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Self-recommending, here is the transcript, audio, and video. Here is part of the summary:
Michael joined Tyler to discuss the intellectual challenge of founding organizations, applying methods from behavioral economics to design better programs, how advanced market commitments could lower pharmaceutical costs for consumers while still incentivizing R&D, the ongoing cycle of experimentation every innovator understands, the political economy of public health initiatives, the importance of designing institutions to increase technological change, the production function of new technologies, incentivizing educational achievement, The Odyssey as a tale of comparative development, why he recently transitioned to University of Chicago, what researchers can learn from venture capitalists, his current work addressing COVID-19, and more.
Here is one excerpt:
COWEN: I’ve seen estimates — they’re actually from one of the groups you founded — that a deworming pill could cost as little as 50 cents a year per person in many parts of Africa. So why isn’t deworming done much more?
KREMER: You could say the glass is half empty, you can say it’s half full, or you can say it’s almost three-quarters full. I think it’s about three-quarters full. When I first got involved in deworming, it was testing a small NGO program. We found phenomenal effects of that. The original work found health gains and education gains. Now we’ve tracked people over 20 years, and we’re seeing people have a better standard of living or earning more.
Following the early results, we presented the results of the government of Kenya to the World Bank. Kenya scaled this up nationally, in part with assistance from the World Bank, primarily just in conveying some of that information.
Indian states started doing that, and then the national government of India took this on. They’re reaching — a little bit harder to know the exact numbers — but probably 150 million people a year. Many other countries are doing this as well, so it’s actually quite widely adopted.
COWEN: But there’s still a massive residual, right?
KREMER: That is for sure.
COWEN: What’s your best explanatory theory of why the residual isn’t smaller? It would seem to be a vote winner. African countries, fiscally, are in much better shape than they used to be. They’re more democratic. Public health looks much better. The response to COVID-19 has probably been better than many people expected, say, in Senegal, possibly in Kenya. So why not do deworming more?
KREMER: The people who have worms are pretty poor people. The richer people are less likely to have worms within a given society. Richer people are probably more politically influential.
There’s also something about worms — they gradually build up in your body, and one worm is not going to do that much damage. The problem is when you’ve got lots of worms in your body, and even there, it’s going to take time.
I’ve had malaria. I don’t think I’ve had worms. I hope I haven’t. When you have malaria, you feel terrible. You go from feeling fine to feeling terrible, and then you take the medicine. You feel great afterwards. With worms, it’s much more like a chronic thing, and when you expel the worms from your body, that’s sort of gross. I don’t think, even at the individual level, do you have quite the demand that would be commensurate with the scale of the problem. That’s a behavioral economics explanation.
I think there are political issues and then there are behavioral issues. I would actually say that a huge, huge issue . . . This sounds very boring, but this falls between the Ministry of Health and the Ministry of Education, and each one of them has different priorities. The Ministry of Health is going to be worried about delivering things through clinics. They’re worried about HIV and malaria, tuberculosis, as it should be.
The Ministry of Education — they’re worried about teacher strikes. It’s very easy for something to either fall between the cracks or be the victim of turf wars. It sounds too small to be, “How can that really get in the way?” But anybody who’s spent time working in governments understands those things can very easily get in the way. In some ways, it’s surprising how much progress has been made.
Here’s one way the political economy works in favor. You mentioned democracy — I think that’s a factor. I actually find — and I don’t want to be necessarily a big fan of politicians — but in some ways, politicians hear how much this costs, and they think they can affect that many people for that small amount of money, and they’re like, “Hey, I want to get on that. Maybe this is something I can claim as an achievement.” We saw that in Kenya. We saw that in India.
COWEN: Let’s say the current Michael Kremer sets up another high school in Kenya. What is it that you would do that the current high schools in Kenya are not doing? What would you change? You’re in charge.
KREMER: Right. We’ve learned a lot in education research in recent years. One thing that we saw in Kenya, but was also seen in India and many other places, is that it’s very easy for kids to fall behind the curriculum. Curricula, in particular in developing countries, tend to be set at a fairly high level, similar to what you would see in developed countries.
However, kids are facing all sorts of disadvantages, and there are all sorts of problems in the way the system works. There’s often high teacher absence. Kids are sick. Kids don’t have the preparation at home, often. So kids can fall behind the curriculum.
Whereas we’ve had the slogan in the US, “No Child Left Behind,” in developing countries, education system is focused on kids at the top of the distribution. What’s been found is, if you can set up — and there are a whole variety of different ways to do this — either remedial education systems or some technology-aided systems that are adaptive, that go to where the kid is . . . I’ve seen huge gains from this in India, and we’re starting to see adoption of this in Africa as well, and that can have a very big impact at quite low cost.
I will be having a Conversation with him soon. So what should I ask him?
Here are previous MR posts on Michael Kremer.
