The inefficient and incredibly lucrative chase for a coronavirus vaccine

Our hottest biotech firm hasn’t yet manufactured an antidote to Covid-19. The company has manufactured three billionaires.

Centuries ago, back in the Middle Ages, battles against plagues seldom went well. Medieval public health warriors had little scientific knowledge about their viral assailants. And what little knowledge they did gain, they couldn’t easily share. Kingdoms had no vehicles for rapid and reliable communicating.

We don’t have that problem today as we do viral battle. Our scientists can share their pandemic insights—to colleagues anywhere else on the planet—in just seconds.

We have a different problem. Our scientists aren’t sharing because they can’t share. Our scientists aren’t sharing because their bosses won’t let them. And our elected leaders don’t seem to mind. They’ve essentially entrusted control over Covid-19 vaccine development to biotech corporations.

These corporations make money by locking up information, not by giving it away freely. Their singular focus: gaining patents that let them price new drugs at whatever the market can bear. The biggest threat to that market might: the free flow of scientific information. If the scientists these corporations employ shared everything they’re learning, other companies might beat them to the patent punch.

But if scientists working on Covid-19 vaccines can’t share what they’re learning, can’t get feedback from their peers elsewhere, can’t access the research their peers are conducting, won’t developing an effective corona vaccine take longer? Won’t hundreds of thousands, maybe millions of people, die unnecessarily if research advances stay secret until they can be, as Wall Streeters like to say, “monetized”?

The simple answer: yes. Knowledge only efficiently advances, historians of science continually remind us, when investigators can share notes and build upon each other’s insights.

“If I have seen further,” as Sir Isaac Newton explained way back in 1675, “it is by standing on the shoulders of giants.”

Apologists for our current economic order have a justification for keeping research secret until they can make big bucks off it. Companies need an incentive to invest in research. Take away that incentive, the argument goes, and the research we need just doesn’t happen.

Lawmakers over recent decades have accepted this argument—as well as hundreds of millions in campaign contributions from Big Pharma and other knowledge-based industries. Congress has time and again, Center for Economic and Policy Research economist Dean Baker points out, lengthened and strengthened patent and copyright “protections,” moves that let our corporate giants keep charging monopoly prices year after year.

Who ultimately benefits from this patent regime? Moderna Inc.—a 10-year-old biotech start-up almost totally unknown to the American general public before this week—neatly offers up one object lesson.

This past Monday morning, a couple hours before Wall Street’s daily opening bell, a Moderna press release trumpeted the news that the company had “positive interim clinical data” to report on its vaccine game plan for the coronavirus.

That announcement triggered a whopping 20 percent rise in Moderna’s share price—and an impressive 3.2 percent jump in the overall S&P 500 Index.

None of this surprised the big boys on Wall Street. They already knew all about Moderna. The company’s “Initial Public Offering” had raised an industry-record $604 million in 2018. The top beneficiary of that IPO: Moderna CEO Stéphane Bancel. His reward for the company’s successful first foray onto Wall Street would be the nation’s most lavish biotech CEO pay deal of 2019.

The deal bestows upon Bancel a ton of stock options that began vesting last year. At that point, the Moderna chief exec had an option to buy 900,000 company shares at $14.22 each. Analysts at BMO Capital see Moderna shares hitting $112. If Bancel exercises his option to buy his 900,000 shares when Moderna shares reach that level, and then sells his shares at market rate, he could pocket nearly a $100 profit on each share and register a windfall worth $90 million.

The 47-year-old Bancel has another 4.59 million shares that start vesting this year at the $23 price Moderna set for its 2018 IPO. If Moderna’s market value—the sum total of the company’s shares—eventually hits the $44-billion target some Wall Streeters are now predicting, Bancel’s pay deal could put his personal net worth north of $4 billion.

Bancel has already become a billionaire. He joined the 10-digit club early this spring after Moderna announced over $400 million in federal coronavirus contracts. Last year, Moderna’s entire revenue only amounted to $60.2 million.

Since early spring, at least two other Moderna insiders appear to have reached billionaire status.

The much more modestly compensated scientists at the National Institute for Allergy and Infectious Diseases, the federal agency that Dr. Anthony Fauci directs, most likely know all about the supersized rewards top figures at Moderna are reaping. The Institute’s scientists have been busily partnering with Moderna on its vaccine development effort and also aiding other companies working on corona vaccines.

But some observers suspect that Moderna has an inside track at the coronavirus vaccine jackpot, and not just because the company has been the first out of the chute with test results. The new chief of the Trump administration’s corona vaccine initiative, “Operation Warp Speed,” just happens to be Moncef Slaoui, a former GlaxoSmithKline executive who served on the Moderna board until earlier this month.

Moderna’s competitors and independent researchers, for their part, have been ripping the blockbuster corona vaccine news release the company released earlier this week as a wildly overhyped mash-up of “partial findings from a small, early-stage study,” all served up without any serious accompanying data.

Enterprises like Moderna, charges former Harvard Medical School research leader William Haseltine, “are holding news conferences to report potential breakthroughs that cannot be verified,” a trend that’s “damaging trust” in medicine’s fundamental methods.

“This is not how you do science,” adds Dr. Peter Hotez, the co-director of the Texas Children’s Hospital Center for Vaccine Development.

So our national chase for a corona vaccine seems to have a bit of everything unsavory. Greed grabs. Conflicts of interest. Suspect science.

Could we be doing this chase any differently? We most certainly could, say top critics of our drug-development status quo like the economist Dean Baker. Instead of granting patents that give corporations monopoly pricing power over new drugs for long stretches of time, Baker compellingly argues, the federal government could increase direct funding for medical research.

This funding would come with strings. Enterprises that get contracts to conduct research would have to share their research findings online, notes Baker, “as soon as practical” so other researchers could benefit from them. All patents resulting from the research would also go into the public domain “so newly developed drugs could be sold immediately as generics.”

Under our current private-domain patent regime, Baker points out, Americans last year spent about $460 billion “on drugs that would likely sell for less than $80 billion in a true free market.”

This system made no sense before the pandemic. This system—enriching the few at the expense of the many—makes even less sense now.

Content licensed under a Creative Commons 3.0 License

Sam Pizzigati co-edits Inequality.org. His latest book, The Case for a Maximum Wage, has just been published. Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.

Print Friendly, PDF & Email

Comments are closed.