Governments paid billions to help develop COVID-19 vaccines — so why is Big Pharma charging us billions more for the vaccines we helped create?

Posted on June 3, 2021 in Policy Context

Source: — Authors: – Opinion
June 3, 2021.   By David Olive, Star Business Columnist

If we think of war profiteers as being lower than a snake’s belly, what are we to make of the drug industry’s pandemic profiteers?

The drug-industry giants, known as Big Pharma, were already in bad odour before the pandemic. Several of the biggest drug firms, including Johnson & Johnson, whose Janssen Biotech Inc. division makes one of the leading COVID-19 vaccines, are implicated in the opioid crisis.

Western governments make possible the excessive drug pricing that drives up health-care costs and keeps medicine out of reach for the working poor. They do this by favouring Big Pharma with extended protection of their patents.

The COVID-19 vaccines may turn out to the biggest money-maker in the drug industry’s history. The current record is held by cholesterol drug Lipitor, with roughly $150 billion in revenues over 15 years.

In the first quarter of this year, Pfizer — which also makes Lipitor — booked an estimated pre-tax profit of $1.1 billion from its COVID-19 vaccine, on $4.2 billion in sales. Pfizer told shareholders last month that it estimates total 2021 sales of its shot will be $30 billion.

The COVID-19 vaccines will continue to be strong sellers for years, given the low rate of vaccination so far in emerging economies, and the many people expected to need booster shots in future years. Canada, for example, has placed vaccine orders with Pfizer that extend into 2024.

Pfizer boasts that it is among the few vaccine developers that didn’t take government money to develop its vaccine. However, it didn’t need to. What we call the “Pfizer vaccine” was actually developed by Pfizer’s German partner, BioNTech SE. The German government gave BioNTech about $540 million to develop the Pfizer-BioNTech vaccine.

And the “messenger RNA” (mRNA) that enabled both Pfizer-BioNTech and Moderna Inc. to rapidly develop their COVID-19 vaccines is the product of taxpayer-financed research. The mRNA technology was developed in large part by the U.S. National Institutes of Health, one of the drug industry’s biggest sources of the chemical compounds it turns into commercial drugs.

The pandemic was a chance to reform a drug-industry model that enriches executives and shareholders of drug companies at the expense of taxpayers and patients.

It presented an opportunity to establish a reasonable price, uniform for all population groups worldwide, for a crucially important medication, and then to use that model to make drugs affordable and thus available to, for instance, the estimated 20 per cent of Canadians who go without medication they cannot afford it.

But this sort of long-overdue reform remains unlikely.

True, western governments, notably in Canada, the U.S. and Europe, are under intense pressure from emerging economies to waive patent protection on COVID-19 vaccines so that cheaper generics can be made and production levels boosted.

But spineless governments are once again bending to Big Pharma’s will, fearful of losing access to vaccines and perhaps other life-saving drugs as well.

In cutting deals shrouded in secrecy — in bilateral negotiations between one country and one drug firm — Big Pharma is able to play the government buyers off against each other.

Governments desperate for vaccines have agreed to deals by which they don’t know if they are paying more or less than other governments for doses. And the licensing and other terms of the deals, some more lucrative than others for Big Pharma, have also been kept under wraps.

But unnamed sources in various countries have said that Canada has been paying between $34.51 and $37.74 per dose, the U.S. is buying doses for between $19.27 and $24.50, and the range of European Union prices is an estimated $18.32 to $27.48.

Last year, the world’s top 10 Big Pharma companies alone made a combined profit of $103 billion. However, Big Pharma did not dip deeply into its prodigious profits to finance a solution to one of humanity’s greatest crises.

The cost of COVID-19 vaccine development was largely paid for by government — that is, taxpayers. The U.S. picked up most of the tab, followed Germany and Britain.

Canada also has financed vaccine candidates and COVID-19-related treatments developed by public- and private-sector researchers across the country.

But Canada, like other government funders in this global crisis, is not expecting to recover its costs in funding COVID-related medicine.

To appreciate the absurdity here, consider that the U.S. government gave $23 billion last year to seven Big Pharma companies — whose combined shareholder value totals $1.6 trillion — to develop COVID-19 vaccines. It has since spent billions of dollars more to buy the vaccine doses whose creation it financed.

As U.S. Congressman Lloyd Doggett, a Texas Democrat, puts it, Big Pharma is giving taxpayers “the privilege of purchasing the same vaccine that we already paid for.”

Ahead of any future pandemic, we need to have in place a system of competitive bidding among aspiring vaccine suppliers. We need transparency, a protocol by which every vaccine development and production contract is promptly made public. That should put an end to price-gouging and sweetheart deals for some buyers and extortionate ones for others.

And we need large buyer groups. Volume purchases reduce the price per dose, of course. With its divide-and-exploit practices, Big Pharma has pushed rich countries deeper into deficit and largely denied poorer countries of vaccines altogether.

The international COVAX consortium was supposed to solve that problem. But that hugely ambitious project to supply about a billion vaccine doses to low-income countries has foundered on “vaccine nationalism.” Countries, notably in Europe, have blocked vaccine exports.

COVAX was also crippled by limited production facilities and resulting supply shortages, resulting in part from Big Pharma’s refusal to license generics.

We can’t expect effective buyer groups to spring up in an emergency; the failure of COVAX shows that. We need to have them on standby now, one for each continent and then subdivided among regions.

Finally, governments that fund research that is used in lucrative commercial drug production must demand a return on their investment.

In future, Big Pharma would produce publicly funded vaccines on a cost-plus basis, and governments would retain the intellectual property created with the taxpayers’ money until the public has recouped its expenses.

That is how commercial enterprises do business with each other, after all.

There was a time when profit and public health were strictly separated. There was a time when Dr. Jonas Salk forfeited an estimated $7 million in royalties by choosing not to patent his vaccine to make it as widely available as possible.

With isolated or widespread epidemics an everyday reality in the world, we need to rediscover that civic spirit.


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