Reinhilde Veugelers, Belgian economist: “Governments must fully finance the development of the vaccine”

Why did you make this report?

In discussions about Covid-19, it has struck me how often I heard mentioning  everything would be solved as soon as we have a vaccine. But can we be so sure there will even be one? And even if there will be one, how can we be sure it will be available on a large scale and at low cost? I wanted to check.

What did you find?

We are definitely not guaranteed a vaccine yet.  In view of the high failure rates of vaccine projects passing clinical trials,  there are way too few candidates. And if we want to ensure that  vaccines will be available to all at the lowest cost, governments must fully finance the development of the vaccine. Otherwise, the private sector will not have the incentive to do what it needs to do.

What has to be done?

Someone has to take the lead and be the hub to bring together the necessary public fundingto finance enough project through to the end of the development pipeline.  The EU can do this. It should commit upfront that it will raise enough money to support enough projects.    We should make sure we have more vaccine candidates starting clinical trials than we have at the moment – in Europe, too. And we should make clear that the projects funded will be licensed  free for all. This is a chance for Europe to show that the European way is to help globally. We will not have a “Europe first” policy.

You argue for licenses to be freed so that governments can set up production of the vaccine when it comes. Why?

In return for receiving full public funding of their development costs,  companies must agree to  compulsory licensing for the funded projects.  Everyone who needs the vaccine, must have the chance to get it. But if we want this, we need to present the industry with incentives, as we need them to make all this possible.   

There has  always been public funding for research into vaccines, but not to this degree, and not in the most expensive stages of clinical trials. That is when big pharma comes in, and these companies need their return on investment. If countries threaten to use compulsory licensing once the vaccine is marketed, this could discourage the companies. Instead, we must make it clear from the start that there will be compulsory licensing – but there will also be full coverage of the development costs.

The drug companies are not overly interested in vaccines, as opposed to other drugs. Why?

The markup of vaccines is not so high compared to other some other drugs. That is one reason why only a few large companies are active in the market for vaccines. Traditionally, only a very small percentage of research and development funds of the pharmaceutical sector goes into vaccines. Companies only engage in this if they see interesting enough prospects for return of their investments. Mostly, very small actors do the work in the initial stages. They depend on the larger players coming in in the later stages. But whether they will,  depends on how attractive vaccine projects are for them,  compared to other projects. 

Why are vaccines less profitable than other medication?

Vaccines are mostly bought by governments, in negotiated public procurements. There is a chance that some governments don’t want to pay too much in these negotiations. With other medication that goes to individual customers, negotiations on prices are easier. 

On the fact that before May 5, barely 9 million € out of 93,2 million € to Covid-19 response in Horizon 2020 and its public-private partnership IMI by had gone into development of a vaccine:

This doesn’t surprise me, but it disappoints me. Vaccine should be overrepresented in the public money, as it is a clear case where the benefits to society are much bigger than private sector’s.   Hopefully now enough governments are convinced we need to identify a vaccine mission and to fund it.

How significant is CEPI, the Coalition for epidemic preparedness innovations, which now is getting most of the public money to specifically fund vaccine development?

Unfortunately it was set up only in 2017, so it still has to learn,  particularly on later stages of vaccine development.  But given the speed we need, we cannot set up a new institution, so let us use the one that exists. CEPI seems to have the capacity to select candidates and raise funds from both private and public sources. But CEPI also does not have funding for the last stages of a vaccine development, and still calls for more money.

What conditions should apply to the public money being channeled through CEPI? 

They should link the money they hand out to conditions on providing access to the vaccine in case of success. 

Germany, France and several non-European countries are preparing to use compulsory licensing if needed to get access to a vaccine. How do you assess that?

My worry is that this will happen in a fragmented way that will discourage the industry from engaging at the needed scale and speed. We need to make compulsory licensing a prerequisite before the public money is paid: If you accept the money in our scheme, you also accept that everyone will have the right to produce the vaccine you may develop. That will create clear and fair conditions from the start.   

On the risk of “vaccine nationalism”:

If for instance Johnson & Johnson is successful and produces its vaccine in the US  – will they be allowed to export anything to other countries, even if they want to?  Given what we have seen so far on medical equipment for Covid-19,  we cannot take this for granted.