AstraZeneca

From the AstraZeneca comments

Transverse Myletitis has a background incidence of 4/million in the US. Currently there are 2 cases reported out of 18,000 people who have already been administered the vaccine. Of those two, one was diagnosed with concurrent MS (another neurodegenerative autoimmune condition known to cause TM and whose population has a 2000% relative risk increase in developing TM depending on criteria used) and one has not had details released.

With 18,000 data points, a “1%” risk would require there to be 178 missed cases. Odds of that are astronomically low. Much more likely, if there were any real correlation (which again seems rather unlikely) we are looking at something 80+) and would STILL result in fewer deaths than waiting. If the choice were this or letting Covid become endemic with just an influenza fatality rate, this would again be the more ethical choice. Economically 1.1 million being totally disabled would be somewhere around $3 trillion, which again would be vastly cheaper than ending transmission through current social policies. In terms of raw lives lost, a 1% incidence would easily be less than letting Covid run.

People say we need more numbers, but funny enough their doom and gloom scenarios invariably involve scenarios that are necessarily imply that all the trial data to date is spurious and/or that even if true are less deadly than waiting.

And note that this argument has no justification for pausing the trial. With 2 data points, 1 of which is almost certainly spurious for the general population, the solution is to keep administering it.

Reality is that regulators and drug companies are simply not doing a cost benefit calculation that weights the currently dying at all in the US. I am hoping that the drug companies are being amoral profit seekers and are hoping to just browbeat the FDA once the Brits get things settled and the US policy scene (one way or the other) stops being about Mr. Trump.

That is from MR commentator Sure.  And also from him:

The other thing to remember is that a lot of pharma’s actual business is not as much discovery of new entities, rather they buy up rights to a lot of those and then take somebody else’s work through the years long process of approval. For big pharma much of their comparative advantage is in navigating an expensive, byzantine approval process. Take that away and they might face far more competition from smaller firms and potentially foreign firms that can manage the new landscape better.

Lastly, pharma lives in fear of the regulators while trying to suborn them. Going against them FDA bureaucrats (who are unlikely to want to de facto kill their own jobs) risks one of them grinding an axe and slow walking a blockbuster approval or fast walking a biosimilar approval. Either of those actions will easily change the net profit for a pharma firm by more than they could possibly make off a Covid vaccine.

Currently, faster has very little upside for them. They have pre-commitment so they are going to get paid even if they are slow. There are dozen odd vaccines coming down the pike and one, maybe two, will take the lion’s share of the market once the immediate crisis is over. They are mostly doing this to win goodwill and being the guy whose vaccine kills 2,000 people is bad if your competitors kill only 5. From a public health perspective, we would be better with the less safe vaccine a month sooner than the safer vaccine a month later (and ideally we would get both and swap promptly). For the pharma firms, the calculus just goes towards being as slow as the rest of pack and being ungodly thorough.

Perhaps things will improve in a few weeks’ time.

From the comments, on AstraZeneca vaccine trial resumption

America is really, really messed up.

The only place with such intensely wasteful discussions about a disease is the U.S. And it is getting increasingly easy to ignore the U.S. as the world continues to respond to this pandemic.

And it is not just the British based trial. This is from Reuters on Sept. 14 – “Clinical trials for the coronavirus vaccine being developed by AstraZeneca PLC and Oxford University resumed in Brazil on Monday after the country’s health regulator got confirmation over the weekend that its British equivalent MHRA had approved the restart, a company representative said.

The Federal University of Sao Paulo, which is running the trials, said in a statement that 4,600 of the planned 5,000 volunteers have been vaccinated in Brazil without any of them reporting any serious health issues.”

This from the Times of India on Sept 20th -“The phase-III human clinical trial of the COVID-19 vaccine developed by Oxford University and being manufactured by the Serum Institute of India (SII) will begin at the Sassoon General Hospital in Pune next week. Dean of the state-run Sassoon General Hospital Dr Muralidhar Tambe told this to on Saturday.

