In the Race for a Coronavirus Vaccine, We Must Go Big

Today in the New York Times I have an op-ed with Susan Athey, Michael Kremer and Christopher Snyder. We argue for a big program to invest in vaccine capacity before any vaccine is tested and approved. We agree with Bill Gates that we want the vaccine factories to be warmed up by the time a vaccine is approved. We can’t leave it all to Gates, however. The US economy is hemorrhaging $150-$350 billion a month so the benefits of a vaccine to society are huge and we should go big.

Today, the U.S. government could go big and create a Covid-19 vaccine A.M.C., guaranteeing to spend about $70 billion on new vaccines — enough to make direct investments to support capacity installation or to repurpose capacity and to pay, say, $100 per person for the first 300 million people vaccinated.

An investment of that size can anticipate and overcome several challenges typical of vaccine development. If we want to achieve a 90 percent probability of success, we must take into account historical rates of success from publicly available data; doing that suggests that we need to actively pursue not two or three vaccine candidates, but 15 to 20.

…Usually, to avoid the risk of investing in capacity that eventually proves worthless, firms invest in large-scale capacity only after the vaccine has proved effective. But in the middle of a pandemic, there are huge social and economic advantages to having vaccines ready to use as soon as they have been approved. If we leave it entirely to the market, we will get too little vaccine too late.

An advance market commitment for Covid-19 should combine “push” and “pull” incentives. The “pull” incentive is the commitment to buy 300 million courses of vaccine at a per-person price of $100, for vaccines produced within a specified time frame. If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. So firms compete to serve the first 300 million people with the most attractive vaccines, and the “pull” component provides strong incentives for both speed and quality.

The “push” incentive guarantees firms partial reimbursement for production capacity built or repurposed at risk and partial reimbursement as they achieve milestones. The partial reimbursement ensures that manufacturers have “skin in the game,” while inducing them to build large-scale capacity before approval is certain.

More than usual, read the whole thing and please do help to circulate the ideas by posting and tweeting.

The op-ed draws on the work of a large team of economists and statisticians who have been working days and nights for weeks. You can find out more at AcceleratingHT where we will soon be posting additional analysis and tools.

It’s a great privilege for me to be working with this group. One day I will write the story but for now let me just say that I have never seen such a brilliant and dedicated group come together to apply their skills to a problem of such importance and urgency.

Comments

And by the way, didn't Bill Gates cripple a few hundred thousand children in India with a vaccine strain of polio? I guess we should trust the same people who blew up the economy because MILLIONS WILL DIE to come up with an effective vaccine that is in no way worse than the disease. After all, they are Very Smart and Serious...

Go back to reading Breitbart or whatever place you get your misinformation.

" It’s certainly possible that someone could argue against vaccination by pointing to an outbreak of disease caused by a vaccine-derived strain of poliovirus, especially an outbreak in which children have been paralyzed. However, the argument that vaccines cause injury often focuses on the myth that certain chemicals in vaccines—including preservatives, like Thiomersal, that are no longer used in vaccine formulations—cause autism. The polio outbreak in the Democratic Republic of the Congo is a case in which a strain of virus that was rendered safe for vaccinating most people has regained some of its disease-causing abilities through genetic mutation. That’s sort of similar to why bugs that are more common problems in developed countries, like staphylococcus and gonorrhea, stop responding to antibiotics: They acquire genetic mutations that make them resistant to certain drugs. What is most important here is to consider the level of risk associated with vaccine-linked outbreaks, or cases of paralysis, compared to the effects of polio in an unvaccinated population. While the attenuated poliovirus in the vaccine itself may lead to no more than four or five cases of paralysis among every million individuals vaccinated, there would likely be thousands of cases of serious disease among a million exposed, unvaccinated people." From the Bulletin of the Atomic Scientists: https://thebulletin.org/2018/07/vaccine-causing-polio-in-africa-context-from-an-expert/

I have seen this response before. Answer a conspiracy theorist with a few truths and they get very angry and insulting. Then after calling you names and behaving badly they call you a troll.

