Analysis: Stricter conditions: why the EU pays more for new COVID vaccines

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  • The US agreed to a higher price than the EU for Pfizer’s jabs in July
  • The EU has imposed more stringent conditions on production, deliveries
  • Some vaccine manufacturers have increased bargaining power
  • Side effects, supply issues overshadow some drugmakers

BRUSSELS, Aug 3 (Reuters) – The European Union has agreed to pay a premium on new COVID-19 vaccine orders because it demands tougher conditions, EU officials said, as the bloc attempts to protect supplies after a difficult start to their vaccination campaign.

The higher price is lower than what the United States agreed to pay in their last order in July.

On Sunday, the Financial Times reported that the EU had agreed to pay Pfizer (PFE.N) and BioNTech (22UAy.DE) 19.5 euros ($ 23.1) for each of their COVID-19 shots under a contract signed in May for a maximum amount of 1.8 billion. doses, against 15.5 euros per dose under the first two supply contracts for a total of 600 million vaccines. This was in line with previous reports Read more.

The price of Moderna’s injections (MRNA.O) rose to $ 25.5 per dose, the newspaper said, referring to a 300 million vaccine deal, from $ 22.6 in its original deal for 160 million. jabs.

MEP Tiziana Beghin, a member of Italy’s ruling 5-star party, said the EU was being ripped off.

“It’s inexplicable,” she said.

Moderna’s price is still at the low end of the company’s $ 25- $ 37 range last year, but Pfizer and BioNTech previously said prices would be lower for larger-volume transactions.

Others said there were good reasons to pay more and that circumstances had changed dramatically since the initial deals were made with drugmakers last year.

French European Affairs Minister Clément Beaune told French radio RFI on Monday that possibly higher prices were still being negotiated and resulted from stricter clauses on variants, production and deliveries.

An EU official familiar with negotiations with vaccine manufacturers said the value of injections from drugmakers had increased since evidence emerged of their effectiveness and the positive impact they had in helping the economy to recover. recover from a pandemic-induced recession.

“Several factors played a role,” the official said, speaking on condition of anonymity.

NEGOCIATION POWER

All vaccines used in Europe have been shown to have a beneficial impact, but those manufactured by AstraZeneca (AZN.L) and Johnson & Johnson have been subject to restrictions on their use in the EU due to concerns that ‘they can, in rare cases, lead to blood. clots.

These two vaccine makers also experienced supply issues which, in AstraZeneca’s case, led to legal challenges from the EU. Read more

As the bargaining power of Pfizer / BioNTech and Moderna has increased, additional demands from the EU are likely to increase the costs of manufacturing and delivering vaccines.

A spokesperson for Pfizer declined to comment on European prices, but said the latest contract with the EU was different from the first, including on issues regarding production and delivery.

Moderna did not respond to a request for comment.

The European Commission, which coordinates negotiations with vaccine manufacturers and representatives of EU governments, declined to comment on the prices.

However, a spokeswoman told a press conference on Tuesday that when discussing with vaccine manufacturers, the EU takes several things into account, including companies’ production capacity, delivery schedules and technology. that they use.

Earlier this year, lawmakers, the media and some analysts criticized the bloc for paying too little for the first supplies of COVID-19 vaccines, saying it contributed to the initial delays in the vaccination campaign.

“It’s easy to criticize the EU for spending too little and late or for spending too much,” said Giovanna De Maio, a non-resident fellow at the Brookings Institution, a US research group.

“The reality is much more complicated, and it may be fair to prioritize access to vaccines over costs given the rate at which the Delta variant is spreading,” she added, noting. reference to the more transmissible variant which was first detected in India.

On July 23, Washington bought an additional 200 million vaccines from Pfizer for $ 24 a dose ($ 20.1), the company said, compared to the $ 19.5 the United States paid for its first $ 300 million. vaccines.

Pfizer said the higher prices in the United States reflected the investment required to produce, package and deliver new formulations of the vaccine, as well as the additional costs to produce smaller packages suitable for “individual supplier offices, including pediatricians “.

MADE IN THE EU

When the EU struck its third supply deal with Pfizer for up to 1.8 billion doses in May, the Commission said the new contract required vaccines to be made in the EU and essential components. come from the region.

In its first supply agreements, the EU had demanded that only vaccines be manufactured in the EU, and not their components.

Concentration of production in Europe can help secure supply now that production lines are well established and there is less room for maneuver, but it is also likely to increase costs.

The European Commission also said in its statement that under the new contract “from the start of supply in 2022 delivery to the EU is guaranteed”, while in the first contract Pfizer was not required to make “best reasonable efforts” to ship pre-agreed volumes on time.

Pfizer has so far met its commitments to the EU and delivered slightly more than initially expected in the first quarter of the year.

Another big change from the first contracts is the emergence of variants and fears that vaccines may not be effective against them.

EU officials have said governments could refuse to buy vaccines that do not protect against variants, while companies will have to adapt their vaccines quickly, potentially at a significant cost.

($ 1 = € 0.8422)

Report by Francesco Guarascio @fraguarascio; additional reporting by Matthias Blamont in Paris and Michael Erman in New Jersey; edited by Joséphine Mason and Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.

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