Should we say "Thank you" to capitalism for the vaccine?

Analysis
Author
Marc Botenga

"We've known this since Adam Smith, but this is a strong reminder: competition works in the public interest." This is the reaction of Johan Van Overtveldt, former Minister of Finance and now MEP for the N-VA (rightist Flemish nationalist party), to the announcement of the coronavirus vaccines from Pfizer-BioNTech and Moderna. By referring to the economist known as "the father of capitalism", he clearly means that we owe the development of vaccines against Covid-19 to the capitalist free market and the benevolence of the pharmaceutical multinationals. There are at least five reasons why he's completely off the mark.

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1. We could have had a vaccine much sooner

On the American television channel MSNBC, the scientific expert Peter Hotez explained that the search for a vaccine against coronaviruses is not new. It started 17 years ago. At that time, the first experimental vaccines were already being studied.

Indeed, in 2003-2004, the world was faced with a serious outbreak of SARS, the older brother of the coronavirus that is currently raging around the world. In 2012, another coronavirus struck mostly in the Middle East. But when the epidemics died down, the interest of multinational pharmaceutical companies also vanished.

In 2016, when Hotez's team came close to discovering a vaccine against a certain type of coronavirus, no investors showed interest. It never got tested on humans.

Even more challenging: When the European Commission wanted to invest more public funds in pandemic research in 2017, it was the pharmaceutical industry itself that swept this proposal aside: "Let's drop it. There is no profit to be made."

Why is that? Because vaccine development is expensive and profit margins are low. An effective vaccine protects you for a long time. Imagine: one little shot for everyone and you've eradicated a disease. For a pharmaceutical company, this is a worst-case scenario. They prefer to invest in drugs that will be taken over a long period of time.

In his book La guerre des médicaments : Pourquoi sont-ils si chers ? (The medicines battle : Why are they so expensive?) (released in 2004), Dirk Van Duppen, PTB-PVDA activist and people's doctor, already explained how the battle for "star" drugs that sell well is being waged at the expense of public health. Instead of investing in SARS vaccines, Pfizer continued this policy. At the beginning of this century, a quarter of Pfizer's sales consisted of a single product: the cholesterol inhibitor Lipitor.

2. The free market had to be neutralized in order to produce a vaccine quickly

Since March, Covid-19 vaccines have been developed at a record pace. No thanks to free competition. On the contrary, it required neutralising the free market.

This is why the European Commission calls its vaccination strategy against coronavirus "risk reduction": the company's investment risk is transferred to the government. The Commission has purchased vaccines that had yet to be developed. If the vaccine had failed, that money would have been lost. The private company therefore ran virtually no risk.

It is only because the government eliminated the commercial risk that vaccines could be developed so quickly. Because a pharmaceutical company will prefer not to start production until it is certain that the vaccine is effective, safe and can be marketed. The investment risk is too high. Since it is financial profitability that is paramount and not social need, companies only move on to the next stage if they have complete certainty about the first one.

This is one of the reasons why vaccine development often takes a long time. Instead of considering this an "investment risk", as private companies do, public authorities started from the social need to have a vaccine quickly, given the scale of the health and economic crisis. In this way, large-scale production could be launched even before it was certain that the vaccine was effective.

In the United States, the global temple of capitalism, something similar happened. The giant Pfizer likes to claim that it has not received public funding for the development of its vaccine. This is true only because it owned a vaccine developed by BioNTech, a German company, with the support of the German authorities. Because BioNTech itself lacked the infrastructure to test and produce the vaccine, it fell like a ripe fruit into the hands of the pharmaceutical mastodon.

The US government placed an order for more than 2 billion euros even before the clinical trials began. The Moderna vaccine was even developed at 99.9 % with public funds. Country singer Dolly Parton (not the pharmaceutical industry) provided the remaining 0.1 %, or $1 million in private funding.

3. Capitalism means more expensive vaccines

It is said that, under capitalism, free competition guarantees the lowest prices. Covid-19 vaccines show the opposite. Although the private sector has not invested much itself and even the risk is borne by the community, patents and intellectual property remain in the hands of companies.

This means that private firms decide for themselves how much they produce and at what price. It's a bit as if, after paying for the plans for a chair, its production and the risk involved in using it, as well as its purchase price, you still have to pay every year to be able to sit on it.

The government and the multinational pharmaceutical companies keep the way this price is determined secret. Everything is negotiated behind the scenes. The taxpayer does not even have the right to know exactly how much he is paying for the vaccines. Transparent prices would, however, allow the authorities to enforce competition between producers. Why wouldn't we use the lowest price of the vaccine to bring down the price of the most expensive? This is not the case for our policy makers and the pharmaceutical industry.

What we do know is that agreements are made "at the taxpayers’ expense". That is, at our expense. The "willingness to pay" is an important principle here. How much is a country willing to pay for access to a drug? Another crucial point is obviously the profit margin.

The CEO of Pfizer has even admitted this publicly. He called it "fanatical and radical" to claim that companies should not make a profit on this vaccine. He has no problem with shareholders' profits being subsidized by taxpayers' money.

