The CEO of Moderna, Stéphane Bancel, reads The Wall Street Journal and the Financial Times every morning, searching for evidence of a developing pandemic like a meteorologist scans morphing weather patterns for a hurricane. So when Bancel saw a small column in December 2019 announcing a few strange respiratory illnesses in Wuhan, China, he took notice.
By January 11, a team of scientists in China had published the first draft of the SARS-CoV-2 virus’s genome. About 48 hours later, Moderna’s bank of computers, with assistance from NIH scientist Barney Graham and his research colleague Jason McLellan, had developed the molecular structure of a proposed vaccine to combat the virus that was causing the illness soon to be called COVID-19. “The vaccine that was reviewed by the FDA on December 17th, it’s exactly the same vaccine that our guys designed in January in silico, we never changed one atom,” Bancel said on a podcast.
Less than a year later, the first semi trucks stocked with an approved, mass-distributed vaccine began rolling away from a plant in Portage, Michigan, manufacturing another vaccine, from the pharmaceutical giant Pfizer. Two pharmaceutical companies, Pfizer and Moderna, had crushed the traditional vaccine timeline and kick-started the process of saving us from the perpetual fugue state of a coronavirus-dominated world.
But a month after the high of the vaccine approval, the U.S. found itself plunged deeper into the pandemic, suffering from rising case counts from the holidays and a punishingly slow vaccine rollout. If the pace of the first month is not accelerated, it will be years before enough U.S. citizens are vaccinated to crush the virus.
Pharmaceutical companies, one of the most hated and least trusted institutions in America, made real scientific progress at an unprecedented rate. But it looks like state governments, health departments, and hospitals are all failing on the vaccine distribution front. What to make of this? The story reflects the best and worst approaches of federal intervention during a crisis—the initial supreme competence and the later reneging of duty.
As the pandemic bounded across the U.S. last spring, a group of government agencies and private companies, known as Operation Warp Speed, formed to streamline the vaccination process. OWS includes officials from the White House, the Department of Health and Human Services, and the Department of Defense. ( The Food and Drug Administration, responsible for approving vaccines, is firewalled from participation lest it influence the approval process.)
By the end of 2020, OWS had spent tens of billions of dollars on vaccine contracts, syringe contracts, and expansion contracts for existing facilities. Many of these contracts were redundant—OWS contracted with at least two vial producers and one prefilled syringe producer—a sign that OWS officials were adept at supply chain management and prepared for potential disruptions. The contracts also balanced large and small firms, another strong planning tactic leading to a balanced portfolio of vaccines and vaccine-related commodities.
In perhaps its largest contribution, OWS realigned the incentive structure of vaccine research and development, making the search for a solution to the coronavirus catastrophe temporarily profitable, and creating a competitive race for manufacturers of all sizes. OWS contracts allowed technology from the (relatively) small outfits Moderna and BioNTech to shine on a public stage; research spending that Moderna has been prioritizing for a decade finally paid off.
But OWS’s planning seems to have extended only as far as vaccine production. No government agency or individual has stepped up to guide the largest-scale vaccine effort ever undertaken on U.S. soil. Pallets of vaccine have been left sitting in warehouses, as government officials and Pfizer point fingers at each other. A lack of confident messaging, and Donald Trump’s neglect at best and deliberate undermining of democracy at worst, created a wash of early skepticism and faux-scientific talking points about vaccine safety. This only feeds existing, generalized doubt about vaccines.
The quick vaccine development showcased the power of government properly incentivizing research from pharmaceutical companies, while holding them to high expectations. The federal government demonstrated its power to demolish potential stumbling blocks, in some cases exerting its power to push past slow suppliers. Unlike in a normal year, when pharmaceutical corporations are left to themselves under the guise of innovation and permitted to hike their prices at will, suddenly the government gave an infusion of cash, righted misaligned incentives, and unlocked the scientific potential of a few smaller companies with strong research-and-development spending.
But the rollout has shown the consequences of the flip side: By not making decisions or providing firm guidance, the administration is reverting to the same hands-off, blame-federalism approach that proved disastrous in the spring. An every-state-for-itself policy just leads to bidding wars and undue burden on underfunded public-health departments. Many states have buckled under the pressure and left decision-making up to hospitals, which are crushed under a deluge of rising case numbers and have limited capacity to handle this additional weight. And overreliance on large systems means that bottlenecks and glitches can endanger many more people than a model with many small networks.
No government agency or individual has stepped up to guide the largest-scale vaccine effort ever undertaken on U.S. soil.
The vaccine, in other words, shows both the promise of muscular government action and the peril of laissez-faire market-dominated indifference.
