Research shows Moderna’s triple jackpot: subsidies, high prices and tax avoidance

Research by SOMO in cooperation with Wemos reveals that Covid-19 vaccine manufacturer Moderna avoids taxes on the profits it generates with billions of public funding. First the pharmaceutical company receives government subsidies for the development of its vaccine, then it sells the vaccines to governments for high prices, and in the end it transfers the majority of the profits to tax havens. Wemos and SOMO urge governments to attach conditions to public investments in development of vaccines and medicines, to ensure the accessibility and affordability of these products.

Public resources

The foundational technology for Moderna’s Covid-19 vaccine has been developed in a public institute, financed from public resources. Moreover, according to Public Citizen, the development for Moderna’s Covid-19 vaccine has entirely been financed with taxpayers’ money. This is why organizations such as Wemos and public health experts argue that the Covid-19 vaccines ought to be a global public good, a ‘people’s vaccine’.

High profits

In total, governments have placed orders for 1.5 billion doses of the Moderna vaccine for 2021 and 2022. Of these, 460 million doses have been purchased in advance by the EU and 500 million by the US. It is estimated that the company will generate approximately 18.4 billion USD in revenue from vaccine sales in 2021 alone. The profit margin calculated by SOMO is 44 percent per dose, which puts profits for 2021 at 8 billion USD. Regardless this high profit margin, the company has hinted that they are likely to increase vaccine prices after the pandemic.

Conditions to public funding

Ella Weggen, global health advocate at Wemos: “To effectively fight the corona pandemic, it is crucial to increase production capacity to boost global access to Covid-19 vaccines. Since these vaccines have been developed with billions of taxpayers’ money, it would only be fair if Moderna and other vaccine producers share their patent rights, know-how and technology to enable other producers to manufacture the vaccines as well. To ensure the accessibility and affordability of vaccines and medicines in the future, governments should attach clear conditions to public funding of the development of these products.”

Tax avoidance

A leaked contract between Moderna and the European Commission reveals that Moderna intends to receive vaccine payments from the EU at their recently founded subsidiary in Basel, Switzerland. Switzerland is notorious for its low tax rates and tax regimes. In addition, the patents on the vaccine are registered in Delaware. Delaware does not tax income from patents. This is advantageous for Moderna, as its profits made are likely to come from royalty payments for the use of patents.

“A shame,” says Vincent Kiezenbrink, researcher at SOMO. “As a society, we pay triple: we fund research into vaccine development, pay too high prices for the purchase of those vaccines, and then Moderna also uses tax structures to avoid corporate tax.”

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