Since for almost all Covid-19 vaccines, research, development, expansion of production capacity and financial risk (including for hidden defects) are largely covered by public money, this means that the taxpayer would actually pay for the vaccine for the third or fourth time at the time of purchase.

Let's be clear: investing their profits in essential medicines is not the priority of pharmaceutical companies at all. In 2019, the Pharma Papers revealed how pharmaceutical companies have become financial behemoths, for whom health is secondary.

Between 1999 and 2017, eleven major pharmaceutical companies made profits of more than €1,000 billion. More than 90 % of this amount was distributed to shareholders. According to analyst Peter Cohan of Forbes magazine, Moderna will be able to count on $34 billion (nearly €28 billion) in additional revenues next year. Pfizer-BioNTech on $20 billion (or more than €16 billion) according to CNN. According to The Guardian, the sole profit from the vaccine far exceeds that of Pfizer's best-selling pneumococcal vaccine.

4. No vaccine before 2023 for poor countries

In the last century, polio, a serious and highly contagious infectious disease, has claimed a huge number of victims. In the 1950s, American researcher Jonas Salk discovered a vaccine against this disease. When asked who held the patent for his invention, Salk replied: "The people. There's no patent. Or could you patent the sun?" As a result, the polio vaccine has entered the international market patent-free, allowing the disease to be completely eradicated in many parts of the world.

Let us suppose that companies now decide to make production royalty-free, as Jonas Salk did with his polio vaccine. Massive production could then be launched in India, Brazil or South Africa.

This would allow many more people to have much faster access to the vaccine. It's important. In the event of a pandemic, no one is safe until everyone is safe. Therefore, safe and effective vaccines must be made available as soon and as widely as possible.

The fact that this is a new type of vaccine ("messenger RNA") may help. These vaccines can be produced more quickly and easily, in smaller and cheaper facilities than traditional vaccines.

But capitalism does not follow this logic. It is said that capitalism is based on free competition. But patents and intellectual property rights eliminate this competition and give one or more companies a monopoly on the vaccine. Intellectual property rights therefore limit the production and availability of the vaccine.

Meanwhile, Western countries quickly bought up the available stocks. For many people in the poorest countries, no vaccine will be available before 2023. By September, Oxfam had already sounded the alarm bell that some rich countries had already bought more than half of the available vaccines. According to Oxfam, in nearly 70 poor countries, from Afghanistan to the Ukraine, and from Burundi to Zimbabwe, only one person in ten will have access to the vaccine next year. Internal documents from CoVax (the global access mechanism for a vaccine against Covid-19) even suggest that billions of people will have to wait until 2024.

5. Being first to get the vaccine pays off more than having the best vaccine

Competition between multinational companies is slowing down the development of quality vaccines. Take Pfizer and Moderna's vaccines. Both are based on the same messenger RNA technology. The first must be kept at minus 70 degrees Celsius. That's colder than Antarctica. The second is at -20°C. The fact that two doses are required, which must be stored at extremely low temperatures, makes Pfizer's vaccine, the first ever on the market, unsuitable for large-scale global vaccination campaigns. In addition, the logistics of the two vaccines need to be developed differently.

If Moderna had shared its technology, we wouldn't need super-freezers. We now find ourselves with two very similar vaccines (messenger RNA) for which we need to develop different protocols. The capitalist logic of competition therefore proves to be totally ineffective.

For companies, it was more important to be first than to develop the best vaccine. Once a vaccine has been approved, it becomes more difficult for competitors to develop alternative vaccines. Indeed, others must demonstrate that the efficacy of their product is not inferior to that of the already registered product. Even if they are cheaper, easier to produce or distribute. The rapid approval of vaccines therefore hinders the development of potentially better competitors.

The alternative: making vaccines a public good

Both before and during the pandemic, capitalism acts as a brake on rapid and broad access to a vaccine. It could be otherwise. Suppose a public consortium prepares the immunization strategy. It would probably decide to develop not one vaccine but several, so as not to put all his eggs in the same basket. The different vaccines could be tested worldwide and compared with each other. Once vaccines are developed, a decision could be made to apply them to priority target groups while continuing trials with other candidate vaccines. Anyone who had the opportunity could produce the vaccine anywhere in the world. And if, in the future, better vaccines were developed, we could go in new directions. This would ensure that the entire population is protected in the safest, most effective and least costly way possible.

Taking the vaccine out of the hands of the multinational pharmaceutical companies has an additional advantage. Scepticism about vaccines is less a lack of confidence in science or in the treating physician than a mistrust of a pharmaceutical industry that puts profit before health. People, but also doctors, are asking questions. When it comes to vaccinating millions of people, trust is paramount. Placing the vaccine under public control and making it clear that no one will benefit from it can help strengthen confidence.

 

The PTB-PVDA supports the European Citizens' Initiative to make vaccines a public good. The aim of this is to force the European Commission to withdraw the COVID-19 vaccine from the hands of multinational pharmaceutical companies. It also aims to make the vaccine available and accessible to everyone, and advocates full transparency and public scrutiny. The initiative is also supported by trade unions, associations, NGOs and activists from ten European countries. You may sign it here: "No profit on the pandemic."

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