Taxpayer dollars are primarily why we have successful vaccines for fighting COVID-19.
The government assumed the financial risk of development, which allowed us to get the vaccines so quickly. But the public is paying a huge chunk for research, development and manufacturing. Congress appropriated nearly 10 billion tax dollars to support development and manufacturing of COVID-19 diagnostics, treatments and vaccines.
The industry directly builds on knowledge funded by the taxpayer.
Moderna was heavily funded by the U.S. government and private donations.The company was given $2.5 billion for development of its vaccine and to pay for doses once approved.
Pfizer says it didn’t take any money to develop the vaccine, but its partner, BioNtech, received $446 million from the German government. Both Pfizer and Moderna used the National Institutes of Health patented messenger RNA technology to create their vaccines. The U.S. committed to buying hundreds of millions of Pfizer-BioNTech vaccines in advance with a price tag of $1.9 billion. Pfizer is being paid handsomely to produce the vaccine and it’s been estimated to have earned more than $900 million in profit in just the first quarter of 2021 – and even greater profits in the second quarter.
The U.S. invested $20 billion in pharmaceutical companies to quickly move forward on clinical trials, development and production capabilities. Moderna had never before produced an approved drug, so the government paid for its production capability and virtually “de-risked” the enterprise for making the vaccines by committing to buy them when brought to market.
The National Institutes of Health’s investment contributed to every drug that was developed in the U.S. from 2010 to 2019. By investing in basic science and drug development, NIH encourages innovation by private pharmaceutical companies. The NIH is the single largest medical research agency in the world. Once a drug has been developed and is ready for commercialization, the NIH turns the intellectual property over to the drug companies with seemingly no strings attached. The pharmaceutical company can determine its prices. Corporations price to maximize revenue, not according to R&D costs.
NIH research is extremely productive and should be expanded so that health, rather than profit, guides our medical research priorities.
Americans got the vaccine for free initially because the government not only paid for development, but also for the vaccine doses.
Our government negotiated the price of vaccines with Pfizer and Moderna. The first two doses of Pfizer vaccine cost $19.50 each, Moderna’s $15 each. Both were considered to be “pandemic pricing.” Post-pandemic, prices will go up – and many of us may need a “booster” shot in the future. Pfizer recently told shareholders that they want to raise the price of a dose from $19.50 to $150 to $175 per dose. Without the government negotiating prices, the sky’s the limit.
Our government has given pharmaceutical companies unilateral ability to charge whatever they want for drugs. They can do the same thing for vaccines.
That’s how our laws work. Our current policies benefit drug makers, not the people who need those medications to remain healthy – and whose tax dollars make their development possible.
The governments of every industrialized country in the world negotiate prices with drug companies using national review boards. These boards negotiate prices and analyze whether a new drug is more effective than its predecessors. Germany, Canada and other Western nations only allow new drugs if they can show that they’re better than existing ones. Outside of the Veterans Administration, the U.S. doesn’t negotiate prices with pharmaceutical companies. The pandemic was a temporary exception.
The drug industry has been involved in over three decades of writing and creating national policy and laws (e.g., the Affordable Care Act) that are designed to benefit them, not you and me. It’s time to reform those laws.
House Bill 3, passed by the House of Representatives in 2019 and ignored by the Senate, would have allowed Medicare to negotiate for all drug prices, allowed those prices to be extended to the private sector, and put a cap on drug price increases annually at no more than the rate of inflation (about 2%, versus the current 9% over inflation). And it would have directed some of the savings to NIH to ensure new and innovative drug development. The Congressional Budget Office estimates that HR 3 would have accounted for about $456 billion in savings over a 10-year period.
It’s an uphill battle because the pharmaceutical industry is one of the wealthiest and most powerful lobbies in the country. This has afforded it almost unlimited resources to fight policy change. When pharmaceutical companies need more money for campaign contributions and lobbyists, they can simply raise the prices of their drugs to pay for them.
President Joe Biden recently said, “Capitalism without competition isn’t capitalism; it’s exploitation.” The pharmaceutical industry has been exploiting Americans for too many decades with the price of drugs, including life-saving drugs.
Pharmaceutical development is high risk, it’s true, but why should we socialize the risk while privatizing the profits? Ask your senator to start hearings on HR 3 in the Senate. That’s how we negotiate for drugs prices we can afford and still maintain fair capitalism and true competitiveness.
Jan Phillips is a retired small-business owner and has been a Durango resident for more than 30 years. She has a background in health education and health promotion and is actively involved in advocating for accessible, affordable and comprehensive health care reform.
