Market Design to Accelerate Vaccine Supply
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.
Read the whole thing and the appendix with details on methods and calculations.
A Majority of Doses are Now Second Doses
As of Feb. 18 (last day of full data) we gave out 817,708 second doses and just 702,426 first doses. In other words, a majority of doses are now second doses. As Daniel Bier writes this means that we are boosting some people from ~85% to ~95% protected when we could be vaccinating more first timers and getting them from 0% protected to ~85% protected.
If we followed the British rule and delayed the booster to 12 weeks, we could immediately more than *double* the number of people going from 0% protected to to ~85% protected. More first-doses would be great for the newly protected and more people at ~85% protection would also reduce transmission so there would be fewer new infections and less threat to the non-vaccinated.
The opportunity cost of not delaying the booster is measured in lives lost.
Duke is a Trademark Bully!
Duke University has gone to incredibly and absurd lengths to contest other people’s trademark applications. For example, Duke opposed the following marks by filing with the Trademark Trial and Appeal Board :
- “The Dude Diet” for a diet-related website
- “Kuke” for electronic products
- “Goluke” for clothing
- “Le Duc” for food and drink services
they have even tried to claim they own “devil” and filed oppositions against:
- “Werdo” with this scribbled image of a devil for shirts and hats
- “Devils Nightmare” for beer
- “Devil’s Garden” for alcoholic beverages
- “Pretty Devil” for slot machines
It gets worse, Duke claims the letter D and the word blue with filed oppositions against:
- “Beach’d” for beach bags and cosmetic bags
- “D’Grill” for barbecue smokers and grills
- “DLove” for advertising and other services
- “True Blue” for auto parts
- “Stay Blue” for denim clothing
- “Blue Ball Chiller” for alcoholic beverages
- “Blue Solutions” for various goods and services related to car rentals and car sharing.
None of this is remotely consistent with trademark law which doesn’t convey an ownership right but is merely meant to help consumers purchase the products they intend to purchase. Yet, many of Duke’s oppositions have been successful since it’s often easier for the group asking for a trademark to simply give up and change their mark. Duke bullies far more than do other similar universities.
All of this is from an excellent paper, Mark of the Devil: The University as Brand Bully by James Boyle and Jennifer Jenkins both of whom are professors at the Duke University of Law! Bully for them!
The AstraZeneca Vaccine Works Well
A new study looking at essentially the entirety of the Scottish population finds that both the Pfizer and AstraZeneca vaccine work very well at preventing hospitalizations from the first dose.
UK policy for use of vaccines against COVID-19 involves an offer of a first dose followed by a second dose 12 weeks later. To our knowledge, this is the first study of COVID-19 vaccine effect against hospitalisation for an entire nation after a single dose of vaccine. We found that a single dose of BNT162b2 COVID-19 vaccine was associated with a vaccine effect (VE) of 85% (95% CI 76 to 91) for COVID-19 hospitalisation 28-34 days post-vaccination. A single dose of ChAdOx1 vaccine was associated with a vaccine effect 94% (95% CI 73 to 99) at 28-34 days post-vaccination. VEs increased over time with a peak at 28-34 days post-vaccination for both vaccines. Comparable VEs were seen in those aged ≥80 years for prevention of COVID-19 hospitalisation with a high combined VE of 81% (95% CI 65 to 90) at 28-34 days post-vaccination.
Arne Akbar, president of the British Society for Immunology, noted “…overall these new findings should provide reassurance around the UK’s decision to offer the two doses of the vaccine 12 weeks apart.”
Another important point is that the AstraZeneca vaccine actually shows a higher effectiveness than the Pfizer vaccine. The study wasn’t designed to compare the vaccines and the populations getting the vaccines aren’t random samples. Nevertheless, the AstraZeneca vaccine appears to work well and it was actually given to a greater proportion of elderly patients.
The new results from Scotland support the UK, EU, and WHO decisions to authorize the AstraZeneca vaccine. If the US had authorized the AstraZeneca vaccine in late December at the same time as did the UK, millions more Americans could have been vaccinated saving many lives.
Where is the FDA’s cost-benefit calculation?
Hungary’s Vaccine Approval Rule
AP: Hungarian health authorities were the first in the EU to approve the Sinopharm jab for emergency use on Jan. 29. That came after a government decree streamlined Hungary’s vaccine approval process by allowing any vaccine administered to at least 1 million people worldwide to be used without undergoing review by the country’s medicines regulator.
The country expects to receive 5 million total doses of the Sinopharm vaccine over the next four months, enough to treat 2.5 million people in the country of nearly 10 million.