Sad.

Why not join with the Europeans and others in the EVI?

...or with the Chinese who seem to have one of the best vaccine candidtates that I have reviewed. I suspect they will be the first one to bring a product to the market.

Come on, America is the greatest nation on Earth, with unparalleled abilities to develop and manufacture a vaccine. Look at America's testing coronavirus program - a model of just how much America follows its own path.

We think a global, coordinated approach is first best and are encouraging the Europeans and the Americans to work together.

Look at the total failure of WHO to guide America's response. Why would Americans want to work in any international context where the Chinese will just cover up their misdeeds, and keep Taiwan from contributing?

The Trump administration fired a Navy officer for sending a memo to the Trump administration calling for a quick response to an epidemic on his ship of thousands of sailors.

How is that different than what the Wuhan administration did when a Wuhan government doctor send a memo to the entire globe about an epidemic in Wuhan?

And Trump has fired many people in his administration, even those he appointed, when they report facts Trump does not like.

And has Trump invited the WHO into the US to inspect the US labs handling pathogens, which given the WHO draws on members, so just as Trump wants his people going into China, China and Russia will want Chinese and Russians on the teams inspecting US government labs.

Its bizarre but Trump told world leaders he puts America First and all other leaders should put their nation fffirst, and Trump always expects to get the better side of any international deals, just as all other leaders should.

I guess Trump knows its politically incorrect to state he wants to be dictator of the world because Hitler, Stalin, Napoleon, et al gave dictators of the world a bad name, but that's at the root of Trump's governing troubles.

Btw, given this report:
https://www.sciencedirect.com/science/article/pii/S0924857920301643

SARS-COV-2 was already spreading in France in late December 2019
Author links open overlay panelADeslandesaVBertiaYTandjaoui-LambotteMDbcChakibAllouiMDaECarbonnelleMD, PhDadJRZaharMD, PhDadSBrichlerMD, PhDaYvesCohenMD, PhDbe

Abstract
The COVID-19 epidemic is believed to have started in late January 2020 in France. We report here a case of a patient hospitalized in December 2019 in our intensive care, of our hospital in the north of Paris, for hemoptysis with no etiological diagnosis and for which RT-PCR was performed retrospectively on the stored respiratory sample which confirmed the diagnosis of COVID-19 infection. Based on this result, it appears that the COVID-19 epidemic started much earlier.

Given the tourist and business travel between NYC et al and Paris et al, it is clear the US east coast cities pandemic mostly came from France where it was already nearing epidemic levels before the private sector global health monitoring system reported the epidemic in Wuhan on Dec 29, 2019.

Doesn't this argue that France was covering up its epidemic that was then spread around the world?

Note, nextstrain.org has been providing evidence of Europe as the source of the majority of SARS-Cov2 strains circulating in the US for 30-60 days.

I assume that since the economy is hemorrhaging 150-350 billion a month, that the price of said vaccine should approach that same figure? And since most people won’t be able to afford anything close to their share of those costs, those that are unable to afford the vaccine should go without?

Make sure when you do your write up for the vaccine that if the manufacturer of the vaccine charges a price that too many people can easily afford that you advocate for two guys in Tennessee do drive around the country and buy up the entire supply so they can increase the price to the real market clearing rate. You know, so we can entice more supply. Just like ticket scalping makes more seats appear at the stadium.

Thats gonna leave a mark.

"If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. "

This is laughably simplistic and makes me wonder if you had anyone with vaccine development expertise advising you. Does the group not take into account the safety of the various vaccines? If human challenge testing is used on young health individuals, how will dosing of older people with less robust immune systems be determined? How will efficacy differences between different vaccine strains be determined if the trial population is so small?

You need to strive for breaking down insularity of experts and from what I read, this doesn't do it.

But you first, since it is only prudent to let other people test it first.

We have consulted with many experts in industry and the NGOs such as CEPI. We are aware of potential safety issues with a vaccine. An op-Ed is too short to deal with all issues.

Vaccines, since you are planning to go big.

