This is an audio transcript of the Behind the Money podcast episode: Who will pay for the next Covid vaccines?

Michela Tindera
The new bivalent booster vaccines for Covid are available now, but the path to making these ready for adults earlier this month wasn’t easy.

Jamie Smyth
The administration, they’ve had to borrow, beg and steal money from different programmes to actually be able to purchase the new bivalent boosters from Pfizer and Moderna.

Michela Tindera
That’s Jamie Smyth, the FT’s US pharmaceutical correspondent.

Jamie Smyth
They took money from funds that were aimed towards building stockpiles of tests, building stockpiles of personal protective equipment. So that money’s been spent on the new boosters.

Michela Tindera
See, since the early days of the pandemic, funding from the US government has helped with things like developing, manufacturing and helping to distribute the vaccines to as many people as possible. And now that they’ve managed to pay for this latest round of boosters, Jamie says that they’re looking for even more funding.

Jamie Smyth
So the Biden administration has been seeking tens of billions of dollars of funding from Congress for several months, but it hasn’t managed to get this package through. So more recently, it’s been an additional request for $24.4bn to lawmakers, but they have not passed this yet. So they’re facing a real difficulty in terms of buying new vaccines, new treatments, developing new vaccines that can provide broader immunity to Covid.

Michela Tindera
And that’s left some experts concerned about how we might continue to fight Covid. Jamie Smyth and our colleague, Washington correspondent Kiran Stacey, interviewed the Biden administration’s Covid co-ordinator, Ashish Jha, recently. And he said this:

Ashish Jha
There’s just a set of things that we put in in the pandemic to manage an acute situation. And you want an orderly transition out of it . . . Yeah. And what Congress is doing is forcing a disorderly transition out of the pandemic. And that leaves lots of Americans vulnerable.

Michela Tindera
Ashish told the FT that what the US needs to be doing is investing in new types of vaccines to fight Covid, vaccines that have the potential to be even more responsive to new variants than we have right now. And Ashish told the FT that he’s concerned that if we don’t invest in these new kinds of vaccines, it could lead to serious problems down the line.

Ashish Jha
It will leave America worse off for both Covid and for future pandemics. And it is remarkable to me that Congress has not yet understood that for national security, for health security, this is an essential investment not just for Covid but for future respiratory pathogens as well. And yes, we will fall behind and further behind on this.

Michela Tindera
So as the world approaches its fourth year of the Covid-19 pandemic, what will the future of Covid vaccines look like?

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I’m Michela Tindera from the Financial Times. On this week’s episode of Behind the Money: as government funding in the US stalls, we’re exploring how the vaccine market will change and what that means for how we fight Covid.

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Well, Jamie, thanks for coming on the show today.

Jamie Smyth
Great to be here again.

Michela Tindera
Let’s go back to the early days of the pandemic and the development of these first Covid vaccines that came out in late 2020 and early 2021. So Jamie, developing these original vaccines so quickly was considered to be one of the greatest scientific achievements of our time. Could you describe what about that process made it so unique or special?

Jamie Smyth
There was just such a severe threat posed by the pandemic. And really, it forced governments to move at record speed and throw unprecedented amounts of cash at the problem. The US government announced something called Operation Warp Speed, a 10bn-plus plan to fast-track development of vaccines, treatments and research to target Covid. But I think you could say that really it was the vaccines which proved to be the most successful element of Operation Warp Speed. It was really quite incredible that we had the development of two mRNA vaccines within less than a year, you know. That is the fastest pace that any vaccine has ever been developed.

Michela Tindera
So the three main pharmaceutical companies that developed mRNA vaccines are Moderna, as well as Pfizer and BioNTech. And getting these vaccines into the arms of so many billions of people has been massively lucrative for these companies. Can you just quantify exactly how lucrative?

Jamie Smyth
If we look back into 2021, the combined sales of Moderna’s Spikevax vaccine and the BioNTech/Pfizer vaccine were around $55bn. And this year they’re forecast to generate about the same amount in revenues. Pfizer and BioNTech have been the most successful. To put this into context, the Covid-19 vaccines are the fastest-selling medicines of all time. You know, and they’ve really transformed the commercial fortunes of the companies, the fortunes of the scientists and the executives involved in these companies.

