COVID-19 vaccine makers must deliver on time to get paid by US

The United States is tying payments for COVID-19 vaccines to timing milestones for production and approval, according to public documents and a Trump administration official, putting pressure on drugmakers including Moderna Inc to meet ambitious targets.

In a deal with Moderna announced this week, federal agencies negotiated a sliding scale of payments. The Cambridge, Massachusetts, biotech’s $1.5bn deal pays out in full if its vaccine receives regulatory clearance by January 31, 2021, according to filings. It receives $1.2bn if it falls short of that timing goal.

Moderna also receives $600m when it can demonstrate it has built out industrial-scale manufacturing capabilities for its vaccine, even if that happens before the drug is authorised by regulators, the filings show.

US government payments to other drugmakers are also conditional on launching clinical trials no later than early fall and building out manufacturing capabilities by the end of the year, two senior administration officials told Reuters, adding that terms varied by company.

The deal terms add financial risk for the drugmakers and increase pressure for speed that has worried some public health advocates. The US Department of Health and Human Services and Moderna declined to comment; other drugmakers had no immediate comment on Friday.

Other drugmakers did not publicly reveal details on the specific terms of their agreements with the US government, though Pfizer has said its deal with the government for its joint vaccine with BioNTech only pays out if it receives regulatory approval.

The US has allocation agreements with Johnson & Johnson, Pfizer Inc, BioNTech SE, Sanofi SA, and GlaxoSmithKline Plc. It also has a claim on 300 million doses of AstraZeneca Plc’s vaccine in exchange for helping finance its research and development efforts.

Analysts already have said drugmakers may struggle to recoup billions invested in vaccine development at US treatment prices that so far range from $20 to $42 per person.

Administration officials have said they expect the US government’s Operation Warp Speed vaccine development programme to deliver an inoculation by the end of the year. President Donald Trump has said he thinks a vaccine could be available before the November 3 presidential election.

To obtain regulatory approval, a vaccine must reduce incidents of infection with the novel coronavirus by 50 percent compared to people who are not inoculated and demonstrate a high level of safety.

Experts say ongoing vaccine trials, which must enrol tens of thousands of people and wait for them to be exposed to the coronavirus, could produce usable results soon or as late as mid-2021, raising questions about drugmakers‘ ability to meet the administration’s timelines.

Shares of Moderna have more than tripled since it announced in January it was developing a vaccine. Moderna has never produced an approved vaccine.

But the implied US government payment per course of treatment for Moderna‘s drug, $30.50, could decline to $24.50 if it does not receive approval of its vaccine by January 31, 2021.

The US, through its Operation Warp Speed vaccine development programme, has set aside around $8bn to lock in deals for COVID-19 vaccines in advance of any of them receiving approval from regulators.