Please stop acting like you are smarter than everyone and are the only one who has thought about these issues. I recall a comment from you on econlog about a month ago describing yourself has someone who has been following Covid "for a while", as if you had some special knowledge from years of research about something that didn't exist before a few months ago.

Sorry, from 3 weeks ago (https://www.econlib.org/flattening-the-curve-and-moving-the-goalposts/#comment-245571), discussing how you've been "tracking this for some time"... bruh, give me a break. That was April 15, and you probably heard about Covid... what... 3 months earlier?

Government cannot execute quickly, efficiently, or at large scale. Private industry (whether in big companies or startups) does far better, on the average.

And after the conformist careerist WYSIATI "experts" screwed up so badly in anticipating the Coronavirus threat (which Silicon Valley saw clearly because they have been trained to overcome the WYSIATI bias), we should be very careful when assessing what these same experts say about a vaccine.

Doesn’t have to be that way.

How do you explain e.g. the success of Manhattan Project? Apollo 11?

Are you implying that a private company would have done even better? Or that the govts have gotten worse since those times?

Vaccines have huge positive externalities and are therefore worthy of subsidies. Say we develop a vaccine that is only 80% effective and makes some people feel sick for a few days after they get it. Some people might not want to get it but, once it passes clinical trials, that vaccine needs to be made mandatory as it would probably be good enough to eradicate the virus entirely under universal vaccination. So even that crappy vaccine has a social value in the trillions of dollars.

" that vaccine needs to be made mandatory"

People still fail to understand how such measures have political effects down the road. The trust towards institutions is already at its low ebb. Doing things such as forcing a vaccine that obviously makes some people sick on unwilling population means that the next President might be an antivaxxer.

Did you read the article? Alex is not advocating government execute the plan, just to . That is left still to private industry. Alex is not a fan of "big government" if you have ever read his stuff.

Will not be won this way - "The op-ed draws on the work of a large team of economists and statisticians who have been working days and nights for weeks."

Not to mention CNTL+ F + "patent" gives zero hits.

What AlexT is proposing is called the "big push" in aid development, promoted by economist Jeff Sachs, and it failed. Let me Google this...wait... a post by none other than AlexT, here: https://marginalrevolution.com/marginalrevolution/2018/10/big-push-failed.html

Relax, Alex is not proposing anything comparable to big push models of economic development.

In economic development, "big push" models mean that there are multiple bottlenecks (or poverty traps) in the process of becoming a rich country and that all must be overcome more or less simultaneously*. But it has really nothing to do with the idea of subsidizing multiple vaccine development initiatives simultaneously, which is fairly orthodox economics when it comes to activities that have positive externalities.

* For instance, maybe a country is poor because most people work in an inefficient agricultural sector. So, you might want to introduce high-yielding varieties and mechanize agriculture. But, if you do that, maybe you will find up with a bunch of unemployed farm laborers moving to big cities but with no jobs for them. So you need industrial policy as well. But then, will these rural migrants have the skills to work in factories or the service sector in big cities? So then you need to throw in education policy and vocational training. But how do you finance an industrial policy and advanced system of education without a tax base and access to international financial markets? Etc.

http://www.genomenewsnetwork.org/resources/whats_a_genome/Chp2_1.shtml

There are two approaches to the task of cutting up the genome and putting it back together again. One strategy, known as the "clone-by-clone" approach, involves first breaking the genome up into relatively large chunks, called clones, about 150,000 base pairs (bp) long. Scientists use genome mapping techniques (discussed in further detail later) to figure out where in the genome each clone belongs. Next they cut each clone into smaller, overlapping pieces the right size for sequencing—about 500 BP each. Finally, they sequence the pieces and use the overlaps to reconstruct the sequence of the whole clone.
---
Cut them up fine, make something useful? But, we can prove that any path toward a target will be one of 4*5*7, an we can divide by four. That is a five by seven separation, that should be two bottles. But, if the virus is complex, then subdivide the one of the other with the best half of the segments, shoren the search time to chomp the surface of the virus. You are getting decompose steps close to recompose, bu winning with concentration. The shorter the search time, the shorter the time on and off the virus, but the greater the concentration of antibody. There will always be an optimum concentration of two five and seven bottles. An docs can make versions with shorter search times on the virus.

