Dean Baker for BuzzFlash: Taxpayer-Funded Drug Research Should Require Open-Source Sharing by BigPharma, Not Profiteering Patents. Let's Start With the Coronavirus Vaccine.

July 27th 2020

Vaccine, Corona, Cost (geralt)

By Dean Baker

As Donald Trump has the United States rushing ahead at “warp speed” on developing a vaccine, we are doing just about everything wrong, if the goal is to quickly produce a safe and effective vaccine that will be widely available throughout the world. We have taken the worst features of our drug development process and ramped them up by an order of magnitude in response to the urgency of the situation. 

Starting with public funding, the federal government is putting more than $3 billion into funding the research and development of a vaccine. This follows the pattern of large-scale public funding of bio-medical research, with the government putting up more than $40 billion in funding each year through the National Institutes of Health. 

The big difference in the case of the coronavirus vaccine is that the funding is narrowly focused on a very specific project, rather than more general biomedical research. This is not unprecedented, the federal government has played a very direct role in financing research in areas like developing treatments for AIDS, but the scale is extraordinary. 

Also, it is important to recognize that it is the government that is bearing most, if not all, of the risk of failure. The pharmaceutical industry routinely cites the fact that most of its research turns up dead ends when trying to justify high drug prices. At the end of the day, most projects do not result in a safe and effective drug that can be sold in a large enough volume to cover their research costs. 

However, in the case of the coronavirus vaccine, the government is bearing the risk. If Moderna or any of the other companies getting a chunk of the advanced funding failed to make progress in developing a vaccine, they would still have been paid for their work. It would be the government that is out the money.

This raises a second major issue with the route chosen by the Trump administration. They approached the development of a vaccine with the idea that it would be a race, both within the United States and around the world. This meant that drug companies would be hoarding their research findings in order to avoid possibly giving a competitor an edge. 

What we would have liked to see, and what we did see to a substantial extent in the early days of scientists struggling to understand the virus, is widespread international cooperation. The federal government could have made a condition of getting public funds that all results would be posted on the web as soon as practical so that researchers around the world could benefit as quickly as possible. To prevent freeloading, we could have negotiated cost-sharing with other wealthy countries, as well as commitments to also make their results public.

There have been numerous pieces in the news about China or Russia’s efforts to hack U.S. pharmaceutical companies with the goal of “stealing” a vaccine. Incredibly, none of these pieces ever ask the obvious question of what it would mean to “steal” a vaccine. After all, if the hackers succeeded in their alleged theft, it would not keep anyone in the U.S. from getting a vaccine. It would just mean that people in China, Russia or elsewhere might get the vaccine sooner and cheaper than would otherwise be the case. 

If we made all our research on the vaccine open-source, it would be impossible for China, Russia, or anyone else to steal it. It would already be fully public.

Of course, in this scenario it would not be possible for Moderna or any other company to charge a high price for the vaccine. It would be available all over the world as a cheap generic. If we want to quickly stop the pandemic, that should be exactly what we would like to see. 

Instead, because we give companies patent monopolies, we are in the absurd situation of begging drug companies that developed a vaccine, largely with public funding, to make it available at an affordable price. Furthermore, there are no clear commitments on access to a vaccine for poor countries in the developing world. 

There is yet another major flaw in Donald Trump’s warp speed approach to developing a vaccine, the question of the vaccine’s safety. We already have a problem with a large number of people questioning the safety of vaccines for diseases like polio and measles. Their safety concerns are based on little or no evidence.

But how willing would people be to receive a warp speed vaccine approved by Donald Trump’s Food and Drug Administration (FDA). If Moderna or another company were to insist they had successfully developed a safe vaccine, does anyone doubt that Donald Trump would fire an FDA commissioner who refused to go along? Perhaps career people in the agency would go public with their doubts, but this would jeopardize their jobs, and we cannot assume that FDA staff would be willing to take that risk.

By contrast, if the research was all open-source, the entire international scientific community would be in a position to assess the evidence on a vaccine’s safety and effectiveness. Furthermore, since the drug companies had been paid in advance, and did not own a patent monopoly, they would have no incentive to lie about the safety and effectiveness of their vaccine.

Apart from the immediate issues associated with developing a safe and effective vaccine, we also lost an incredibly valuable opportunity to experiment with an alternative method of financing drug research. If an open-source cooperative approach worked with the vaccine, we could look to extend to pharmaceutical research more generally.

In addition to being a huge health issue, it is also a huge economic issue. We will spend more than $500 billion on prescription drugs this year.  These drugs would almost certainly cost us less than $100 billion if they were sold without patent monopolies, as generics in a free market. The difference of $400 billion is enormous. It comes to more than $3,000 per household. It is more than five times the annual food stamp budget. In other words, it is a really big deal.

It is also money that is redistributed upward, from the bulk of the population to the better paid employees of drug companies and their shareholders. People who are concerned about inequality, including racial inequality, should be paying attention to an incredibly inefficient policy that redistributes a huge amount of money to the largely white top 1 percent and 10 percent.

It is tragic, if not surprising, that Donald Trump would not take advantage of an unprecedented opportunity for international cooperation to test an ambitious alternative mechanism for financing pharmaceutical research. It is surprising that almost no one on the center or left challenged his approach. 

Dean Baker is an American macroeconomist and co-founder, with Mark Weisbrot, of the Center for Economic and Policy Research in Washington, DC. He is credited as being one of the first economists to have identified the 2007–2008 United States housing bubble. His areas of research include housing and macroeconomics, intellectual property, Social Security, Medicare and European labor markets. He is the author of several books, including “Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.”