/ g ASPE REPORT
Se RNSNY troreiee to August 2022 (Updated May 2023)

PLANNING AND EVALUATION

Understanding Coverage Considerations for
COVID-19 Vaccines and Treatments*

Trinidad Beleche, Laina Bush, Kenneth Finegold, Teresa Manocchio, Sarada Pyda, Lok Wong Samson,
Benjamin D. Sommers

 

KEY POINTS

e COVID-19 vaccines and treatments have been important tools in the prevention of
infections, hospitalizations, and deaths. Availability of these vaccines and treatments
has relied in part on the Food and Drug Administration (FDA)'s Emergency Use
Authorizations (EUAs), with the US Government (USG) making purchasing commitments
conditional on FDA approval or authorization. To date, the USG has generally covered
both the administration and ingredient costs of COVID-19 vaccines and treatments
available under EUAs without individual cost-sharing, regardless of insurance status.

e Inthe near future, COVID-19 vaccines and treatments will need to transition to more
established regulatory pathways of approval and payment by public and private payers
(a process we refer to as "commercialization"). This reflects both the likely exhaustion
of funds for direct government purchase of these products and the need for planning as
we move beyond the acute phase of the pandemic.

e During the COVID-19 pandemic, it has taken 5 to 18 months from EUA issuance to FDA
approval of COVID-19 vaccines and treatments; the timing depends on many factors,
including activity against currently circulating variants and continued data collection.

e Coverage and payment considerations and policies needed to transition to
commercialization vary by payer and the product in question. One key approach that
may prevent potential gaps in coverage is for payers to expedite and begin coverage
and payment decision-making well before the USG-provided supply runs out,
potentially concurrently with FDA regulatory review.

e Coverage of COVID-19 vaccines and treatments could lead to savings to payers by
reducing hospitalization costs. Our estimates indicate that COVID-19 vaccines result in
large savings in direct health care costs. The savings from the initial vaccination series
far exceed the costs of the vaccines. Savings from vaccine boosters essentially cover the

 

 

" This report was initially released in August 2022 and subsequently updated in May 2023 to reflect recent
legislative changes to Medicare Part D, the planned expiration of the COVID-19 Public Health Emergency
Declaration on May 11, 2023, and the announcement that the monoclonal antibody Evusheld is no longer
authorized for emergency use by the FDA as of January 23, 2023.

 

August 2022 (Updated May 2023) ASPE Report 1
 

full cost for older adults. COVID-19 treatments also generate savings by lowering

hospitalization costs, and these savings partially offset the costs of these treatments.
e These estimated health care savings are in addition to the lives saved and health

improved by these vaccines and treatments, which are their most important benefits.

 

INTRODUCTION

COVID-19 vaccines have been an important tool in the prevention of COVID-19, including preventing
hospitalization or death. Similarly, COVID-19 treatments have been used to treat those infected,
including for early treatment to prevent hospitalization, severe illness, or death. COVID-19 treatments
like Paxlovid have demonstrated effectiveness of nearly 90 percent in preventing hospitalizations.*?
Prevention or early treatment can help improve patients' health outcomes, reduce stress on health care
facilities, and reduce costs by preventing hospitalizations, intensive care unit stays, and other related
health care costs. To date, the US Government (USG) has provided funding for the purchase of at least
500 million doses of COVID-19 vaccines and more than 3.9 million courses of treatments such as
antivirals.>*

The availability of COVID-19 vaccines and treatments has relied in part on Emergency Use Authorizations
(EUAs) by the Food and Drug Administration (FDA), with the USG making commitment purchases
conditional on FDA marketing authorization or approval. The USG has made these vaccines and
treatments available to individuals without any cost-sharing, regardless of their insurance status. The
development of COVID-19 vaccines and treatments was also partly funded by the USG through the
Department of Health and Human Services (HHS)'s Biomedical Advanced Research and Development
Authority's (BARDA) COVID-19 Medical Countermeasures portfolio.° The USG invested in the
development of six COVID-19 vaccines (with two approved by the FDA, two authorized under an EUA
and two more still in phase 3 development), as well as 18 COVID-19 treatments (including monoclonal
antibodies and oral antiviral medications), many of which have been approved or authorized by FDA.°

This approach was a response to the unprecedented nature of the COVID-19 pandemic combined with
the need to expedite the development, production, and access to COVID-19 vaccines and treatments.
Ultimately, availability and access of these COVID-19 vaccines and treatments will need to transition to
the traditional market approach for payment and coverage using established regulatory pathways
because of both the likely exhaustion of funds for direct government purchase of these products and the
need for planning to support the transition out of the acute phase of the pandemic. During this
transition from USG-supplied products, there may also be some circumstances where some products
under an EUA could be covered by payers, while others may depend upon FDA approval for coverage
and payment. The end of the PHE and the end of EUA declarations by the HHS Secretary that facilitate
the issuance of EUAs for COVID-19 vaccines and treatments also have implications for these changes.'
The timing of these two actions - ending the PHE and the issuance of EUAs - are independent actions.
Because the EVA declaration is allowed under a different authority than the general PHE, EUAs can
continue to be issued even if the general PHE ends.

Given these possibilities, Federal and state agencies, medical product manufacturers, and payers need
to prepare to transition from relying on USG-supplied COVID-19 vaccines and treatments to payer

 

August 2022 (Updated May 2023) ASPE Report 2
coverage and payment for COVID-19 vaccines and treatments, or "commercialization." Understanding
the potential costs, as well as cost-savings, associated with COVID-19 vaccines and treatments can also
inform planning, payment, and coverage decisions.

Understanding the implications of these changes is important for multiple reasons. First, each payer's
coverage and payment processes and decision-making considerations may vary. Second coverage and
payment decisions may vary by product and payers based on whether a medical product has FDA
approval, or is FDA authorized under an EUA and whether there is a PHE in place. For example, COVID-
19 vaccines have an established coverage pathway for most payers. If the CDC's Advisory Committee on
Immunization Practices (ACIP) recommends COVID-19 vaccines and treatments, they are required to be
covered by Medicaid for certain populations and non-grandfathered group health plans, and health
insurance issuers offering non-grandfathered group or individual health insurance coverage. Third, the
extent to which vaccination and treatment may reduce downstream medical spending can be an
important factor in coverage decision-making by payers.

As we prepare for the end of the PHE, this report: 1) provides an overview of the current coverage and
payment of COVID-19 vaccines and treatments across payers; 2) identifies expected gaps in coverage
after the end of USG-provided supply and key considerations for coverage determinations post-PHE; and
3) presents estimates on expected savings and spending offsets for a select set of COVID-19 products
that have been demonstrated to reduce COVID-19-related hospitalizations. This report concludes with
potential next steps for payers as they navigate the coverage and payment process to prevent gaps in
availability of lifesaving COVID-19 vaccines and treatments. In the course of preparing the Report,
Secretary Xavier Becerra, other HHS officials, and HHS staff convened a stakeholder meeting with
payers, manufacturers, providers, pharmacies, state and local officials, and other organizations from
across the health care system whose input and partnership on these issues is critical.

PART I. BACKGROUND: COVID-19 VACCINES AND TREATMENTS

Overview of FDA EUA vs. Approval of COVID-19 Vaccines and Treatments

An EUA by the FDA is a mechanism intended to facilitate the availability and use of medical
countermeasures, including vaccines and treatments, in order to prepare for and respond to certain
types of emergencies. On January 31, 2020, the HHS Secretary first announced that a PHE from the
novel coronavirus (2019-nCoV) existed since January 27, 2020. This PHE was declared under section 319
of the Public Health Service Act (PHS).® This allowed the adoption of certain regulatory flexibilities by
Federal and state governments as well as implementation of public health mitigation measures, such as
wearing masks, stay-at-home orders, and suspending elective procedures. In early 2023, HHS announced
its plan to end the PHE on May 11, 2023.°

A section 319 PHE declaration, however, does not enable the FDA to issue EUAs. A separate declaration,
referred to as an EVA declaration, must also be issued by the HHS Secretary under section 564 of the
Federal Food, Drug, and Cosmetic Act (FD&C Act).

