JJ Gouin
The COVID-19 emergency is expected to end in May, the Biden administration informed lawmakers and governors last week, outlining how that will impact a multitude of pandemic-era countermeasures, including what was largely a cost-free use of COVID vaccines and treatments.
In a letter sent to governors on Thursday, Health Secretary Xavier Becerra extended the federal public health emergency (PHE) for another 90 days from Feb. 11, noting that he expects it to be the last renewal based on current trends of the pandemic.
The announcement comes at a time when daily COVID cases have dropped 92% from the Omicron peak in January 2022, leading to an 80% or more decline in COVID-related hospitalizations and deaths.
First declared in early 2020, PHE saw the rollout of Pfizer (NYSE:PFE)/BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA) COVID shots developed using mRNA technology. Johnson & Johnson (NYSE:JNJ) and Novavax (NASDAQ:NVAX) joined the fray later with their more traditionally designed vaccines.
In 2021, Pfizer (PFE) and Merck (MRK)/ Ridgeback Biotherapeutics opened a new battlefront with oral COVID therapeutics, joining the likes of Gilead’s (GILD) intravenously delivered antiviral remdesivir.
During the emergency phase, Americans enjoyed free access to these vaccines and treatments regardless of their insurance status, thanks to the government-led procurements for the federal stockpile.
That will change in May when the pandemic’s emergency phase expires. People, irrespective of their healthcare policy, will be able to receive these vaccines and treatments at low or no cost as long as the government-led procurements last.
However, there will be significant changes when supplies run out, and manufacturers move their products to a private market as the federal stockpile dwindles with no additional funding from Congress.
Pfizer (PFE) and Moderna (MRNA) expect to transition their products to a commercial market and charge ~$110 to $130 per vaccine dose, up from $26 – $30 implied in the latest government contracts.
That puts the uninsured and underinsured in a tight spot as they will have to pay the full cost out-of-pocket or look for free or low-cost vaccinations through a different pandemic relief program, which also took a hit after federal funding dried up in the spring of 2022.
Yet, the shots will continue to be free under Medicare Part B and most private insurance plans even after the lapse of emergency. Many people with job-based private insurance will also have free access to vaccines as long as their providers are in-network.
A recent KFF report indicated that the cost of buying vaccines for even half of U.S. adults at new higher prices would reach $12.4B – $14.8B, nearly double the $7.5B estimated for all adults assuming shots purchased at the average federal price.
As for COVID treatments, people with Medicare will face cost-sharing once the PHE ends, while there will be no change in coverage for most with private insurance as many private payers started to reimplement cost-sharing for therapeutics by late 2021.
However, Medicaid – the state-federal health insurance program for those low-income earners – will continue to cover vaccines and treatments for free through September 30, 2024. The coverage will vary thereafter.
The end of PHE will not affect the emergency use authorizations (EUA) the FDA introduced to accelerate the pandemic response. The agency will continue to issue EUAs as this provision relates to a separate emergency declaration.
Ocugen (OCGN), Veru (VERU), and Vaxart (VXRT) are some of the companies that continue to eye U.S. authorizations for their new COVID-19 shots and therapeutics.
Seeking Alpha authors commented on how vaccine makers respond to a private market. Despite reassurances from the management, investors should carefully assess Pfizer’s (PFE) plans for transition, JR Research wrote recently, while Edmund Ingham raised concerns if Novavax (NVAX) can be competitive in a private market.