Intestinal helminths—including hookworm, roundworm, whipworm, and schistosomiasis—infect more than one-quarter of the world’s population. Studies in which medical treatment is randomized at the individual level potentially doubly underestimate the benefits of treatment, missing externality benefits to the comparison group from reduced disease transmission, and therefore also underestimating benefits for the treatment group. We evaluate a Kenyan project in which school-based mass treatment with deworming drugs was randomly phased into schools, rather than to individuals, allowing estimation of overall program effects. The program reduced school absenteeism in treatment schools by one-quarter, and was far cheaper than alternative ways of boosting school participation. Deworming substantially improved health and school participation among untreated children in both treatment schools and neighboring schools, and these externalities are large enough to justify fully subsidizing treatment. Yet we do not find evidence that deworming improved academic test scores.
If you do not today have a worm, there is some chance you have Michael Kremer to thank!
With Blanchard, Kremer also has an excellent and these days somewhat neglected piece on central planning and complexity:
Under central planning, many firms relied on a single supplier for critical inputs. Transition has led to decentralized bargaining between suppliers and buyers. Under incomplete contracts or asymmetric information, bargaining may inefficiently break down, and if chains of production link many specialized producers, output will decline sharply. Mechanisms that mitigate these problems in the West, such as reputation, can only play a limited role in transition. The empirical evidence suggests that output has fallen farthest for the goods with the most complex production process, and that disorganization has been more important in the former Soviet Union than in Central Europe.
Kremer with co-authors also did excellent work on the benefits of school vouchers in Colombia. And here is Kremer’s work on teacher incentives — incentives matter! His early piece on wage inequality with Maskin, from 1996, was way ahead of its time. And don’t forget his piece on peer effects and alcohol use: many college students think the others are drinking more than in fact they are, and publicizing the lower actual level of drinking can diminish alcohol abuse problems. The Hajj has an impact on the views of its participants, and “… these results suggest that students become more empathetic with the social groups to which their roommates belong,.” link here.
And don’t forget his famous paper titled “Elephants.” Under some assumptions, the government should buy up a large stock of ivory tusks, and dump them on the market strategically, to ruin the returns of elephant speculators at just the right time. No one has ever worked through the issue before of how to stop speculation in such forbidden and undesirable commodities.
Michael Kremer has produced a truly amazing set of papers.
…finance ministers from at least three Western countries are scheduled to meet in Rome next week to announce a pilot program for delivering next-generation vaccines more rapidly to poor nations. An official for the GAVI Alliance, an international vaccines group, confirmed that the project would be the first step of a controversial plan to pay qualifying vaccine makers a higher price than they would ordinarily receive for their products in impoverished areas hard hit by infectious diseases.
The Nobel Prize goes to Abhijit Banerjee, Esther Duflo and Michael Kremer (links to home pages) for field experiments in development economics. Esther Duflo was a John Bates Clark Medal winner, a MacArthur “genius” award winner, and is now the second woman to win the economics Nobel and by far the youngest person to ever win the economics Nobel (Arrow was the previous youngest winner!). Duflo and Banerjee are married so these are also the first spouses to win the economics Nobel although not the first spouses to win Nobel prizes–there was even one member of a Nobel prize winning spouse-couple who won the Nobel prize in economics. Can you name the spouses?
Michael Kremer wrote two of my favorite papers ever. The first is Patent Buyouts which you can find in my book Entrepreneurial Economics: Bright Ideas from the Dismal Science. The idea of a patent buyout is for the government to buy a patent and rip it up, opening the idea to the public domain. How much should the government pay? To decide this they can hold an auction. Anyone can bid in the auction but the winner receives the patent only say 10% of the time–the other 90% of the time the patent is bought by the government at the market price. The value of this procedure is that 90% of the time we get all the incentive properties of the patent without any of the monopoly costs. Thus, we eliminate the innovation tradeoff. Indeed, the government can even top the market price up by say 15% in order to increase the incentive to innovate. You might think the patent buyout idea is unrealistic. But in fact, Kremer went on to pioneer an important version of the idea, the Advance Market Commitment for Vaccines which was used to guarantee a market for the pneumococcal vaccine which has now been given to some 143 million children. Bill Gates was involved with governments in supporting the project.
My second Kremer paper is Population Growth and Technological Change: One Million B.C. to 1990. An economist examining one million years of the economy! I like to say that there are two views of humanity, people are stomachs or people are brains. In the people are stomachs view, more people means more eaters, more takers, less for everyone else. In the people are brains view, more people means more brains, more ideas, more for everyone else. The people are brains view is my view and Paul Romer’s view (ideas are nonrivalrous). Kremer tests the two views. He shows that over the long run economic growth increased with population growth. People are brains.
The work for which the Nobel was given is for field experiments in development economics. Kremer began this area of research with randomized trials of educational policies in Kenya. Duflo and Banerjee then deepened and broadened the use of field experiments and in 2003 established the Poverty Action Lab which has been the nexus for field experiments in development economics carried on by hundreds of researchers around the world.
