No more free COVID vaccines: US plots move to private market in 2023, setting up market clash between Pfizer and Moderna

The U.S. government expects to bow out of the distribution of COVID-19 vaccines and treatments, handing the countermeasures to the commercial market. And that bodes well for marketing expert Pfizer, the company argues.

No thanks to a lack of funds authorized by Congress, the Biden administration expects it won’t be able to continue buying COVID shots and therapeutics for free distribution starting next year, Dawn O’Connell, HHS’ assistant secretary for preparedness and response, said in a blog post Tuesday.

“We have always intended to transition this work to the commercial market and have been planning for that transition for some time now,” O’Connell wrote. “Unfortunately, the timeline to make the transition has accelerated over the past six months without additional funds from Congress to support this work.”

The government-led initiative has been offering vaccines and therapeutics to healthcare providers for free. And that will for sure change in the commercial setting.

The transition may not be a bad thing for COVID product manufacturers. Once the commercial market opens up, those biopharma companies will have access to more distribution channels and the ability to utilize additional marketing tools.

Before dropping out of dispatching vaccines and treatments, the U.S. government is ending a free at-home COVID test distribution program this Friday, citing lack of funding.

In terms of vaccines, HHS has secured about 171 million doses of bivalent, omicron-targeted boosters for this fall and winter. The FDA on Wednesday just authorized updated shots from Pfizer-BioNTech and Moderna. But starting from January 2023, HHS won’t have enough federal funds to support further distributions, O’Connell said.

As for therapeutics, the federal supply of AstraZeneca’s preventative antibody Evusheld is expected to run out in early 2023, followed by Merck’s oral antiviral Lagevrio by the second quarter at the latest. The HHS expects that its stock of Pfizer’s Paxlovid will be depleted by mid-2023.

Gilead’s Veklury, the first COVID treatment approved, transitioned to the commercial market in October 2020 after a short period of federal government-managed distribution. Federal distribution of several COVID antibodies by Eli Lilly, Regeneron and GSK-Vir Biotechnology have been suspended because the drugs appeared to have lost potency against omicron.

But Eli Lilly's bebtelovimab has retained its efficacy and FDA emergency use authorization. The company has made it available for purchase in the commercial market.

Meanwhile, developers of COVID products have been bracing themselves for the expected transition. Pfizer CEO Albert Bourla and Moderna chief Stéphane Bancel have both talked up their planning to have their products in the private market.

“As we look to 2023, we are prepared for a shift to the commercial market in the U.S. for COVID boosters, where the market will be more fragmented than it was during the pandemic where the U.S. government was the sole purchaser of vaccines,” Moderna chief commercial officer Arpa Garay said during an investor call earlier this month. Moderna has talked to commercial payers, distributors and key pharmacies about the transition, she added.

As Pfizer’s Bourla sees it, Pfizer can be “even more competitive” and its commercial skills are “even better suited” in an open market than a government-contracting model, he said during an investor call in July. Even before the pandemic, Pfizer was one of the world’s leading vaccine producers thanks to its pneumococcal vaccine Prevnar, whereas Moderna is a private commercialization greenhand. 

After moving to the commercial market, Pfizer will be able to reach “a much broader set of channels that we currently do today,” Pfizer’s biopharmaceuticals chief Angela Hwang said during the call.

In terms of consumer education, Pfizer has currently limited itself to unbranded disease awareness efforts, Hwang said. But in a commercial setting, branded education could focus on Pfizer’s products, including BioNTech-partnered Comirnaty and antiviral Paxlovid.

“All of these are things that […] the commercial organization of Pfizer does really well,” Hwang said “This is our sweet spot.”