Alex, could you specify what specific "push" incentives you propose? I still see lots of risk of failure if 20 companies are pursuing vaccines, if 2-3 winners take all, even if the $50b+ market size is guaranteed.

Correct. The push incentives would cover about 80% of the costs of building or repurposing capacity. It’s expensive because you need more warm factories ready to go than will be needed.

So are you envisioning that anyone developing a vaccine can now apply for a fully-forgivable government loan, that would need to be in the billions of dollars for the scale needed?

"Today, the U.S. government could go big and create a Covid-19 vaccine A.M.C., guaranteeing to spend about $70 billion on new vaccine.."

I am not sure all commenters here understand what is being suggested. As I read that, it is a letter of intent, a commitment to purchase $70 billion in vaccine when it becomes available.

I see no problem with that. It's just a pre commitment to what we all know we need.

"to what we all know we need". Except that it's really "to what we all think we need". Without the precommitment, if it turns out we have herd immunity anyway by the time the vaccine is developed, or a magic cure, the government will say to the companies, "Hey, I know we told you we needed you to invest $100 billion, but we were wrong. Sorry, we don't need it after all." The government might do that anyway, but we've got the Contracts Clause, which helps if there is a formal contract.

It is important to remember that herd immunity is an assumption by people with general pandemic (flu strain) experience, and less well accepted by coronavirus scientists.

It may be out there, but I've seen nothing to suggest that it would come easy.

Here is some new data on the tragic hope that Sweden is doing us some "service" with their "sacrifice:"

https://twitter.com/ritholtz/status/1257007849756033029?s=19

Too early to tell.

5/3:
growth in deaths (0.7%)
growth in cases (1.2%)

Note current estimate is 30% of Stockholm is now immune. Caveat that based on SARS full immunity may only last 1-2 years.

What exactly is the argument for only looking at Sweden's neighbors (N=3!!) to judge how they're doing? Why not also look at western Europe?

You mean countries like Greece or Portugal or Austria, which are roughly comparably sized? Western Europe is a patchwork, much like the U.S. - some places in the U.S. have had truly catastrophic conditions, and others have been relatively unaffected.

Sweden is showing what happens when you do not put serious effort into trying to keep this virus from spreading too quickly. But much like how Italy also performed a service with its sacrifice, that no one in the U.S. will learn from it is a very safe bet.

Sweden is not overwhelmed with cases, which is exactly what "flattening the curve" is supposed to do, not reducing the cases to zero through lockdowns and then a cure/vaccine.

This is a minority view.

https://thehill.com/policy/healthcare/495382-majority-of-americans-support-another-two-weeks-of-lockdown-poll

Mostly people want a better bet than "people will die, but maybe not me."

People should be saying that every morning when they wake up, and every night before they go to bed.

Because it's true every second of every day.

With or without the virus, someone is going to die.

Good for you and the other three, Prof. Tabarrok. What is needed for policy in this epidemic is smart people thinking in a common-sense way. I guess I do have to teach "Thing ahead; reason back" in game theory, but though, deep, it's not sophisticated. Your effort is needed because policymakers and experts in other fields don't seem to know that maxim.
Have you read Klitgaard's book Tropical Gangsters? It's an entertaining book about his experiences as a US development expert in Equatorial Guinea around 1986. Your good op-ed makes me think of it. The country's main problem was that if someone started a business, the government immediately started asking it for free stuff and looking on it as a tax opportunity.

I liked that book.

Me too!

Are you asking us to spend another trillion dollars? There's already so much Trumpbux floating around that it's pumping up the stock market to near pre-COVID levels even though the real economy has crashed.

Did anyone else see the irony in a libertarian suggesting massive government intervention. The same libertarians that seem to suggest price should be used as a signal to magically bring forth more PPE for only those that can afford it.

Why does the market not work work in a pandemic?

