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Could COVID Vaccination Incentives Hint at Future Problems for Pfizer and Moderna?

By Keith Speights and Brian Orelli, PhD - Updated Jun 25, 2021 at 1:49PM

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The need for incentives for vaccination now could point to lower vaccination rates going forward.

Free beer, desserts, donuts, and even the potential to win millions of dollars. Some companies and states are offering all of these and more to entice individuals to receive COVID-19 vaccines. In this Motley Fool Live video recorded on May 26, Motley Fool contributors Keith Speights and Brian Orelli discuss whether or not these incentives could hint at future problems for the major COVID-19 vaccine makers.

Keith Speights: There have been quite a few stories in recent weeks about states and individual companies offering incentives for individuals to get their COVID-19 vaccines. I have a couple of questions for you. First, are there any of these incentives that you think might be especially effective or ineffective? Then secondly, could the fact that these gimmicks are being required to encourage people to get the vaccines, could this be bad news potentially for companies like Pfizer (PFE -0.72%) and Moderna (MRNA 3.27%) over the long run, maybe serving as a forewarning that vaccination rates in the future could be low?

Brian Orelli: I think beer and donuts. [laughs] White Castle's giving away free desserts, I think maybe a hamburger will be better with your burger, but to each his own. I think some of these are just promotional by the companies.

They're not any different than a company offering a 2-for-1 deal they're expecting while they're losing money off of giving you [inaudible] the free promotional item. They're hoping people come in and buy extra of that thing or stay for an extra beer or buy additional items for the kids and their family. I think a lot of these are probably just promotional in nature. I don't think that you can read anything into them.

New York is offering scratch-off lottery tickets that are worth up to $5 million. That's going to cost the state actual money, and so I don't think the state would necessarily do that if they didn't need to. I think that does hands out the fact that there may be some low rates of trying to convert the second half, so we've hit that 50 percent point this week, people in the US that are vaccinated. I think that's just eligible people or adults, I'm not sure. But we're somewhere around 50 percent. Then getting that other 50 percent, I think, is probably going to be difficult.

For Pfizer and Moderna this year, I don't think it really matters because they've already got the orders booked by the government. The government is obviously going to buy them, so it's not an issue. Looking further out, it could be a problem because the governments aren't going to buy them if people aren't taking them. Eventually, at some point, the government's going to stop buying them and then we're just going to expect our insurance companies to buy them for us. The levels of booster shots is going to be important.

I think there's two ways to look at it. One, lower sales is lower sales, and so young people aren't worried about getting it, then they're not going to get vaccinated. That could be a problem for creating lower sales.

On the other hand, if that means a lot of people are getting sick and spreading it next year, maybe that could increase the desire for some people to get it. [laughs] It's a [inaudible] , it's low levels virus spreading, then not very many people are going to get it at it's high levels, then a lot of people are going to get it. It's spreading is that a lot of people didn't get the vaccine. I'm torn on this and I don't know if there's any real way to figure it out except to wait and see.

Speights: Yeah. I do like positive incentives, like some of these things though, the positive incentives to encourage people to get the vaccines. You're talking about like New York, I think several other states are doing lottery-based incentives. I think those could work.

My concern is that we may see companies, and particularly employers, resort to more negative incentives going forward. Like you've got to be vaccinated to go do this. I don't know if we will get to the point of the company say, "You've got to be vaccinated to work here." that potentially could happen. But to me, I prefer positive incentives to negative incentives any day.

Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights owns shares of Pfizer. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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Pfizer Inc. Stock Quote
Pfizer Inc.
$49.75 (-0.72%) $0.36
Moderna, Inc. Stock Quote
Moderna, Inc.
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