Talk has turned to a potential vaccine, with President TrumpDonald TrumpStowaway found in landing gear of plane after flight from Guatemala to Miami Kushner looking to Middle East for investors in new firm: report GOP eyes booting Democrats from seats if House flips MORE promising one in “a couple of months.”
However, Health and Human Services Secretary Alex Azar effectively decided the opposite by stating that the U.S. would not place price controls — regulations to control the cost— on potential coronavirus vaccines. In Azar’s words: “The priority is to get vaccines and therapeutics. Price controls won’t get us there.”
But the reality is that without price controls it may not matter whether a coronavirus vaccine is developed because it will be out of reach to millions across the world who cannot afford it. This is why, despite concerns about losses of potential profits and overzealous government regulation, the vaccine price is critical.
Being a South African, I have witnessed the impact laws allowing price controls and parallel imports can have on people’s health. Making medicines affordable has been an ongoing challenge in developing countries. Intellectual property protection on medicines and vaccines can make life-saving interventions completely inaccessible.
Twenty years ago, most South African couldn’t access antiretroviral drugs (ARVs). In 2001, the Doha Declaration changed this. Since then, the price of Tenofovir, a highly effective ARV, dropped by 64 percent in South Africa, and millions of lives have been saved. Vaccines can have an even bigger impact, depending on their efficacy. The 2017 flu vaccine, for example, prevented about 6.2 million influenza cases in the U.S. This shows how powerful affordable health interventions can be and why getting access faster, matters.
Although affordable medicines have become increasingly available with many manufacturers of generic medications based in developing countries, the same cannot be said for vaccines. This is because the Declaration’s solutions — which helped to make medicines affordable — do little for vaccines.
Ordinarily, the Declaration allows governments to bypass negotiating with pharmaceutical companies in public health emergencies, such as the coronavirus pandemic. This can expedite the production of affordable medicines.
However, because vaccines are so difficult to make, governments are often unable to bypass pharmaceutical companies, even in a public health emergency. Developing countries rarely have sufficient infrastructure, technical expertise and capacity to produce the vaccines at scale. This creates a strong barrier to the production of generic vaccines.
Countries must also pay "adequate compensation" to the company that developed the vaccine. This can pose a problem for governments that have to stretch limited resources to pay for a coronavirus vaccine instead of care for other diseases.
This is where price controls come in. Although price controls introduced by the government would only directly apply in the U.S., they provide leverage for developing countries to negotiate a lower price when they purchase the vaccine from pharmaceutical companies.
If the price controls are low enough, other governments may not even need to negotiate a lower price and may be able to purchase the vaccine outright at the controlled price in the U.S., ensuring faster access for those who need it.
The ability to purchase the vaccine at an affordable price from the developers or manufacturers also means that developing countries can get access faster without needing to first invest substantial amounts of money in the infrastructure and expertise needed to produce a vaccine.
The U.S. also benefits from effective prevention in developing countries. If pandemics are kept under control through measures like a vaccine, this has significant benefits for the global economy, trade and health across the world.
There are reasons why pharmaceutical companies are given intellectual property rights and set the prices of drugs, vaccines and other health technologies. It is part of the risk-reward formula of a free market, where the company taking substantial risks in spending large amounts of money to develop the drug gets potentially massive profits.
This justification doesn’t hold up as well when millions of lives are at risk. There is now an inelastic demand for a coronavirus vaccine resulting in almost guaranteed profits for an effective vaccine.
Making medicines affordable has turned the tide of epidemics like HIV. Effective regulation can do the same for coronavirus and that is where price controls will get us. Azar should introduce price controls on the companies that have the capacity and know-how to produce vaccines to aid the quick production of an affordable coronavirus vaccine to help stop this pandemic.
If getting the coronavirus doesn’t depend on your income, neither should be getting a vaccine.
Safura Abdool Karim is a senior researcher and health lawyer at the South African Medical Research Council’s Centre for Health Economics and Decision Science. She is a 2020 Aspen Institute New Voices Fellow.