“The phase-III trial of ‘Covishield’ vaccine will begin at Sassoon hospital from next week. It is likely to start on Monday. Some volunteers have already come forward for the trial. Around 150 to 200 volunteers will be administered the vaccine candidate dose,” he said.

Regulators in Japan and South Africa also have no problem with the trial continuing.

That is from Easy-Peasy.  And I did google to ensure that those claims about foreign trial resumption are correct, for instance Japan resumed no later than October 2.  This is one reason — not the only! — why I am puzzled when Derek Lowe claims on Twitter that American perhaps cannot go any faster with its vaccine.  If you think Japan and the Brits are irresponsible, by all means let us know.  Otherwise…it is time to speak up in favor of maximizing expected value.

The AstroZeneca saga, according to one source

This seems unconfirmed, and do note some sources in the story do not believe this account, but here goes:

AstraZeneca, whose Phase 3 coronavirus vaccine clinical trial has been on hold for more than a month, did not get critical safety data to the US Food and Drug Administration until last week, according to a source familiar with the trial.

The FDA is considering whether to allow AstraZeneca to restart its trial after a participant became ill. At issue is whether the illness was a fluke, or if it may have been related to the vaccine.

The source said the root of the delay is that the participant was in the United Kingdom, and the European Medicines Agency and the FDA store data differently.

“They had to convert data from one format to another format. It’s like taking stuff off a PC and putting it onto an Apple. They had to spend a lot of hours to get what they wanted,” the source said.

On Friday, a federal official hinted there might be some word this week on the trial’s future.

Or maybe they just fooled CNN with it?

Otherwise, good thing we are kept safe from such dangerous data formats!  Would it really not be better to move to reciprocal recognition procedures?  Not to mention a unified data format, or perhaps some FDA methods to read data produced for the EU?

For the pointer I thank Jackson Stone.

And yet the American trial remains suspended

Those nasty, reckless Brits:

The NHS is preparing to introduce a coronavirus vaccine soon after Christmas. Trials have shown it will cut infections and save lives, Jonathan Van-Tam, the deputy chief medical officer, has privately revealed.

He told MPs last week that stage three trials of the vaccine created at Oxford University and being manufactured by AstraZeneca mean a mass rollout is on the horizon as early as December. Thousands of NHS staff are to undergo training to administer a vaccine before the end of the year.

The government changed the law this weekend to expand the number of health professionals able to inoculate the public. The regulations will enable pharmacists, dentists, midwives and paramedics to administer jabs.

C’mon U.S. public health authorities, let’s get on this one and demand a resumption of the suspended AstraZeneca trial.  You are advocates of science, right?  You don’t actually want to make Donald Trump correct, do you?  (Maybe that one will work.)

You don’t have to make it the vaccine, as the Brits seem to be doing, you just have to resume the trial, as the even more reckless Japanese did weeks ago.  How about it?

Here is the article from Times of London (gated, but a cheap and worthwhile subscription for foreigners), via Linda Yueh.

Solve for the rational Bayesian equilibrium

I now read quite a few public health experts on matters of the day, and I have noticed that none of them have condemned the British government for proceeding with the AstraZeneca vaccine trial, even after two adverse health events experienced by participants, noting that those events presumably have been examined and considered by the oversight committee.

At the same time, the American trial for AstraZeneca has remained halted.  I also have not read any public health experts criticizing that decision either.

What is the most likely equilibrium to be holding here?

1. Public health experts don’t express many opinions, especially these days.

2. Plenty of commentators think the British decision to resume is rash, Tyler just isn’t reading enough of them.

3. Most public health experts think it is fine for the British to keep on going.  But they won’t criticize the American trial halt, because their incentives and natural temperamental tendencies are to express mainly the risk-averse opinions, and rarely if ever say that the regulatory process should allow for more risk to be taken.

4. The mainly American experts actually are happy to see America free-riding upon British data, so they are content with things as they stand, but don’t want to quite come out and admit they enjoy exploiting the Brits.