Following the section 319 PHE declaration, on February 4, 2020, the HHS Secretary determined,
pursuant to this authority under section 564 of the FD&C Act, that there was an emergency with
significant potential to affect national security.?° On March 27, 2020, the HHS Secretary issued an EUA

 

August 2022 (Updated May 2023) ASPE Report 3
declaration for drugs and biologic products,?* which continues until the HHS Secretary declares an end
to the EVA declaration. This difference in the declaration of a PHE under the PHS Act and an EUA
declaration means that even if the section 319 or general PHE ends and the HHS Secretary no longer
renews the general PHE, new medical products authorized under an EUA may continue to be made
available while manufacturers seek FDA approval, if certain statutory conditions are met. Figure 1
illustrates the steps in a potential transition period between the end of section 319 PHE under the PHS
Act and the end of the EUA declaration.

Figure 1. Timeline of Public Health Emergency Declarations and Potential Transition Period

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Available COVID-19 Vaccines and Treatments

As of August 15, 2022, there are four COVID-19 vaccines in the United States authorized for emergency
use or FDA-approved (each vaccine may have different dose or formulations by age or for boosters). All
of these vaccines first became available under an EUA for use in certain populations.2 Two of the four
vaccines have obtained FDA approval for the prevention of COVID-19 for certain patient populations -
Pfizer's Comirnaty (ages 12 and up),* and Moderna's Spikevax (ages 18+)***> - and also remain under an
EUA for certain populations. Janssen's and Novavax's COVID-19 vaccines are available under EUA for
individuals ages 12 and up.?®" Veklury (remdesivir) and Olumiant (baricitinib) are the two drugs that
have obtained FDA approval for treatment of COVID-19 in certain patients, after first being made
available under EUAs."® Veklury and Oluminant also remain available under EUA for some populations.
In addition, other treatments that have been authorized under EVA include monoclonal antibodies
(bebtelovimab), oral antiviral therapies [Lagevrio (molnupiravir) and Paxlovid (nirmatrelvir co-packaged
with ritonavir)] are available under an EUA."* A pre-exposure prophylaxis for prevention (PrEP) therapy
[Evusheld (tixagevimab and cilgavimab)] was originally available under an EUA that the FDA

 

August 2022 (Updated May 2023) ASPE Report 4
discontinued in January 2023.*2° Furthermore, additional COVID-19 vaccines and treatments are under
development that may be more effective against future variants.2222

Comparing EUA versus New Drug or Biologics License Application Process

Under an EVA declaration, FDA may consider issuing EUAs allowing the use of unapproved medical
products or unapproved uses (such as new strength or form or population) of approved medical
products in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or
conditions when certain statutory criteria are met.?3 FDA evaluates the evidence submitted by
manufacturers and assesses the risks and benefits and whether certain criteria have been met to
determine whether an EUA can be issued.

Overall, development of vaccines or drugs under the established regulatory pathways to FDA approval
can be summarized into four distinct phases.242>627

e Research and Development, pre-clinical and pre-investigational New Drug: For vaccines, this
includes the development of the rationale based on disease, immunogen identification,
development of manufacturing process, and conduct of non-clinical studies. For drugs, this
includes the exploratory stage that includes identification and validation of a potentially
treatable target for a specific disease, identifying a candidate compound, investigating
interactions or potential effects, and animal testing.

© Clinical Stage - pre-licensure/pre-marketing: This includes submission of an Investigational New
Drug (IND) application to the FDA before beginning human trials, and conducting phase 1, phase
2, and phase 3 clinical studies."*

e Regulatory Review: This includes submission of a biologics license application (BLA) to the FDA
for review by the FDA's Center for Biologics Evaluation and Research (CBER) for vaccines, or a
New Drug Application (NDA) to the FDA's Center for Drug Evaluation and Research (CDER) for
drugs. The sponsor of the BLA or NDA must demonstrate that its drug or biological product is
safe and effective for the intended use, and that it can manufacture the product to Federal
quality standards.

e Post-marketing: This includes conducting phase 4 studies to further investigate the duration of
immune response to the vaccine or to collect additional safety data.

For an EUA, the FDA and manufacturers actively engage to expedite all stages of the development
process, which may include conducting certain steps in parallel rather than in sequential order;
prioritizing inspections, reviews, or other related assessments; and requiring essential information to be
provided to providers and recipients to address risks and benefits.2?° (Appendix B Table A1 provides an
illustrative example for vaccines.) For instance, to expedite review of COVID-19 treatments and vaccines,
the FDA created the new Coronavirus Treatment Acceleration Program in April 2020.7° Another example
is the creation of the Accelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV) partnership

 

* On January 26, 2023 FDA announced that Evusheld is not currently authorized for emergency use in the United
States until further notice by the agency because the therapeutic is unlikely to be active against more than 90% of
the SARS-CoV-2 variants currently circulating in the United States.

 

August 2022 (Updated May 2023) ASPE Report 5
between Federal agencies and industry partners to coordinate the response to the COVID-19 pandemic.
The ACTIV partnership included activities such as developing a collaborative framework for prioritizing
vaccine and drug candidates, streamlining clinical trials, and coordinating regulatory processes.**

In addition, for FDA approval of INDs, BLAs, and NDAs, FDA has a number of expedited programs
manufacturers may request as part of the application review process, including Fast Track, Accelerated
Approval, Priority Review, Breakthrough, and Regenerative Medicine Advanced Therapy, if certain
conditions are met.?" For example, Fast Track means the FDA will meet and communicate more
frequently with the applicant and allow rolling submission of parts of the BLA/NDA application.
Accelerated Approval allows developers to use a surrogate or intermediate clinical endpoint while
confirming clinical benefit post-approval. Priority Review means the FDA acts on an application within 6
months, compared to 10 months under standard review timelines. It is important to note that a priority
review designation does not shorten the clinical trial length or alter the regulatory standard for approval
or the quality of evidence necessary for approval of a product.3234536 Where applicable, these
regulatory review pathways or designations can expedite the review of COVID-19 treatments and
vaccines under consideration for FDA approval through the FDA's BLA/NDA application processes.?"

Table 1 illustrates the variation in the time it may take to get FDA approval after FDA has issued an EUA
for some COVID-19 vaccines and treatments; Table 1 also shows that not all drugs under EUA gain
approval. As Table 1 shows, based on experience in the last two years (2020-2022), it may take as few as
5 months (remdesivir) from EUA issuance to BLA/NDA submission and FDA approval of COVID-19
vaccines and treatments, or as many as 14 months (Moderna's COVID-19 vaccines primary series) or 18
months (Baricitinib for hospitalized COVID-19 patients needing ventilation). The estimated time from
EUA to potential FDA approval reflects time for the FDA to review an application, time for companies to
recruit sufficient number of study participants in clinical trials to assess and demonstrate effectiveness
and safety, time to prepare an application, time for FDA to review an application, and at least 6 months
follow-up data on potential adverse events to address FDA requirements. The timing may also vary by
patient subgroups, which reflects varying benefit/risk considerations and challenges recruiting certain
patient populations, such as children. In addition, manufacturers may use an approach where clinical
trials may begin in adults or adolescents and proceed downward in age as safety and effectiveness data
are gathered. Timing may also vary if additional information is required in order for the FDA to initiate or
complete its review.