Authorize any vaccine already used by at least 1 million people is a type of reciprocity or peer-review rule in which you speed up approval in your country based on data from another country. As with all such rules, it’s imperfect–new and extensive use will reveal common, serious side effects and many uncommon ones as well but extensive use is not a guarantee of safety or efficacy. Nevertheless, when time is of the essence the 1 million+ rule is a smart rule.
Hat tip: Bart Madden.
From the Comments, On FDF
Also this from Tom Meadowcroft:
Scientific researchers search for the truth. Medical clinicians use limited data balance cost and benefits in the face of uncertainty to save the most lives.
When searching for the truth, it is important to have high standards of statistical significance, integrity, and patience, because credibility and a reputation for integrity is everything. Every academic knows that a retracted paper or an accusation of playing fast and loose with statistics can be the death knell for a career. As a result it is prudent to be very certain before publishing. Public health officials, particularly those in charge of approving vaccines, dread the possibility that a vaccine that will be given to millions of healthy people, often children, to prevent diseases where death is rare, which could harbor some flaw that causes a hundred avoidable deaths; they seek the highest standards of proof of safety and efficacy before approving such a vaccine.
But a pandemic is not a search for truth, and a COVID vaccine administered in the midst of a pandemic is very different than a measles vaccine administered to 2-year-olds. The pandemic makes these decisions for FDF or for vaccine approvals into clinical decisions, where health professionals should be balancing the certain benefit of reducing the thousands of daily deaths against the uncertain cost of the possibilities of harmful side-effects and uncertain details of efficacy (when does immunity kick in, how long does it last, how valuable is a booster) that additional months of testing and trials would reveal more clearly.
Public health researchers, academics for the most part, lack the ability (and courage) to make the sort of cost/benefit analysis with necessarily limited data that clinical physicians make every day in examination rooms. Any good clinician, faced with the citizenry of a country as their patient, would have opted for FDF, the AZ vaccine, and quite likely reduced doses by the start of the year. Because we are stuck with academics and administrators as our decision makes, unable to see beyond their usual routine of searching for the truth and protecting their reputations, thousands more will die.
The First Dose is Good
WSJ: The Covid-19 vaccine developed by Pfizer Inc. and BioNTech SE generates robust immunity after one dose and can be stored in ordinary freezers instead of at ultracold temperatures, according to new research and data released by the companies.
The findings provide strong arguments in favor of delaying the second dose of the two-shot vaccine, as the U.K. has done . They could also have substantial implications on vaccine policy and distribution around the world, simplifying the logistics of distributing the vaccine.
A single shot of the vaccine is 85% effective in preventing symptomatic disease 15 to 28 days after being administered, according to a peer-reviewed study conducted by the Israeli government-owned Sheba Medical Center and published in the Lancet medical journal. Pfizer and BioNTech recommend that a second dose is administered 21 days after the first.
The finding is a vindication of the approach taken by the U.K. government to delay a second dose by up to 12 weeks so it could use limited supplies to deliver a single dose to more people, and could encourage others to follow suit. Almost one-third of the U.K.’s adult population has now received at least one vaccine shot. Other authorities in parts of Canada and Europe have prioritized an initial shot, hoping they will have enough doses for a booster when needed.
Preliminary data also suggest that the other widely used vaccine in the U.K. developed by AstraZeneca PLC and the University of Oxford could have a substantial effect after a first dose .
The Israeli findings came from the first real-world data about the effect of the vaccine gathered outside of clinical trials in one of the leading nations in immunization against the coronavirus. Israel has given the first shot to 4.2 million people—more than two-thirds of eligible citizens over 16 years old—and a second shot to 2.8 million, according to its health ministry. The country has around 9.3 million citizens.
…”This groundbreaking research supports the British government’s decision to begin inoculating its citizens with a single dose of the vaccine,” said Arnon Afek, Sheba’s deputy director general.
The Israeli study is here. Data from Quebec also show that a single dose is highly effective, 80% or higher (Figure 3) in real world settings.
It’s becoming clearer that delaying the second dose is the right strategy but it was the right strategy back in December when I first started advocating for First Doses First. Waiting for more data isn’t “science,” it’s sometimes an excuse for an unscientific status-quo bias.