Don’t hold your breath waiting for an answer. The silence will be deafening.

It did bring forth PPE. Check amazon and around the Internet today. You can get n95 masks by May11th.

Safety goggles, glasses are now abundant.

What did you guys want? Nationalized production? I mean what is the argument here? Price controls?

Markets are great! A firm, however, will tend to wait to build capacity until after its vaccine is approved. We incentivize firms to build or repurpose capacity in advance of approval. It’s worth doing that because the gains from a vaccine are enormous and cannot all be captured by selling vaccine.

I understand your argument and agree with your proposal. My issue was with the commenters above. How do they want PPE production handled? Nationalize production? Price controls?

A paper mask, long ago designed and in production with existing assembly line equipment in place is in no way a comparison for development, verification, testing, manufacturing, distributing and using a drug that does not now exist... and may never.
Let's wake up about this stuff.

A large team of economists and statisticians has been working days and nights for weeks, just so you can rest easy,

You must have a special Amazon I don’t have. There are zero 3M N95 masks available. I can hopefully have Clorox wipes in 3 weeks. Though it doesn’t say delivery by then. Just hoping to have in stock.

Protect yourself...god bless

https://accumed.com/

Does anyone else see the irony in Alex suggesting Statist Solutions To Everything day after day, month after month, year after year, while people like you ask how a libertarian could propose these things?

Shocking news for Al: The vaccine people are sufficiently motivated to develop a vaccine. We do not need Nancy Pelosi's House trying to get involved. All that will accomplish is ensuring that the vaccine people are sufficiently diverse and unionized.

Are you sure you know how a supply chain works? Anyways what is your alternative? Nationalize production of PPE and vaccines?

Also amazon and other online purveyors are fairly well stocked in N95 masks, safety goggles and glasses. You can all of that stuff in a week right now so I’m not sure the market didn’t do it’s job in that regard.

It depends if they personally need it or not

Competition or collaboration? 15-20 separate efforts to develop a vaccine suggests that competition is the path Tabarrok et al. believe will achieve the fastest results, with the winner guaranteed at least partial reimbursement for production capacity built in advance. What about the other 19? Will sufficient capital flow to all 20 of the competitors if there's a one in twenty chance of winning? There was but one Manhattan Project, the effort of the allies in the race against Germany to produce the first nuclear weapon, a collaboration led by the U.S. with the support of the U.K. and Canada. The race against covid-19 is equivalent to the Manhattan Project, because without a vaccine millions may die just as millions might have died if the Manhattan Project lost the race to produce the first nuclear weapon. What Bill and Melinda Gates have proposed is a separate effort to build production facilities (separate from the effort to produce a vaccine) in advance so they would be ready when the vaccine is developed. They have proposed building seven facilities, but using only three as the first three vaccines are developed, the other four facilities held in reserve in case the first three vaccines fail in practice. Gates knows that not every new product that appears to be a winner is a winner in practice. I assume that the developers of the successful vaccine and the owners of the production facility would enter into a joint venture or other business relationship. The model being proposed by Tabarrok et al. is very different from the model contemplated by Gates. Which model is better, better in the sense that it will provide the fastest route to production and distribution of an efficacious vaccine?

this reminds me of when the first statin to control cholesterol levels was developed. There was a lot of criticism of the pharma industry for continuing to poor money into this class of drugs. Why invent more 'me-too' compounds. The simple reason, and it's equally applicable to vaccines, the first one on the market is not necessarily the best one. Atorvastatin was the fifth or sixth statin approved and showed the best therapeutic value with the fewest side effects of any of the other drugs in the class. It's still the standard of treatment.

Of course that is already being done. Johnson and Johnson that evil big pharmaceutical Company is gearing up to produce a billion doses of its new experimental vaccine before the end of 2020 before they even know if it works. Thank god for the big bad guys.

..and the Oxford group has an agreement with AstraZeneca for production of their vaccine. IMO, this one is a huge non-issue.

If you haven't been part of a large team of economists and statisticians who have been working days and nights for weeks.