Much has been learned in field experiments about what does and also doesn’t work. In Incentives Work, Dufflo, Hanna and Ryan created a successful program to monitor and reduce teacher absenteeism in India, a problem that Michael Kremer had shown in Missing in Action was very serious with some 30% of teachers not showing up on a typical day. But when they tried to institute a similar program for nurses in Putting a Band-Aid on A Corpse the program was soon undermined by local politicians and “Eighteen months after its inception, the program had become completely ineffective.” Similarly, Banerjee, Duflo, Glennerster and Kinnan find that Microfinance is ok but no miracle (sorry fellow laureate Muhammad Yunus). A frustrating lesson has been the context dependent nature of results and the difficult of finding external validity. (Lant Pritchett in a critique of the “randomistas” argues that real development is based on macro-policy rather than micro-experiment. See also Bill Easterly on the success of the Washington Consensus.)
Duflo, Kremer and Robinson study How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya. This is an especially interest piece of research because they find that rates of return are very high but that farmers don’t use much fertilizer. Why not? The reasons seem to have much more to do with behavioral biases than rationality. Some interventions help:
Our findings suggest that simple interventions that affect neither the cost of, nor the payoff to, fertilizer can substantially increase fertilizer use. In particular, offering farmers the option to buy fertilizer (at the full market price, but with free delivery) immediately after the harvest leads to an increase of at least 33 percent in the proportion of farmers using fertilizer, an effect comparable to that of a 50 percent reduction in the price of fertilizer (in contrast, there is no impact on fertilizer adoption of offering free delivery at the time fertilizer is actually needed for top dressing). This finding seems inconsistent with the idea that low adoption is due to low returns or credit constraints, and suggests there may be a role for non–fully rational behavior in explaining production decisions.
This is reminiscent of people in developed countries who don’t adjust their retirement savings rates to take advantage of employer matches. (A connection to Thaler’s work).
Duflo and Banerjee have conducted many of their field experiments in India and have looked at not just conventional questions of development economics but also at politics. In 1993, India introduced a constitutional rule that said that each state had to reserve a third of all positions as chair of village councils for women. In a series of papers, Duflo studies this natural experiment which involved randomization of villages with women chairs. In Women as Policy Makers (with Chattopadhyay) she finds that female politicians change the allocation of resources towards infrastructure of relevance to women. In Powerful Women (Beaman et al.) she finds that having once had a female village leader increases the prospects of future female leaders, i.e. exposure reduces bias.
Before Banerjee became a randomistas he was a theorist. His A Simple Model of Herd Behavior is also a favorite. The essence of the model can be explained in a simple example (from the paper). Suppose there are two restaurants A and B. The prior probability is that A is slightly more likely to be a better restaurant than B but in fact B is the better restaurant. People arrive at the restaurants in sequence and as they do they get a signal of which restaurant is better and they also see what choice the person in front of them made. Suppose the first person in line gets a signal that the better restaurant is A (contrary to fact). They choose A. The second person then gets a signal that the better restaurant is B. The second person in line also sees that the first person chose A, so they now know one signal is for A and one is for B and the prior is A so the weight of the evidence is for A—the second person also chooses restaurant A. The next person in line also gets the B signal but for the same reasons they also choose A. In fact, everyone chooses A even if 99 out of 100 signals are B. We get a herd. The sequential information structure means that the information is wasted. Thus, how information is distributed can make a huge difference to what happens. A lot of lessons here for tweeting and Facebook!
Banerjee is also the author of some original and key pieces on Indian economic history, most notably History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India (with Iyer).
Before last year’s Nobel announcement Tyler wrote:
I’ve never once gotten it right, at least not for exact timing, so my apologies to anyone I pick (sorry Bill Baumol!). Nonetheless this year I am in for Esther Duflo and Abihijit Banerjee, possibly with Michael Kremer, for randomized control trials in development economics.
As Tyler predicted he was wrong and also right. Thus, this years win is well-timed and well-deserved. Congratulations to all.
It's hard to summarize, so read the whole thing. But he is calling for a closer look at the evidence and the application of RCT [randomized control trial] standards. Here is an excerpt:
First, the fact that a technology has been scientifically proven in isolation–such as a certain fertilizer proven to raise crop yields–does not mean that it will improve people’s well-being amidst the complexities of real villages. Recent research by Esther Duflo, CGD non-resident fellow Michael Kremer, and Jonathan Robinson shows that fertilizer use is scientifically proven highly effective at raising farm yields and farmers’ profits in Kenya. But for complex reasons very few farmers wish to adopt fertilizer, even those well trained in its use and usefulness. This means that this proven technology has enormous difficulty raising farmers’ incomes in practice. The gap between agronomy and development is very hard to cross.
Second, it is not sufficient to compare treated villages to untreated villages that were chosen ex-post as comparison villages because they appear similar. Many recent research papers have shown this conclusively. A long list of studies conducted over decades showed that African and other children learned much more in schools that had textbooks than in schools that appeared otherwise similar but did not have textbooks. Paul Glewwe, Michael Kremer, and Sylvie Moulin evaluated a large intervention in some of the neediest schools in Kenya (ungated version here, published here). Schools that received textbooks were randomly chosen from an initial pool of candidates. The problem: Children did not learn more in the treated schools than in the untreated schools.
