As the 2019-2020 flu season approaches, pharmaceutical firms are engaging in an invisible war to set the price of their flu vaccines.
Last year, the supply price of a flu vaccine went below 10,000 won ($8.4) per shot due to severe competition. Drug companies said they would not focus only on price competition this year.
The Ministry of Food and Drug Safety said the government authorized the release of 24.67 million doses of flu vaccines this year – 14.25 million doses of trivalent vaccines and 10.42 million doses of quadrivalent vaccines. The numbers are similar to those of last year.
Companies are facing uncertainties over quadrivalent vaccines in particular. Most trivalent vaccines are consumed because of the National Immunization Program (NIP). In contrast, drugmakers directly supply quadrivalent vaccines to medical institutions, and the price competition is inevitable. As it was the first time that the output of quadrivalent vaccines outpaced that of trivalent vaccines last year, the companies competed to lower the price of quadrivalent vaccines significantly.
The supply of excessively low-priced quadrivalent products leads to more returned goods and operating losses. As flu vaccines cannot be stored, a drug company has no other choice but to discard all the returned products. If the supply price is too low, the company has to suffer low margins and losses.
Another issue is that the government is discussing whether to include quadrivalent vaccines in the list of NIP. The NIP covers trivalent vaccines only, but the discussion is to expand the program. The National Assembly is reviewing the matter now. If the National Assembly approves, the NIP will cover quadrivalent vaccines from next year.
If quadrivalent flu vaccines are supported by the NIP next year, the government will base the bidding price on this year’s supply price. Big vaccine makers cannot focus on lowering the price only, while other smaller makers might pursue short-term profits via cheap vaccines.
A salesperson at an influenza vaccine maker said, "If quadrivalent flu vaccines are covered by the NIP next year, it will be difficult for us to compete in price too much as we did last year."
The pricing of quadrivalent flu vaccines will be much more complicated due to many variants, he added.
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