Michela Tindera
So these companies have done so well. And at the moment, a lot of that is thanks to governments from around the world. Jamie says that the Covid vaccine market relies completely on governments to buy up their vaccines to distribute among their populations right now. But there’s a chance that that will change in the coming months.

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So about a week and a half ago, President Biden appeared on 60 Minutes and he made some comments.

Scott Pelley
Mr President, first Detroit Auto Show in three years.

Joe Biden
Yeah.

Scott Pelley
Is the pandemic over?

Joe Biden
The pandemic is over. We still have a problem with Covid. We’re still doing a lot of work on it.

Jamie Smyth
One of the big problems for the Biden administration’s Covid coordinators are that just as they’re asking for this huge amount of money from Congress, we’ve had an announcement from President Biden and he said the pandemic is over. So that does not create a great political environment to go to Republican lawmakers and ask for more money. The Republicans have been very firm that they don’t think there’s enough of a crisis to justify more money to be diverted to the Covid fight. So I think that declaration is gonna make it more difficult.

Michela Tindera
Now, Biden, in that same clip, did say that there’s still more work to do on managing the virus. But, you know, the soundbite that people really latched on to was where he said the pandemic is over. So Jamie, what happened after President Biden’s comments came out?

Jamie Smyth
Well, the moment that President Biden made this comment, you know, caused a huge impact on the share price of the main vaccine makers, Pfizer, Moderna, BioNTech. $10bn was knocked off the share prices of the three main vaccine makers. Investors are concerned that the end of the pandemic means the end of the Covid vaccine bonanza that has been driving revenue growth over the last couple of years.

Michela Tindera
Mm-hmm. And so what does that actually mean for the pharma companies? Are they making changes to their business model because of that possible end to this vaccine bonanza?

Jamie Smyth
The pharma companies, I think, are preparing for a phase of the pandemic where rather than producing a new vaccine every couple of months and expecting people to take boosters, they’re gonna move to a phase where we’re going to have annual boosters for Covid, a bit like the market for influenza. So that’s gonna mean, I think, a far lower amount of sales and a far lower amount of revenue. So if you look at the influenza market in the US, annual boosters generate roughly, you know, somewhere just above $5bn a year in sales.

Michela Tindera
OK. And what’s the plan for the future? I mean, I think it’s probably fair to say that Covid-19 is not going to disappear any time soon. So will the government continue to make these vaccine purchases as the virus continues to evolve?

Jamie Smyth
It looks like we’re going to see a private market evolving in 2023 for the Covid vaccines. It’s already here for a few treatments for Covid. And we’ve seen monoclonal antibody product created by Eli Lilly, which is now being sold to private providers rather than governments. And that’s what’s coming next.

Michela Tindera
OK. So what would that look like in the future for vaccines specifically?

Jamie Smyth
So the downside of a private market for the pharmaceutical companies is that there won’t be this huge amount of bulk purchases that governments can do, you know, billions of dollars in a single contract. So they could have thousands of buyers now for these vaccines. And that’s gonna be a huge logistical challenge to be able to manage that and make sure that they can boost their revenues as high as they can. And however, there is one positive element for the pharmaceutical companies, and that is that they get more control of pricing. So at the minute, the prices, you know, of the Covid vaccine, the latest contract, it’s about $26 for a vaccine. And the companies are guiding that. They think the price in the private market is gonnna be somewhere closer to $100 per shot and, but they’re probably gonna sell a lot less of the vaccines. That price increase will compensate to a certain degree, but not totally in terms of the revenues.

Michela Tindera
OK. So Pfizer, Moderna and BioNTech are planning to keep updating these booster shots. So what else are they working on?

