Vaccines are a big business. Robert F. Kennedy Jr. wants to take a blowtorch to it.
Next week’s meeting of an outside panel of vaccine experts could transform how major insurance carriers cover shots instrumental in containing the spread of deadly diseases like Covid-19, measles, mumps and rubella. Kennedy, as health secretary, has already stacked the influential panel with physicians who doubt the effectiveness of some vaccines. And his critics say his controversial recent ouster of the CDC’s director paves the way for changes that could drive up vaccination costs for patients.
But the potential changes could also dent the revenue of domestic drugmakers, scramble private insurance benefits and push vaccination rates below thresholds that are necessary for staving off costly outbreaks. And that underscores how RFK Jr.’s once-fringe political movement — a coalition that spans pharma-wary liberals in wealthy enclaves to hard-right religious activists — now has the power to roil multitrillion-dollar industries.
Health insurers are required to cover vaccines recommended by the expert panel, the Advisory Committee on Immunization Practices, or ACIP, at no cost to consumers. If the committee no longer endorses certain vaccines, the companies would be off the hook for providing free coverage for those shots. The companies publicly maintain that they’ll “follow the science” when making vaccine coverage decisions and consider the recommendations of other groups, like the American Academy of Family Physicians and the American Academy of Pediatrics.
But privately, insurers are contemplating whether they might take steps to limit vaccine coverage to protect their bottom lines during a time of financial uncertainty.
Soaring research and development costs for new vaccines have pushed up the prices charged to providers and pharmacies, costs that ultimately get passed along to patients or their insurers. The most recent earnings season was mixed for health insurers. And any decision to pull back on vaccine recommendations might be viewed as an opportunity to lower costs — especially as insurers struggle with rising medical costs and the potential expiration of enhanced Obamacare subsidies at the end of the year.
“Everybody’s projected that costs will skyrocket, and in that context, you’re just trying to do whatever you can,” said a health insurance executive granted anonymity to openly discuss insurers’ internal deliberations.
That speaks to a much larger point: The economic benefits of vaccines — at least in aggregate — are enormous. The CDC’s own estimates say that between 1994 and 2023, routine childhood vaccinations prevented more than 1.1 million deaths and resulted in direct savings of $540 billion and societal savings of $2.7 trillion. Fewer illnesses and hospital visits can mean more money for carriers, and those savings are all-but-certain to diminish if more states follow Florida’s lead on “medical freedom” and nix mandatory vaccinations for schoolchildren.
But not all vaccines — or vaccine savings — are created equal.
Dr. Monet Stanford, a senior vice president of health care policy at the financial intelligence firm CFRA, said insurers are “more likely to adopt the vaccines with clear, short-term cost savings” — like flu or RSV shots, which can keep common illnesses from leading to hospital stays.
The question becomes how they’ll respond if they’re no longer required to cover vaccines for certain populations that are unlikely to see costly medical outcomes if they get sick.
“When they project out what the costs are, they have to validate each thing that they pay for,” she said. Vaccines have typically “been seen as a cost-effective product.”
But if given latitude to make those judgment calls for different vaccines and patient cohorts — particularly those who might be able to weather an illness — they may find themselves asking: “Am I going to really fight to pay for that?”
If patients have to pay more for vaccines, that’s bad news for major drugmakers who’ve already seen an erosion in their vaccine-related revenue as fewer Americans get vaccinated. Market analysts are already starting to lower their forecasts for Covid-19 vaccine makers to account for the likelihood that ACIP adjusts its recommendations.
Whether the insurance industry goes along with any other substantive changes RFK Jr.’s panel makes to the slate of available vaccines remains to be seen. In addition to the pressure being brought to bear by the physicians’ groups and the medical community, carriers will also have to face the wrath of those who get stuck with an unexpected medical bill.
“The public relations disaster that would [occur] if insurance companies decide not to cover childhood vaccines, or some of these other vaccines that are out there for adults? I think it would be too overwhelming for them,” said Larry Bucshon, a physician and former Republican congressman from Indiana who’s now a senior policy adviser at Holland & Knight.
“It wouldn’t be like Bud Light or something, but it could be,” he added.