Sanofi's Zika-shot pricing dust-up highlights a divide over taxpayer-backed vaccine R&D

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Sanofi has reportedly turned down requests to add pricing language to a proposed Zika vaccine license from the U.S. Army. Sanofi didn't confirm or deny the report. (Health.mil)

Sanofi got more than it bargained for when it teamed up with the U.S. Army to develop a Zika shot. The company's forthcoming license on the vaccine—whose R&D was partly funded by taxpayers—has triggered a backlash, with nonprofits and politicians demanding guaranteed affordable pricing.

The latest development came on Wednesday, with a report that Sanofi had rejected the suggestion that it include pricing provisions in the license it's now negotiating with the Army. An Army official had said last month that the agency couldn't enforce future vaccine prices.

But Sanofi is far from alone in tapping government funding for vaccine development, both in Zika and more broadly. Since Zika started its worldwide spread, other U.S. agencies have partnered with Big Pharmas GlaxoSmithKline and Takeda on different Zika vaccine approaches. Takeda's deal could be worth up to $312 million in funding from the U.S. government. 

The question now is whether the debate over Sanofi's deal with the U.S. Army—with up to $173 million in potential funding and a follow-up exclusive license to commercialize the product—will lead to demands for pricing concessions in other shared-risk development partnerships like GSK's and Takeda's.

Such deals are key for vaccine R&D, companies say, because of the huge risks and costs particular to developing immunizations. An Army official addressing the Sanofi deal has said exclusive licenses are often the only way to entice a pharma company to partner.

RELATED: U.S. Army can't add a pricing safeguard to Sanofi's Zika vaccine license, official says

Sanofi's license for the Zika shot hasn't been finalized, so its provisions are still up for negotiation. A Sanofi spokesperson told FiercePharma that discussions with the Army are “ongoing,” adding that the “terms of the agreement are still being negotiated.” Sanofi didn’t confirm or deny the report on its pricing stance.

Nonetheless, news of the decision has drawn the ire of Sen. Bernie Sanders, I-Vt., who wrote a New York Times op-ed in March asking the Trump Administration to call off a “bad deal.” Through an “insane system,” Sanders wrote at the time, taxpayers fund vaccine development and then later have to pay for protection against the virus.

On Wednesday, Sanders called the move “unacceptable.” He added in a statement that U.S. citizens “should not be forced to pay the highest prices in the world for a critical vaccine we paid to help develop.”

The saga over the license started late last year, when a Federal Register post announcing the license proposal drew fire from nonprofit Knowledge Ecology International and other groups. KEI called for pricing safeguards and said the deal would “not be legal” because it isn’t necessary to motivate Sanofi to develop the shot through to the market.

RELATED: U.S. Army can't add a pricing safeguard to Sanofi's Zika vaccine license, official says

Responding on the pricing issue, an Army official wrote last month that the agency is simply unable to honor the request. Addressing KEI Director Jamie Love, the Army’s director of medical technology transfer at the Medical Research and Materiel Command, Barry Datlof, said it’s not feasible.

The Army can’t “define, implement and enforce 'affordable prices' or … set price controls for a potential vaccine that will require great investment and face high risk of failure,” Datlof wrote in a letter. Datlof said the ultimate deal will comply with U.S. laws and will “be in the best interest of the U.S. government and the public.”

“Considering the high risk and high cost involved in advanced vaccine development, granting an exclusive license for a federally developed technology is often the only incentive significant enough to attract a competent and willing commercial partner,” Datlof explained in the letter.

Despite that argument, Love maintains that such a pricing guarantee would be “very simple.” KEI filed an appeal on Friday.

Sanders and other politicians have joined in with the critics along the way, and Sanofi’s R&D head explained the proposed deal through a New York Times op-ed in March. Elias Zerhouni said Sanofi is not getting something for nothing in the arrangement and that the collaboration could lead to a shot that would protect the public from a devastating disease. Vaccine development “entails tremendous costs and risks," he added.

RELATED: Sanofi exec fires back amid fight over Zika vaccine license

Further, Sanofi would have to pay “significant” milestones and royalty payments if the vaccine reaches the market, Zerhouni said.

The French drug giant's vaccine unit entered its Zika vaccine collaboration with the Army last summer and has since won $43 million to support R&D. Another $130 million in government funding could assist the project as it progresses, according to the HHS.

As a series of devastating diseases has cropped up in recent years, pharma, governments and nonprofits have increasingly collaborated to pool resources and risks to address new challenges. But the Sanofi deal is attracting more scrutiny than the others and highlights a difference of opinion between those involved in the project—who face the risk of failure—and those who want a guarantee for an affordable vaccine that taxpayers helped to fund.