Rather than give away its COVID-19 vaccine, Oxford makes a deal with drugmaker

In a business driven by profit, vaccines have a problem. They’re not very profitable — at least not without government subsidies. Pharma companies favor expensive medicines that must be taken repeatedly and generate revenue for years or decades. Vaccines are often given only once or twice. In many parts of the world, established vaccines cost a few dollars a dose or less.

Last year, only four companies were making vaccines for the U.S. market, down from more than 20 in the 1970s. As recently as Feb. 11, Anthony Fauci, the government’s top infectious-disease expert, complained that no major drug company had committed to “step up” to make a coronavirus vaccine, calling the situation “very difficult and frustrating.”

Oxford University surprised and pleased advocates of overhauling the vaccine business in April by promising to donate the rights to its promising coronavirus vaccine to any drugmaker.

The idea was to provide medicines preventing or treating COVID-19 at a low cost or free of charge, the British university said. That made sense to people seeking change. The coronavirus was raging. Many agreed that traditional vaccine development, characterized by long lead times, manufacturing monopolies, and weak investment, was broken.

"We actually thought they were going to do that," James Love, director of Knowledge Ecology International, a nonprofit that works to expand access to medical technology, said of Oxford's pledge. "Why wouldn't people agree to let everyone have access to the best vaccines possible?"

A few weeks later, Oxford — urged on by the Bill & Melinda Gates Foundation — reversed course. It signed an exclusive vaccine deal with AstraZeneca that gave the pharmaceutical giant sole rights and no guarantee of low prices — with the less-publicized potential for Oxford to eventually make millions from the deal and win plenty of prestige.

Other companies working on coronavirus vaccines have followed the same line, collecting billions in government grants, hoarding patents, revealing as little as possible about their deals — and planning to charge as much as $37 a dose for potentially hundreds of millions of shots.

Even as governments shower money on an industry that has not made vaccines a priority in the past, critics say, failure to alter the basic model means drug industry executives and their shareholders will get rich with no assurance that future vaccines will be inexpensively available to all.

"If there were ever an opportunity" to change the economics of vaccine development, "this would have been it," said Ameet Sarpatwari, an epidemiologist and lawyer at Harvard Medical School who studies drug-pricing regulation. Instead, "it is business as usual, where the manufacturers are getting exclusive rights and we are hoping on the basis of public sentiment that they will price their products responsibly."

In the United States and other developed nations, the solution to the reluctance of drug companies was to shower them with billions of dollars in public funds to persuade them to help. The Trump administration has announced deals worth more than $10 billion with seven companies to try to turn basic research — often funded by the government — into effective, widely distributed vaccines but with no guarantee they would be widely affordable or available.

That approach has driven up stock prices in the last four months and enriched drug executives betting with somebody else’s money.

AstraZeneca stock and options owned by CEO Pascal Soriot have increased by nearly $15 million in value since early April, according to calculations by KHN based on company disclosures. The stock hit an all-time high in July. The stock market value of Novavax, a biotech that never recorded a profit in more than two decades, soared tenfold to $10 billion after a nonprofit and the Trump administration agreed to give it $1.6 billion to make a vaccine.

Companies “say we have to charge high prices because we are taking a risk,” said Mohga Kamal-Yanni, an independent consultant on global health based in the United Kingdom. “Actually, the public is taking the risk. The public is paying for the cost of research and development and probably the cost of manufacturing, as well.”

Moderna, another company working on a vaccine candidate, received nearly $1 billion from the U.S. government to pay essentially all costs to research the product and get it approved by regulators. It's using a vaccine designed in large part by the National Institutes of Health and academic scientists using federal grants.

If the vaccine works, the company will get an additional $1.5 billion to cover 100 million doses, a deal that U.S. Rep. Lloyd Doggett, a Texas Democrat, likened to giving taxpayers “the privilege of purchasing that same vaccine that we already paid for.”

That deal comes to $15 a dose. Moderna told Wall Street analysts it might charge as much as $37 a dose for smaller-volume contracts.

“This is greedy, and the taxpayers who have funded all of this should have expected better negotiation on the part of the U.S. government,” said Margaret Liu, a globally respected vaccine scientist who once worked for Merck and is now chair of the International Society for Vaccines.

Even if Moderna distributed a successful vaccine at a loss to make it widely available, it would reap enormous benefits because government support would have helped validate its technology for future products, Liu said. Moderna did not respond to requests for comment.

Nonprofits such as Oxfam and Doctors Without Borders have been pressuring drug companies to change for years. Exclusive patents and high prices that sometimes make lifesaving medicines unaffordable in rich countries often render them completely unavailable in the poor world, they argue.

One work-around has been enormous private and government subsidies, including from the U.K., the United States and the Gates Foundation, to promote developing-nation vaccines through the Geneva nonprofit Gavi, formerly known as the Global Alliance for Vaccines and Immunization.

The Gates Foundation helped launch another non-governmental organization, the Coalition for Epidemic Preparedness Innovations, in 2017. CEPI was created to fight something exactly like the coronavirus: potential infectious threats ignored or slighted by pharmaceutical companies.

CEPI’s early principles of “equitable access” drew praise from reformers. The group asked for public data disclosure from drug-company grantees, “transparent” accounting to show true vaccine cost, and the right to step in and take over a vaccine project if the developer failed to deliver.

The pharma industry immediately objected. Even though drug companies were bankrolled by public money, they were “concerned about the precedent that could be set if they allowed an outside entity, in this case CEPI, to set [the] price of a product unilaterally,” CEPI reported in February. The nonprofit backed down, removing most references to prices in a new policy that Doctors Without Borders called “an alarming step backward.”

The original policy was intended to be "interim," and CEPI's "commitment to equitable access as a principle is the same," said spokesperson Rachel Grant.