Publicly funded vaccines must be priced fairly and available for all
Researchers worldwide are scrambling to develop coronavirus vaccines. More than 140 candidates are being advanced with all possible speed by research teams from small academic labs and big drug companies alike. While the Trump administration is pushing developers to meet faster timelines, providing supports in the form of favorable legislative measures and more than $7 billion in taxpayer funding so far, it hasn’t addressed an equally urgent question: What will be done to ensure vaccines are accessible for those who need them most? It is amazing that the answer is not yet determined, considering the gravity of the situation.
With all these candidates being advanced, the likelihood of more than one safe and effective vaccine being developed could lead to some competition that would benefit pricing. But the pattern in the past has been that a competitor exits the market once a successful vaccine has been established. That leaves one company with a patent and the freedom to set price and secure indemnification from injuries resulting from vaccines. This gives vaccine marketers advantages that no other type of American company has and which raise complex issues.
These advantages are manifested in several different ways. Developers are helped by the strongest lobby in American politics. Big pharma, which spent $295 million on lobbying in 2019 — twice as much as the next biggest spender, exerts more influence and has more freedom over setting prices than any other industry.
Lobbying has also increased pharma’s influence in the UK and Europe, where big pharma’s main lobbying group sits on eight EC main-advisory bodies. Observers note that the 40 million euros spent on lobbying the EU in 2019 resulted in restricted access to medications as increased prices made them unaffordable for many and drove insurer costs higher.
According to the World Health Organization, a typical immunization schedule in developing countries — including measles, polio, and tuberculosis vaccines — now often costs less than 10 percent the prices in Europe or the U.S., where pharmaceutical companies often base prices not on their development costs, but on the benefit they believe a vaccine brings. Old vaccines have been reformulated with higher costs; new ones have entered the market at once-unthinkable prices. Since 1986, the average cost to fully vaccinate a child with private insurance to the age of 18 has risen from $100 to $2,192, according to CDC data. Even with deep discounts, costs to the federal government — which buys half of all vaccines for the nation’s children — have increased.
Lobbyists have also helped create protective laws, like the Bayh-Dole Act, which guards manufacturers’ vaccine patents, and programs that limit vaccine company liability. A 2018 ruling by the U.S. Supreme Court insulates vaccine manufacturers from state lawsuits. While several of these provisions are necessary, together they give the industry advantages which no other type of American company has, and that makes it difficult to justify the prices they charge for their vaccines created with public money.
For example, vaccine prices have gone up in recent years. Developed in the 1920s, tetanus vaccinations still cost little — less than $35 a shot, according to the CDC. But a single dose of Gardasil, a Merck HPV vaccine approved in 2006, costs nearly $230 out-of-pocket.
Other drugs, such as HIV medication AZT, which costs $21,000 per year — more than 350 times the cost of generic versions available in other countries, and the cancer treatment Kymriah, which Novartis now sells for $475,000 per treatment, are astronomically priced. The irony is that taxpayers subsidized the development of these drugs and many more.
Since the 1930s, the NIH has put some $900 billion taxpayer dollars into research that drug companies patented, selling as proprietary, brand-name products, reaping profits in most cases without repaying the funding.
The federal government spent $484 million developing the cancer drug Taxol, marketed under licensing agreement with Bristol-Myers Squibb, which since 1993 has sold $9 billion worth of Taxol worldwide; the National Institutes of Health has only received $35 million in royalties from the agreement. In fact, every drug approved by the FDA from 2010 to 2016 benefitted from science that taxpayers funded to the tune of more than $100 billion, according to advocacy group Patients for Affordable Drugs.
The Trump administration’s Operation Warp Speed program, meant to vastly accelerate the development and production of effective vaccines, selected five vaccine projects to receive billions in federal funding before there’s proof their vaccines work.
Three Warp Speed candidates Moderna, Astra Zeneca/Oxford University, and J&J/Beth Israel Deaconess Medical Center have so far received about $2.2 billion in taxpayer’s funds with more funding on the way. Novavax, which has never brought a product to market before, recently received $1.6 billion from the Trump administration. Contracts with each candidate are opaque; many fear that lobbyists have exerted influence on the process and it is not known if the companies are under any obligation to repay the money, though it’s possible that a licensing arrangement similar to Taxol’s would be employed.
We know that developers’ costs are high. A Coalition for Epidemic Preparedness Innovations study in The Lancet found that cost of developing a single infectious disease vaccine from preclinical trials through to the end of phase 2a as high as $68 million, and that average cost of advancing an infectious disease vaccine from preclinical through the end of phase 2a could run as high as $469 million. But drug companies’ investment and total costs (including marketing) vs. profits are not often transparent.
Lawmakers and patient advocates are rightly concerned about the ability to leverage successful vaccines to reach the broadest number of patients at the lowest possible cost. However, recently passed laws tend to favor vaccine companies.
Though some Republicans and congressional Democrats did their best to prevent it, the pharmaceutical lobby successfully inserted language into the $8.3 billion coronavirus relief package authorizing federal agencies to grant exclusive licenses to companies that develop vaccines with taxpayer money, essentially creating virtual monopolies for patent holders. In addition to securing more than $3.1 billion in publicly funded grants supporting vaccine development and manufacturing, lobbyists also added language to the bill that prevents the government from delaying a vaccine’s development over concerns about its affordability — giving manufacturers carte blanche in setting the price. Vaccines, once lost leaders, have turned into cash cows.
In February, Health and Human Services (HHS) Secretary Alex Azar seemed to confirm that when it came to pricing, all bets were off when he said, despite public funds being used to develop them, vaccines might not be affordable to all who need them. He dismissed the idea of using price supports to ensure that poor people would have access to the vaccine.
That approach cannot stand, and while some vaccine developers have told Congress that they would make a low-cost option available, exactly who would pay for it hasn’t been shared. When public funds are used to develop vaccines, a condition must be that vaccines are made accessible to all. This can be achieved through a variety of factors including price supports, fostering competition, must-carry agreements with payers, increasing the negotiating power of HHS, and other approaches designed to bring balance to the equation. The public-private partnerships that exist today around vaccines do not appear to support solutions that work, or which the public, at home or around the world, can afford.
Jonathan Fielding, M.D., is a UCLA professor of Health Policy and Management. He headed public health for Massachusetts and Los Angeles County.
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