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Moderna hit by shareholders who want to know why its COVID-19 vaccine is so expensive and unavailable in poorer countries

December 27, 2021, 1:15 PM UTC

Moderna has promised to further explain the pricing for its COVID-19 vaccine—one of the most expensive for countries outside the U.S.—as it tries to quell multiple shareholder revolts over unequal access to the lifesaving substance.

Moderna’s mRNA-based jab—the only medicine in the company’s portfolio—is in many places the most expensive COVID vaccine, costing as much as $30 a dose. In the U.S., where the government removed much of the risk for the company by giving it $2.48 billion to develop the vaccine, Moderna charges around $15 per dose.

The pharma firm promised a year ago that it would “provide effective and affordable vaccines and therapeutics to all populations,” and indeed it recently agreed to charge the African Union just $7 per dose. However, as detailed in a widely shared New York Times report in early October, Moderna spent most of the vaccine’s first year serving rich countries such as the U.S. and Germany, sending only a million doses to low-income countries while rivals Pfizer and Johnson & Johnson sent 8.4 million and 25 million doses respectively. Moderna pledged to deliver a billion doses to poor countries by the end of 2022, but many shareholders were not satisfied.

As reported by the Financial Times on Sunday, the asset-management giant Legal & General wrote to Moderna last month, pointing out that “universal and low-cost vaccine access is critical to save lives, stabilize the economy, and prevent domestic outbreaks.”

It proposed that at Moderna’s upcoming annual meeting, shareholders formally ask management to explain “whether and how Moderna’s receipt of government financial support for development and manufacture of a vaccine for COVID-19 is being, or will be, taken into account when making decisions that affect access to such products, such as setting prices.”

Barrage of proposals

Legal & General’s proposal was revealed when Moderna wrote to the Securities and Exchange Commission (SEC) 10 days ago, asking for assurance that it wouldn’t be penalized for excluding the document from the proxy statement it will file ahead of its 2022 annual shareholder meeting.

In its letter to the SEC, Moderna argued that it has already provided a lot of information about its pricing, particularly in the U.S., and said it would release another statement by mid-February that will provide the explanation that Legal & General is demanding. Moderna’s 2022 annual meeting is scheduled for April 28. The company has not yet responded to a request for comment on the proposal.

The language of Legal & General’s proposal is nearly identical to that in a separate set of investor demands, announced earlier this month by the Interfaith Center on Corporate Responsibility (ICCR). Those proposals target not only Moderna, but also Pfizer and J&J—the latter company’s COVID vaccine efforts received nearly $1.5 billion in U.S. government funding, while Pfizer’s benefited from the $445 million given to its partner, BioNTech, by the German government last year.

The ICCR, whose members include investment firms, religious institutions, and nongovernmental organizations such as Oxfam America, also aimed proposals at Moderna and Pfizer that would force them to report on the feasibility of transferring intellectual property and technical know-how to manufacturers in low- and middle-income countries, to stimulate production.

“At this moment of unprecedented peril for public health and the global economy, we must seek all options to bring the vaccine to everyone, everywhere as quickly as possible,” said Oxfam America CEO Abby Maxman in a statement. “Continuing to prioritize short-term profits over people’s lives is not only immoral, it is also a grave risk to all companies, investors, and our economy.”

Legal & General’s supporting statement also touched on this subject. “As of September 2021, Moderna had shipped 88% of its doses to upper- and upper-middle-income countries; it has acknowledged that its manufacturing capacity is ‘still limited,’” the asset manager wrote. “As a result, Moderna is under pressure to share intellectual property with other manufacturers to boost supply. As of October 2021, Moderna had declined to transfer its technology to any manufacturer in a low- or middle-income country.” (This remains the case at the end of December.)

Legal & General also noted that Moderna has not followed J&J and AstraZeneca (also a recipient of funding under the U.S.’s Operation Warp Speed) in pledging to provide its vaccine on a nonprofit basis during the pandemic, and that “its pricing does not seem to be linked to income.” The U.S. and EU have been paying less per dose than middle-income countries such as Botswana, Thailand, and Colombia.

Vaccine inequality

As of mid-December, just 4% of people in low-income countries had been vaccinated against COVID-19, while rich countries are plowing on with booster campaigns that could exacerbate the inequality, potentially encouraging the rise of further variants beyond Omicron.

“It really is a stain on our global soul, and it affects us all because I think people are beginning to realize that if we allow the disease to spread in poor countries and the virus mutates, it comes back to haunt even the fully vaccinated,” former British Prime Minister Gordon Brown said last week.

Also last week, Oxfam America said it has filed an SEC whistleblower complaint against Moderna for failing to disclose its long-running patent dispute with the U.S. National Institutes of Health (NIH), with which it collaborated in the vaccine’s development. Moderna tried to secure a patent for a key genetic sequence without naming NIH scientists as coinventors. Following reports of the dispute, and an ensuing outcry, Moderna partially backed down in mid-December, suspending the finalization of the patent application.

“Instead of being transparent and using its lifesaving technology to help curb the pandemic, Moderna is doing the opposite, obfuscating its patent dispute with the U.S. government, ignoring the death and suffering of millions worldwide, and declining to share their technology to help alleviate the stranglehold that COVID-19 has placed on the global economy,” Oxfam America senior legal adviser Diana Kearney said in a statement.

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