to some clinics, but priced at thousands for therest.

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And it won't feel like a bargain if we get free or cheapvaccines during a pandemic but pay dearly for annual COVID-19 shotsthereafter.

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Drug companies deserve a reasonable profit for taking on thisurgent task of creating a COVID-19 vaccine. But we deserve areturn, too.

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So before these invaluable vaccines hit the market, we shouldtalk about an actual price. Otherwise, we will be stuck payingdearly for shots that the rest of the world will get for muchless.

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Kaiser HealthNews (KHN) is a national health policy news service. It is aneditorially independent program of the Henry J. Kaiser Family Foundation whichis not affiliated with Kaiser Permanente.

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