The Trump administration’s Operation Warp Speed is on a spending spree to find an FDA-approved vaccine for the coronavirus by the end of 2020 or early 2021, but while the government may be footing the bill now, Americans should be worried about how much this will all cost us in the long run.
The United States has already spent over $9 billion dollars on research and development across 7 companies, all of which are racing toward a product that promises billions of dollars in revenue to whoever gets to the finish line first.
Moderna, who is predicted to supply 40% of the U.S.’s vaccine supply, has received $2.48 billion in government funding so far, despite never having produced a successful vaccine in the company’s 10-year history, and despite President Stephen Hoge telling lawmakers that Moderna has no intention of selling the vaccine to the public at cost, even though it is the public who has financed their entire operation.
Dr. Hoge is no stranger to drug portfolio valuation. He was hired by Moderna after serving as partner at McKinsey and Company, a management consultant group famous for eliciting mind-numbing profits and keeping out of the public eye, even though McKinsey currently serves 90 of the world’s 100 largest corporations and has been a not-so-secret actor managing autocrats around the world.
Perhaps the scariest detail of all is Hoge’s excitement about joining Moderna on the premise that the company’s technology has the potential to be an “industry disruptor,” a trendy term usually associated with upstarts who wish to replace industry standards with their own, which translates into a whole lot of money, especially in the pharmaceutical industry, especially during a pandemic.
Some companies with deals through OWS, including Johnson & Johnson and AstraZeneca, have already pledged to produce millions of doses at cost—about $15 and $4 per dose, respectively—but other players fully intend to profit from a market made desperate by fears of infection and realities of mass unemployment.
“We recognize that these are extraordinary times and our pricing will reflect that.” Pfizer’s Chief Business Officer John Young said at a congressional hearing last month.
And though Pfizer’s research is not currently funded by taxpayer dollars, Young’s statement points to major flaws in the U.S.’s approach to healthcare on the whole, an approach that allows companies to charge Americans in both pre- and post-production, and to make fabulous profits doing so.
Since the 1960’s, drug development has become one of the most bankable industries in the world, and that is in large part due to the fact that manufacturers not only protect their developmental data from negotiations on cost, but they also maneuver “exclusive licenses”—in other words, monopolies—on drugs and treatments that can be priced however the manufacturer pleases.
This, coupled with extensive government funding, has lead the pharmaceutical industry to a heart-stopping gross profit margin of 76.5% on average.
How has this happened? Milton Friedman might have said it best in 1970, when he argued that businesses cannot exercise “social responsibility” without doing so on the stockholder’s dime.
The result? A business-centered model of drug production that prizes profits over accessibility, persuasive marketing over solid results, and a network of private insurance companies that would rather pass the cost down to the consumer than provide coverage for the patients they are supposed to insure.
Which makes Hoges’ appointment at Moderna, and the company’s 2020 market cap increase from $7 billion to $30 billion, that much more threatening.
As Operation Warp Speed continues to, in their own words, diversify their vaccine portfolio, companies like Novavax and Vaxart have seen their stock prices soar, which has lead industry insiders and company executives to hundreds of millions of dollars in instant profits thanks to deals—or in some cases, just meetings—with OWS and optimistic—if not well-timed—press releases.
Not that any of this qualifies as insider trading.
And in a country where vaccines routinely cost anywhere from $25 to $225 per dose, there is a major chance that we will be paying top dollar for a vaccine whose development we paid for, and that is being sold for pennies on the dollar to everyone but us.
So yes, leading pharmaceutical companies are deeply invested in finding a vaccine and being the first to do so.
After all, extraordinary times call for extraordinary profits.
And if this is indeed a war on COVID, we must take a hard look at those geared toward benefiting from it. Because an industry that has its heart set on a “decent” profit margin of 60% to 80% during the pandemic, and that intends to price vaccines at market value after the pandemic is over, cannot be trusted to do the right thing without astronomical financial incentives.
And that, in layman’s terms, is war profiteering 101.
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