Getting Drug Development Right
Recent cases of pharmaceutical companies jacking up the price of lifesaving vaccines confirms once again that we need a new approach to pharmaceutical innovation. Health-sector governance and public funding should be promoting collaboration and solidarity, not zero-sum competition and gatekeeping.
LONDON – As political theater, it would be hard to beat US Senate Health, Education, Labor, and Pensions Committee Chairman Bernie Sanders’ recent grilling of Moderna CEO Stéphane Bancel, who was forced to explain why his company has quadrupled the price of its COVID-19 vaccine. But while Sanders is right that Moderna owes its vaccines to billions of dollars of US taxpayer support, its decision to raise the price should come as no surprise. As I warned in March 2020, drug companies will always make a killing from crises like the pandemic, and US taxpayers will always be gouged, until we fix an obviously broken system.
In those early days of the pandemic, the US federal government could have set a powerful precedent by aligning its vaccine investments with common-good principles such as equitable access and affordability. But it chose “business as usual” instead, and now we are witnessing the predictable results: Moderna is doing everything it can to maximize profits and shareholder value, even if that comes at the expense of public health. It claims that it is raising the price for its vaccine to make up for lost revenues; but its vaccine is the fruit of collective intelligence.
The US National Institutes of Health not only invested billions in the discovery of the vaccine; it also holds patents for the foundational mRNA modifications on which the Moderna vaccine relies. After several years of patent disputes, the NIH agreed to license its technology to Moderna for $400 million. From Moderna’s perspective, it was a great deal. That $400 million returned $36 billion back in global sales, a windfall reflected in enormous compensation packages for its executives. During the pandemic, Bancel himself sold $400 million in shares, and his golden parachute (what he will receive if the company is sold and he is ousted) was raised to almost $1 billion, a 100-fold increase from 2019.
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