Chris Blattman comments.
The Advance Market Commitment for vaccines launched on friday. Under the commitment a group of developed nations (Canada, Italy, Norway, Russia, the United Kingdom) and Bill Gates! (The Bill & Melinda Gates Foundation) promises to pay for a pneumococcal vaccine suitable in price and effectiveness for the developing world. The idea, the brain child of economist Michael Kremer, could save millions of lives over the next several decades. Kremer deserves a Prize for his Prize – in Peace or Economics.
Owen, who played a part in the project, has more background and musings.
Operation Warp Speed was by far the most successful government program against COVID. But as of yet there is very little discussion or history of the program. As just an indication I looked for references in a bunch of pandemic books to General Perna who co-led OWS with Moncef Slaoui. Michael Lewis in The Premonition never mentions Perna. Neither does Slavitt in Preventable. Nor does Wright in The Plague Year. Nor does Gottlieb in Uncontrolled Spread. Abutaleb and Paletta in Nightmare Scenario have just two index entries for Perna basically just stating his appointment and meeting with Trump.
Yet there are many questions to be asked about OWS. Who wrote the contracts? Who chose the vaccines? Who found the money? Who ran the day to day operation? Why was the state and local rollout so slow and uneven? How was the DPA used? Who lifted the regulations? How was the FDA convinced to go fast?
I don’t know the answer to these questions. I suspect when it is all written down, Richard Danzig will be seen as an important behind the scenes player in the early stages (I was involved with some meetings with him as part of the Kremer team). Grogan at the DPC seems under-recognized. Peter Marks at the FDA was likely extremely important in getting the FDA to run with the program. Marks brought people like Janet Woodcock from the FDA to OWS so you had a nominally independent group but one completely familiar with FDA policy and staff and that was probably critical. And of course Slaoui and Perna were important leaders and communicators with the private sector and the logistics group but they have yet to be seriously debriefed.
It’s also time for a revisionist account of President Trump’s Council of Economic Advisors. Michael Kremer and I spoke to the DPC and the CEA early on in the pandemic and argued for a program similar to what would later be called OWS. The CEA, however, was way ahead of the game. In Sept of 2019 (yes, 2019!) the CEA produced a report titled Mitigating the Impact of Pandemic Influenza through Vaccine Innovation. The report calculates the immense potential cost of a pandemic and how a private-public partnership could mitigate these costs–all of this before anyone had heard the term COVID. Nor did that happen by accident. Thomas Philipson, the CEA chair, had made his reputation in the field of economic epidemiology, incorporating incentives and behavioral analysis in epidemiological models to understand HIV and the spread of other infectious diseases. Eric Sun, another CEA economist, had also written with Philipson about the FDA and its problems. Casey Mulligan was another CEA chief economist who understand the danger of pandemics and was influenced by Sam Peltzman on the costs of FDA delay. So the CEA was well prepared for the pandemic and I suspect they gave Trump very good advice on starting Operation Warp Speed.
In short, someone deserves credit for a multi-trillion-dollar saving government program! More importantly, we know a lot about CDC and FDA failure but in order to know what we should build upon we also need to know what worked. OWS worked. We need a history of how and why.
I’ve been shouting about fractional dosing since January, most recently with my post A Half Dose of Moderna is More Effective Than a Full Dose of AstraZeneca and the associated paper with Michael Kremer and co-authors. Yesterday we saw some big movement. Writing in Nature Medicine, WHO epidemiologists Benjamin Cowling and Wey Wen Lim and evolutionary biologist Sarah Cobey title a correspondence:
Exactly so. They write:
Dose-finding studies indicate that fractional doses of mRNA vaccines could still elicit a robust immune response to COVID-192,3. In a non-randomized open-label phase 1/2 trial of the BNT162b2 vaccine, doses as low as one third (10 μg) of the full dose produced antibody and cellular immune responses comparable to those achieved with the full dose of 30 μg (ref. 4). Specifically, the geometric mean titer of neutralizing antibodies 21 days after the second vaccine dose was 166 for the group that received 10 μg, almost the same as the geometric mean titer of 161 for the group that received 30 μg, and 63 days after the second dose, these titers were 181 and 133, respectively4. For the mRNA-1273 vaccine, a dose of 25 μg conferred geometric mean PRNT80 titers (the inverse of the concentration of serum needed to reduce the number of plaques by 80% in a plaque reduction neutralization test) of 340 at 14 days after the second dose, compared with a value of 654 for the group that received the standard dose of 100 μg (ref. 5). According to the model proposed by Khoury et al.6, if vaccine efficacy at the full dose is 95%, a reduction in dose that led to as much as a halving in the post-vaccination geometric mean titer could still be in the range of 85–90%. Although other components of the immune response may also contribute to efficacy, these dose-finding data are at least indicative of the potential for further exploration of fractionation as a dose-sparing strategy. Durability of responses after fractional doses should also be explored.