IN EARLY 2020, the U.S. pharmaceutical market did not seem like fertile ground for the most rapidly developed vaccine of all time. Once a beacon of scientific research and progress, U.S. drug companies have since fallen prey to easy wins and quick financial hits. Research and development is no longer a key part of most large pharmaceutical manufacturers’ budgets; almost 70 percent of the global drug pipeline originated in biotech and small pharmaceutical companies.
Huge drugmakers tend to get their research by absorption, rather than development; they buy up small companies with innovative ideas and either adopt the product or shut it down, lest it cannibalize the company’s existing drugs (what’s called a “killer acquisition”). Almost three-quarters of new drugs patented by large companies were developed at a smaller one and then acquired. As a result, U.S. drug development has gotten less innovative as consolidation becomes more common.
With fewer resources devoted to R&D, large pharmaceutical corporations have turned more of their energies to heavily patenting existing drugs, trying to extend patent monopolies for as long as possible. Nearly 80 percent of new drug patents issued are for existing drugs, rather than new ones.
AbbVie, for example, has filed for at least 247 patents on the best-selling Humira, used to treat arthritis, inflammatory bowel disease, and more. With a long patent timeline, AbbVie has monetized Humira for all it’s worth. If Humira was a company itself, it would have ranked around 152 on the Fortune 500 from 2018.
But AbbVie hasn’t created any life-changing drugs as it works to maintain a Humira monopoly; the most it’s been able to do is acquire a few potential high-revenue drugs from Allergan (including Botox) and develop a few new immunosuppressants that don’t promise much more than Humira.
The incentive structure set up by Operation Warp Speed motivated these pharmaceutical companies to at least temporarily shake off their calcified strategies. OWS contracted with at least six drugmakers to manufacture vaccines. Within this diverse portfolio, it spread the risk by backing several different types of vaccines, in case one type of technology failed to come to fruition. The U.S. government also preordered enough doses to cover the U.S. population four times over, assuming all vaccines in the portfolio are eventually FDA-approved. Most high-income countries followed this strategy; presumably, any excess doses can then be rolled out to lower-income countries, although it’s worth noting that it will still likely be years before all countries have adequate access to the vaccine.
The strategy of offering research funding and guaranteeing purchase of the resulting product was just the incentive pharmaceutical companies needed to get to work. Still, the first winners of the vaccine race serve as a testament to the power of R&D spending at smaller firms. Pfizer’s vaccine was developed in partnership with BioNTech, a small German company that’s been around since 2008 and has just 1,300 employees. Moderna is also just around a decade old; it was launched as part of a venture capital incubator before going public in 2018.
A brief overview of the technology is helpful. Pfizer/BioNTech and Moderna both produced what’s called an mRNA vaccine. All cells produce mRNA regularly. When a cell wants to make a protein (which is basically the main function of a cell), it copies its DNA using mRNA, and the mRNA is then translated into a protein.
The vaccines, then, provide the mRNA for a cell to manufacture tiny, nonviral bits of protein that resemble the spike protein on the COVID-19 virus. The body recognizes these nonviral bits of protein as foreign, producing antibodies for it—all without ever having been exposed to an actual COVID-19 virus. It’s genius.
Paul Sancya/AP Photo
Moderna, just around a decade old, has been working to develop mRNA vaccines for years.
Scientists have known about the power of mRNA for a long time, but they haven’t previously been able to harness it. That’s because the human body is trained to recognize foreign bits of material like mRNA, and the immune system shreds the input before it ever gets inside a cell. The real innovation of BioNTech and Moderna lies in devising a system to get the mRNA into the cell.
Pfizer, having shuttered its infectious-disease research unit years ago, partnered up with BioNTech, a firm devoted to research but without the scale or funding needed to run large-scale vaccine trials. Moderna, which has been working to develop mRNA vaccines for years (and which has nine vaccines in its pipeline now, including the clinically approved COVID-19 vaccine), was able to quickly leverage its technology to create a COVID-19 vaccine; it then partnered with the much-larger Lonza corporation to manufacture at scale.
As Dr. William Schaffner, an internist and infectious-disease specialist at the Vanderbilt University School of Medicine, noted, “[t]hey had a very mature technology that they could immediately apply to making a vaccine … Within a matter of weeks, we had created vaccines in the laboratory. That was a huge triumph.”
Other types of coronavirus vaccines have yet to make it through clinical trials. Most of the other vaccines on the verge of seeking approval are more standard killed or deactivated virus–type vaccines. These will be crucial to achieving herd vaccination, but they are not part of the rollout yet.
The case of Pfizer, the second-largest pharmaceutical corporation in the world, particularly demonstrates the power that the federal government can still wield, even over large, multinational corporations.
