Ted S. Warren/AP Photo
Jennifer Haller receives the first shot in the first-stage clinical trial of a potential COVID-19 vaccine from Massachusetts-based Moderna, at the Kaiser Permanente Washington Health Research Institute in Seattle, March 16, 2020.
As we look forward with anxiety and hope to the development of a vaccine against COVID-19, there have been accounts of the multiple conflicts of interest on the part of Dr. Moncef Slaoui, now serving as President Trump’s vaccine czar. The day before the overhyped announcement of promising early vaccine trials by Moderna, the company on whose board Slaoui served, he and other executives were engaging in insider stock trading.
As the Prospect has covered in great detail, corruption and personal enrichment on the part of senior Trump officials is pervasive. In this case, the bigger scandal is the fact that for-profit vaccine development, extensively underwritten by the government, exists at all.
Vaccines are a classic case of market failure. It takes a lot of research and testing to develop a vaccine. But the retail market is literally a one-shot, unlike pharmaceutical drugs that enjoy repeat profits from endless refills. It’s also unprofitable for the for-profit sector to maintain enough production capacity to meet peak needs, as in a pandemic.
So vaccines are public goods. Not surprisingly, nearly all of the cost of their development, if you trace it back, is underwritten by government or by foundations. The National Institutes of Health alone has spent some $700 million on COVID research since the SARS outbreak of 2002.
In 2006, in the wake of the 9/11 panic, Congress created a biomedical agency roughly modeled on the Defense Advanced Research Projects Agency (DARPA)—the Pentagon’s investment bank for funding advanced technologies with military applications but no early prospects for profits. The new agency was called BARDA, which stands for the Biomedical Advanced Research and Development Authority, with a pre-pandemic budget of $1 billion to $2 billion a year.
Virtually all of this goes to subsidize private, for-profit companies via research and development contracts. There are no public-interest quid pro quos, and little oversight.
In the first CARES bill, BARDA’s budget was increased well into the tens of billions. The actual number is blurred with other appropriations, but it amounts to an almost infinite slush fund for drug companies.
If this were the most effective way to get a vaccine into mass production and distribution, there might be a case for throwing money at private pharma. But that’s not the case.
If you compare two of the most promising vaccines, you get a sense of just how perverse this system is.
The one that has gotten the recent headlines is a COVID-19 vaccine being developed by the Cambridge, Massachusetts–based company Moderna. Last week, Moderna reported that eight people (far from a significant sample) in its stage one trials had developed some antibody protection against the virus. A stage one trial is conducted only to show whether the vaccine is safe. Still to come are trials to show whether it is effective. The much-hyped finding that some people developed antibodies was incidental and inconclusive.
On April 16, Moderna had received a contract from BARDA of a jaw-dropping $483 million to work on this vaccine and other COVID research. Compare this with a scientifically more promising vaccine, using a different approach, developed by the Jenner Institute in Oxford, U.K.
Jenner is a nonprofit. It has its own manufacturing facilities. It is further along toward stage two and stage three trials, and if the initial success of the vaccine in rhesus macaque monkeys can be replicated in humans, millions of vaccine doses could be available by September.
In order to get the production scale needed, Jenner has contracted with a for-profit, AstraZeneca, to coordinate worldwide production, but with the proviso that the vaccine be widely licensed, not for maximum profit but for maximum cheap distribution.
Other examples abound. The Ebola vaccine was developed in Canadian government labs, then licensed to commercial drug companies that delayed its worldwide development and distribution. The authors of an authoritative scientific paper on this saga call for: “a public sector led supply of essential, affordably priced medicines from discovery all the way through manufacturing and regulatory approval.”
The funding for all this research and development is public. The vaccines and their worldwide distribution should be in the public domain.
A good model is the international consortium known as CEPI, which stands for the Coalition for Epidemic Preparedness Innovations. CEPI was created in 2017 as a global nonprofit to finance vaccine technologies, and get them distributed at low cost.
In early May, at the World Health Organization meeting that the Trump administration trashed and boycotted, WHO members pledged over $8 billion for vaccines and passed a resolution calling for universal licensing of all new vaccines at low cost.
In the U.S., vaccine producers, working overwhelmingly with government funds, are free to charge whatever the market will bear.
The funding for all this research and development is public. The vaccines and their worldwide distribution should be in the public domain. The drug companies add nothing but cost, duplicative competition that fragments the science, corruption, and profiteering.
As a start, Sen. Elizabeth Warren and Rep. Jan Schakowsky have introduced a COVID-19 Emergency Manufacturing Act, which would create a federal office to produce vaccines directly and provide for wide distribution at low prices. As Warren suggests, the time to shift to a public option for vaccines is not just during the pandemic emergency, but permanently. More emergencies will be with us; and it’s always an emergency for anyone exposed to a lethal virus.