5. In reality the commentators think the whole trial is so risky it never should have been started in the first place.

6. What they really enjoy writing is philosophical pieces about how social process have all these twists and turns, and natural bumps in the road, and so they don’t wish to work too hard to remove those bumps.

7. The public health experts think that Americans and British have optimally different tolerances for risk, and the split regulatory outcomes reflect that difference.

Your choice?

Oxford’s Jenner Institute to Prepare for Challenge Trials for COVID-19

I am one of the signatories to an open letter from 1DaySooner on challenge trials sent to Dr. Francis Collins at NIH. A major development announced with the letter is that 1Day Sooner and Oxford’s Jenner Institute are collaborating to prepare viral production for use in challenge trials.The Jenner Institute is the creator of the AstraZeneca produced vaccine, the vaccine farthest along in development.

A key goal of the letter is to encourage the NIH to start its own preparation for challenge trials:

The undersigned urge the U.S. government…its allies, international funders, and world bodies (e.g. the World Health Organization), to undertake immediate preparations for human challenge trials, including supporting safe and reliable production of the virus and any biocontainment facilities necessary to house participants.

Among the signatories are 15 Nobel prize winners including Oliver Hart and Al Roth, Molecular geneticist Mario Capecchi, professor of medicine William G. Kaelin and physician Barry Marshall (who knows a thing or two about volunteer trials.)

As I discussed earlier, since challenge trials restrict the volunteers to be young and healthy, you can’t apply their results directly to the sick and elderly (the external validity problem) but “challenge trials could help us whittle down [candidate vaccines]… to the best two to three, substantially speeding up the vaccine discovery process.” You could also use challenge trials to help figure out the right dosing which is unusually important in the current situation because if a vaccine can work with .5ml instead of 1ml that’s equivalent to doubling the available supply. The Director of the Jenner Institute, Adrian Hill, agrees writing:

We see considerable potential in the use of human challenge studies to accelerate COVID-19 vaccine development, down-select and help validate the best candidate vaccines, and optimise vaccination approaches.

You can read the whole letter here.

The NIH Should Run Human Challenge Trials for COVID

As I have been warning, social distancing measures are making it more difficult to test COVID vaccines even as the cost of COVID remains very high.

WashPost: The Oxford group earlier boasted that it had an 80 percent chance of developing an effective vaccine by September. Hill said the difficulty of testing the vaccine in Britain may mean there’s only a 50 percent chance of success within that time frame now.

The probability of an Oxford vaccine by September has fallen by 30 percentage points. Oxford isn’t the only vaccine and we may be able to find clinical trial candidates in Brazil and the United States where infections continue to occur. So let’s be generous and convert this into say a 10% increase in a one month’s delay of any vaccine. The world economy is losing $375 billion a month so this means we have lost an expected $37.5 billion. That number highlights why we should be willing to pay large sums to speed vaccines and it also indicates the immense value of human challenge trials.

More than 28,000 people have already volunteered to be part of a challenge trial and if we paid a few hundred volunteers a million dollars each it would be worthwhile (and would surely increase the number of volunteers).

The main impediment to human challenge trials appears to be skittish firms rather than bureaucratic governments which is why challenge trials should test multiple vaccines under the auspices of the NIH. The NIH umbrella can protect the firms and increase the efficiency of the trials.

Addendum: China is adopting a bold approach. We used to be bold. Apathy is killing us.

Operation Warp Speed Needs to Go to Warp 10

Operation Warp Speed is following the right plan by paying for vaccine capacity to be built even before clinical trials are completed. OWS, however, should be bigger and should have more diverse vaccine candidates. OWS has spent well under $5 billion. At current rates, the US economy is losing about $40 billion a week. Thus, if $20 billion could advance a vaccine by just one week that would be a good deal. As I said in the LA Times, “It might seem expensive to invest in capacity for a vaccine that is never approved, but it’s even more expensive to delay a vaccine that could end the pandemic.”