…Concerns about the evolution of vaccine resistance have been posited as a potential drawback of dose-sparing strategies. However, vaccines that provide protection against clinical disease seem to also reduce transmission, which indicates that expanding partial vaccination coverage could reduce the incidence of infection. As described in a recent paper, lower prevalence should slow, not accelerate, the emergence and spread of new SARS-CoV-2 variants8.
…In conclusion, fractionated doses could provide a feasible solution that extends limited supplies of vaccines against COVID-19, which is a major challenge for low- and middle-income countries.
Also a new paper in preprint just showed that 1/4 doses of Moderna create a substantial and lasting immune response on par with that from natural infection.
Here we examined vaccine-specific CD4+ T cell, CD8+ T cell, binding antibody, and neutralizing antibody responses to the 25 ug Moderna mRNA-1273 vaccine over 7 months post-immunization, including multiple age groups, with a particular interest in assessing whether pre-existing crossreactive T cell memory impacts vaccine-generated immunity. Low dose (25 ug) mRNA-1273 elicited durable Spike binding antibodies comparable to that of convalescent COVID-19 cases. Vaccine-generated Spike memory CD4+ T cells 6 months post-boost were comparable in quantity and quality to COVID-19 cases, including the presence of TFH cells and IFNg-expressing cells.
Finally, an article in Reuters notes that Moderna are preparing to launch a 50 ug dose regimen as a booster and for children. Thus, contrary to some critics of our paper, the technology is ready.
Frankly, governments are way behind on this–they should have been pushing the vaccine manufacturers and funding trials on alternative dosing since at least January. Indeed, imagine how many lives we might have saved had we listened to Operation Warp Speed advisor Moncef Slaoui who advocated for half doses in January. On a world scale, we could have vaccinated tens even hundreds of millions more people by now had we ramped up fractional dosing.
At this point, it’s my view that there is enough knowledge to justify rolling out alternative dosing in any hot spot or in any country worried about outbreaks. Roll it out in a randomized fashion (as Kominers and I discussed in the context of the US vaccination rollout) to study it in real time but start the roll out now. Lives can be saved if we speed up vaccination, especially of the best vaccines we have, the mRNAs. Moderna and Pfizer have together pledged to deliver (mostly Pfizer and mostly through the US) some 250m vaccine doses to COVAX in 2021 for delivery to less developed countries. If we go to half-doses that becomes 500m doses–a life saver. And recall these points made earlier:
Judging by neutralizing antibodies, a 50 ug dose of, for example, Moderna looks to be more effective than standard dosing of many other vaccines including AZ and J&J and much better than others such as Sinovac. Thus alternative dosing is a way to *increase* the quality of vaccine for many people.
A 50 ug dose vaccine available today is much higher quality than a 100 ug dose vaccine available one year from now.
If we have the will, we can increase vaccine supply very rapidly.
Some quick comments in response to questions and discussion about my paper Could Vaccine Dose Stretching Reduce COVID-19 Deaths? (written with the all-star cast of Witold Więcek, Amrita Ahuja, Michael Kremer, Alexandre Simoes Gomes, Christopher M. Snyder and Brandon Joel Tan.
1) Any method of increasing vaccine supply will require other changes in the supply chain such as more needles. We think alternative dosing can increase supply quickly with the fewest supply chain disruptions.
2) If we had started Moderna with 50 ug dosing no one would be advocating for 100 ug dosing, thereby halving supply. Rather than “full” or “half-doses,” which bias thinking, we should talk about alternative dosing and ug.
3) Judging by neutralizing antibodies, a 50 ug dose of, for example, Moderna looks to be more effective than standard dosing of many other vaccines including AZ and J&J and much better than others such as Sinovac. Thus alternative dosing is a way to *increase* the quality of vaccine for many people.
4) A 50 ug dose vaccine available today is much higher quality than a 100 ug dose vaccine available one year from now.
5) There are substantial risks from following the current approach, as India and now parts of Africa illustrate. Alternative dosing has a very large upside but small downside since we could switch back to standard doses. For example, Great Britain and Canada delayed the second dose to 12 and 16 weeks respectively but have since reduced the dosing interval as more supplies have become available.
6) The greatest risk to immune escape comes from the unvaccinated. Alternative dosing protects not only those who are dosed but by reducing transmission also reduces risks to the unvaccinated.
7) The key question we face now is not whether there are objections and complications to alternative dosing (there are) the key question is what additional information, available quickly could resolve the most uncertainty? In other words, what can we learn soon that would most aid decision makers?
See the paper for details and also my previous post, A Half Dose of Moderna is More Effective Than a Full Dose of AstraZeneca.
Addendum: It should be clear that this isn’t about the United States, it is about getting high-quality vaccine to places that have little to none.
Today we are releasing a new paper on dose-stretching, co-authored by Witold Wiecek, Amrita Ahuja, Michael Kremer, Alexandre Simoes Gomes, Christopher M. Snyder, Brandon Joel Tan and myself.