Approximately 16 million second doses have been administered in the US. If those doses had been first doses an additional 16 million people would have been protected from dying. Corey White estimates that every 4000 flu vaccinations saves a life which implies 4000 lives would have been saved by going to FDF. COVID, of course, is much deadlier than the flu–ten times as deadly or more going by national death figures (so including transmission and case fatality rate)– so 40,000 deaths is back of the envelope. Let’s do some more back-of-the-envelope calculations. Since Dec. 14, there have been approximately 10 million confirmed cases in the United States and 200,000 deaths. There are 200 million adults in the US so 1/1000 adults has died from COVID, just since Dec. 14. If we use 1/1000 as the risks of a random adult dying from COVID, then an additional 16 million vaccinations would have saved 16,000 lives. But that too is likely to be an underestimate since the people being vaccinated are not a random sample of adults but rather adults with a much higher risk of dying from COVID. Two to four times that number would not be unreasonable so an additional 16 million vaccinations might have avoided 32,000-64,000 deaths. Moreover, an additional 16 million first doses would have reduced transmission. None of these calculations is very good but they give a ballpark.
It is excellent news that the vaccine is stable for some time using ordinary refrigeration. Scott Duke Kominers and I argue that there is lot of unused vaccination capacity at the pharmacies and reducing the cold storage requirement will help to bring that unused capacity online. The announcement is also important for a less well understood reason. If Pfizer is only now learning that ultra-cold storage isn’t necessary then we should be looking much more closely at fractional dosing.
When I said that we should delay the second dose, people would respond with “but the companies say 21 days and 28 days! Listen to the science!”. That’s not scientific thinking but magical thinking. Listening to the science was understanding that the clinical trial regimen was designed at speed with the sole purpose of getting the vaccines approved. The clinical trial was not designed to discover the optimal regimen for public health. Don’t get me wrong. Pfizer and Moderna did the right thing! But it was wrong to think that the public health authorities could simply rely on “the science” as if it were written on stone. Even cold-storage wasn’t written on stone! Now that the public health authorities know that the clinical trial regimen isn’t written in stone they should be more willing to consider policies such as delaying the second dose and fractional dosing.
We are nearing the end in the US but delaying the second dose and other dose-stretching policies are going to be important in other countries.
Myopic Voters and Natural Disaster Policy
Do voters effectively hold elected officials accountable for policy decisions? Using data on natural disasters, government spending, and election returns, we show that voters reward the incumbent presidential party for delivering disaster relief spending, but not for investing in disaster preparedness spending. These inconsistencies distort the incentives of public officials, leading the government to underinvest in disaster preparedness, thereby causing substantial public welfare losses. We estimate that $1 spent on preparedness is worth about $15 in terms of the future damage it mitigates. By estimating both the determinants of policy decisions and the consequences of those policies, we provide more complete evidence about citizen competence and government accountability.
From the now classic paper of the same title by Andrew Healy and Neil Malhotra. As Neil said on twitter “It becomes depressing tweeting out this article after every instance of government failure,” but there you go.
Canada and First Doses First
…With such a highly protective first dose, the benefits derived from a scarce supply of vaccine could be maximized by deferring second doses until all priority group members are offered at least one dose. There may be uncertainty about the duration of protection with a single dose, but the administration of a second dose within 1 month after the first, as recommended, provides little added benefit in the short term, while high-risk persons who could have received a first dose with that vaccine supply are left completely unprotected. Given the current vaccine shortage, postponement of the second dose is a matter of national security that, if ignored, will certainly result in thousands of Covid-19–related hospitalizations and deaths this winter in the United States — hospitalizations and deaths that would have been prevented with a first dose of vaccine.
Danuta M. Skowronski, M.D.
British Columbia Centre for Disease Control, Vancouver, BC, Canada
[email protected]Gaston De Serres, M.D., Ph.D.
Institut National de Santé Publique du Québec, Quebec City, QC, Canada
That’s from a letter to the NEJM which also includes a debate on delaying the second dose and a poll (vote for delaying the second dose!). What I want to point out today is that the authors are experts from Canada. I believe that first doses first will save lives in the US but delaying the second dose and other dose-stretching policies are even more vital in countries where vaccines supplies are more limited than in the United States.
Canada and Novavax
Canada has made some smart moves with the Novavax vaccine. First, they initiated a rolling review of the Novavax vaccine in late January which suggests that they might authorize the vaccine based on the British trial before the US trial is concluded. The FDA will probably wait until the US trial is concluded. Second, Canada also signed a production agreement to bring some capacity online in Canada, although that will take time. That agreement, however, is on top of an advance purchase of 52 million doses with an option on another 24 million doses.
In short, if they act quickly, Canada could approve the Novavax vaccine before the United States and get a jump on its own vaccination efforts.