Finally, FDA also regularly reviews the appropriateness of an EUA, and may revoke, suspend or revise
the EUA based on emerging information associated with the emergency uses for the authorized
products such as the effectiveness of the products against newer, emerging variants. For example,
monoclonal antibody treatments such as Bebtelovimab (November 2022)** and Evusheld (January
2023)" had their EUA temporarily suspended or revoked, respectively. Furthermore, amendments to
EUAs may be needed for newer formulations, such as the bivalent COVID-19 vaccines that became
available in the fall of 2022.

 

August 2022 (Updated May 2023) ASPE Report 6
Table 1. FDA EUA and Approvals of Select COVID-19 Vaccines and Treatments, as of May 2023

Product (tradename)

Pfizer/BioNTech COVID-19
mRNA Vaccine" (Comirnaty)
Note: As of 4/18/2023 the EUA
for the monovalent version of
the vaccine has been replaced
by the bivalent version.

Pfizer-BioNTech COVID-19
Vaccine, Bivalent (Original and
Omicron BA.4/BA.5)

Note: As of 4/18/2023 the EUA
for the bivalent version replaces
the monovalent doses for all
individuals."

Moderna COVID-19 mRNA
Vaccine" (Spikevax)

Note: As of 4/18/2023 the EUA
for the monovalent version of
the vaccine has been replaced
by the bivalent version.

 

Age Group
(years)

16+ (two dose primary)

18+ (first booster)

16-17 (first booster)

65+ or 18-64 high-risk (first
booster) *

50+ or 12+
immunocompromised (second
booster) *

12-15 (two dose primary)
12-15 (booster) *

5-11 (two dose primary) *
5-11 (booster) *

6 months - 4 (primary) *

12 and older

5-11

6 months - 4 (third dose of
primary; booster)

Individuals 6 months+ not yet
received bivalent dose or
unvaccinated

65 years and older (second
bivalent booster)

4 and older -
immunocompromised
(additional bivalent doses
after first dose)

6 months - 4
immunocompromised
(additional 4 bivalent dose)*
6 months - 5, 6-11 (two dose
primary; 3" dose for
immunocompromised) *
6-11 years (booster) *

12-17 (two dose primary) *
12-17 (booster) *

18+ (two dose primary)
65+ or 18-64 high risk (first
booster) *

18+ (first booster) *

18+ immune-compromised
(second booster) *

UPA ET Te=)
DF} K)

12/11/2020
11/19/2021
12/09/2021
09/22/2021

03/29/2022

05/10/2021
01/03/2022
10/29/2021
05/17/2022
06/17/2022
8/31/2022

10/12/2022
12/8/2022

3/14/2023
4/18/2023

4/18/2023

4/18/2023

4/28/2023

06/17/2022

Not
authorized
06/17/2022
Not
authorized
12/18/2020
10/20/2021

12/9/2021
3/29/2022%8

FDA Estimated
Approval Time from
EUA to FDA
Ney elcey ee}
8/23/2021: 8 months
7/08/2022 14 months
1/31/2022 13 months

 

August 2022 (Updated May 2023)

ASPE Report 7
Product (tradename)

Moderna COVID-19 Vaccine,
Bivalent (Original and Omicron
BA.4/BA.5)

Note: As of 4/18/2023 replaces
the monovalent doses for all
individuals.

Janssen COVID-19 Vaccine"?

Novavax COVID-19 Vaccine,
Adjuvanted*?
Remdesivir (Veklury)>" °3

Baricitinib (Olumiant)*>

Ritonavir-Boosted Nirmatrelvir
(Paxlovid)>7>*

Molnupiravir (Lagevrio)©

 

Age Group
Ty)

18+ (booster)

6-11 (booster or primary)
12-18 (booster or primary)

6 months - 5 (booster or
primary)

All individuals 6 months +
(booster or primary)

6 months-5 and

6+ immune-compromised
(additional booster)

65 + (additional booster after
first bivalent dose)

18+ (single primary dose)
EUA limited to individuals 18+
not appropriate for other
vaccines (single primary or
booster dose)

18+ (primary)

18 + (first booster)**

12+ hospitalized

12+ outpatient
Infants/children

18+

2-17

12+ high-risk with mild-to-
moderate symptoms

Revised EUA; positive test results
no longer needed*®

12+ as pre-exposure
prophylaxis for
immunocompromised

18+ high-risk with mild-to-
moderate symptoms

Revised EUA; positive test result
no longer needed*1

FDA
Approval

Estimated
Time from
EUA to FDA
Ney eee)

EUA Issuance
DF} k=)

8/31/2022
10/12/2022
10/12/2022
12/8/2022

4/18/2023

4/18/2023

4/18/2023

2/27/2021
5/05/2022

07/13/2022
10/19/2022
05/01/2020 10/22/2020 5 months
1/21/2022
4/25/2022
11/19/2020 5/10/2022°°
11/19/2020

12/22/2021

18 months

2/1/2023

12/08/2021 NA

12/23/2021

2/1/2023

Source: FDA, https://www.fda.gov/emergency-preparedness-and-response/mcm-leqgal-requlatory-and-policy-
framework/emergency-use-authorizationi#tvaccines
https://www.fda.gov/drugs/emergency-preparedness-drugs/emergency-use-authorizations-drugs-and-non-

vaccine-biological-products

Notes: Blanks indicate FDA approval not yet secured. Greyed out text reflects products whose authorization has
been revoked or replaced. * Denotes the monovalent version of the vaccine that has been replaced by the bivalent

version.

It is important to note that as more data are collected on potential adverse events or other risk-benefit
information including efficacy against newer variants, EUAs may also be revoked, revised, or approvals

 

August 2022 (Updated May 2023)

ASPE Report 8
may be limited for certain use or in specific populations, as seen with the revised EUA for the Janssen
COVID-19 vaccine.

PART II. GAPS IN COVERAGE AND CONSIDERATIONS AFTER THE PHE

COVID-19 Vaccine and Treatment Coverage Considerations by Payer

Payers will need to consider statutory and regulatory restrictions in their decisions to cover and pay for
COVID-19 vaccines and treatments under an EUA and whether FDA approval is required for coverage
and payment. Some of these products are available through procurement and distribution efforts led by
the USG. With the potential end of the PHE and depletion of COVID-19 funds, payment and coverage of
COVID-19 vaccines and treatments will need to shift to regular coverage pathways public programs like
Medicare and Medicaid/CHIP, private insurance, and programs for uninsured and underinsured
individuals. This section reviews coverage and payment considerations for each type of payer for COVID-
19 vaccines and treatment.

Table 2 summarizes these considerations across payers, discussed in the next section and updated as of
May 2023.

MEDICARE

Vaccines and Monoclonal Antibody Treatments

Vaccines and drugs are typically covered and paid for by Medicare Part A, B, and/or D upon FDA
approval based on the approved label and do not need to undergo a National Coverage Determination
(NCD) process. However, there may be a potential gap in coverage for some COVID-19 treatments under
an EUA prior to FDA approval and Medicare coverage if USG supplies run out. During the transition,
there may be in circulation at the same time both USG-procured products authorized under EUA as well
as FDA-approved commercial products.

Coverage of COVID-19 Vaccines and COVID-19 Monoclonal Antibodies under Part B

Any FDA-approved COVID-19 vaccination is covered under Medicare Part B by statute (see section
1861/(s)(10)(A) of the Social Security Act). Furthermore, Medicare is statutorily required to cover COVID-
19 vaccines without cost-sharing under the Coronavirus Aid, Relief and Economic Security (CARES) Act,
and CMS has proposed via rulemaking™ to treat a COVID-19 vaccine's EUA by the FDA to be tantamount
to being "licensed under section 351 of the PHS Act," as required by the CARES Act.© This would avoid a
potential gap in coverage for COVID-19 vaccines under EUA, if USG supplies are depleted.