Jamie Smyth
They’re looking to create what are called next generation Covid jabs. These are jabs which would provide longer lasting protection and immunity and broader immunity. So there’s things that we call a pan-coronavirus vaccine, which would cover lots of different coronaviruses. And that’s something that’s under development. Now, these are complex, highly complex tasks and they haven’t been mastered yet. So these pan-coronavirus vaccines could be years off.

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Michela Tindera
So at the beginning of the episode, we heard from part of your interview with the White House Covid co-ordinator Ashish Jha. And in that interview he was talking about how important it is to get funding for new kinds of vaccines. So can you explain more about why that’s so important?

Jamie Smyth
So one of the big problems with the current generation of Covid vaccines is that they’re not providing the protection against infection that we initially saw when the first vaccines came out in December 2020. They were showing a 95 per cent protection against infection. But the big problem now is we’ve got these new variants which are exceptionally adept at evading the immune system. So one of the ways that scientists are looking to tackle the new Covid variants is by finding vaccines, particularly nasal and oral vaccines, that can provide more immunity at the spot at where you actually encounter the Covid virus.

Michela Tindera
Mm hmm. And can you elaborate? What do you mean by the spot where you actually encounter the virus?

Jamie Smyth
One of the things about these nasal vaccines is that there’s a hope that that would provide more protection against infection, because by boosting the immunity in the local area where the Covid virus, you know, comes into contact first with the body, and that is a way to block infection.

Michela Tindera
We also spoke with Eric Topol, who’s the founder and director of the Scripps Research Translational Institute. And Eric’s concern that the US government has relied too much on the existing shots and booster shots to pull us out of the pandemic.

Eric Topol
To me, that’s like the house that got remodelled. The old house, it’s had several remodellings. No, we need a new house. We need a, we need a next generation vaccine that is basically getting ahead of the virus. A nasal vaccine to get ahead of the virus. So we, the United States, never developed another Operation Warp Speed. The plan should be: we’re gonna do a, what we call the Operation Nasal Vaccine. And for these vital steps that will get us out of the pandemic much faster and more definitively. It’s just amazing how little is being done to help on either of these fronts.

Michela Tindera
So, Jamie, what’s happening right now with these vaccines that Eric’s talking about?

Jamie Smyth
So we’ve got companies working on vaccines which you can inhale through the mouth or you can put them as drops up your nose. And we’ve actually seen two examples of that have gained regulatory approval. There was a vaccine approved in India and a vaccine approved in China. Now, we don’t have a lot of data to suggest exactly how much protection they provide. And in the regulatory approval documents that came out, it said they provided good immunity, but didn’t drill down into the statistics. But that’s a sign that, you know, companies are looking at different ways to boost immunity. And there are programmes in the US aimed at producing nasal vaccines. So I interviewed a professor at Yale University who is working on nasal vaccine. It’s done pre-clinical trials in mice and showed good progress and boosting immunity. But one of the problems is they lack the funding to go ahead and actually develop this further.

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Michela Tindera
So Jamie, given how things are going at the moment with Covid in the US, you know, if another really concerning variant pops up, which scientists do think is well within reason to happen, do you think we’d see another mobilisation like we did in 2020, you know, another Operation Warp Speed? Or do you think there’s just such a fatigue by the government that we’d be stuck?

Jamie Smyth
I think there’s always a danger of a new variant emerging that’s gonna push us back into chaos. That’s, you know, if we got a variant which was more infectious or was able to evade people’s immune system, like the Omicron variant able to spread quickly, it would cause a lot of problems in the political arena. You know, there’s a lot of polarisation which has infected the whole debate around Covid. So if we were to get a new variant emerging, I think it would be difficult to get the co-ordinated response, to get the money together and create the same type of response that we saw under Operation Warp Speed. The politicisation of the pandemic, particularly in the US, I think has been really damaging and really has hindered the fight against Covid.

Michela Tindera
OK. Well, thanks for coming on the show again, Jamie.

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Behind the Money is hosted by me, Michela Tindera. This episode was edited by John Buckley. Topher Forhecz is our executive producer. Sound design and mixing by Sam Giovinco. Special thanks to Sarah Neville. Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.

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This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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