I'm not anti-vaccine generally, I get a flu shot every year, but I cannot fathom anyone thinking vaccine research is a good idea for covid. A vaccine is only useful against a single virus, maybe even only for a single season of that virus, it has to be administered to more or less the entire population, and it has to be administered before natural infection occurs to do any good. All of this for a virus that is basically harmless to the vast majority of people it infects? It seems uniquely designed to be a bad ROI for the massive investment required.

Let me propose we spend those hundreds of billions of dollars researching better pneumonia treatment instead. Pneumonia is how covid actually kills people, if we can come up with an effective treatment we eliminate entirely the danger posed by covid. And we do it by providing the treatment only to those patients who need it, and exactly at the time they need it. Treating pneumonia is also highly robust against seasonal mutations, so unlike vaccines, it's guaranteed not to be a 'single season cure'. In addition, many other respiratory viruses also are only dangerous insofar as they cause pneumonia, such as sars, mers, flu, etc... with a single breakthrough in pneumonia treatment, all of these viruses become benign, as well as any further outbreaks. This is just a far better ROI proposition than vaccines, but nobody is taking seriously about funding research for pneumonia.

FWIW, this is why I want a vaccine:

"He had a patient who needed 8 blood transfusions in a morning even though he wasn’t bleeding. The coronavirus was just eating his red blood cells faster than his bone marrow could make them. It’s fucking mystifying and brutal."

https://twitter.com/bessbell/status/1257057870136242176?s=19

I think there's a problem here, pneumonia from what I understand, is what happens when your lungs fill up with pus and fluid as your body is fighting an infection. That becomes a breeding ground for other various types of bacteria. A 'cure for pneumonia' would either be something that stops the cause of pneumonia to begin with or some type of blanket treatment for all possible bacteria that might start breeding in a fluid filled lung.

A vaccine for covid-19 on the other hand could end up becoming a general coronovirus vaccine which would be extremely positive since there's a good chance this is nowhere near the worst possible virus that could make the leap out of bats, pigs, birds or whatnot into humans. If we could rapidly produce vaccine to any general coronovirus, we would be making a huge investment against future possible pandemics that would make this one look like nothing.

Even if that's not the case, a vaccine could push this particular virus into extinction as more testing, isolation and selective shut downs shrink the hot zones to a few in number. Then vaccination could be deployed to deprive the virus of more human hosts. You wouldn't have to vaccinate every human on earth.

"A vaccine is only useful against a single virus, maybe even only for a single season of that virus"

The German virologist Christian Drosten said that they suspect existence of crossed immunity between SARS-CoV-2 and some milder strains of coronavirus that cause common cold.

" All of this for a virus that is basically harmless to the vast majority of people it infects? "

How do you know? By looking at the death rate only? There is emerging evidence that the virus attacks endothelium. The resulting damage in tissues may be permanent, even though the patient survives.

Looking at the nontypical strokes, lung scarring and kidney damage being reported even from younger patients, I would rather avoid this particular bug, and I am not yet 42 and in good shape.

We have national labs run by private contractors who have to bid to run them.

If we are talking about surge capacity to scale up a drug for distribution, the government could own the surge capacity and contract with others to manufacture at the site. Or, the government purchase an option to use private facilities during a national emergency. And, of course, there is always the Defense Production Act.

Are we really talking about nation states competing to subsidize their national industry:

"
Desperate to protect its people and to deflect growing international criticism of how it handled the outbreak, it has slashed red tape and offered resources to drug companies. Four Chinese companies have started testing their vaccine candidates on humans, more than the United States and Britain combined.
But China’s leaders have empowered a vaccine industry that has long been mired in quality problems and scandals." Todays NYT

+1

An option purchase makes a lot of sense, and for more than just vaccines. An obvious step going forward would be surge capacity options for PPE.

The benefit of an option is that you don't have to own the facilities, and you can have competitive bidding for option capacity.

My concern is that there will be favors. So, a competitive bidding model seems the best; otherwise, there is a potential for abuse.