However, CARES Act coverage of COVID-19 vaccines does not apply to COVID-19 treatments. In order to
ensure beneficiary access to COVID-19 monoclonal antibodies under an EUA, CMS announced via
rulemaking that it will cover COVID-19 monoclonal antibodies under the Part B preventive vaccine
benefit through the end of the calendar year in which the PHE ends. CMS has recently proposed to end
that vaccine benefit-based coverage instead at the end of the calendar year in which the FDA's EUA
declaration for drugs and biologicals ends with respect to COVID-19 (rule to be published July 29,
2022)*©*' (See Appendix B. Table A2). If the rule is finalized (also refer to Tables 71-72 of the proposed
rule), CMS will stop paying for COVID-19 monoclonal antibodies and their administration under the Part
B preventive benefit after the end of the EUA declarations, and then shift coverage of COVID-19

 

August 2022 (Updated May 2023) ASPE Report 9
monoclonal antibodies and their administration back under the applicable payment system of the
setting in which the product is administered (i.e., Part A for inpatient, Part B for outpatient). Once
COVID-19 monoclonal antibodies and their administration are no longer covered under the Part B
preventive vaccine benefit, Medicare beneficiaries may be subject to the standard Part B cost-sharing
(20 percent of the cost of the drug, though approximately 84 percent of Medicare beneficiaries have
supplemental coverage that may reduce these out-of-pocket costs).

For pre-exposure prophylactic COVID-19 monoclonal antibodies, CMS's policy is slightly different. CMS
recently proposed to continue coverage and payment of pre-exposure prophylactic COVID-19
monoclonal antibodies and their administration under the Part B vaccine benefit even after the
applicable EUA declaration ends.

Coverage of COVID-19 Antiviral Treatments

Once a drug receives FDA approval, the type of coverage under Medicare depends on whether the
antiviral treatment is administered via an infusion by a physician in the hospital or outpatient clinic and
therefore paid for under Medicare Part A or B, or if it is an oral antiviral prescription medication
available at the pharmacy and therefore a Medicare Part D covered drug. Generally under current law
(Social Security Act, Sections 1860D-2(e)(1) and 1927(k)(2)), Medicare cannot cover prescription
medications under Part D while they are authorized under an EUA and have not yet received FDA
approval.®? However, the Consolidated Appropriations Act (CAA), 2023 allows Part D plans to cover oral
antivirals under an EUA." Part D plans may also waive cost-sharing and prior authorization for Part D-
covered drugs indicated for treatment or prevention of COVID-19."1 During the PHE, CMS exercised
enforcement discretion to allow plans to pay pharmacy dispensing claims for oral antivirals under EUA
while the drug cost is being covered by USG procurement," such as Paxlovid, a highly effective COVID-
19 oral antiviral treatment. The CAA allows Part D plans to cover oral antivirals under an EUA through
December 31, 2024; after that date, Part D coverage would require FDA approval.

Coverage Decisions in Medicare Advantage under Part C

Medicare Advantage plans are required to cover the same benefits covered by Medicare Parts A and B.
Furthermore, if the estimated cost of a Part A or B national coverage decision or legislative change
represents at least 0.1 percent of the national average per capita costs (e.g. $13 per beneficiary per
year), it is considered a significant cost and the FFS Medicare program provides coverage for the service
until the costs are factored into Medicare Advantage payments, thus preventing gaps in coverage
between plan bid cycles. CMS determined that the legislative change in benefits to add Part B coverage
of a COVID-19 vaccine and its administration met the significant cost threshold. Therefore, the FFS
Medicare program provided this coverage for MA plan enrollees through 2021. MA organizations began
paying for the COVID-19 vaccine and its administration (including approved booster doses), without cost
sharing, as of January 1, 2022, for beneficiaries enrolled in their plans. This coverage will continue during
and beyond the expiration of the PHE.

Medicare Advantage plans that include Part D prescription drug coverage are subject to the same Part D
coverage rules and requirements as standalone Medicare Part D plans.

 

August 2022 (Updated May 2023) ASPE Report 10
MEDICAID/CHIP

COVID-19 Vaccines

For COVID-19 vaccines, currently the USG is paying for the vaccine costs while the Medicaid program
provides reimbursement for vaccine administration. If the USG supply runs out, the costs of vaccines for
Medicaid-enrollees would be borne by CDC's Vaccines for Children (VFC) program, which covers 100% of
the costs for all ACIP-recommended vaccines. The cost of administration for children in Medicaid and
CHIP is paid for with state and federal funds. This benefit is provided without cost-sharing. For the adult
and other remaining populations, vaccine and vaccine administration would be fully federally funded up
until the last day of the first calendar quarter that begins one year after the last day of the COVID-19
emergency period (the ARP coverage period). After that period, the vaccine and vaccine administration
services would be reimbursed at the applicable state federal medical assistance percentage (FMAP). To
receive the 1% FMAP bump authorized by section 4106 of the Affordable Care Act, states must also
include all USPSTF A and B recommended preventive services without cost sharing, but this is not
required.

As included in the American Rescue Plan (ARP),'"? mandatory coverage of COVID-19 vaccines and vaccine
administration for nearly all Medicaid beneficiaries expires at the end of the ARP coverage period. Once
the provisions of the ARP expire, coverage of ACIP-recommended vaccinations on the pediatric and
adult vaccine schedule without cost sharing will only be mandatory for adults enrolled in an Alternative
Benefit Plan (ABP) and children eligible for Early and Periodic Screening, Diagnostic and Treatment
(EPSDT) services. Under the Inflation Reduction Act, beginning October 1, 2023, state Medicaid and CHIP
programs must cover approved adult vaccines recommended by ACIP and their administration, without
cost sharing. While vaccines must be recommended by ACIP, this coverage requirement is not limited to
vaccines that ACIP includes on the immunization schedules. Coverage of vaccines and vaccine
administration is optional for other Medicaid beneficiaries. In general, states can choose to cover
COVID-19 vaccines and their administration for non-mandatory populations.

Children would continue to qualify for COVID-19 vaccine coverage without cost-sharing under separate
state CHIP programs after the expiration of the ARP provisions."

COVID-19 Treatments

Manufacturers wishing to have state Medicaid programs cover their FDA-approved covered outpatient
drugs (CODs) must participate in the Medicaid Drug Rebate Program (MDRP). With limited exceptions,
states must in turn cover FDA-approved CODs from manufacturers with a rebate agreement. The MDRP,
however, does not apply to prescription drugs only available under EUAs. A series of COVID-19 related
laws (most recently, ARP) addressed this gap by requiring that Medicaid cover all outpatient drugs for
COVID-19, regardless of whether they were included in the MDRP. These provisions apply through the
last day of the first calendar quarter that begins one year after the end of the COVID-19 PHE."> The ARP
also requires similar coverage under CHIP, with the same timeline, although separate state CHIP
programs are not part of the MDRP." Currently the USG is paying for the costs of all COVID-19
treatments until supplies run out.

After the ARP provisions expire, Medicaid programs would remain responsible for coverage of COVID-19
CODs. Federal matching and rebates would be available, but enrollees could be responsible for cost-
sharing, which is generally lower in Medicaid than in other types of coverage. Coverage of COVID-19

 

August 2022 (Updated May 2023) ASPE Report 11
treatments in separate state CHIP programs would be subject to the same rules as other prescription
drugs are in those programs.

PRIVATE INSURANCE

COVID-19 Vaccines

Private insurance includes employer-sponsored plans, Marketplace plans, and other individual market
coverage. Private health plans that are compliant with the Affordable Care Act (ACA), including all
Marketplace plans, are required to cover vaccines recommended by the ACIP without patient cost-
sharing, including those for COVID-19 under either EUAs or FDA approval. However, plans such as
grandfathered and Short-Term Limited-Duration Insurance (STLDI) may not cover COVID-19-required
vaccines or may require cost-sharing.