Pfizer chose not to take OWS money directly, probably to avoid potential regulatory requirements. It did, however, sign a guaranteed-purchase agreement with the U.S. government for approximately 100 million doses. (In addition, its partner BioNTech took research funding from the German government.) In December 2020, after the Pfizer vaccine had been approved, The New York Times reported that the government had failed to contract for the full amount of doses that Pfizer offered, instead settling on 100 million. Operation Warp Speed, however, leveraged its power to get more doses. In return for using the Defense Production Act (DPA) to overcome supply chain constraints, OWS secured an additional 100 million doses from Pfizer.
With these guaranteed-purchase agreements and OWS stepping in on supply chain issues—and, most likely, the intensity of the spotlight on them—Pfizer officials followed OWS’s lead and pursued a redundant domestic supply chain process that could serve as a model for future pharmaceutical rollouts. The corporation retrofitted a plant in Andover, Massachusetts, to make the mRNA. It set up a plant in St. Louis to make raw material for the shots. And it purchased pricey machines that package the mRNA in nanolipids, sending them to manufacturing facilities in Kalamazoo, Michigan, and Puurs, Belgium. In one anecdote recounted by The Wall Street Journal, the manufacturing chief of Pfizer developed an idea to fit another machine in a factory, allowing the company to speed up its commercial timeline by six months. The manufacturing chief called the CFO and said, “I got an idea, and I need $10 million. Is it an issue?” The CFO responded, “Just do it.”
In general, Operation Warp Speed has left vaccine decisions entirely up to the states.
OWS’s purchasing agreements and R&D funding also motivated pharmaceutical companies to begin manufacturing at scale, even as trials were still going on. In normal times, a drug is only manufactured for the public once it is FDA-approved. But as Dr. Schaffner puts it, “what we did as taxpayers, we made a bet that these vaccines were going to work, so while the trials were still under way … we began paying the manufacturers to start manufacturing the vaccine in large volume and storing it in a warehouse.” In his opinion, we “won the bet.”
Winning the bet in the U.S., of course, does not mean the world gets to reap those rewards. As Zain Rizvi, an expert in access to medicines at the advocacy organization Public Citizen, told me, “Warp Speed is yet another example of how the pharmaceutical industry uses government-funded research to develop products that are protected by government-granted monopolies … we are seeing scarcity because we have allowed one corporation to dictate supply.” In Rizvi’s view, OWS’s failure to force Pfizer and Moderna to share their vaccine recipes with other manufacturing plants globally, even as those global plants sit idle, is “one of the great tragedies of this moment.” Advocates with an eye to global access are frustrated that OWS and the federal government, which have provided years of general scientific-research funding and more acute funding for the COVID-19 vaccine, are not requiring Pfizer, Moderna, and the rest to turn their vaccine technology over to any global plant that wants it and has capacity.
Moderna publicly stated that it would not be enforcing its patents on the vaccine for the duration of the pandemic, although it appears to have reserved the right to decide when that is. This seemingly altruistic statement also elides that Moderna continues to closely hold its mRNA technology, which is the real scientific breakthrough of this vaccine. Kate Elder, a senior vaccines policy adviser for the international group Médecins Sans Frontières, said in a press statement, “Moderna’s announcement to not enforce patents during the pandemic might be enough to get good press, but it isn’t enough to make sure people will have access to this vaccine at an affordable price.”
Interestingly, access to and pricing for the COVID-19 vaccine flips the typical U.S./international drug paradigm; usually, drugs like insulin are less expensive in countries like Canada, India, and South Africa because of government negotiations with pharmaceutical manufacturers. Now, it appears U.S. citizens will enjoy access to the vaccine first, while still paying far more for less-advanced drugs.
Whether having relatively inexpensive COVID-19 vaccines changes how U.S. residents view drug access remains to be seen. The free market has not been producing the consistent advances the world needed. Now that people have seen government negotiation beget speed, innovation, and low costs, it’s possible Congress and voters will take a kinder view of the government stepping in to shepherd pharmaceutical corporations toward scientific breakthroughs at lower prices.
IN THE EARLY 1970s, Japanese businessmen pioneered a new process of supplying their factories with the inventory needed for production. Rather than keeping a supply for several days or weeks of production, they began streamlining their logistics pipeline such that inventory arrived “just in time.” This just-in-time stocking kept companies running leaner, with more liquidity. But it also makes supply chains more prone to disruptions. Unless there is redundancy built into the supply chain—with several manufacturers for each part—the whole system is a bunch of failure points waiting to be tripped.