I am also concerned that OWS is narrowing down the list of candidates too early:

NYTimes: Moderna, Johnson & Johnson and the Oxford-AstraZeneca group have already received a total of $2.2 billion in federal funding to support their vaccine programs. Their selection as finalists, along with Merck and Pfizer, will give all five companies access to additional government money, help in running clinical trials and financial and logistical support for a manufacturing base that is being built even before it is clear which if any of the vaccines in development will work.

These are all good programs and one of them will probably be successful but we also want to support some long-shots because a small probability of a very big gain is still a big gain.

The five candidates also all use new technologies and are less diverse than I would prefer. There are a lot of different vaccine platforms, Live-Attenuated, Deactivated, Protein Subunit, Viral Vector, DNA and mRNA among others. The Accelerating Health Technologies team that I am a part of collected data on over 100 vaccine candidates and their characteristics. We then created a model to compute an optimal portfolio. We estimated that it’s necessary to have 15-20 candidates in the portfolio to get to a 80-90% chance of at least one success and that you want diverse candidates because the second candidate from the same platform probably fails if the first candidate from that platform fails. Moderna and Pfrizer are both mRNA vaccines–a platform that has never been used before–while AstraZeneca, Johnson and Johnson and Merck are using somewhat different viral vector platforms (Adenovirus for AstraZeneca and J & J and measles for Merck) which is also a relatively novel approach. I think it would be better if there were some tried and true platforms such as a Deactivated or Protein Subunit vaccine in the mix. As Larry Summers said, “if you will die of starvation if you don’t get a pizza in two hours, order 5 pizzas”. I would change that to order 10 pizzas and order from different companies!

One way to diversify the portfolio is to make deals with other countries to avoid the prisoner’s dilemma of vaccine portfolios. The prisoner’s dilemma is that each country has an incentive to invest in the vaccine most likely to succeed but if every country does this the world has put all its eggs in one basket. To avoid that, you need some global coordination. One country invests in Vaccine A, the other invests in Vaccine B and they agree to share capacity regardless of which vaccine works.

So my critique is that OWS is good policy but it would be even better if more vaccine candidates and more diverse vaccine candidates were part of the program. In contrast, the critiques being offered in Congress are ridiculous and dangerous.

Democrats in Congress are already seeking details about the contracts with the companies, many of which are still wrapped in secrecy. They are asking how much Americans will have to pay to be vaccinated and whether the firms, or American taxpayers, will retain the profits and intellectual property.

How much will Americans have to pay to be vaccinated??? A lot less than they are paying for not being vaccinated! The worry about profits is entirely backwards. The problem is that the profits of vaccine manufacturers are far too small to give them the correct social incentives not that the profits are too large. The stupidity of this is aggravating.

Skepticism about Trump administration policies is understandable but I am concerned that one of the best things the Trump administration is doing to combat the virus will be impeded and undermined by politics.

Fight the Virus!

I was asked by the LATimes to contribute to a panel on economic and pandemic policy. The other contributors are Joseph E. Stiglitz, Christina Romer, Alicia H. Munnell, Jason Furman, Anat R. Admati, James Doti, Simon Johnson, Ayse Imrohoroglu and Shanthi Nataraj. Here’s my contribution:

If an invader rained missiles down on cities across the United States killing thousands of people, we would fight back. Yet despite spending trillions on unemployment insurance and relief to deal with the economic consequences of COVID-19, we have spent comparatively little fighting the virus directly.

Testing capacity has slowly increased, but where is the national program to create a dozen labs each running 200,000 tests a day? It’s technologically feasible but months into the crisis, we have only just begun to spend serious money on testing.

We haven’t even fixed billing procedures so we can use the testing capacity that already exists. That’s right, labs that could be running tests are idle because of billing procedures. And while some parts of our government are slow, the Food and Drug Administration seems intent on reducing America’s ability to fight the virus by demanding business-as-usual paperwork.