However, there is another issue as well: ingredients and components to manufacture the vaccine. You could envision a person with capacity making it available, but requiring use only of components it manufactures or sources or doing it more subtly by designing it into the process. So, you would need second sourcing requirements as well.

+1

You’d probably also need to audit the capacity by selecting some % and having them run a known vaccine (could donate to developing countries). Could do the same for PPE.

APIs and reagents as well, yes. Although at least in more normal circumstances, the limiting factor is manufacturing capacity and not vaccine reagents, even for influenza mass annual vaccines. Don’t know enough about the current trials to have an estimate on whether this will be an issue.

Hubris runs rampant. "Experts" in economics, finance, manufacturing... everything, it seems, but epidemiology, think we will soon be saved 'cuz we're - you know - like really smart and can do anything.
A "big" vaccine push might work - assuming that there can even be one, that immunity is significant, that there are not serious side effects, etc., etc. Thinking big, but wrong, (also known as 'wishful thinking') is a great danger today at the top of society, at the bottom and at many points between.

It seems to me there's already a big pull for a vaccine. Let's say you have a private sector vaccine that sells for a straight $700 and gives you a year's immunity. To secure $1B in sales, the pharma company that gets to market with this would have to supply 1.4M to willing buyers. There are easily that many in the US who would pay cash for such a thing as well as employers who would be happy to buy it for their employees etc.

I think the concern, though, would be after 12-18 months the demand may not be there. If the virus is squashed, for example, then no one will want it and that investment is wasted. I believe we more or less got to a SARS vaccine but since we squashed the virus and it probably no longer even exists anymore there's not much anyone can do with it.

I would modify the incentive to say we should fund the production capacity of 200M or more doses of vaccine each year going forward. If Covid is squashed then use that capacity to make extra flu shots or other vaccines and give them away free to the developing world. We need the productive capacity to always be available once we find a vaccine that works. In the 'off years' that capacity cannot be allowed to rot.

Second problem is the time to to find a working vaccine. Since it takes months and months even with human trials accelerated, That leads to a lot of this uncertainty for private investment. I would feel very comfortable owning a new vaccine for Covid that will be available in 6 months, 18 months from now I'm not sure what the demand will be if any. When we encounter a pandemic with a massive death rate, imagine a 10% or more death rate, this ability to get to vaccine more rapidly may save the human race.

The issue is that vaccine manufacturers will not spend the capital to prepare to manufacture hundreds of millions of vaccines until its FDA approved. For obvious risk mitigation reasons.

The question is how to incentivize the build up of manufacturing capacity prior to approval, which could take 1-4 years.

Note that there is also a chance no effective vaccine is found.

Neither China, Japan, nor the EU care the least about FDA approval, and none of three require American capacity to test and manufacture a vaccine.

It's not that FDA approval is the problem, it's that there's two different models at play here.

A 'normal vaccine' takes a long standing disease that is well known and attempts to make a vaccine for it. Say Hepatitis C. Since many attempts have been made before and there is a lot of ways for such a vaccine not to work, it makes sense that a company is first going to concentrate on seeing if they can even make a workable vaccine. If they do then they can either sell the vaccine to a company that has the skill to ramp up manufacturing or they can manufacture it themselves but you need that proof of concept to work. Once you have done that, though, you now have a product that can generate many years of sales.

A time sensitive vaccine, though, doesn't have the luxury of waiting years. The strains of flu that will be common in 2020 need to be guessed at now and the vaccine grown starting now. By 2021 it will be too late as different strains will 'become popular'. For the flu, at least, there is a process for making educated guesses each year on the upcoming strains, growing them and a market for the vaccine even though some years it is less effective than other years.

Here, though, in 18 months were will this virus be? It might be like SARS, extinct after months of lockdowns, testing, isolations, and treatments have driven it gone. Or it might be chronically surging up and down over and over again. Demand for a vaccine might be huge, or it might be like finally inventing the world's best VCR tape rewinding machine long after everyone has stopped using VCRs.

The EU and Japan have their own approval process for vaccinations, which is typically done concurrently as the requirements are almost identical.