Against Regulatory Nationalism
I’ve long argued that if a drug or medical device is approved in another country with a Stringent Regulatory Authority it ought to be approved in the United States. But, of course, the argument is even stronger in the other direction. Drugs and devices approved in the United States ought to be approved elsewhere. Indeed, this is how much of the world actually works because most countries do not have capability to evaluate drugs and devices the way the FDA or say the EMA does. Although it’s the way the world works, few will admit it because that would violate pretensions of regulatory nationalism. Moreover, keeping up with pretenses means transaction costs and unnecessary delays.
The price of such regulatory nationalism can be very high as indicated in this interview with Adar Poonawalla, chief executive of the Serum Institute of India (SII), the world’s largest producer of vaccines.
Some people think the reason that rollout has been slow in many countries is because the developers who hold the patents on the vaccines have licensed too few manufacturers to make them. Do you agree?
No. There are enough manufacturers, it just takes time to scale up. And by the way, I have been blown away by the cooperation between the public and private sectors in the last year, in developing these vaccines. What I find really disappointing, what has added a few months to vaccine delivery – not just ours – is the lack of global regulatory harmonisation. Over the last seven months, while I’ve been busy making vaccines, what have the US, UK and European regulators been doing? How hard would it have been to get together with the World Health Organization and agree that if a vaccine is approved in the half-dozen or so major manufacturing countries, it is approved to send anywhere on the planet?
Instead we have a patchwork of approvals and I have 70m doses that I can’t ship because they have been purchased but not approved. They have a shelf life of six months; these expire in April.
Did you get that? Regulatory nationalism has added months to vaccine delivery and now threatens to put to waste millions of stockpiled doses.
Addendum: See also Scott Sumner on the costs of regulatory nationalism.
Half Doses of Moderna Produce Neutralizing Antibodies
A new phase II study from Moderna shows that half-doses (50 μg) appear to be as good as full doses (100 ug) at generating correlates of protection such as neutralizing antibodies.
In this randomized, controlled phase 2 trial, the SARS-CoV-2 vaccine candidate mRNA-1273, administered as a two-dose vaccination regimen at 50 and 100 μg, exhibited robust immune responses and an acceptable safety profile in healthy adults aged 18 years and older. Local and systemic adverse reactions were mostly mild-to-moderate in severity, were ≤4 days of median duration and were less commonly reported in older compared with younger adults. Anti-SARS-CoV-2 spike binding and neutralizing antibodies were induced by both doses of mRNA-1273 within 28 days after the first vaccination, and rose substantially to peak titers by 14 days after the second vaccination, exceeding levels of convalescent sera from COVID-19 patients. The antibodies remained elevated through the last time point assessed at 57 days. Neutralizing responses met criteria for seroconversion within 28 days after the first vaccination in the majority of participants, with rates of 100% observed at 14 and 28 days after the second vaccination. While no formal statistical testing was done, binding and neutralizing antibody responses were generally comparable in participants who received the 100 μg mRNA-1273 and the 50 μg dose at all time points and across both age groups. Overall, the results of this randomized, placebo-controlled trial extend previous immunogenicity and safety results for mRNA-1273 in the phase 1 study in an expanded cohort including participants older than 55 years of age [16, 19].
[These data] confirm that a robust immune response is generated at both 50 and 100 ug dose levels.
As I wrote earlier, halving the dose is equivalent to instantly doubling the output of every Moderna factory.
See my piece in the Washington Post on getting to V-day sooner for an overview of dose stretching strategies.
Addendum: France says one dose is sufficient for previously COVID infected.
The Big Push: A Plan to Accelerate V-Day
In the Washington Post I have an extensive piece on accelerating progress to V-day, Vaccine or Victory day, the day everyone who wants a vaccine has gotten one. I cover themes that will be familiar to MR readers, including First Doses First, Fractional Dosing, Approving More Vaccines and DePrioritization to Expand Delivery. I won’t belabor these points here but the piece is useful at collecting all the arguments in one place and there are lots of authoritative links.
One point I do want to make is that all the pieces of the “Tabarrok plan,” if you will, fit together. Namely, use First Doses First to make a big push to get as many people vaccinated with first doses as possible in the next 90 days. Approve more vaccines including Johnson & Johnson, AstraZeneca and others and make them available to anyone, anywhere–that is possible because these vaccines don’t require significant cold storage, J&J is a single shot and AZ is better with a second shot at 12 weeks or later all of which eases distribution.
