Contagious Disease Pharmaceuticals Public Policy

Does the government really need to provide financial support for COVID vaccine development?

Based on an a medRχiv working paper by Vu by et al. (2020), the answer from an analysis of other emerging infectious diseases (EIDs) is an overwhelming ‘yes’. The authors analyze hypothetical investment returns of a portfolio of 141 pre-clinical emerging infectious disease (EID) vaccine development programs across different emerging infections without a vaccine. These 9 diseases of interest that were modeled include: CCHF, Chikungunya, Lassa, Marbur, MERS, Nipah, RVF, SARS, and Zika. Their analysis found that:

The cost and risk of R&D programs and uniquely unpredictable demand for EID vaccines have discouraged vaccine developers, and government and nonprofit agencies have been unable to provide timely or sufficient incentives for their development and sustained supply. We analyze the economic returns of a portfolio of EID vaccine assets, and find that under realistic financing assumptions, the expected returns are significantly negative, implying that the private sector is unlikely to address this need without public-sector intervention. 

Note that prior to COVID, we observed trend towards fewer life science companies willing to engage in vaccine R&D. A prescient STAT news article from January stated “Drug companies don’t have much financial incentive to invest research and development dollars into new vaccines and antibiotics, leaving the world vulnerable to future pandemics.”

The authors proposed some approaches to better incentivize vaccine development through either with higher prices, enhanced public‐private partnerships (e.g., government-backed guarantees), and subscription models. Due to the significant externalities, vaccine development is an area where public-private partnership is highly desirable.

Leave a Reply

Your email address will not be published. Required fields are marked *