Operation Warp Speed is one of the few bright spots. Potential vaccines often fail and so firms will typically not build manufacturing capacity, let alone produce doses until after a vaccine has been approved. But if we follow the usual procedure, getting shots in arms could be delayed by months or even years.

Under Operation Warp Speed, the government is paying for capacity to be built now so that the instant one of 14 vaccine candidates is proven safe and effective, production will be ready to go. That’s exactly what Nobel-prize winning economist Michael Kremer, Susan Athey, Chris Snyder and I have recommended. It might seem expensive to invest in capacity for a vaccine that is never approved, but it’s even more expensive to delay a vaccine that could end the pandemic.

Relief payments can go on forever, but money spent on testing and vaccines has the potential to more than pay for itself. It’s time to fight back.

Alex Tabarrok is a professor of economics at George Mason University and a member of the Accelerating Health Technologies With Incentive Design team.

My point about not fighting the virus directly was illustrated by many of the other panelists. Joseph Stiglitz, Christina Romer, Alicia Munnell, Jason Furman, James Doti, and Shanthi Nataraj say nothing or next to nothing about viruses. Only Anat Admati, Simon Johnson, Ayse Imrohoroglu get it.

Admati supports a Paul Romer-style testing program:

Until effective vaccines and therapies are available, which may be many months away, our best approach is to invest heavily in increasing the capacity for testing many more people and isolating those infected.

Simon Johnson argues, in addition, for antibody tests (not the usual PCR tests):

Policymakers should go all-in on ramping up antibody testing, to determine who has been exposed to COVID-19. Such tests are not yet accurate enough to determine precise immunity levels, but the work of Michael Mina, an immunologist and epidemiologist at Harvard, and others demonstrates that using such tests in the right way generates not just information about what has happened but, because of what can be inferred about underlying disease dynamics, also the information we need to understand where the disease will likely next impact various local communities.

Imrohoroglu advocates for targeted lockdown:

In addition to CDC recommendations about social distancing and public health strategies for all, I believe that as we reopen, we should keep a targeted lockdown policy in place for at-risk groups.

Sweden has lots of wealth inequality

From Tino:

Sweden is viewed as an egalitarian utopia by outsiders, but reality is complex. In some ways Sweden has less social equality than the United States. While the American upper class is largely meritocratic, the upper class in Sweden are still mostly defined by birth.

Historically, Sweden, Norway and Finland alone in Europe never developed Feudalism (Denmark was closer to continental Europe). The Nordic nobility was a small share of the population and not as powerful as the nobility in continental Europe, though still influential. The upper class in Sweden today consists of the nobility and of wealthy bourgeoisie families that socially merged with them. Wealthy bourgeois families live in the same neighborhoods and have adopted similar behavior and identity as the nobility. Despite long Social Democratic dominance they remain a coherent social group, with a distinct and recognizable accent, way of dressing, values etc.

Belonging to the upper-class is not defined merely by wealth, depending more on blood. Just as in historical times, a Nouveau riche member of the middle class will not automatically be accepted as a member of the upper-classes, unless they actively adapt their behavior and are accepted by the upper-classes socially.

The upper classes in Sweden retain a disproportional hold on wealth and power. The formal nobility in Sweden constitutes around 0.2% of the population. A couple of years ago I looked through the list of the wealthiest Swedes. Fully 10% of the richest Swedes are members of the nobility. By contrast not a single one of the richest Swedes was a non-European immigrant. Of Sweden’s prime-ministers Sweden during the modern era 20% belonged to the nobility.

Sweden is known for income equality. Increasingly, studies also point to Sweden as a country characterized by high intergenerational mobility of income. Income-distribution and wealth distribution are however not the same thing. What some may not know is that wealth-inequality is relatively high in Sweden. The top one percent own around 35% of wealth in the United States. In Sweden, because of extensive tax evasion, the number is harder to calculate. When including estimates of wealth held outside of Sweden, Roine and Waldenström estimate that the top one percent richest Swedes own 25-40% of total wealth, not far from American inequality levels, and increasing more rapidly.

