Pfizer's $5 Billion Bill for Covid Pills to Take Big Bite from New Pandemic Funds

(Bloomberg) -- The Biden administration is on the hook to pay Pfizer Inc. nearly $5 billion for pills it’s already ordered to treat Covid-19, meaning as much as half of a scaled-back pandemic funding bill the Senate is debating is already spoken for, according to officials familiar with the matter.

Senators announced a deal Monday to provide $10 billion in new Covid funding, far less than the White House has requested. The true purchasing power of the package will be even less because of commitments the government’s already made, the officials said.

They asked not to be identified to discuss internal deliberations.

The administration plans to pay Pfizer for the remainder of 20 million courses of its pill using the new money from Congress -- a total of nearly $5 billion, two of the officials said. A third cautioned that it’s not clear all of Pfizer’s money would come from the new pandemic funding. The White House declined to comment.

Since the pared-down package is less than half of what the White House first sought, it leaves the Biden administration with tough choices about what to prioritize. Biden aides have ramped up warnings that the bill not only does nothing for international vaccinations, but also falls short of spending needs within the U.S.

“The bill is a start,” White House Covid-19 response coordinator Jeff Zients said at a press briefing Tuesday. “Congress must keep working to immediately provide additional funding for our remaining domestic needs.”

Antiviral pills, including Pfizer’s Paxlovid, are a major breakthrough in the fight against Covid-19. The administration has cited the medications as a reason to lift restrictions such as mask mandates and further reopen society. Biden has called Pfizer’s pill a “game-changer.”

The U.S. last year bought 10 million courses of Paxlovid at a cost of $5.3 billion. In January, at the height of the omicron surge, the U.S. announced a “commitment” to order another 10 million once Pfizer finishes delivering the first batch, anticipated in June.

But further details of that second order were never made public. The cost for the second order is similar to the first and about 90% of it has not yet been fully contracted, two of the officials said. Roughly $4.9 billion is still due, one said. 

The administration is firmly committed to proceeding with the purchase, the officials said.

The circumstances highlight a rising drumbeat of warnings from the White House that the cupboards of the U.S. pandemic response are increasingly bare. Administration officials say they need more money for new Covid-19 treatments and more vaccines, as well as for research, and that any shortfall risks leaving the nation unprepared for a resurgence of the virus.

Some programs have already been scaled back.

Shipments of another therapy, monoclonal antibodies, have slowed already and are poised to end without new funding. The White House has warned that without more money, test production and research on variant-specific vaccines will slow and that antiviral pill shipments will stop in September, when the balance of the second Pfizer order is due.

“We continue to collaborate with the U.S. government to help broaden patient access to Paxlovid, and we are confident that the administration will fulfill its purchasing commitments,” a Pfizer spokesperson said in a statement, when asked if the U.S. has paid for its second order of 10 million courses. They referred further questions to the administration. 

The White House initially sought $22.5 billion in new pandemic funding. Democrats were prepared to include just over $15 billion in a broad government spending bill earlier this year, but it was removed amid disputes with Republicans about whether it should be offset by spending cuts elsewhere in the government.

The $10 billion Senate bill includes a requirement that at least half the money must be spent on therapeutics. Following through on the announced Pfizer purchase would satisfy that clause almost by itself.

The bill was pared back mainly by cutting funding for international vaccination programs, and it would be fully offset. Many Democrats want to immediately follow the legislation with another spending package to help vaccinate the world, arguing it’s critical to head off new, more dangerous variants of the virus.

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