The paper makes three big points. First, Khoury et al (2021) just published a paper in Nature which shows that “Neutralizing antibody levels are highly predictive of immune protection from symptomatic SARS-CoV-2 infection.” What that means is that there is a strong relationship between immunogenicity data that we can easily measure with a blood test and the efficacy rate that it takes hundreds of millions of dollars and many months of time to measure in a clinical trial. Thus, future vaccines may not have to go through lengthy clinical trials (which may even be made impossible as infections rates decline) but can instead rely on these correlates of immunity.
Here is where fractional dosing comes in. We supplement the key figure from Khoury et al.’s paper to show that fractional doses of the Moderna and Pfizer vaccines have neutralizing antibody levels (as measured in the early phase I and phase II trials) that look to be on par with those of many approved vaccines. Indeed, a one-half or one-quarter dose of the Moderna or Pfizer vaccine is predicted to be more effective than the standard dose of some of the other vaccines like the AstraZeneca, J&J or Sinopharm vaccines, assuming the same relationship as in Khoury et al. holds. The point is not that these other vaccines aren’t good–they are great! The point is that by using fractional dosing we could rapidly and safely expand the number of effective doses of the Moderna and Pfizer vaccines.
Second, we embed fractional doses and other policies such as first doses first in a SIER model and we show that even if efficacy rates for fractional doses are considerably lower, dose-stretching policies are still likely to reduce infections and deaths (assuming we can expand vaccinations fast enough to take advantage of the greater supply, which is well within the vaccination frontier). For example, a half-dose strategy reduces infections and deaths under a variety of different epidemic scenarios as long as the efficacy rate is 70% or greater.
Third, we show that under plausible scenarios it is better to start vaccination with a less efficacious vaccine than to wait for a more efficacious vaccine. Thus, Great Britain and Canada’s policies of starting First Doses first with the AstraZeneca vaccine and then moving to second doses, perhaps with the Moderna or Pfizer vaccines is a good strategy.
It is possible that new variants will reduce the efficacy rate of all vaccines indeed that is almost inevitable but that doesn’t mean that fractional dosing isn’t optimal nor that we shouldn’t adopt these policies now. What it means is that we should be testing and then adapting our strategy in light of new events like a battlefield commander. We might, for example, use fractional dosing in the young or for the second shot and reserve full doses for the elderly.
One more point worth mentioning. Dose stretching policies everywhere are especially beneficial for less-developed countries, many of which are at the back of the vaccine queue. If dose-stretching cuts the time to be vaccinated in half, for example, then that may mean cutting the time to be vaccinated from two months to one month in a developed country but cutting it from two years to one year in a country that is currently at the back of the queue.
Read the whole thing.
The Becker-Friedman center also has a video discussion featuring my co-authors, Nobel prize winner Michael Kremer and the very excellent Witold Wiecek.
For the last year and a half I have been shouting from the rooftops, “invest in capacity, build more factories, shore up the supply lines, spend billions to save trillions.” Fortunately, some boffins in the Biden administration have found a better way, “the US supports the waiver of IP protections on COVID-19 vaccines to help end the pandemic.”
Waive IP protections. So simple. Why didn’t I think of that???
Patents are not the problem. All of the vaccine manufacturers are trying to increase supply as quickly as possible. Billions of doses are being produced–more than ever before in the history of the world. Licenses are widely available. AstraZeneca have licensed their vaccine for production with manufactures around the world, including in India, Brazil, Mexico, Argentina, China and South Africa. J&J’s vaccine has been licensed for production by multiple firms in the United States as well as with firms in Spain, South Africa and France. Sputnik has been licensed for production by firms in India, China, South Korea, Brazil and pending EMA approval with firms in Germany and France. Sinopharm has been licensed in the UAE, Egypt and Bangladesh. Novavax has licensed its vaccine for production in South Korea, India, and Japan and it is desperate to find other licensees but technology transfer isn’t easy and there are limited supplies of raw materials:
Virtually overnight, [Novavax] set up a network of outside manufacturers more ambitious than one outside executive said he’s ever seen, but they struggled at times to transfer their technology there amid pandemic travel restrictions. They were kicked out of one factory by the same government that’s bankrolled their effort. Competing with larger competitors, they’ve found themselves short on raw materials as diverse as Chilean tree bark and bioreactor bags. They signed a deal with India’s Serum Institute to produce many of their COVAX doses but now face the realistic chance that even when Serum gets to full capacity — and they are behind — India’s government, dealing with the world’s worst active outbreak, won’t let the shots leave the country.
Plastic bags are a bigger bottleneck than patents. The US embargo on vaccine supplies to India was precisely that the Biden administration used the DPA to prioritize things like bioreactor bags and filters to US suppliers and that meant that India’s Serum Institute was having trouble getting its production lines ready for Novavax. CureVac, another potential mRNA vaccine, is also finding it difficult to find supplies due to US restrictions (which means supplies are short everywhere). As Derek Lowe said:
Abolishing patents will not provide more shaker bags or more Chilean tree bark, nor provide more of the key filtration materials needed for production. These processes have a lot of potential choke points and rate-limiting steps in them, and there is no wand that will wave that complexity away.
Technology transfer has been difficult for AstraZeneca–which is one reason they have had production difficulties–and their vaccine uses relatively well understood technology. The mRNA technology is new and has never before been used to produce at scale. Pfizer and Moderna had to build factories and distribution systems from scratch. There are no mRNA factories idling on the sidelines. If there were, Moderna or Pfizer would be happy to license since they are producing in their own factories 24 hours a day, seven days a week (monopolies restrict supply, remember?). Why do you think China hasn’t yet produced an mRNA vaccine? Hint: it isn’t fear about violating IP. Moreover, even Moderna and Pfizer don’t yet fully understand their production technology, they are learning by doing every single day. Moderna has said that they won’t enforce their patents during the pandemic but no one has stepped up to produce because no one else can.
The US trade representative’s announcement is virtue signaling to the anti-market left and will do little to nothing to increase supply.
What can we do to increase supply? Sorry, there is no quick and cheap solution. We must spend. Trump’s Operation Warp Speed spent on the order of $15 billion. If we want more, we need to spend more and on similar scale. The Biden administration paid $269 million to Merck to retool its factories to make the J&J vaccine. That was a good start. We could also offer Pfizer and Moderna say $100 a dose to produce in excess of their current production and maybe with those resources there is more they could do. South Africa and India and every other country in the world should offer the same (India hasn’t even approved the Pfizer vaccine and they are complaining about IP!??) We should ease up on the DPA and invest more in the supply chain–let’s get CureVac and the Serum Institute what they need. We should work like hell to find a substitute for Chilean tree bark. See my piece in Science co-authored with Michael Kremer et. al. for more ideas. (Note also that these ideas are better at dealing with current supply constraints and they also increase the incentive to produce future vaccines, unlike shortsighted patent abrogation.)
Bottom line is that producing more takes real resources not waving magic patent wands.
You may have gathered that I am angry. I am indeed angry that the people in power think they can solve real problems on the cheap and at someone else’s expense. This is not serious. I am also angry that they are sending the wrong message about business, profits and capitalism. So let me end on positive note. Like the Apollo program and Dunkirk, the creation of the mRNA vaccines by Pfizer and Moderna should be lauded with Nobel prizes and major movies. Churchill called the rescue at Dunkirk a “miracle of deliverance,” well the miracle of Moderna will rescue many more. Not only was a vaccine designed in under a year, an entirely new production process was set up to produce billions of doses to rescue the world. The creation of the mRNA vaccines was a triumph of science, logistics, and management and it was done at a speed that I had thought possible only for past generations.
I am grateful that greatness is still within our civilization’s grasp.
Addendum: Lest I be accused of being reflexively pro-patent, do recall the Tabarrok curve.
Here’s a question I’ve been mulling in recent months: Is Alex Tabarrok right? Are people dying because our coronavirus response is far too conservative?
I don’t mean conservative in the politicized, left-right sense. Tabarrok, an economist at George Mason University and a blogger at Marginal Revolution, is a libertarian, and I am very much not. But over the past year, he has emerged as a relentless critic of America’s coronavirus response, in ways that left me feeling like a Burkean in our conversations.
He called for vastly more spending to build vaccine manufacturing capacity, for giving half-doses of Moderna’s vaccine and delaying second doses of Pfizer’s, for using the Oxford-AstraZeneca vaccine, for the Food and Drug Administration to authorize rapid at-home tests, for accelerating research through human challenge trials. The through line of Tabarrok’s critique is that regulators and politicians have been too cautious, too reluctant to upend old institutions and protocols, so fearful of the consequences of change that they’ve permitted calamities through inaction.
Tabarrok hasn’t been alone. Combinations of these policies have been endorsed by epidemiologists, like Harvard’s Michael Mina and Brown’s Ashish Jha; by other economists, like Tabarrok’s colleague Tyler Cowen and the Nobel laureates Paul Romer and Michael Kremer; and by sociologists, like Zeynep Tufekci (who’s also a Times Opinion contributor). But Tabarrok is unusual in backing all of them, and doing so early and confrontationally. He’s become a thorn in the side of public health experts who defend the ways regulators are balancing risk. More than one groaned when I mentioned his name.
But as best as I can tell, Tabarrok has repeatedly been proved right, and ideas that sounded radical when he first argued for them command broader support now. What I’ve come to think of as the Tabarrok agenda has come closest to being adopted in Britain, which delayed second doses, approved the Oxford-AstraZeneca vaccine despite its data issues, is pushing at-home testing and permitted human challenge trials, in which volunteers are exposed to the coronavirus to speed the testing of treatments. And for now it’s working: Britain has vaccinated a larger percentage of its population than the rest of Europe and the United States have and is seeing lower daily case rates and deaths.
My co-authors, Eric Budish and Chris Snyder, have an excellent piece in the WSJ:
We recently published a paper in the journal Science that aimed to quantify the enormous value of Covid-19 vaccine capacity: both existing and the value of building more. We worked with a team of economists, statisticians and policy experts led by the University of Chicago’s Michael Kremer.