COVID-19 Treatments - Monoclonal Antibodies and Oral Antivirals

Federal law does not require private plans to cover COVID-19 treatment or put any limits on patient
cost-sharing if they do. Plans generally have discretion to cover medicines under EUAs, and to set cost-
sharing rules for them as they do for FDA-approved drugs. In the early period of the pandemic, when the
only available COVID-19 treatments were for hospitalized patients, most fully-insured employer plans
covered these treatments without patient cost-sharing." By August 2021, however, 72 percent of the
largest fully-insured plans in the employer and individual markets were requiring cost-sharing for COVID-
19 treatment. The Kaiser Family Foundation Employer Health Benefits Survey found similar results for
self-insured employer plans in the first half of 2021. These findings suggest that most employer and
individual market plans will cover the COVID-19 treatments currently procured by the USG after the
supply ends, but that enrollees will be responsible for some of the costs related to treatments and their
administration. Evidence about the effectiveness of these treatments in preventing serious and
expensive illness may influence plans' coverage and cost-sharing decisions.

UNINSURED AND UNDERINSURED INDIVIDUALS

Access to COVID-19 vaccinations and treatments after the transition to commercialization may be most
limited for the 26.4 million people who lack health insurance (as of early 2022), as well as millions more
whose insurance may not include adequate coverage for these products (whom we refer to in this
context as "underinsured")."® With Federal procurement of vaccines and treatments, and the Health
Resources and Services Administration (HRSA) COVID-19 Uninsured Program to cover administration
costs, uninsured individuals have been able to get vaccinated and treated for COVID-19 as needed with
no out-of-pocket costs. The HRSA program also covered the costs of COVID-19 testing for the uninsured.
In the absence of additional funding, however, the HRSA program stopped accepting provider claims for
testing and treatment of COVID-19 on March 22, 2022, and stopped accepting claims for vaccine
administration on April 5, 2022.7

Fifteen states have adopted a new Medicaid option created by the Families First Coronavirus Response
Act (FFCRA) to provide COVID-19 testing vaccines and treatment to uninsured patients, but this option
will no longer be available after the end of the month in which the PHE ends.®° As with most health care
services, uninsured individuals may be able to obtain COVID-19 vaccines and treatments without charge,
or ona sliding scale based on income, from Federally Qualified Health Centers or other safety-net
providers - though it is unlikely that there will be adequate supply to meet the full need without

 

August 2022 (Updated May 2023) ASPE Report 12
additional dedicated funding. This means many uninsured or underinsured individuals will have to pay
full cost for COVID-19 vaccination or treatment, or else not receive these lifesaving services.

Section 317 of the PHS Act authorizes the federal purchase of vaccines for certain populations; this is
known as the Section 317 Vaccine Program. COVID-19 vaccines have also been made available through
CDC's Section 317 Vaccine Program, which covers uninsured children not covered by VFC and uninsured
adults. Section 317 is dependent on available funding and if CDC makes a determination to include
COVID-19 vaccines as part of the program. State, local, tribal, and territorial governments have been
active in administering COVID-19 vaccines under USG procurement and some may continue to do so
with funding from Section 317 or other sources.

The FY2024 President's Budget includes a proposal to create a mandatory Vaccines for Adults (VFA)
program to provide uninsured individuals access to ACIP-recommended routine and outbreak vaccines
at no cost.®" This would include COVID-19 vaccines. The VFA program would be modeled CDC's VFC
program and tailored to adults. The VFA program would provide funding for the purchase of ACIP-
recommended vaccines for eligible adults, provider fees, and program operations. Ultimately, the
program aims to reduce vaccination coverage disparities, improve outbreak control of vaccine-
preventable diseases, and enhance and maintain the infrastructure needed for responding to future
pandemics.

 

August 2022 (Updated May 2023) ASPE Report 13
Table 2. Overview of Coverage of COVID-19 Vaccines and Select Treatments by Payer and FDA Status,
as of May 2023

COVID-19 Vaccines®2

COVID-19 Antiviral Treatments

 

 

 

 

 

 

 

 

 

 

USG supplied No (ended Yes (previously
October available under EUA)
2020)**
Medicare
Part A NA NA NA Yes (5 day IV NA
(See Part B) | (See Part B) (See Part D) treatment if (See Part B)
hospitalized)
Part B Yes Yes® NA Yes if Yes (proposed
(See Part D) outpatient rulemaking to continue
this coverage without
beneficiary cost sharing
after the EUA ends)
Part C (Medicare Same as Part A (inpatient) and Part B58 (outpatient); however if a new benefit is added through a
Advantage) National Coverage Determination by FFS Medicare or a legislative change and is determined to be a
"significant" cost, the FFS Medicare program provides coverage for the service until the costs are
factored into Medicare Advantage payments. MA plans began covering the COVID-19 vaccine as of
Jan. 1, 2022
Part D NA NA Yes, covered NA

(See Part B)

(See Part B)

through
12/31/24, may
be subject to
cost-sharing)

(See Part B)

 

Medicaid: Children

 

 

 

 

During PHE & Up Yes Yes Yes Yes Yes

to One Year After

PHE

>1 Year After PHE | Yes, covered | Yes Possibly covered | Yes, covered; Yes - EUA drugs can

Ends by VEC -EUA drugs can | most children be covered as
program be covered as exempted from prescribed drugs if

 

 

 

prescribed drugs
if included in the
state plan; most
children
exempted from
cost sharing but
some may be
subject to cost
sharing
depending on
state-specific
policy

 

cost sharing
but some may
be subject to
cost sharing
depending on
state-specific
policy

 

included in the state
plan

 

 

August 2022 (Updated May 2023)

ASPE Report 14

 

 
CHIP: Children

COVID-19 Vaccines®2

COVID-19 Antiviral Treatments

 

 

 

 

 

 

During PHE & Up Yes Yes Yes Yes Yes
to One Year After
PHE
>1 Year After PHE | Yes Yes Possibly covered | Possibly Possibly covered - can
Ends -EUAdrugs can | covered -can be covered as prescribed
be covered as be covered as drugs if included in the
prescribed drugs | prescribed state plan; may be
if included inthe | drugs if subject to cost sharing
state plan; may included inthe | depending on state-
be subject to state plan; may | specific policy
cost sharing be subject to
depending on cost sharing
state-specific depending on
policy state-specific
policy
Medicaid: Adults?)
During PHE & Yes Yes Yes Yes Yes
About One Year
After PHE
>1 Year After PHE | Yes (with an | Possibly Possibly Yes, may be Possibly covered
Ends ACIP covered. States | covered. subject to (depends on eligibility
recommend- | Must cover EUA drugs cost-sharing | group and state"); may
ation) EUA vaccines depends on be subject to cost-
without cost | Tat are ACI. eligibility group sharing)
Fg (4! ;
sharing for subject to cost-
beneficiaries sharing
receiving
coverage
through an
Alternative

 

 

Benefit Plan,
and could opt
to cover
vaccines with
only an EUA for
other adults.)
May be cost-
sharing for
some
beneficiaries.

 

 

 

 

 

Private Insurance

 

 

 

August 2022 (Updated May 2023)

ASPE Report 15
COVID-19 Vaccines®2 COVID-19 Antiviral Treatments

 

Plans subject to Yes Yes May not be covered or may require cost-sharing
the ACA's
preventive service
requirements
Plans not subject May not be covered or may require cost-sharing
to the ACA's
preventive service
requirements

 

 

 

 

 

Notes: NA = Not Applicable. Green - covered, no cost sharing; Light green - covered, may include cost-sharing; Orange -
Possibly not required to be covered, or covered with limitations; Red - Not covered. Status as of August 27, 2022.

(1) As of January 26, 2023, FDA announced that Evusheld is not currently authorized for use in the United States until further
notice by the agency because the therapeutic is unlikely to be active against more than 90% of the SARS-CoV-2 variants
currently circulating in the United States based on data from CDC. https://www.fda.gov/media/154704/download

(2) The Consolidated Appropriations Act, 2023 allows Medicare Part D plans to cover oral antivirals under an EUA through the
end of 2024. After that, Part D coverage will depend on whether those products have received FDA approval.

