Yeah, I've gone back and forth, but in the end I think contagion should just be completely rewritten, as a plot spell rather than a combat spell. Something like this:
CONTAGION
5th-Level Necromancy
Casting Time: 1 action
Range: Touch
Components: V, S, M (a black sapphire worth 1,000 gp; see below)
Duration: Until cured
When you cast this spell, the creature you touch must make a Constitution save or be afflicted with a deadly plague. The disease incubates for 24 hours, after which the victim becomes infectious. Symptoms begin after 48 hours, and include fever, coughing, and distinctive bruising under the eyes and on the lips. Upon developing symptoms and every 24 hours thereafter, the victim must make a Constitution save or have his or her maximum hit points reduced by 5. Three successful saves (not necessarily consecutive) end the disease, and the victim can regain the lost hit points normally.
Anyone who spends at least 1 minute within 15 feet of the original victim, or who touches the original victim, must make a Constitution save or become infected. The disease then follows the same course, except that secondary victims can't spread the disease further. Those who successfully save are immune to this contagion. The sapphire used as a material component becomes hot to the touch and remains so as long as there is at least one infected person. If the sapphire is destroyed, all victims recover instantly.
At the DM's option, contagion may be used to produce other diseases.
At Higher Levels. When you cast this spell using a higher-level spell slot, secondary victims can also spread the disease. If you use a 6th-level slot, the disease can go two "jumps" from the original victim instead of one. If you use a 7th-level slot, the disease can make three jumps. If you use an 8th-level slot, it can make five jumps. If you use a 9th-level slot, the disease can spread without limit.