Operation Warp Speed’s involvement helped correct for these fragile commodity markets. With a reported budget as large as $18 billion, OWS was given leeway to contract for all the complicated pieces of a mass vaccine rollout. OWS officials took the necessity of redundancy to heart. For example, consider that OWS has given $204 million to Corning Glass in upstate New York to expand its production of borosilicate glass vials, another $143 million to SiO2 Materials Science for another type of vaccine vial, and $138 million (and a $590 million loan) to ApiJect, which offers as-yet untested prefillable syringe technology. Each of these three companies offers a different kind of vaccine delivery mechanism. If ApiJect’s technology fails to pan out, Corning’s time-tested vials can come through. If Corning’s expansion construction takes longer than expected, SiO2 Materials Science’s vials are available.
There is precedent in using a redundancy strategy, and in the government shoring up parts of the distribution process that might fail if left to unfettered capitalism. The U.S. agency tasked with preparedness for biological events, the Biomedical Advanced Research and Development Authority, or BARDA, maintains a flock of secret chickens, constantly producing millions of eggs in the event of a novel pandemic flu. The influenza virus grows best in chicken eggs, and chickens only lay one egg at a time, so BARDA pays for the ongoing maintenance and egg collection of this flock to be prepared to create a mass flu vaccine at any point in time. This might not be seen as economically efficient to a large company, but the government has more things to think about than efficiency.
Kale Wilk/AP Photo
Government funding accelerated vaccine development and motivated drug companies to manufacture at scale.
GIVEN THE POWER AND SPEED of the government-incentivized vaccine manufacturing process, it’s been shocking to watch the subsequent vaccine rollout. Perhaps it shouldn’t have been. The parts of the rollout that can’t be contracted for have been abysmal. There’s been a severe lack of information given to state planning agencies. Hospitals, already overwhelmed with COVID-19 patients, have proven unable to handle the responsibility for distribution. Although OWS officials put out a report in September outlining their process for helping jurisdictions develop distribution plans, it appears those plans lost their wheels as the distribution actually began.
Peter Hotez, dean for the National School of Tropical Medicine at Baylor College of Medicine, told Bloomberg, “The only part of the pandemic Trump responded to was things he could get companies to manufacture.” This seems to apply to OWS as well—the military officials running OWS are undoubtedly good at securing procurement contracts, but they seem to have been caught unprepared for the messiness of the American health system and the public-health challenges of a vaccine rollout. Dr. Jason Schwartz, an assistant professor of health policy at the Yale School of Public Health, told me that OWS “really failed to provide a similar level of commitment and investment to the just-as-critical steps that occur as soon as vaccines are produced, manufactured, and shipped.”
In general, OWS has left vaccine decisions entirely up to the states. This could be a powerful strategy if states were prepared, but it appears that states were expecting stronger federal guidance. In October, for example, the National Governors Association sent a list of detailed supply chain and funding questions to the White House. The Department of Health and Human Services responded with largely vague answers; it’s unclear whether they ever developed stronger guidance.
States, in general, are leaning hard on hospitals to figure out distribution. But the process is complicated enough that even wealthy, well-connected facilities are struggling. Stanford Hospital in California spent weeks developing an algorithm meant to prioritize staff members at high risk of infection to receive the vaccine. But the algorithm fell short, naming just a handful of medical residents and instead choosing staff members who had been working from home for the duration of the pandemic. In an unusual display of public frustration, Stanford medical residents picketed the hospital.
To handle non-hospital vaccine rollout, Operation Warp Speed has abandoned its strategy of redundancy and turned to just a few big players. In October, OWS and HHS named CVS and Walgreens as the health care partners that would be distributing the vaccine to long-term care facilities. Contrary to the myth that private enterprise can always handle tasks in a superior fashion to government, the two pharmacies already appear to be struggling.
Because of capacity limitations, CVS has the capacity only to visit each group home a total of three times to give out the two necessary injections of the vaccine. This means that nearly all staff members and residents have to be vaccinated simultaneously, in direct contradiction to the CDC’s recommendation that health systems stagger their vaccinations. This recommendation is because the vaccine may cause flu-like symptoms, a result of a person’s body mounting an immune response to the nonviral bits of protein. The CDC wants to avoid health workers and their patients all feeling sick and cranky on the same day.
As of early January, West Virginia was actually doing the best of all 50 states, because it didn’t partner with CVS or Walgreens. West Virginia has limited retail pharmacies, but the state does have a network of independent pharmacies with existing relationships with long-term care facilities in the state. As a result, West Virginia injected the highest percentage of delivered doses to its population over the first month of the vaccine rollout.