(3) Medicaid coverage of ACIP-recommended vaccines depends on eligibility category. Coverage is mandatory for beneficiaries
eligible for EPSDT and those enrolled in ABPs for ACIP-recommended vaccines.

(4) Coverage would be mandatory for approved vaccines that are ACIP-recommended beginning October 1, 2023, as
established by Section 11405 of the Inflation Reduction Act (IRA). The IRA requires coverage of approved, ACIP-recommended
adult vaccines without enrollee cost sharing for most Medicaid categorically needy enrollees and Medicaid medically needy
enrollees. In cases when the IRA does not mandate coverage without cost sharing, states have flexibility to determine coverage
and cost sharing policies, but any cost sharing must be nominal.

(5) States may continue to cover EUA drugs after the end of the ARP PHE period if their state plan specifies such coverage.

PART Ill. ANALYSIS OF POTENTIAL COST SAVINGS FROM VACCINES AND
TREATMENTS

As discussed in the previous section, some payers have the authority to cover COVID-19 vaccines and
treatments but are not required to do so. Thus, another important consideration is understanding the
costs as well as potential cost-savings from covering COVID-19 vaccines and treatments. In this section,
we estimate potential cost-savings associated with averted hospitalizations for COVID-19 vaccines and
select COVID-19 treatments.

DATA

We utilized multiple data sources, including infection rates and information on the effectiveness of
COVID-19 vaccines (separately for primary doses and boosters) and treatments, and the probability of
hospitalization among different populations. These data were analyzed separately for those ages 19-64

 

August 2022 (Updated May 2023) ASPE Report 16
and adults 65 and over. For simplicity, individuals 65 and over are assumed to be covered by Medicare
and those 19-64 by other payers.®° We also used data on vaccination from the Centers for Disease
Control and Prevention (CDC). The estimated cost of the vaccines or treatments was informed by
publicly available sources®"** and are meant to be for illustrative purposes only. Given the multiple
factors involved in commercial negotiations, there is uncertainty regarding what the costs will be after
negotiations.

METHODS

We estimated cost savings as a result of reductions in hospitalizations in two steps. First, we calculated
the expected per-person hospitalization cost with and without intervention (receiving a COVID-19
vaccine or treatment). The per-person cost of hospitalization is calculated using the cost per hospital
stay, the probability of infection, and the probability of being hospitalized, based on historical data.
Second, for each scenario we compared the anticipated costs of the vaccine or treatment and expected
hospitalization cost with and without the vaccine or treatment. Specifically, we calculated the difference
between the per-person cost of the vaccine or treatment and the per-person expected hospitalization
cost. When cost savings from reduced hospitalizations exceed the cost of the vaccine or treatment, this
means the vaccine or treatment is cost-saving on net; when the hospitalization cost savings are less than
the costs of the vaccine or treatment, this results in a partial cost offset.

We note that for purposes of this analysis we focus on inpatient hospitalizations. Cost-related benefits
associated with reduction in emergency department or ambulatory visits are not considered in this
analysis. We make the simplifying assumption that the cost of the treatment or the hospital stay does
not vary by health insurance coverage status. We also make simplifying assumptions with respect to the
timing of vaccine and booster efficacy. This methodology also does not consider reduced future
spending from reduced prevalence or intensity of future infections due to vaccination or treatments.
This methodology is limited in that it does not examine benefits by more disaggregated age groups,
vaccination status, or health history. As such, the average estimates may not fully reflect the potential
for cost savings of these treatments when targeted specifically toward individuals with very high-risk
profiles.

Most importantly, this analysis only examines savings related to health care costs. These estimates do
not measure presumably the most important benefit of these vaccines and treatments - their reduction
in illness and death. Previous research by ASPE quantifies some of those non-financial benefits, finding
for instance that COVID-19 vaccinations accounted for nearly $3 trillion in benefits to the US through
mid-2021, primarily through vaccine-related reductions in mortality.®?

See Appendix A methodology for additional details on the data and related assumptions.

RESULTS

Projected Cost Savings from COVID-19 Vaccines and Treatments

Table 3 shows projected costs savings for COVID-19 vaccines and treatments related to reductions in

hospital spending separately for all payers (population under 65) and Medicare (population 65 and
older). We note that our estimates rely on assumptions and publicly available data sources that may not

 

August 2022 (Updated May 2023) ASPE Report 17
fully reflect the information or other factors, including commercial negotiations, involved in actual
coverage decisions.

Adults Under 65: Table 3 shows the results for the adult population ages 19 to 64. Overall, we find that
the initial vaccination series is cost-saving with roughly $110 in reduced hospital costs per person on
average compared to remaining unvaccinated. Other boosters and treatments result in smaller hospital
cost savings, which reflects the low probability of hospitalization in this younger population, but still
offset a significant portion of the costs of treatment in some cases. Specifically, reduced hospital
spending offsets 23 percent of Paxlovid's treatment cost ($181 out of $800) and 6 percent ($122 out of
$2,100) of the cost of a monoclonal antibody treatment, assuming infection with an Omicron-like
variant.

Population 65 and Older: Table 3 shows the results for the population age 65 years and older. Overall,

we find that the initial vaccination series is cost-saving, with nearly $1,000 per person in reduced hospital

costs on average compared to remaining unvaccinated; this is more than enough to offset the vaccine
cost even with significant levels of

wasted doses. The cost savings for
Medicare are largely driven by a

 

 

 

e COVID-19 vaccines reduce hospitalization reduced probability of infection and
reduced probability of hospitalization
costs after vaccination among adults aged
> by $110 per person in adults under 65 65 years and older.
> and nearly $1,000 per person among
. Boosters, compared to full
seniors a :
| vaccination, show smaller savings, but
e Hospital savings from boosters nearly still enough that hospital savings from
cover the full cost of booster doses booster shots nearly or fully cover the
cost of additional doses at $20 per
dose.

For treatments, cost savings increase as the probability of hospitalization increases. Under our current
assumptions, reduced hospital spending offsets 51 percent of Paxlovid costs ($410 out of $800) and 13
percent of the cost of a monoclonal antibody treatment ($277 out of $2,100), assuming infection with
an Omicron variant.

 

August 2022 (Updated May 2023) ASPE Report 18
 

This analysis only examines savings related to health care costs. These
estimates do not measure the most important benefit of COVID-19
vaccines and treatments - their reduction in illness and death.

 

Table 3. Projected Cost Savings from COVID-19 Vaccines and Treatments

 

Scenario Added Per Per Person Per-Person
Person Cost Savings from Net Cost or
of Vaccine Reduced from
Col ek oy ie) [rz-1a cela Vaccination
eich datas or Treatment
(%)
(A - B)
Full Vaccination (2 shots) vs. non-Vaccinated (0 $150 $110 (275%)
shots)
2 Booster (4 shots) vs. 1 Booster (3 shots) $20 $3 $17 (15%)
$800 $181 $619 (23%)
Monoclonal Abs vs. No Treatment, Among $2,100 $122 $1,978 (6%)
COVID-19 Infected individuals
RON SS Se
$916
S40 $956 (2,290%)
1 Booster (3 shots) vs. No Booster (2 shots) $20 $26 $6 (30%)
$20 $19 $1 (95%)

Paxlovid vs. No Treatment, Among COVID-19 °
Infected individuals ee aa 2390\(517%)

Notes: Red font denotes cost-savings.

 

August 2022 (Updated May 2023) ASPE Report 19
DISCUSSION

This report provides a comprehensive summary of how COVID-19 vaccines and treatments have been
made available to the public through the USG's purchase and via EUAs and approvals by the FDA.