…some people argue that adding a third (or fourth) vaccine might not help because of persistent delivery logjams at the state and local levels. But we know there is unused distributional capacity, even for the supply we do have. The United States is currently administering about 1.5 million coronavirus vaccine shots per day. While that sounds like a lot, for comparison consider that in September — during the pandemic, when social distancing measures were in full effect — we vaccinated for the seasonal flu in some weeks at the rate of 3 million people a day.
There are two main reasons the rollout has been so slow. First, the Moderna and especially the Pfizer vaccines require ultracold storage. (The Johnson & Johnson and AstraZeneca doses can be stored at ordinary refrigerator temperatures.) Second, we have tried to prioritize vaccinations using a confusing mishmash of age, health conditions and essential-worker status that differs by state and sometimes even by county. “Confirming such criteria is complicated at best, and it’s probably not even feasible to try under conditions of duress,” as Baylor’s Hotez puts it.
Arguments continue about prioritization lists, and the idea of tossing them entirely would cause a political fight. But there is a compromise at hand: Quickly approve the Johnson & Johnson and AstraZeneca vaccines and make them — and only them — available to anyone, anywhere. Keeping things simple is a sure way to increase total vaccinations. With no cold-storage requirement, the new vaccines could be administered by any of the 300,000 pharmacists and more than 1 million physicians in the United States authorized to deliver vaccines, most of whom are not now giving Pfizer or Moderna shots.
Diversity and Inclusion in Economics
We congratulate the Department of Economics at the University of Missouri-Columbia for winning the AEA’s inaugural Award for Outstanding Achievement in Diversity and Inclusion.
Eric Parson’s, one of the leaders of the initiative, credits our textbook, Modern Principles of Economics, with providing the springboard for fruitful discussions and explorations of these ideas. He writes:
[The Economics, Ethics, and Public Policy chapter] really illustrates the authors’ willingness to address these important issues and make them part of the economic conversation. It is also a chapter that I think is unique among Principles textbooks (at least the ones that I have examined, which covers quite a few). This chapter directly exposes students to questions of exploitation and fair and equal treatment and also introduces them to the work of John Rawls, as well as other social justice paradigms. It also includes a discussion of whose views generally count the most in the policy process (in the context of immigration) and, with some additional questioning along these lines, allows students the opportunity to explore their own (sometimes contradictory) viewpoints on this question. Hence, overall the chapter provides a great springboard for thinking about these issues and how these ideas compare and contrast with the typical economic viewpoint.
I always tell the students that this chapter is more about getting them to think critically about the topics and begin asking questions than it is about providing answers. It also gives another nice opportunity to highlight the positive versus normative distinction that we take so seriously in economics and hopefully provides students with some of the tools they will need to discuss these issues intelligently and civilly with one another while considering other viewpoints and worldviews. In fact, I think this chapter is so important that I save it until the end of the term, as it provides an excellent bookend to our semester’s worth of economic study.
Osterholm on First Doses First
Here from a podcast is Michael Osterholm, Regents Professor, McKnight Presidential Endowed Chair in Public Health, the director of the Center for Infectious Disease Research and Policy (CIDRAP) and state epidemiologist for the Minnesota Department of Health.
…Imagine you are setting across the table from two people both of whom are 65 or older, both with underlying health conditions. You have two doses of vaccine, one in each hand. And you say to them I can give two doses to you or to you but then the other person gets nothing. Or I can give one dose to both of you. And this is what I know. At the very least, one dose is likely to prevent serious illness, hospitalization and death. Two doses will probably even prevent clinical disease with B.1.1.7. But the other one of you; if you get infected with this virus, which I think substantial numbers of Americans will, things are not looking good for you. What do you want me to do?
If that is your Mom or Dad. Your Grandpa or Grandma. What would you do?
This is where the rubber meets the road. I think if the data bears it out we can save so many lives in the upcoming weeks and we are missing that opportunity.
I have already made my choice. I am postponing my second dose. I want my second dose. But I am confident that I can wait. And I can only hope that my second dose, which I have just deferred, will go to someone who it will save their life. It will make a totally different world for that family.
You know some could argue that this could be the end of my career. But I could not sleep with myself at night if I didn’t do this. I just know in my heart of hearts that this is something we must do if we are going to save lives.
The entire podcast is worthwhile, this is from around minute 44:30 (my imperfect transcription).
Hat tip: Anon.
Addendum: Many other countries should be looking very closely at dose-stretching policies.
In other news, South Korea approves the AstraZeneca vaccine. It’s not like we have anything to learn from South Korea about managing a pandemic, right? Right?
Sure and Tom Meadowcroft have been hitting it out of the ballpark in the comments sections. Two examples.
Sure: