Moderna’s COVID Vaccine Price Increase Demonstrates Government Failure
The US and Japan together developed the mRNA vaccine. Why then does it not act accordingly?
The administrative headquarters of the National Institutes of Health may be seen in Bethesda, Maryland, on August 17, 2009. NIH researchers and funding played a significant role in the development of COVID-19 vaccines.
Activists started accusing the National Institutes for Health (NIH) of being “taken advantage of by pharma” in late 2021 as Moderna and the NIH publicly argued over one of the patents essential to the mRNA COVID-19 vaccine. Public health professionals and proponents of medication pricing stated that the U.S. government should express itself more as co-inventor of the vaccine with Moderna.
But more than a year later—and more than two years after the vaccine’s initial launch in the U.S.—the government has yet to make clear its role in the vaccine’s development and has not used the authority it possesses to influence the future of the medicine.
Given this background, Moderna’s revelation early this month that it would be considering raising the price of the vaccine was inevitable. Similar announcements had been made in October by Pfizer and BioNTech. The planned price rise by Moderna, from the current $26 per dose to between $110 and $130 per dose, is a startling 4,000 percent more than the $2.85 per dose manufacturing cost. In past contracts, the government gave Moderna $15–$16 per dosage in exchange for providing Americans with the vaccine at no cost.
As a result of the “outrageous” price increase, the vaccine would no longer be affordable for “many millions of uninsured and underinsured Americans,” according to Senator Bernie Sanders (I-VT), the incoming chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, who spoke with Stéphane Bancel, CEO of Moderna, on January 10. Additionally, Medicaid, Medicare, and other government programmes’ budgets would suffer a great deal. Moderna has not yet replied to Sen. Sanders’ letter, and when contacted by the Prospect, the business declined to respond.
Given that vaccines only have an impact at the population level when they are widely used, the cost barrier renders them essentially useless. Alex Lawson, executive director of Social Security Works, claimed that at $130 per dose, we cannot get anything “near herd immunity.”
Accordingly, Maybarduk claimed that the impending high cost of vaccines is both a “product of pharmaceutical greed” and a “result of the inability to fund a substantial public COVID response.” Americans were given two years to benefit from the vaccine as a public good before being switched to the greedy private healthcare system.
Operation Warp Speed is to blame for the U.S.’s current situation (OWS). Although OWS was successful in delivering medicines to market fast, the early contractual agreements for the vaccinations lacked two crucial clauses: reasonable price and non-exclusive licencing. According to Maybarduk, non-exclusive licensing is typical, even for other NIH-funded technology. Furthermore, “fair price for government-funded pharmaceuticals was the norm up until the 1990s… We have limited public health policy options to guarantee fair pricing without those stipulations.
The NIH and Moderna’s patent conflicts could make the issue worse. Despite working together on the vaccine’s research, the two organisations haven’t always acted as partners or even equals.
In what was possibly the most widely reported dispute between the two parties, Moderna submitted a patent application in July 2021 without naming federal scientists as co-inventors of the vaccine. The genetic region covered by the patent tells the body to create a safe variant of the virus’s spike proteins, which set off an immune response. The fact that the body is protected by acquired immunity when the true virus strikes makes the patent essential to the vaccination.
Inventor status would have permitted the NIH to collect royalties or licence the invention to overseas manufacturers because a co-inventorship designation presumes co-ownership. Owning the patent by itself, in Moderna’s opinion, may enable the company to “justify its prices and fend off pressure to make its vaccine accessible to impoverished countries.”
Given that Moderna was paid $1.4 billion to produce and test the vaccine and an additional $8 billion to distribute the initial doses to the country, many scientists viewed the company’s omission as a “betrayal.” After some time, Moderna decided not to pursue the patent application, citing the NIH’s objections. To “prevent any distraction,” it also offered to co-own the patent with the other party. The business, meanwhile, submitted a request for a continuance that would permit it.
While this lessened hostilities, it also did not end them; as far as the Prospect is aware, no agreement has been struck. The government does not appear to have “exercised much power on price” in the intervening months, as Maybarduk noted, which would have allowed the NIH to make the judgements that its co-ownership should have permitted.
On the extent to which the government controls the price of the vaccination, experts vary. However, it is evident that little pressure is now being applied, rendering the pressure coming from supporters empty. What does Moderna care? asked Jason Silverstein, editor-in-chief of PESTE Magazine and a lecturer in the Harvard Medical School department of global health and social medicine. They are triumphant. Following Moderna’s statement, PESTE circulated images urging investors to sell their Moderna stock since it was “something Moderna might care about.”
