The pharmaceutical industry, which has occupied the last place in its public reputation for what seems like decades, is currently entering a “can’t go wrong” phase.
This is due to his success in developing COVID vaccines – not one, but several.
The vaccines being launched by Pfizer, Moderna, AstraZenica and other companies lack some of the qualities that have brought Big Pharma executives to the witness tables of Congressional committees.
Moderna’s announcement of not enforcing patents during the pandemic may be enough to get good publicity, but it is not enough to guarantee that people will have access to this vaccine at an affordable price.
Doctors Without Borders
They are not copied formulas designed to artificially extend the company’s patents or generics manufacturers for hamstrings. They are not priced in the extortion stratosphere. They are known to work better than any alternatives, instead of being as good at therapies or drugs already on the market.
However, the manufacturing and distribution practices of Pfizer and Moderna in particular – they are the first companies with vaccines approved in the United States so far – are already being questioned, and with good reason.
Companies are expected to earn billions of dollars in profits from their COVID vaccines this year, according to forecasts by investment analysts. Since vaccines are unlikely to provide 100% cure or eradicate the disease-causing virus, there will be more profits in later years.
While no one is saying that companies shouldn’t make any profit from the COVID vaccine, does that leave the question of how much is enough? Neither Pfizer nor Moderna answered my specific questions about their expectations of revenue or profit from the vaccine. More on that below.
More than just money is at stake. Pfizer and Moderna also claim rights to large amounts of intellectual property that will be useful, if not necessary, for others to develop vaccines in the future.
Moderna said it will not enforce its patents on the vaccine during the pandemic, but has not made the same commitment to intellectual property linked to its messenger RNA technology, the key to the COVID vaccine.
That announcement drew fire from health advocacy groups. Doctors Without Borders, for example, appealed to Moderna and other pharmaceutical companies “not to impose any intellectual property (IP) on COVID-19 tools at any point – not just patents – from know-how, technology and other components of development vaccines and manufacturing can still be protected by IP rules. “
As long as they are in place, the organization said, these rules will limit the availability of vaccines worldwide.
“Moderna’s announcement of not enforcing patents during the pandemic may be enough to get good press, but it is not enough to guarantee that people will have access to this vaccine at an affordable price,” said the organization.
Pfizer has made no commitment regarding vaccine or IP patents.
I have already written about the bottleneck that Pfizer and Moderna have maintained in the manufacture of their COVID vaccines, although American taxpayers have paid billions of dollars for basic research and the initial development of the technology.
The sad harvest of this system is already visible in the implementation of vaccines, which has been occurring much more slowly than the most pessimistic projections of the federal government.
Part of the fiasco is due to the irregular distribution of doses already manufactured; the fault of that belongs to the feds. But it is also clear that the pace of manufacturing has not met demand. And that is the responsibility of pharmaceutical companies.
On Sunday, Moncef Slaoui, the scientific head of the government vaccine program Operation Warp Speed, proposed to stretch the supply of the Modern vaccine by cutting the recommended dose in half for people between 18 and 55 years. That means “reaching the goal of immunizing twice as many people with the doses we have,” he said.
Pfizer and Moderna spoke positively and enthusiastically about the agreements they made with other manufacturers to produce their vaccines. But the federal government had the opportunity to step up its own manufacturing business, bypassing patent or licensing claims.
The Bayh-Dole Act of 1980 gives the government “marching” rights to issue federally funded patent licenses if it believes that corporate patent holders are not acting in the public interest.
Another federal law known as Section 1498 grants the government immunity from patent claims when it determines that the violation serves the public good; the patent holder is entitled to “reasonable compensation”.
As Tricia Neuman and colleagues at the Kaiser Family Foundation reported in 2019, the government can authorize the production of an equivalent, lower-priced product, as long as the patent holder receives royalties. “
Section 1498 has not been used for drugs for several decades, but it has been used for other products. George W. Bush used it as a threat to force Bayer to lower the price of the Cipro antibiotic during the 2001 anthrax scare.
But there is no evidence that President Trump has even threatened, let alone invoked, Section 1498 to secure the supply of vaccines or to force the price reduction Pfizer and Moderna are charging the government for the hundreds of millions of doses they are providing government contract.
Although the vaccine should be distributed free to Americans, the government is paying what seems expensive for the drugs. The Pfizer government contract for 100 million doses sets the unit price at about $ 20 per dose. Moderna’s two contracts for 100 million doses each are set at around $ 15 per dose.
The actual cost of production is much less. Pfizer’s profit margin on its vaccine will be 60% -80%, estimated Geoffrey Porges of SVB Leerink.
This is clearly excessive for a product with guaranteed worldwide demand, especially one based heavily on government investment.
Pfizer is proud to have not accepted any development financing from Operation Warp Speed for its vaccine (although its $ 1.95 billion manufacturing contract with the program has certainly reduced its risk).
But basic and federally funded research at the National Institutes of Health, the Department of Defense and academic labs created the basis for mRNA technology. In fact, almost no drug reaches the market in the United States without this funding.
Federal funding for Moderna’s effort went even deeper: the company collaborated directly with NIH’s Barney Graham on the development of its vaccine and received federal funding totaling nearly $ 1 billion during the development and testing stage.
“We fully paid for the research and testing costs of Moderna, so they had nothing to recover,” said economist Dean Baker of the Center for Economic and Political Research, which closely follows the madness of US patent and licensing rules.
Although Pfizer pays its own development costs, its partner in the vaccine project, BioNTech, based in Germany, received $ 600 million from the German government.
“If Moderna ends up selling 500 million doses, say, at an average price of $ 15, they will be pocketing $ 7.5 billion in a project in which they effectively did not put money in and took no risks,” notes Baker. “Calculate a comparable number for Pfizer, although it may have generated about $ 750 [million] in research and test costs. “
Both companies have boasted about the financial potential of their vaccines. Wall Street estimates that companies will raise $ 32 billion in vaccine revenue this year alone. Moderna said it expects $ 4 billion in cash flow from September 2020 to the end of this year, the company said in an October earnings release.
“Moderna holds worldwide rights to develop and commercialize mRNA-1273 [the COVID vaccine], “in which it faces” no profit sharing with a partner, “said the company – unlike Pfizer, which will share its profits with BioNTech.
Pfizer did not apologize for its gains from the virus. Asked in July by Barron’s whether the company should forgo any profits, CEO Albert Bourla called this view “very wrong … You need to be very fanatical and radical to say something like that now … Who’s finding the solution ? The private sector has found the solution for the diagnosis, and the private sector has found the solution for the therapy and is together [the] way to find more therapeutic solutions and vaccines. “
The notion that the “private sector” achieved all of this entirely on its own is the foundation of the pharmaceutical industry’s position that it deserves everything it can get.
But it is wrong. None of its diagnoses, therapies or vaccines would exist if the United States and other developed countries had not funded the research before companies intervened to exploit it. The role of public funding in drug development has been an open secret for decades.
Their role in the development of COVID vaccines must not escape scrutiny – and the private sector must be compelled to reciprocate. Patents and intellectual property rights are worth billions too, and taxpayers should get their share.
This story originally appeared in the Los Angeles Times.