Operation Warp Speed bought 100 million doses of Pfizer's and Moderna's vaccines before results came in. That $3.5 billion bet is paying off.

• The US launched Operation Warp Speed, an initiative to deliver coronavirus shots to Americans, in May.
• The program has funded the manufacturing of six promising vaccine candidates while clinical trials are ongoing.
• That includes shots from Pfizer and Moderna. Both companies recently announced positive results from their final stage of clinical trials.
• Warp Speed plans to distribute doses as soon as a vaccine is approved.

Operation Warp Speed is, in essence, a risky bet: The US program is bankrolling the production of six promising coronavirus vaccine candidates in large quantities before clinical trials are finished. But if the results aren't good, the money is gone.

"If a vaccine doesn't work, you've lost a few hundred million dollars," Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told The New Yorker. "If it does work, if it's safe and effective, you've saved four, five, six months of waiting to get people the vaccine. That's huge."

Operation Warp Speed's overall goal is to deliver 300 million doses of a vaccine by January. Since the leading candidates require two shots per person, that would be enough to immunize 150 million Americans — about 45% of the population. The program has outfitted manufacturing facilities with equipment and raw materials to produce needles, syringes, and vials.

In some cases, Operation Warp Speed is also funding clinical trials, allowing companies to move quickly from one research stage to the next.

So far, two companies backed by Operation Warp Speed — Moderna and Pfizer — have announced positive results from their final stage of trials: Pfizer's vaccine was found to be 95% effective in preventing COVID-19, while Moderna's was found to be 94.5% effective.

Warp Speed awarded Moderna $955 million to advance its clinical trials, and another $1.5 billion to manufacture and deliver 100 million vaccine doses. Pfizer's contract is different: The company received $1.95 billion to manufacture and distribute 100 million doses, but it did not accept funding for research or development.

Money to accelerate research

The US declined to join COVAX, a global alliance spearheaded by the World Health Organization that aims to develop, manufacture, and distribute coronavirus vaccines. More than 180 nations have signed on.

Operation Warp Speed, meanwhile, kicked off in May and is spearheaded by the Department of Health and Human Services and the Department of Defense.

Traditionally, it takes at least 10 years to develop a vaccine, but the program intends for the US to start distributing a coronavirus vaccine roughly one year after scientists first sequenced the virus' genome in a lab — an unparalleled scientific feat.

That has generated some concern among Americans that a vaccine won't be thoroughly vetted before it reaches the public, but any candidate will have to pass several checkpoints before it's widely distributed.

An independent scientific board first monitors clinical trial data to determine whether it's promising enough to hand over to the Food and Drug Administration. From there, the FDA has to determine that the vaccine is safe and at least 50% effective.

Once a vaccine is approved, Operation Warp Speed will help deliver doses through a contract with McKesson Corporation — the nation's largest distributor of flu shots. Pfizer, however, has opted to use its own delivery system centered in Michigan and Wisconsin.

Funding for the Moderna and Pfizer vaccines

Under the Warp Speed agreements with Pfizer and Moderna, the US government has the option to acquire 500 million additional doses of Pfizer's vaccine (on top of the 100 million it already bought), and 400 million additional doses of Moderna's vaccine.

Both Moderna and Pfizer are also in independent talks with COVAX to distribute their vaccines internationally. The European Union has also already purchased 200 million doses from Pfizer, with the option to acquire 100 million more.

Warp Speed has purchased 100 million vaccine doses each from AstraZeneca, Johnson & Johnson, Novavax, and the Sanofi-GlaxoSmithKline partnership as well. Should any of those candidates get approved, the program is prepared to distribute doses of that vaccine.

The program also funded clinical-trial research for AstraZeneca, Johnson & Johnson, and Sanofi-GlaxoSmithKline.

Most of Warp Speed's budget — around $10 billion — came from congressional funds awarded in the spring, according to the HHS. But a September Bloomberg investigation found that the Trump administration siphoned additional funds to Warp Speed that were meant for other public-health programs. That included $6 billion from the Strategic National Stockpile and $1 billion from the Centers for Disease Control and Prevention (CDC).

Some Americans could get shots in January

Moderna and Pfizer could apply for emergency FDA authorization by the end of this month. From there, it could take weeks for the FDA the review the data, but Warp Speed is prepared to distribute doses as soon as a shot is approved.

"Within 24 to 48 hours of the time the emergency use authorization is authorized, we expect to be putting needles into people's arms," Paul Mango, the deputy chief of staff for policy at HHS, said in an October press call.

Moncef Slaoui, Operation Warp Speed's chief scientist, said at a White House event last week that around 20 million Americans could get vaccinated in December. Then 25 to 30 million Americans could get shots each month afterward, he said.

"Optimistically, I would hope by the summer we are substantially back to normal," Slaoui told Business Insider last month. "I would also hope that before the next flu season, we really have this virus under control."

HHS Secretary Alex Azar offered a similar timeline in October.

"We expect that we would have, by the end of this year, enough vaccine that is FDA-authorized to be able to vaccinate all of the most vulnerable individuals," he said. "Then by the end of January, we expect we'd have enough to vaccinate all seniors, as well as our healthcare workers and first responders — and by the end of March to early April, enough vaccine for all Americans who would want to take a vaccine."

However, Pfizer's shot in particular may pose some distribution challenges: The vaccine must be shipped at -94 degrees Fahrenheit, which would require vaccination sites to have deep freezers or dry ice. Under normal refrigerator temperatures, Pfizer's vaccines would spoil in around five days.

Moderna's shot requires a temperature of -4 degrees Fahrenheit. It can survive 30 days in a refrigerator, or 12 hours at room temperature.

Experts question the program's distribution plan

Although many public-health experts have lauded Operation Warp Speed, some are still concerned about how vaccine distribution will go — especially since states were required to come up with their own distribution plans. A decentralized approach could cause supply-chain issues and slow the process of administering shots, particularly in remote areas.

"I'm a bit concerned about their current plan because it's not clear to me how much guidance was given to the states to assure a uniformity of distribution," Marissa Levine, a public-health professor at the University of South Florida, told Business Insider.

It might have been easier, she added, to lean on distribution plans used during previous public-health crises, like the H1N1 pandemic in 2009. During that crisis, the CDC played a lead role in vaccine distribution.

Although some CDC officials are involved Warp Speed, the scientists are outnumbered by military personnel, according to an organizational chart obtained by STAT. Several of the program's officials, including Slaoui, are also employed through a private contractor, Advanced Decision Vectors. Some experts worry that could allow them to skirt ethics laws.

As chief scientist, for example, Slaoui has held onto his $10 million investment in GlaxoSmithKline, where he worked for around three decades. He also previously served on Moderna's board but stepped down in May.

Biden must decide where to take the program in 2021

It's not yet known whether President-elect Joe Biden will overhaul Warp Speed when he takes office in January.

Biden's advisers recently told the New York Times that they still aren't privy to the program's inner workings.

"One of the good things about a Biden administration is that we might resurrect some of the things that actually worked well and not try to create whole new distribution systems that really don't build on the distribution expertise that already exists," Levine said.

But at this stage, any major changes to Warp Speed could also sow confusion, costing the US valuable time to save lives.

"We're going to continue running as fast as we can, as well as we can, always looking after safety and efficacy of the vaccines," Slaoui told CNBC on Monday. "And clearly, we would hope there is no disruption because of the transition."