Silverstein is correct. Moderna spent $3.8 billion, or 20.2 percent of its total annual profits for the two years, “on buybacks to manipulate its stock price” between 2021 and 2022, according to a new research by economists William Lazonick and ner Tulum. They foresee Moderna’s continued dependence on stock buybacks to manipulate its price in the years to come.
Not all art is moderna. According to research by Lazonick and Tulum, the 14 biggest publicly traded pharmaceutical corporations spent more on dividends and stock buybacks in the past ten years than they did on research and development. This runs counter to pharmaceutical industry claims that businesses must maintain high medicine prices as a “necessary expenditure” in order to reinvest in new discoveries. According to research, the majority of businesses invest their income in political donations, lobbying, and marketing rather than innovating. Large corporations are “nowhere near as crucial to true drug innovation” as they claim, as the majority of the patents they do submit are for “me-too” treatments, which are altered versions of currently available medications that are used to prolong patent rights. NIH-funded research projects are more frequently the source of “breakthrough” items like the mRNA vaccines.
Maybarduk claims that Moderna still depends on government assistance to “defend its interests abroad, including enforcing patent rights.” Given that an expensive vaccination weakens the nation’s effort to combat the virus, this should provide the administration the leverage to reject a unilateral pricing request. The businesses “aren’t bashful about asking the U.S. government to step in in defence of their interests against foreign countries,” Maybarduk claimed. Therefore, the government of the United States shouldn’t be reluctant to request what it requires.
The NIH has not fully utilised all of its options for enforcing its patents. For instance, the NIH already holds several patents on mRNA spike proteins (including one on a piece of technology that the United States leased to the World Health Organization and the United Nations’ Medicines Patent Pool in May). Numerous vaccine producers have used U.S. 10,960,070, one of the NIH patents. Without an NIH licence, Moderna appears to include it in each dosage of the vaccine it manufactures. According to Morten, if the U.S. government finds that Moderna is infringing on a valid claim made by its patent, attorneys may use the prospect of legal action to pressure Moderna into requesting a licence in exchange for other voluntary concessions.
More generally, Morten added that the White House might “require Moderna to be a better corporate citizen.” That might entail pressuring Moderna to voluntarily share its innovations with other nations on a global basis.
California enacted legislation in 2020 to establish CalRx, a public generic medicine label.
However, the American government is known “for not vigorously enforcing its [own] patent rights.” With this vaccination, for example, it frequently focuses on early-stage research. The management of intellectual property during the later stages of an innovation is then left to “private business.” Pharma companies frequently spend hundreds of millions of dollars on final development, which is just a small part of the total cost of a new treatment.
Lazonick and Tulum assert that Moderna was able to “keep the lion’s share of the earnings” after the FDA granted an emergency use authorization because the business maintained control over the vaccine’s marketing. Moderna was able to manufacture vaccines without having to make any infrastructure investments thanks to a 10-year contract it had with the contract development and manufacturing company Lonza, based in Switzerland.
Thankfully, alternatives are starting to appear. In a piece for the Prospect in July, Alex Sammon suggested that the government could develop its own manufacturing capacity. This would be ideal for goods like vaccinations, which businesses frequently consider to have low margins and not be worth producing.
Researchers Dana Brown and Tom Latkowski released a state policy kit on public drugs in December of last year. According to Brown and Latkowski, the failure of medication pricing reform to alter the underlying “design” of the larger sector has resulted in its failure to date. They claim that in order to provide a “public alternative,” there should be state-owned companies that produce generic drugs and sell them through local or state systems. Small-scale versions of that infrastructure already exist around the nation. (Of course, there are larger pockets all across the world. While the majority of the pharmaceutical industry in Sweden was nationalised in 1970, the industry in Cuba has been open to the public since 1960.)
For more than a century, Massachusetts has been home to a public biopharmaceutical R&D and manufacturing enterprise. The company, MassBiologics, produces a tetanus and diphtheria vaccine and sells goods all throughout the country. It is the “only non-profit maker of vaccinations licensed by the FDA” in the nation.
Other states are stepping up their efforts. California enacted legislation in 2020 to establish CalRx, a public generic medicine label. When a second bill was passed in 2022 mandating the construction of an insulin production plant in the state, that apparatus advanced. In contrast, Maine approved legislation in 2022 to determine if it would be feasible for the state to produce insulin. Up until 1998, Michigan produced and freely distributed a number of its own vaccines, including those for typhoid, diphtheria, pertussis, tetanus, rabies, and anthrax. However, the state no longer has public drug manufacturing.
Realistically, it will be many years before a publicly produced and disseminated COVID vaccine is available. However, these state-based models show promise, particularly in light of the impending potential of vaccinations for diseases like cancer and RSV. Price disagreements are probable, therefore a significant involvement is required. Without one, Moderna’s narrative might be a sign of all the “crises of inequitable access to come,” Morten told me.