The report identifies gaps in current payer coverage of COVID-19 vaccines and treatments authorized
under an EUA and describes how USG-provided supplies have temporarily covered and made available
these life-saving vaccines and treatments during the PHE. Payers need to begin preparing for coverage
of these COVID-19 vaccines and treatments in the transition to the end of the PHE and FDA approval of
these life-saving medical products.

One key factor that may expedite commercialization and minimize the risk of gaps in access is for payers
to expedite and begin coverage decision-making well before the USG-provided supply runs out. Other
payers can start their own coverage determination processes prior to FDA approval to prevent potential
gaps in coverage.

Our estimates of potential costs and savings demonstrate the benefits to payers of covering COVID-19
vaccines and treatments, which not only can save lives but also reduce costs by preventing
hospitalizations in the US. Our analysis demonstrates that the initial COVID-19 vaccination series is cost-
saving for all payers and remains cost-saving or essentially cost-neutral for Medicare for booster doses.
COVID-19 treatments reduce the risk and cost of hospitalizations, which partially offset the costs of
providing those products, with the highest offsets for Paxlovid, followed by monoclonal antibody
treatments. These calculations will vary based on stratification by patients' risk factors such as comorbid
conditions, occupational exposure, and community environmental risks. This analysis only included age
stratification for populations below and above 65 years and only considered savings from inpatient
costs. Reduced infections and severity of illness also likely reduce follow-up outpatient care and related
costs, further improving the return on investment for payers covering these services.

Our results underscore the importance of primary vaccination as a population-based prevention strategy
across all payers and geographic areas. Reduced hospitalization costs associated with the use of oral
antivirals also partially offset the costs of these treatments to varying degrees among payers, with
higher offsets for seniors. Studies suggest hospitalization costs for COVID-19 are higher than the average
hospitalization. For example, the average cost of a Medicare hospitalization for COVID-19 was just under
$22,000 and more than $49,000 if the patient needed a ventilator,° whereas it was less than $20,000
for a Medicare non-COVID-19 hospitalization prior to the pandemic, and approximately 145 times the
cost of vaccinating a Medicare beneficiary. Other studies have estimated the average cost of a COVID-19
non-complex inpatient stay to be approximately $34,000, up to $98,000 for a complex inpatient stay.
Given that private insurers are the primary payers for working adults, these estimated cost savings
underscore the economic benefits of continued coverage of COVID-19 vaccines and treatments,
especially among higher-risk populations. While this analysis did not break out hospitalization costs or
estimate cost savings for specific groups other than older or younger than 65, previous studies have
shown COVID-19 and severe outcomes from COVID-19 disproportionately impact Black, Latino, and
American Indian/Alaska Native individuals," people with low income, people working in high-risk public-
facing occupations, and those with one or more chronic conditions." Higher cost savings can therefore
be expected in these higher risk groups from continued access to COVID-19 vaccines and treatments.

 

August 2022 (Updated May 2023) ASPE Report 20
Cost savings are also likely to differ by payer-where those with a large share of high risk groups
expected to experience higher cost savings.

Our analysis has important limitations. The COVID-19 pandemic is an evolving situation, with new
variants and ongoing research about the effectiveness of current treatments and vaccines. Accordingly,
changes in recommended treatments may occur over time. In response, vaccine manufacturers are now
developing COVID-19 vaccines that can be more effective against multiple strains of SARS-CoV-2, the
virus that causes COVID-19. Our estimates reflect the state of knowledge as of August 2022 (though the
policy details about coverage provisions have been updated as of May 2023); with new variants,
vaccines, and treatments, potential cost savings may change. Finally, the costs for vaccines and
treatments that will be paid by different insurers are unknown at this time; we provide estimates of
potential savings here that can be compared as needed to whatever specific prices are ultimately
adopted or negotiated by different payers.

CONCLUSION

Current coverage for many of the COVID-19 vaccines and treatments available in the US rely in part on
EUAs that can continue even after the end of the federal public health emergency. However continued
coverage after USG-provided supplies run out and the end of EUA declarations for COVID-19 vaccines
and treatments will require payers to work through coverage determinations in an expedited manner.
The public will expect coverage of these lifesaving vaccines and treatments without gaps and ensuring
broad and equitable access to these services is a key priority for the Federal government.

 

August 2022 (Updated May 2023) ASPE Report 21
APPENDIX A. METHODOLOGY

COVID-19 Vaccines: Our projections were based on current infection rates combined with information
on mRNA vaccine and booster effectiveness in individuals who are not immunocompromised. We
assume the fourth shot has the same incremental effect as the third, and that the same percentage of
individuals who went from 2 shots to 3 would go from 3 shots to 4. This percentage was 70 percent in
the Medicare population® and 43 percent in the 18-64 population.*° We then compared costs for 2
shots vs. 0 (fully vaccinated vs. unvaccinated); 3 shots (first booster) vs. 2 shots; and 4 shots (second
booster) vs. 3 shots. These estimates do not incorporate the varying levels of effectiveness resulting
from the timing of vaccination. Future variants could result in different probabilities of infection and
associated costs.

Paxlovid and Monoclonal Antibodies: We considered the infection and hospitalization risks of the Delta
and Omicron variants. Omicron risks are calculated by updating the vaccine effectiveness in reducing
infection and treatment effectiveness in reducing hospitalization" relative to baseline hospitalization
risk of the Delta variant.°® We assume 89 percent effectiveness for Paxlovid®? and 60 percent
effectiveness for monoclonal antibodies in reducing hospitalizations. While we do separately model the
risk of hospitalization for vaccinated (completed primary series) vs. unvaccinated individuals receiving
treatment, the estimates do not incorporate changes in vaccine effectiveness based on the timing of
doses or number of boosters each individual has received. As was the case for vaccines, future variants
could result in different probabilities of infection and associated costs.

Calculating Savings from COVID-19 Vaccines and Treatments: We first calculate the estimated per-
person costs of those who receive a COVID-19 vaccine or treatment (C') and those who do not (C'),
which are denoted by equations (1) and (2) below.

(1) C=cdthi
(2) C=c'th'

In equation (1), c! denotes the cost of receiving a COVID-19 vaccine or COVID-19 treatment (e.g., $40)
and hi is the expected cost of hospitalization with receipt of vaccine or treatment ($200). hiis the cost of
a hospital stay (e.g., $20,000) which is multiplied by the probability of being hospitalized for those who
receive a vaccine or treatment (e.g., probability equal to 0.01). In equation (2) c' is zero, and h' is the
expected cost of hospitalization (e.g., $2,000) which is calculated using the cost of a hospital stay
($20,000) times the probability of being hospitalized (e.g., probability equal to 0.1) if the person does
not receive a vaccine or treatment at-home, at the hospital or as outpatient. We assume that the cost of
a hospital stay is the same in (1) and (2).

Second, to determine whether the estimated reduction in hospitalization costs would cover the entire
cost of the treatment or not, we calculate the difference in costs between those who received the
vaccine or treatment and those who did not. In other words, we calculate C, or equation (3):

(3) C=C'-C

Equation (3) could also be calculated as c! + h'- h', which in the example provided would be, -$1760
($40+S200-S2000). Estimated per person cost-savings are determined when the costs of COVID-19

 

August 2022 (Updated May 2023) ASPE Report 22
vaccines or treatments are less than the costs of COVID-19 hospitalizations compared with the
counterfactual scenario when no vaccines or treatments are available (C < 0), which indicates that the
reduction in the per-person expected hospitalization cost was greater than the per-person cost of the
treatment or vaccine. Estimates where C > 0 denote indicate that the estimated reduction in
hospitalization does not cover the cost of the treatment. That is, cost-offsets reflect the reduction in
hospital spending associated with vaccination or receipt of a COVID-19 therapeutic.

