Moderna’s $130 Vaccine And The Path To Cheap Drugs – OpEd

According to news reports, Moderna is considering a price in the range of $110 to $130 for shots of its Covid booster. People may recall that we paid Moderna close to $450 million to develop its Covid vaccine. We then paid another $450 million for the clinical trials that were needed to determine its effectiveness.

Moderna has already made a good return on our tax dollars, selling the initial set of shots at around $20 a piece. According to Forbes, the company’s soaring stock price had already produced five billionaires by the summer of 2021.

Who knows how many Moderna billionaires we will have if the company gets away with charging $110-$130 for its new booster. Of course, this money will come out of the pockets of the rest of us, or at least those of us who are not prevented from getting boosters by these high prices.

Fortunately, there is an alternative if the Biden administration is prepared to challenge Moderna and drug companies more generally on their monopoly pricing.  Peter Hotez and Elena Bottazzi, two highly respected researchers at Baylor University and Texas Children’s Hospital, developed a simple to produce, 100 percent open-source Covid vaccine. It uses well-established technologies that are not complicated (unlike mRNA). Their vaccine has been widely used in India and Indonesia, with over 100 million people getting the vaccine to date.

If we want to see the vaccine used here it would need to be approved by the Food and Drug Administration (FDA). In principle, the FDA could rely on the clinical trials used to gain approval in India, but it indicated that they want U.S. trials. (In fairness, India’s trials are probably lower quality.)[1]

However, the government could fund a trial of Hotez-Bottazzi vaccine (Corbevax) with pots of money left over from Operation Warp Speed, or alternatively from the budgets of National Institutes of Health or other agencies like Biomedical ​Advanced Research and Development Authority (BARDA). With tens of billions of dollars of government money going to support biomedical research each year, the ten million or so needed for a clinical trial of Corbevax would be a drop in the bucket.

The arithmetic on this is incredible. Shots of Corbevax cost less than $2 a piece in India. If it costs two and a half times as much in the U.S., that still puts it a $5 a shot. That implies savings of more than $100 a shot. That means that if we get 100,000 people to take the Corbevax booster, rather than the Modern-Pfizer ones (Pfizer is planning to also charge over $100 for its booster), we’ve covered the cost of the trials. If we get 1 million to take Corbevax, we’ve covered the cost ten times over, and if 10 million people get the Corbevax booster, we will have saved one hundred times the cost of the clinical trial. 

There is also the advantage that, since at least some of the reason for vacine hesitancy is fears of mRNA vaccines. We may get some vaccine hesitant people to take Corbevax, who wouldn’t take the mRNA vaccines.

It is understandable that the pharmaceutical industry would be very unhappy if the Biden administration were to put up the money for a clinical trial of Corbevax. Not only would FDA approval seriously cut into the gold mine they were anticipating from selling boosters at more than $100 a shot, it would also be a dangerous example for the industry.

It would show that it is possible to develop effective vaccines without relying on government-granted patent monopolies. (Hotez and Bottazzi supported their research on small grants from the government and private foundations.) And, it would be a great reminder that vaccines (and drugs) are cheap. It is rare that it is actually expensive to manufacture and distribute a drug or vaccine. Drugs are expensive because we give companies patent monopolies, or other forms of protection.

If we pay for the research up front, we don’t have to gouge patients to recover development costs. And, we don’t give drug companies an enormous incentive to lie, cheat, and steal to maximize the value of their patent monopolies.

The Biden administration has a great opportunity to hugely advance public health, and set an incredibly important example, by putting up the money for a clinical trial of Corbevax. Bernie Sanders, as chair of the Senate Health Committee, can also get on the case. He has been critical of Moderna for charging outrageous prices for a vaccine developed with taxpayer money.

Sanders’ anger is quite justified. But rather than just haranguing the company into lowering its price, we can take away its ability to get away with charging $130 a shot by giving them some competition. Competition is great for capitalism, even if it may not be good for individual capitalists.

Notes:

[1] It seems as though the pharmaceutical industry may also be working to slow the use of Corbevax outside of the United States. Hotez and Bottazzi have been unable to get the World Health Organization (WHO) to move on their request for pre-qualification, which they submitted back in June. They have been given no reason for the delay. This matters hugely for developing countries, because their health agencies are reluctant to approve a vaccine that the WHO has not pre-qualified.

This first appeared on Dean Baker’s Beat the Press blog.