Why Moderna wants to raise the cost of its COVID-19 vaccine
Yahoo Finance’s Anjalee Khemlani joins the Live show to discuss key takeaways from Moderna CEO Stéphane Bancel’s testimony before the Senate and why the pharmaceutical biotechnology company wants to raise the cost of its COVID-19 vaccine to match market competition.
BERNIE SANDERS: Are you prepared to substantially charge less for the vaccine to the United States government and our agencies?
STEPHANE BANCEL: Given the situation at hand, Mr. Chairman, we have no idea of a volume that we'll need this year. We have very increased complexity--
BERNIE SANDERS: Yeah, you have complexity, but you have money for stock buybacks by the billions, and you guys became billionaires. That doesn't seem too complex to me. Let me ask you this question, at least. The United States pays-- the people in our country pay the highest prices in the world for prescription drugs in general, something this committee will work on.
Will you at least tell us today that the price you are charging for the vaccine will be lower than what other countries around the world are paying? Or are once again we going to pay the highest prices?
STEPHANE BANCEL: So Mr. Chairman, the price will depend on the value in each country. The cost of health care is different in each country.
BERNIE SANDERS: That's not the answer.
- That was Senator Bernie Sanders and Moderna CEO Stéphane Bancel in a heated conversation about the cost of the US government and consumers paying for the COVID-19 vaccine. So why exactly does Moderna want to quadruple the price after years of record profits? And what does that mean for the company's stock performance?
Yahoo Finance Anjalee Khemlani has the details on this Bernie-Bancel brouhaha that took place yesterday.
ANJALEE KHEMLANI: [LAUGHS] It was a sight to see, I'm telling you. But so let's break down what happened. We know that Moderna and Pfizer, by the way, are going to be increasing their price per dose to $130, or in that range. What we did get out of this hearing yesterday was that, number one, that Moderna is in negotiation with all of the payors-- so that is going to be the government agencies as well as insurers-- on what that final list price is going to be. But out-of-pocket cost for Americans is supposed to remain zero. That's what the CEO told the committee yesterday.
Meanwhile, we know that costs are going to be increasing for the companies-- that includes Pfizer as well-- because they're shifting from the government taking control of distribution as well as those 10-dose vials to reduce to single-dose vials or prefilled syringes. And they're expecting costs coming from that as well as incurring the cost of loss because they do not yet know what that market is going to look like, right?
This fall, when we hear the booster cycle, we're not sure how many people are going to take those doses. And so they're kind of flying blind right now. And we heard Stéphane Bancel say yesterday that there is market analyst consensus that the company is going to be at a loss this year and that they may well lose out on that status and all that cash that they're sitting on. It's just going to have been a one-time pandemic windfall.
So that's sort of the back-and-forth that we saw happen yesterday between Senator Sanders and other members of the committee, as well as CEO Stéphane Bancel. And really at the core of the argument is why Moderna specifically, who got a lot of investment from the federal government, is now turning around and raising prices to match what the market, you know, competition is. And so that's really, you know, the basis of the conversation yesterday.
- Yeah, really interesting stuff and sort of gets to, like, questions about capitalism--
ANJALEE KHEMLANI: Yeah.
- --more broadly. It's big question. Thanks so much, Anjalee, for continuing to track it for us.