The pharmaceutical industry, which has seemed in the public reputation at the point of recent decades, is currently engaged in a “can do nothing wrong” phase.
This is because of the success of developing COVID vaccines – not one, but several.
The vaccines rolled out by Pfizer, Moderna, AstraZenica and other companies have some features that have brought the management of Big Pharma to the testimony tables of the congressional committees.
Moderna’s announcement not to enforce patents during the pandemic may be enough to get good press, but it is not enough to ensure that people have access to this vaccine at an affordable price.
Doctors Without Borders
These are not copier formulas designed to artificially extend patents or generic drug manufacturers. They are not praised in the extravagant stratosphere. It is known that they work better than any alternative, rather than being just as good with therapies or medications that are already on the market.
But especially the manufacturing and distribution practices of Pfizer and Moderna – they are the first companies with hitherto approved vaccines in the USA – are rightly mentioned.
According to investment analysts’ projections, the companies will earn billions of dollars this year from their COVID vaccines. Since the vaccines are unlikely to cure 100%, or the virus that causes the disease will be eradicated, there will be gains later.
Although no one is saying that the companies should not collect any profit from the COVID vaccine at all, this leaves open the question of how much is enough? Neither Pfizer nor Moderna answered my specific questions about their revenue or profit expectations from the vaccine. More about this below.
More than just money is at stake. Pfizer and Moderna also claim the rights to large quantities of intellectual property that will be useful, if not necessary, for others to develop vaccines in the future.
Moderna said he would not apply his patents to the vaccine for the duration of the pandemic, but he did not make the same commitment to the intellectual property associated with the messenger RNA technology, the key to the COVID vaccine.
This announcement has given rise to health advocacy groups. Médecins Sans Frontières, for example, called on Moderna and other drug companies “not to impose intellectual property (CO) on COVID-19 instruments at any stage – not just patents – as knowledge, technology and other components of development of vaccines and manufacturing can still be protected under the IP rules. “
The organization said the rules would limit the availability of vaccines around the world as long as they remain in force.
“Moderna’s announcement not to enforce patents during the pandemic may be enough to get good press, but it’s not enough to make sure people have access to this vaccine at an affordable price,” he said. the organization said.
Pfizer has not entered into any connection with its vaccine patents or IP.
I have already written about the stranglehold that Pfizer and Moderna maintained on the manufacture of their COVID vaccines, even though US taxpayers paid billions of dollars for the basic research and early development of the technology.
The sad harvest of this system is already visible in the deployment of the vaccines, which has happened much more slowly than even the most pessimistic forecasts of the federal government.
Some of the failure is due to the distribution of doses already produced; the blame for that belongs to the feds. But it is also clear that the pace of production did not meet demand. And that is the responsibility of the drug companies.
On Sunday, Moncef Slaoui, the scientific chief of the government’s Operation Warp Speed Vaccination Program, proposed expanding the supply of the Modern vaccine by halving the recommended dose for people between the ages of 18 and 55. “It means ‘the goal is to immunize the double number of people with the doses we have,'” he said.
Pfizer and Moderna spoke positively and enthusiastically about the deals they have made with other manufacturers to manufacture their vaccines. But the federal government had the opportunity to act with its own manufacturing agreements and circumvent patent or license claims.
The Bayh-Dole Act of 1980 gives the government ‘in-March’ rights to issue licenses on federally funded patents if it believes corporate patent holders are not acting in the public interest.
Another federal law, known as Article 1498, grants the government immunity from patent claims when it provides that infringement serves the public benefit; the patent holder is entitled to ‘reasonable compensation’.
As Tricia Neuman and colleagues from the Kaiser Family Foundation reported in 2019, the government can authorize the production of an equivalent, cheaper product provided the patent holder receives royalties. ‘
Article 1498 has not been used for drugs for decades, but for other products. George W. Bush threatened to force Bayer to lower the price of the antibiotic Cipro during the 2001 anthrax scare.
But there is no evidence that President Trump even threatened, and even less argued, Article 1498, to secure the vaccine supply or enforce the price Pfizer and Moderna are asking the government for the hundreds of millions of doses they give through the government contract.
Although the vaccine must be delivered free of charge to Americans, the government pays the highest dollar for the drugs. Pfizer’s 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 about $ 15 per dose.
The actual production cost is much less. Geoffrey Porges of SVB Leerink estimated that Pfizer’s profit margin on its vaccine will be 60% -80%.
This is clearly excessive for a product with guaranteed global demand, especially one that is heavily based on government investment.
Pfizer boasts that it has not accepted any operating financing from Operation Warp Speed for its vaccine (although the $ 1.95 billion manufacturing contract from the program has certainly reduced the risk).
But federally funded and applied research at the National Institutes of Health, the Department of Defense and academic laboratories has laid the foundation for mRNA technology. In fact, almost no medicine reaches the US market without such funding.
The federal funding of the Moderna effort was even deeper: the company worked directly with Barney Graham of the NIH to develop its vaccine and received federal grants totaling $ 1 billion during the development and trial stages.
“We paid the cost of Moderna’s research and testing costs completely, so they had nothing to recover,” said economist Dean Baker of the Center for Economic and Policy Research, which closely follows the folly of U.S. patent and licensing rules .
Although Pfizer paid its own development costs, its partner in the vaccine project, BioNTech, in Germany, received $ 600 million from the German government.
“If Moderna sells 500 million doses, for example at an average price of $ 15, they put $ 7.5 billion into a project where they actually raised no money and took no risk,” Baker notes. ‘Suggest a similar number for Pfizer, although it could have raised about $ 750 [million] in research and trial costs. ‘
Both companies boast the financial potential of their vaccines. Wall Street estimates that the companies will collect $ 32 billion in vaccine revenue this year alone. Moderna said it expects $ 4 billion in cash flow to be generated by the end of this year, he said in an earnings presentation in October.
“Modern reserves global rights to develop and commercialize mRNA-1273 [the COVID vaccine], “on which he” has no profit sharing with a partner “, the company said – unlike Pfizer, which will share its profits with BioNTech.
Pfizer was unsatisfactory about its gain by the virus. When asked by Barron in July whether the company should abolish any profits, CEO Albert Bourla called the view ‘very wrong … You have to be very fanatical and radical to say something like that now … Who finds the solution? The private sector found the solution for diagnostics, and the private sector found the solution for therapy [the] way to find more solutions for therapy and vaccines. “
The notion that the ‘private sector’ has achieved all this on its own is the basis of the pharmaceutical position that it deserves everything it can get.
But this is wrong. None of the diagnostic, therapeutic or vaccines would exist if the US and other developed countries did not fund research before the companies intervened. The role of public funding in drug development has been an open secret for decades.
Its role in the development of COVID vaccines should not escape research – and the private sector should repay it. Patent and IP rights are also worth billions, and taxpayers need to get their share.
This story originally appeared in the Los Angeles Times.