Other big players will purportedly handle other major steps of the vaccine rollout. For example, McKesson, one of the largest drug and medical equipment distributors in the world, will be responsible for distributing the vaccine to individual providers’ offices, once the vaccine is more widely available (it has also played this role in the annual flu vaccine rollout).
Even if these private-sector corporations are entirely successful, and they devote enough time, money, and manpower to the efforts instead of higher-revenue alternatives, OWS has undermined its earlier manufacturing strategy by creating just a few failure points in the system. Take this one example: If a freezer goes out in a doctor’s office, it is the loss of several dozen doses of vaccine. But if a freezer goes out at the CVS or McKesson distribution centers, it can mean a significant delay in the vaccination timeline.
We have a real-world example of this. On January 4, a broken freezer in Ukiah, California, sent hospital personnel racing through the small town to administer 600 doses in two hours. They managed to get the job done because it was relatively achievable. A similar failure at a large distribution center would simply lead to mass spoilage.
OWS also neglected softer points of the vaccine rollout. The U.S. has had no mass, public efforts to build vaccine confidence; on the contrary, President Trump undermined scientists at almost every point during the COVID-19 crisis. In Dr. Schaffner’s view, the biggest failure of the federal government has been the lack of “communication-slash-education.” As he explained, “Not just education, which is a one-way street, but communication, which means listening, responding, and generating confidence in people. It’s not only important, it’s going to be essential.”
The American people have watched a vaccine distribution process run directly into the balkanized American health system.
It may well be that the vaccine rollout had a bumpy start but will come together. After all, no single country (except, as of this writing, Israel) has seen a rapid start. In a press conference during the last week of December, Gen. Gustave Perna, the chief operating officer of OWS and the former head of the U.S. Army Materiel Command, sounded a note of confidence. “There’s a learning curve in the system,” he said. “As vaccines become more available in pharmacies, it will become more straightforward. I expect that things will move quickly. What we should be looking at is the rate of acceleration over the coming weeks.” Indeed, by the first week of January, dosage rates were hitting 700,000 a day, and rising.
THIS FINAL PHASE OF THE PANDEMIC will probably still prove the most frustrating. Seemingly the most difficult part of the process, the manufacture of the vaccine, was completed in record time. Operation Warp Speed proved adept at navigating supply chain crises and incentivizing the manufacture of unprecedented doses, despite a pharmaceutical industry that has never been more sclerotic.
Now, trapped inside, the American people have to watch a vaccine distribution process run directly into the balkanized American health system, one notoriously resistant to blanket incentives and already barely holding up under the strain of the virus. And OWS seems to be nowhere to be found. Certainly, its officials are not on the ground, working out the kinks that each health system may encounter. Nor are officials promulgating guidance that would ease the initial phases of the rollout.
But at the risk of finding silver linings in a storm that’s killing hundreds of thousands, there are some real takeaways from the vaccine manufacture and distribution so far. A strong central-planning team with experience in logistics and contracting, deliberately finding redundancies and funding a diverse portfolio of products, can crush previous scientific timelines. Smaller pharmaceutical companies and biotech firms are producing lifesaving research and should be both funded and protected from acquisitions, and the government should be able to reap the rewards on the behalf of the American people. Perhaps most importantly, the pandemic is also demonstrating that research-and-development spending from the government is never a bad investment. In fact, more R&D spending on the public-health side might have built the infrastructure that would allow an easier vaccine distribution.
The innovation of private companies is real, but so is the power of the government in motivating and surfacing that research. Operation Warp Speed’s early involvement in securing supply chains and creating a competitive portfolio of vaccines was crucial in getting us here, with several working vaccines just a year after COVID-19 was first described. But now we need even more.
To successfully roll out the vaccine, we need an influx of funding, a real effort from central planners, and an understanding of the dual effects of concentrated power and health care balkanization. To smooth all this over, OWS or other federal officials will need to take back the reins and give real, detailed guidance to jurisdictions on whom to prioritize, when, and how. They will need to circulate instructions, work through kinks, and be on the ground continuing to develop best practices. They need to spend heavily on public-health and distribution infrastructure, while also spending on a public, bipartisan campaign to shore up vaccine confidence.
Officials are responsible for building more redundancy—not only more manufacturers, but more storage facilities and distribution points to inject the vaccine (independent pharmacies would not be a bad place to start). And they’ll have to get creative: mobile vans to carry the vaccine, going door-to-door in neighborhoods to provide education and injections, pop-up sites in public parks. All of these decisions will require strong central government coordination, which the Biden team has begun to set up.
And then, when the vaccine is finally in the arms of enough Americans—a diverse, large group of Americans—they need to prepare for the next pandemic, using this hard-won playbook.