While vaccines are intuitively very valuable, the numbers are mind-boggling. The value of three billion courses of annual vaccine capacity—enough to vaccinate rich countries by the end of 2021 and the world by the end of 2022—is $17.4 trillion, or $5,800 for every course. This reflects the value of getting people back to work and school, avoiding unnecessary deaths and preserving health. If anything, we suspect our figure is conservative.
We estimate that another billion courses of vaccine capacity is worth $1 trillion of additional global benefits, and could accelerate vaccination by two months for rich countries and five months for the world. This $1 trillion—$1,000 for each additional course—would be much higher if the pandemic takes a turn for the worse—if, say, new variants require fresh vaccination or some vaccine manufacturers hit production snags.
Is it physically possible to build more capacity? We don’t know how much more can be built and how quickly, but the global benefits of capacity—$5,800 for every vaccination course overall, and $1,000 for incremental capacity—far exceed the prices paid to firms in deals to date, between $6 and $40 a course. This means that private incentives are a fraction of the social value at stake.
Private incentives may be particularly poor when it comes to speed. Consider a firm that will vaccinate one billion people at a fixed price of $40 each. The firm earns the same $40 billion whether it supplies the billion courses in a single month or stretched over a year. But doing it in a month requires 12 times the capacity costs. If you are wondering why vaccination is taking so long, this is the basic economic reason.
…The recent announcement that Merck will produce the Johnson & Johnson vaccine is a great example of finding a creative way to build more capacity. We don’t have specific production numbers for this deal. But suppose deals like this one could create an additional 40 million courses a month for the U.S., starting in April. Our analysis suggests that such a capacity increase is worth $136 billion to the U.S. and allows Americans to be vaccinated by June instead of August. If this new capacity is donated to the world after the U.S. is finished using it, it would generate more than $500 billion in total global benefits and accelerate global vaccination by nearly three months.
There are also options for stretching what exists: delaying the second of two doses, giving only one dose to those previously infected, or using lower-dose regimens. If it turns out that half doses are almost as effective as full doses, or a single dose is almost as effective as a two-dose course, capacity would effectively double overnight—which our analysis suggests is worth several trillion dollars.
Market design to accelerate COVID-19 vaccine supply is my new paper in Science, co-authored with Camilo Castillo, Michael Kremer, Eric Budish, Susan Athey and others. We make three vital points. First, governments invested much less than our group advised. We spent trillions on fiscal support and maybe $20 billion or so on vaccines, far too little. Nevertheless, the 3bn courses we have (conservatively) in 2021 capacity is worth on the order of $17.4 trillion or $5800 per course. If advance market commitments moved us from 2 billion to 3 billion courses then they were worth 2.4 trillion dollars. I feel pretty good about the work we did to encourage Operation Warp Speed and other advance purchases.
Second, it’s not too late to do more. If we could get an additional billion courses in capacity online by July 2021 that would speed up vaccination in high-income countries by 1.4 months and in the world by 4.3 months. A few months might not seem like much but that speed-up is worth half a trillion to the world economy. If we could get additional capacity online by April it would be worth a trillion dollars.
You might think that getting more capacity online by April isn’t possible but you can do a lot for a trillion dollars. Moreover, we can increase capacity not just by building more factories but by using the doses we have now more wisely. Low-dose syringes, for example, can increase supplies by 20%. I think the health authorities know this now (although they should have been prepared) but even at this late stage almost everyone is under-estimating how much it would be worth spending to get 20% more vaccine capacity. Similarly, going to half-doses is equivalent to doubling the number of Moderna and Pfizer factories. Even if we did half doses for the young alone, that’s a big increase in supply. We calculate that additional capacity is worth $576 to $989 per annual course, far higher than the price.
Third, we also give advice on how to structure contracts. Buying doses isn’t optimal because companies can just agree and put you to the back of the queue. Optimal rewards and penalties are very difficult to implement, especially when optimal penalties could bankrupt firms many times over (because the social value of vaccines is much greater than the private value.) So it’s much better to subsidize capacity with an option to buy doses at a discount produced from that capacity–this is similar to what Operation Warp Speed did with Moderna and Novavax.
Finally, here’s a fourth important point I haven’t made earlier. We suggest procurement auctions to surface prices on necessary inputs. Ordinarily, an increase in demand to a final producer such as a vaccine manufacturer is transmitted along the entire supply chain through the signaling and incentive mechanism of prices. When final goods prices are limited socially or by law, however, the supply chain can become dis-coordinated. Capacity contracts could be fulfilled, for example, and the producer could yet claim an inability to produce because raw materials are in short supply. Thus, we need a mechanism to coordinate supply chains.The US Defense Production Act is one such mechanism. An alternative procedure that may work more quickly is to organize procurement auctions for all the inputs and complementary goods required for vaccine production. The advantage of a procurement auction is that it can attract and incentivize firms globally, firms that are well beyond the reach of the DPA.