The Food and Drug Administration’s COVID-19 vaccine approval issued Aug. 27 comes with restrictions on who’s eligible to receive the vaccine. Meanwhile, the administration has endorsed seasonal influenza vaccines — but only if they do not include the mercury-based preservative thimerosal.
These changes have sparked confusion among consumers. Will vaccines be available this fall? Will they be effective? And will they be covered by insurance? Industry leaders also are likely wondering how these changes will affect reimbursement rates, profitability and their overall bottom line.
Below, Patrick Aguilar, MD, managing director of Olin Business School’s Business of Health initiative at Washington University in St. Louis, discusses the potential impact these changes may have on the health sector, which makes up nearly 20% of the U.S. economy.
What are the current recommendations for annual vaccines like COVID and flu?
Respiratory viruses like influenza and COVID-19 tend to change significantly over time for a variety of interesting reasons. As a result of those changes, vaccines need to be updated regularly to remain effective against the viral strains that are currently expected to be most active. The Centers for Disease Control and Prevention (CDC) still recommends that nearly everyone 6 months and older gets a vaccine against influenza every year in September or October. Some people have medical reasons not to get the vaccine, but those exceptions are rare.
For COVID-19, the Food and Drug Administration recently approved new vaccines for this virus season, but it limited the approval to only include adults over 65 and those adults/children over 5 years old who have at least one high-risk health condition. For children under 5 years old with at least one serious health problem, the Moderna vaccine will be the only option available because of the new rules.
The impact of this is that vaccines will be more difficult to get for people who are under 65 and do not have one of the specified high-risk criteria. Pharmacies may still administer vaccines to people who meet the criteria. For those who do not meet the criteria, they will likely require physician prescription.
Physicians can prescribe medications to people for things outside of FDA regulations, and they will be able to do that to provide vaccines for patients that do not meet the criteria, though pharmacists may be unable to administer these vaccines. Depending on how pharmacies respond to these changes, that may introduce another restriction to vaccine access.
Finally, it is not yet clear whether insurance companies will pay for vaccines administered off-label. Because of the need for physician prescription, the challenges to pharmacists being able to administer “off-label” vaccines, and the uncertainty around insurance coverage, the changes in the FDA’s approvals for COVID-19 vaccines result in a significant hurdle for patients who are under 65 without a serious health condition to get a vaccine.
How could these changes impact pharmaceutical companies’ bottom line and investment in future vaccine development?
The exact numbers of people who received the COVID vaccine are difficult to track, but we know that Pfizer’s early revenues from COVID vaccines have decreased in recent years. That said, COVID vaccines still contributed significantly to profitability for the company. With the new FDA regulations, it is reasonable to expect that fewer people will be vaccinated, further negatively impacting earnings. While Pfizer’s diversified portfolio will help them weather that change, Moderna has a near complete focus on COVID vaccines and will likely see a much more significant overall impact.
The pandemic inspired significant investments in vaccine development by a variety of pharmaceutical companies. The new actions by the government highlight some of the uncertainties manufacturers may face, particularly when making vaccines that require approval of new iterations with regularity. Given the fact that business works best in predictable environments, it is reasonable to suspect that this will cause companies to exercise more caution about investments in the production of vaccines.
From the pharmaceutical standpoint, do you anticipate any other challenges due to the administration’s actions?
I don’t have any reason to believe that these regulations will impact vaccine effectiveness, but I suspect that manufacturers will significantly reduce ongoing production of vaccine in anticipation of decreased demand. This could create supply chain challenges, particularly given the difficulty in predicting the willingness of physicians to prescribe, and pharmacists to administer, vaccines to individuals outside of the approved criteria.
How could these changes impact pharmacies?
While major pharmacy chains do not segment their revenue in enough detail to understand the specific impact of vaccines on overall earnings, the challenges facing the retail pharmacy industry are such that any loss of revenue is problematic. Vaccines tend to produce higher margins than other prescriptions because of differences in the way prices are negotiated, as well as the inclusion of an administration fee that is not included with other products. Any loss of higher-margin activity is cause for concern on the part of pharmacy leaders.
Under the current guidance, will consumers have the choice to get vaccines?
Consumers will likely need prescriptions to get vaccinated under the new regulations unless they meet the FDA’s eligibility criteria. Even with those prescriptions, pharmacists may be unable to administer the vaccines because of separate regulations on pharmacist scope of practice. That will reduce the access some patients have to COVID vaccines. Additionally, insurance companies may or may not cover COVID vaccines for patients who don’t meet the criteria, raising the cost and decreasing access further for patients who cannot afford them.
How might this impact hospitals and health-care systems?
The data about vaccine effectiveness clearly suggests that recipients are at lower likelihood of severe illness, though that data is strongest among patients for whom the FDA has approved the vaccines.
For others, there is less certainty about what impact a decrease in vaccination rates will have on hospitals and health systems. While it is difficult to predict the exact impact, if a significant portion of the population is not vaccinated, hospitals may see a rise in respiratory illness, exacerbating overcrowding and creating challenges for access among patients who need hospital care for other reasons.