At the same time, the intergenerational mobility of top wealth is chokingly low. A recent studyfound that a astonishing 80-90% of inequality of top wealth is transmitted to the next generation in Sweden!

According to one studythe share of the richest Swedes who inherited their wealth is around, 2/3 with 1/3 being entrepreneurs, while in the United States it was the opposite, with 1/3 of the wealthiest inherited their wealth while around 2/3 are entrepreneurs.

Thus while the Swedish middle class is large and has a compressed earning distribution, at the very top you have a small number of aristocratic families controlling much of the wealth. Mobility into this group is rare, probably rares than it is in the United States. One reason are stronger informal class-barriers, merely earning wealth is not enough to be accepted a member of the aristocratic upper-class. Another more interesting reason may be the unintended effect of welfare-state economic policies.

During the era of Social Democratic dominance, they wondered how to deal with wealth inequality. The dilemma facing the Social Democrats was this: The upper-class business families did a very good job managing Swedish export industry, the key to Sweden’s wealth. This is especially true for the Wallenberg family, the leading industrial family in Sweden, controlling amongst others ABB, Ericsson, Electrolux, Atlas Copco, SKF, AstraZeneca and Saab and doing an excellent job.

The Social Democrats decided to accept the unequal distribution of assets, but simply make these assets worth less using punitive high tax rates. Because of high inflation capital taxes were often 80-100%.

The upper-class families still owned most of private industry, but because of taxes those assets were simply not worth much. Paradoxically the high taxes and capital regulations which prevented foreign investments seem to have helped freeze the asset distribution into place, with the share of wealth owned by the rich being fairly constant between 1970 to the 1990s.

The OECD also reports that Sweden is quite unequal in wealth, hat tips go to Old Whig and Luis Pedro Coelho.

Me-Too Drugs

At Tyler’s prompting I will have several posts this week on me-too drugs.  It’s a difficult area but one that I have been thinking about.  Why are me-too drugs bad, even though competition is ordinarily good?  The reason is that when an industry is characterized by market power and price exceeds marginal cost the private returns to innovation may exceed the social returns.

Here’s a simple model.  I own a profitable gold mine.  You buy some land nearby and begin to dig but instead of finding your own gold you tunnel underneath my land and steal my gold – you undermine my profits.   Now this may be very profitable to you but as far as society is concerned your digging is wasted effort.  You expended resources not to increase production but simply to transfer profit from me to you.  The prospect of stealing my gold attracts too much entry (and the threat of this may in turn cause me to invest less in the first place).

A patent on a blockbuster drug is like a gold mine.  Me-too drugs undermine the profit from the blockbuster.  The R&D that goes into the me-toos is thus a social waste.

The gold-mine problem is the economic case against me-too drugs.

The gold-mine model leads to some surprising insights.  Me-too drugs are bad because resources are used to undermine someone else’s profits.  But a firm won’t undermine it’s own profits.  Thus, a firm’s own "me-too" drugs are not an example of the gold-mine problem.

AstraZeneca introduced Nexium just as their drug Prilosec was going off patent.  Nexium is very similar to Prilosec and for almost all patients it offers few additional benefits – it is widely cited as a me-too drug.  The Nexium problem, however, is quite different from the gold-mine problem.  The Nexium problem is, Why do people buy the expensive brand when the cheap generic would be just as good?  The Nexium problem is that customers think, or act is if they think, that Nexium is not a me-too drug. 

In contrast, in the statin market there is Zocor, Lipitor, Pravachol, Lescol and Crestor.  Even if consumers thought these drugs were me-toos, each of them would still have a market.  Here the problem is, or appears to be, the gold-mine problem.

Solutions to the Nexium problem, such as better informed patients or getting consumers to pay a larger share of their drug purchases, do not necessarily solve the gold-mine problem.    

In a future post, I will look at some solutions to the gold-mine problem.  I will also look more closely at whether the pharmaceutical market fits the assumptions of the model.