 

August 2022 (Updated May 2023) ASPE Report 23
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Table 2. Medicare Coverage and Payment of COVID-19 Treatments during and after PHE*

 

Calendar years after PHE' ends

    

 

  
  

No coverage at this time without final
rulemaking. CMS has recently proposed to
cover and pay for pre-exposure
prophylactic COVID-19 monoclonal
antibodies and their administration under
the Part B vaccine benefit even after the
applicable EUA declaration ends.

 

 

 

 

Treatment EUA Calendar year that contains PHE™
Authorization
or FDA
Approval

COVID-19 EUA™ Covered without cost-sharing because

Monoclonal CMS is paying for them under the Part

antibodies for B vaccine benefit.

immuno-

compromised

patients, e.g.,

Evusheld

(Medicare Part [Approval Covered without cost-sharing because

B) CMS is covering them under the Part BiWeelads
Vaccine benefit

Oral antivirals, |EUA™* No coverage

e.g., Paxlovid Approval Review within 90 days and

(Medicare Part determination within 180 days but

D) Part D plans not required to place
drug on formulary until next plan
Vvear.
Part D plans must cover 2 drugs per
class (or 1 drug under some
circumstances) on formulary.
Any drug not on the formulary will be
available to an individual on a one-off
basis through the formulary exception
process.

Physician- EUA™ No coverage

administered = [Approval Regular coverage under Part B with

antivirals cost-sharing.

(Part B)

 

 

No coverage at this time without final
. Potential coverage after
PHE/EUA declaration ends if proposed rule
is finalized. CMS has recently proposed to
cover and pay for pre-exposure
prophylactic COVID-19 monoclonal
lantibodies and their administration under
tthe Part B vaccine benefit even after the
lapplicable EUA declaration ends.

  

No coverage
Same as during PHE

No coverage
Regular coverage under Part B with cost-
Sharing.

 

 

 

Notes: *Public Health Emergency under section 319 of the Public Health Service Act; ** EUA authorization of treatments
is made pursuant to a declaration under section 564 of the FD&C Act also referred to as 564 declaration. The end of the
EUA declaration may be after the end of the COVID-19 PHE under the PHS Act (currently in rulemaking to instead cover
through the end of the EUA declaration). Some coverage of treatments is through the end of the calendar year of the
COVID-19 PHE under the PHS Act. Until FDA approval is received, some treatments may not be covered after the COVID-
19 PHE ends (after the EUA declaration ends if rulemaking is finalized as proposed). Color scheme: Green - regular
coverage; Red - no coverage; Yellow - potential coverage under certain circumstances.

 

August 2022 (Updated May 2023)

ASPE Report 26
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and Morbidity in the United States, and an Approach to Valuing these Benefits. Washington, DC: Office of the
Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. December 2021,
https://aspe.hhs.gov/reports/economic-health-benefits-covid-19-vaccination.

90 Patient Characteristics and Costs Associated With COVID-19-Related Medical Care Among Medicare Fee-for-
Service Beneficiaries. Annals of Internal Medicine. 2021;174(8):1101-1109. doi:10.7326/m21-1102 %m 34058109
51 COVID-19 Medical and Hospitalization Costs: National. Fairhealth FH® Total Treatment Cost. September 2021.
https://s3.amazonaws.com/media2.fairhealth.org/infographic/asset/COVID-
19%20Medical%20Hospitalization%20Costs%20by%20State%20-%20FINAL National.pdf

2 Tai DBG, Shah A, Doubeni CA, Sia IG, Wieland ML. The Disproportionate Impact of COVID-19 on Racial and Ethnic
Minorities in the United States. Clinical Infectious Diseases. 2020;72(4):703-706. doi:10.1093/cid/ciaa815

 

 

 

 

 

 

 

August 2022 (Updated May 2023) ASPE Report 32
 

93 Baker MG. Nonrelocatable Occupations at Increased Risk During Pandemics: United States, 2018. American
Journal of Public Health. 2020;110(8):1126-1132. doi:10.2105/ajph.2020.305738

4 Tisminetzky M, Delude C, Hebert T, Carr C, Goldberg RJ, Gurwitz JH. Age, Multiple Chronic Conditions, and
COVID-19: A Literature Review. The Journals of Gerontology: Series A. 2020;77(4):872-878.
doi:10.1093/gerona/glaa320

% Centers for Disease Control and Prevention (CDC). COVID-19 Data Tracker. 67.3% of individuals over 65 opted for
the 3 dose; see https://covid.cdc.gov/covid-data-tracker/#vaccinations vacc-total-admin-rate-total

°6 Centers for Disease Control and Prevention (CDC). COVID-19 Data Tracker. 43% of individuals aged 18-64 opted
for the 3™ dose; see https://covid.cdc.gov/covid-data-tracker/#vaccinations vacc-total-admin-rate-total

37 Thomson MG, Natarajan K, Irving SA, Rowley EA, Griggs EP, et al. Effectiveness of a Third Dose of mRNA Vaccines
Against COVID-19-Associated Emergency Department and Urgent Care Encounters and Hospitalizations Among
Adults During Periods of Delta and Omicron Variant Predominance-VISION Network, 10 States, August 2021-
January 2022. MMWR Morb Mortal Wkly Rep 2022;71(4): 139-145. doi:
http://dx.doi.org/10.15585/mmwr.mm7104e3

98 Estimate uses 31% fewer omicron vs delta patients go to the emergency department, of which 50% fewer are
subsequently admitted to the hospital as reported by: UK Health Security Agency, December 2021 UK Health
Security Agency, December 23, 2021, https://www.gov.uk/government/news/covid-19-variants-identified-in-the-
uk

9° Hammond J, Leister-Tebbe H, Gardner A, et al. Oral Nirmatrelvir for High-Risk, Nonhospitalized Adults with
Covid-19. New England Journal of Medicine. 2022;386(15):1397-1408. doi:10.1056/NEJMoa2118542

100 HHS Determination of Public Health Emergency, February 7, 2020. Available at:
https://www.federalregister.gov/documents/2020/02/07/2020-02496/determination-of-public-health-emergency
101 HHS Emergency Use Authorization Declaration, April 1, 2020, available at:
https://www.federalregister.gov/documents/2020/04/01/2020-06905/emergency-use-authorization-declaration

 

August 2022 (Updated May 2023) ASPE Report 33
 

U.S. DEPARTMENT OF HEALTH AND HUMAN
SERVICES

Office of the Assistant Secretary for Planning and Evaluation

200 Independence Avenue SW, Mailstop 434E
Washington, D.C. 20201

For more ASPE briefs and other publications, visit:
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meh

oO

ABOUT THE AUTHORS

Trinidad Beleche is a Senior Economist in the Office of Science and Data Policy at ASPE.
Laina Bush is Deputy Assistant Secretary in the Office of Science and Data Policy at ASPE.
Kenneth Finegold is a Social Science Analyst in the Office of Health Policy at ASPE.
Teresa Manocchio is a Social Science Analyst at ASPE.

Sarada Pyda is an Economist in the Office of Health Policy at ASPE.

Lok Wong Samson is a Health Policy Analyst in the Office of Health Policy at ASPE.
Benjamin D. Sommers is the Senior Counselor in ASPE.

SUGGESTED CITATION

Trinidad Beleche, Laina Bush, Kenneth Finegold, Teresa
Manocchio, Sarada Pyda, Lok Wong Samson, Benjamin D.
Sommers. Understanding Coverage Considerations for COVID-19
Vaccines and Treatments. Washington, DC: Office of the
Assistant Secretary for Planning and Evaluation, U.S. Department
of Health and Human Services. August 2022 (Updated May
2023).

COPYRIGHT INFORMATION

All material appearing in this report is in the public domain and
may be reproduced or copied without permission; citation as to
source, however, is appreciated.

 

For general questions or general
information about ASPE:

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August 2022 (Updated May 2023) ASPE Report 34