Assessing vaccination costs and government negotiations
“You have Medicare/Medicaid, the VA system, and a bunch of independent insurers negotiating rates for drugs rather than a single government entity, which makes the U.S., at least thus far, unable to negotiate prices for drugs even close to those of other developed nations. It would not be odd for European countries to pay less than we do for a vaccine, because they pay less for all other drugs. Take for example, the price of new cancer drugs. According to research in the medical journal Lancet, we pay 2.3 times as much for those drugs than high income European nations do.”
One potential bargaining chip available to the U.S. government is the threat of compulsory licensing, Rodwin says. In certain cases, including health emergencies, countries may enter a process by which they compel a company with a patented drug to allow other manufacturers to produce it at a reduced cost. The patent holder would be paid a licensing fee.
During the anthrax scare after 9/11, President George W. Bush’s Department of Health & Human Services used the threat of a compulsory license to convince Bayer A.G. to halve the price of its anthrax medication Cipro. “The problem,” says Rodwin, “is that it’s hard to say exactly how politics will play out, because there are some who will argue that this version of eminent domain, for medicines, is anti-business and makes companies less interested in investing in innovation.”
“Focusing on the cost of the vaccine is one thing,” he says. “Another challenge is supply. There’s going to be competition around the world for this vaccine, if and when it works and is safe, and that will help pharmaceutical companies in their bargaining efforts.”
According to Rodwin, the Trump administration’s contentious relationship with the World Health Organization is another important factor. Historically the country has been part of world-wide efforts to control pandemics, from polio to the flu. These successful efforts relied on the fact that countries worked together and shared knowledge, data and breakthroughs.
If the U.S. does not push for a similar type of global response to COVID-19, and patent pooling to share innovations, the ability to contain the virus will be significantly diminished, he says.