$10 billion US-Pfizer COVID-19 Contract Includes Provision That Allows Pfizer to Charge More in the Future

The $10 billion contract between the U.S. government and Pfizer to purchase 500 million doses of the Pfizer COVID-19 vaccine contains a clause indicating that the $20 per dose price may be a floor and not a ceiling going forward.

The contract (No. W15QKN-21-C-0012) was awarded by the Army in December of 2020. It provides Pfizer with $10,016,418,500 to purchase 500 million doses of the Pfizer vaccine, at roughly $20 per dose. The last round of doses is set to be delivered by April 30, 2022. Since the Pfizer vaccine requires two doses, this contract does not cover booster shots. But back when the contract was signed, Pfizer may have been thinking about the potential profitability of boosters, when it included the following term:

Government Program Pricing

The price per dose in this contract was established per Operation Warp Speed and in light of the COVID-19 pandemic, and thus is specific to this contract only. This price shall not serve as the basis for pricing under any separate government contracts between Pfizer and HHS, the Department of Defense, or any other Department or agency of the Government by application of most favored customer, most favored nation, or any other contract or program-specific terms.

Knowledge Ecology International (KEI) has reviewed approximately 315 contracts or contract amendments entered into by the USG related to COVID-19. We have not seen a contractual term on pricing similar to the one in this Pfizer contract, although many of the contracts are so heavily redacted that there is still much to learn.

In fact, as KEI has previously reported, several of the agreements contain a most favored nation or customer clause making the purchase price a ceiling, by preventing the contractors from charging the USG more than they charge other countries or customers for the resulting COVID-related products.

Pfizer’s most recent 10(q) filing with the SEC forecasts that the Pfizer vaccine will earn $33.5 billion in revenues in 2021 alone.

Pfizer is capable of charging far lower than $20 a dose for its vaccine. The USG has also entered into a contract with Pfizer to purchase 500 million doses of its vaccine for international donation, and the Biden Administration is reportedly in talks to purchase another 500 million. The initial international donation purchase agreement, Contract No. W58P05-21-C-0002, was awarded on July 30, 2021 by the Army. The government paid $3.5 billion, or $7 a dose, the price that Pfizer considers “not-for-profit” but that is probably considerably higher than the actual costs of manufacturing. KEI has not yet obtained a copy of the agreement, but a DOD notice announcing the agreement states that Pfizer will deliver the doses by the end of 2022.