U.S. government taps Pfizer to produce millions of doses of potential coronavirus vaccine

The United States will pay Pfizer and German biotech firm BioNTech $1.95 billion to produce and deliver 100 million doses of their Covid-19 vaccine in the U.S. if it proves safe and effective in humans, the companies announced Wednesday.

Under the agreement, the U.S. can acquire an additional 500 million doses of the vaccine, the Department of Health and Human Services added. BioNTech and U.S.-based Pfizer are jointly developing four potential vaccines.

If one of the vaccines proves safe and effective in a large phase three trial and receives regulatory approval, HHS said Pfizer will begin to deliver doses to locations across the U.S. at the government’s direction. The vaccine would then be made available to Americans “at no cost,” HHS said. It’s unclear who the first doses of the potential vaccine would go to and how that decision would be made.

The companies previously said they expect to begin a large trial with up to 30,000 participants later this month, if they receive regulatory approval.

Shares of Pfizer rose more than 5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in premarket trading on the news and BioNTech stock popped over 8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. 

The two companies announced earlier this month preliminary data for vaccine candidate BNT162b1, the most advanced of their four potential vaccines. Researchers said the early stage clinical trial showed the BNT162b1 vaccine produced some neutralizing antibodies, which researchers believe is necessary to build immunity to the virus. 

Health officials have previously warned that one of the greatest challenges of rapidly rolling out a vaccine will be obtaining the supplies necessary to produce enough doses. That includes syringes and transport media. However, HHS Secretary Alex Azar said on CNBC’s “Squawk Box” later Wednesday that the government has bolstered the supply chain so the companies can at least produce enough initial doses to vaccinate the U.S.

“We’ve secured that to be able to ensure that we’ll be able to vaccinate the American people once we get vaccines that are demonstrated safe and effective to the FDA’s gold standard of approval or authorization,” he said. 

The deal was signed as part of Operation Warp Speed, the Trump administration’s effort to accelerate development and production of vaccines and treatments to fight the coronavirus. It appears to be the largest award yet signed as part of Operation Warp Speed.

“Through Operation Warp Speed, we are assembling a portfolio of vaccines to increase the odds that the American people will have at least one safe, effective vaccine as soon as the end of this year,” HHS Secretary Alex Azar said in a statement. “Depending on success in clinical trials, today’s agreement will enable the delivery of approximately 100 million doses of vaccine being developed by Pfizer and BioNTech.”

As part of the program, the government previously announced a $1.6 billion agreement with Novavax to accelerate development of its potential vaccine with the aim of delivering 100 million doses by January 2021.

The government also announced a $456 million investment in Johnson & Johnson’s vaccine candidate in March, $486 million in support for Moderna’s vaccine in April, and up to $1.2 billion in May for AstraZeneca’s vaccine being developed with Oxford University. The U.S. government also awarded Emergent Biosolutions $628 million to expand domestic manufacturing capacity for a potential coronavirus vaccine and drugs to treat Covid-19.

“This is what’s really unprecedented with President Trump’s Operation Warp Speed, we are literally making the commercial scale vaccine now as we’re going through the clinical trial,” Azar told CNBC. “We’re doing that at risk, using the full power of the U.S. government and our financial resources to do that. No one’s ever done this before.”

Vaccine manufacturers like Pfizer, Moderna, AstraZeneca and others have been ramping up manufacturing capacity before their vaccine’s have been proven to be safe and effective and before receiving regulatory approval. That will help shave months off the time it takes to ultimately distribute a vaccine across the globe.

“We’ve been committed to making the impossible possible by working tirelessly to develop and produce in record time a safe and effective vaccine to help bring an end to this global health crisis,” Dr. Albert Bourla, chairman and CEO of Pfizer, said in a statement. “We made the early decision to begin clinical work and large-scale manufacturing at our own risk to ensure that product would be available immediately if our clinical trials prove successful and an Emergency Use Authorization is granted.”

Developing a safe and effective vaccine is seen as crucial to curbing the spread of the coronavirus, which has infected more than 14.9 million people around the world and killed at least 617,200 people, according to data compiled by Johns Hopkins University.

While the companies and government race to deliver a successful vaccine, regulators and company officials have assured the public and members of Congress that they will not sacrifice on safety. All that’s at risk, they say, is money. 

CNBC’s Berkeley Lovelace Jr. contributed to this report.