Swing and a miss, prior.

Then fund every year a few hundred million dose capacity, straight up. If there's a demand for a vaccine, it can be used, if there isn't it's an 'insurance policy'. In essence think of this as like Amazon or Youtube, a platform. The capacity is there to join millions of sellers and buyers or creators and viewers, or not. A vaccine platform would simply be the capacity to manufacture millions of doses. If no approved vaccine is available for whatever the major disease is in any given year, it could be used to make extra flu shots or even throw away the eggs or whatever is used in the capacity.

Are you actively courting folks with connections in Congress and/or the White House? There are lots of proposals out there on the testing side, but none of them seems to get any traction. Need a champion to push this through the politics.

It’s a great plan but you need the government and business to stand behind it. That may be the hard part.
There may be a lot of resistance to adopting “ your plan”. They may just say: Trump already has a plan whatever it is.
You need some big names behind it. A big name politician like Rubio, health big shots like Fauci, biotech companies supporting you.
Getting the plan to actually end up on the government’s agenda is hard I think.

If this model does result in a vaccine I wish the machinery could then be turned on what I see as an even bigger problem and which I've always felt needed a focused, "Manhattan Project"-level of commitment: male pattern baldness.

Covid left on it's own will eventually recede into the background, but baldness has tormented us since time immemorial. Let's finally give it the attention it deserves.

There's a lot of pain out there!

Can the US government be taken to the court for not honoring the advance purchase commitment? Once a vaccine is developed, there would be tremendous pressure on the company to make it available. Is it possible for the government to lower the payout ex-post? Just trying to understand.

Isn't it trials that are the current bottle-neck, so why the heck is AT talking about manufacturing? I find it ironic that Google News headline this morning was "WHO envoy warns that vaccine may never be developed". I wonder if that editorial space would have been better spent proposing and promoting a "vaccinate at home" kit? Nah, that would have gored too many sacred cows. 300 million doses in 30 days. LMFAO. WHY (!!) would that be a good idea? (i.e. what could go wrong?)

$70 billion for a vaccine and not even a measly $2 million to develop and roll out DRACO?

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3144912/

You want to go big? For a mere $1 billion we could develop the entire suite of SENS therapies that will not only reverse immunosenescence (the biggest factor in COVID-19 severity and deaths) but restore the homeostasis entire body as well.

You guys don't the meaning of "going big". You think its only about throwing around lots of money. Its really about doing something truly effective.

I don't fully understand this proposal. So the government guarantees it will buy $30 billion worth of vaccines plus pay $70 billion towards the cost of building the needed capacity.

That changes the ROI on research dramatically, obviously. Still, it seems as if what we want to do two things that seem intermingled here:

1. Encourage plausible but low-probability projects. This might do that, but I'm not sure it's the best approach. A direct subsidy might be better, or generous rewards for reaching milestones even if the project ultimately fails. I sort of like the latter better.

2. Guaranteeing that production capacity will be there when needed. Here I have a question. Would the needed plant differ radically depending on which vaccine is successful, or are there substantial similarities? Could a sort of baseline plant be built, and adapted as needed for the ultimate product? If so, and I have no idea, then wouldn't it make sense to get going on the baseline plant now?

But in the middle of a pandemic, there are huge social and economic advantages to having vaccines ready to use as soon as they have been approved. If we leave it entirely to the market, we will get too little vaccine too late.
Now go one further. There is no harm in taking more than one vaccine. So we don't even need to test for efficacy. Just ramp up production of the dozen or so vaccines that look most promising right now and give them all to everybody. One or more of them is bound to work, and even if none of them do, at least we'll know that a whole lot sooner.
Safety is not a big concern here, as vaccines are pretty safe. And you have to weigh whatever risk you're taking against the dangers of allowing the pandemic to continue.

Great article. Thank you Alex for your incredibly hard work. Let us hope this effort goes well and the politics is navigated successfully.

You don't think pharma companies are working as hard as they can on coronavirus vaccines already? I seriously doubt the lack of financial incentives is serving as any kind of bottleneck.

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