(Bloomberg Opinion) -- In the war against the coronavirus, only one weapon has the potential to ease the conflict quickly: a vaccine. With about 164,000 Americans dead from Covid-19, the economy battered and communities forced into recurring lockdowns, the federal government has made a $10 billion wager that public funds and expertise wedded to private research and production can jump-start a vaccine’s arrival — possibly by early next year.
Operation Warp Speed, launched in April, is administered by the Department of Health and Human Services, the Biomedical Advance Research and Development Authority, and the Department of Defense, along with several other federal agencies. A handful of pharmaceutical companies, including AstraZeneca Plc, GlaxoSmithKline Plc, Johnson & Johnson, Moderna Inc., Novavax Inc., Pfizer Inc. and Sanofi SA, have received the lion’s share of the federal funding.
The companies are spending those billions on vaccine development and clinical trials, as well as the cost of manufacturing and delivering a successful candidate to the government. Companies aren’t required to repay the money, and the government is getting no equity stake or profit participation in return for the taxpayer dollars. But the companies have committed to delivering hundreds of millions of doses of their vaccines directly to the government, which promises free inoculations for Americans.
There’s likely to be plenty of wreckage along the way. Many companies may not be able to engineer a vaccine, much less deliver one, and billions of dollars will go down the drain. It’s a calculated risk worth taking, as long as it speeds an effective vaccine to market. Drug companies normally develop drugs slowly in order to minimize pricey failures. A cushion of federal funding allows Big Pharma to begin manufacturing possibly money-losing drugs even while trials are underway, compressing years of work into months.
Warp Speed’s upside — saving lives — is well worth any money that may get lost. But the program also has been shrouded in secrecy. The government has good reasons to keep some parts of the program under wraps, particularly negotiations that could affect the stock prices of companies making bids. But the process for deciding which companies were tapped to participate in the public health equivalent of the Manhattan Project has been entirely too opaque. And that lack of transparency is also likely to make the public — the folks who will have to line up for inoculations — skeptical that the government has ensured that we wind up with an effective, safe vaccine.
Two of the men overseeing Warp Speed, Moncef Slaoui and Gary Disbrow, say they aren’t cutting any corners around testing or safety protocols before a vaccine is released into the wild, but time is of the essence.
“If we were to wait to scale up manufacturing until we had results of Phase 3 clinical trials, we would be looking at a six- to eight-month delay before we even started manufacturing,” says Disbrow, who has worked for Barda since 2007 and is now the agency’s acting director. “The financial burden for lives lost and the financial burden to our overall economy for not allowing our people to go back to a somewhat normal routine is much greater than the financial burden that we're assuming in developing these vaccines.”
Slaoui is a well-regarded, Moroccan-born research scientist who spent three decades at GlaxoSmithKline, most recently as head of the drug giant’s vaccines department, before he retired in 2017. He also served on several corporate boards of directors, including Moderna’s, before President Donald Trump’s administration appointed him as Warp Speed’s chief adviser in May.
“As I took the role coming from industry, I had a few hesitations, concerns that I may get myself into some kind of a moving sand and bureaucracy,” he says. “And it’s just in the reverse. It’s incredible. I think the level of focus and alignment and empowerment and lack of interference — it’s just perfect. And I think as an executive team we’re running at a thousand miles an hour.”
Slaoui also has little patience for critics of Warp Speed’s structure or goals: “Many, many experts are saying, ‘Why, this has never been done,’ and ‘Why, it’s impossible to do.’ I would like to ask them: Please, can you take 10% of your time and help us try to make it work? … Of course its very difficult. Of course it could fail.”
That doesn’t address one of the most pertinent criticisms: that Warp Speed’s contracts and spending aren’t transparent. The House Select Committee on the Coronavirus Crisis has just called for Warp Speed officials to provide more information on its operations.
In a recent Senate hearing, legislators grilled Disbrow, along with Robert Redfield, director of the Centers for Disease Control and Prevention, and Francis Collins, director of the National Institutes of Health, about how the operation is being run.
“The administration still has not provided any explanation of how it is selecting vaccine candidates, what the risks are of narrowing down that shortlist or addressed concerns about potential conflicts in contracts that predate this crisis,” Senator Patty Murray, a Democrat from Washington state, observed during the hearing.
The Warp Speed leaders declined to offer specifics to senators on which companies were candidates or how the selection process works. Disbrow noted that Barda has been making Warp Speed investments public as soon as the agency believes it’s appropriate to do so. (The full list can be found here.) Collins said his agency convened a panel of experts who reviewed 50 Covid-19 vaccine candidates before the list was winnowed down.
All three men told the senators that they hadn’t come under pressure from the White House or anyone else in government to select particular Warp Speed participants or to expedite the delivery of a vaccine to improve President Trump’s re-election prospects.
But political controversy has haunted every discussion of Warp Speed and its timeline for delivering a vaccine. And for good reason. Trump has frequently highlighted the possibility that a vaccine will arrive much sooner than experts and Warp Speed’s own leaders predict, and he has forced agencies such as the CDC and the Food and Drug Administration — both part of the Warp Speed effort — to bend to his will or follow his lead on medically dubious initiatives.
Slaoui says a vaccine could be available by the end of the year for some at-risk individuals, but that would require emergency approval from the FDA. Stephen Hahn, the FDA commissioner, has said his agency will maintain high standards in its approval process, but Trump has also made his preferences clear. That could put pressure on Hahn, an inexperienced commissioner who already flip-flopped on granting emergency authorization for the use of hydroxychloroquine, a controversial and ineffective drug favored by the president.
Members of the medical community have also raised red flags about Warp Speed’s opaque selection process. They contend that some companies appeared to have been selected because they could manufacture a vaccine quickly, not because they demonstrated the most promising scientific approaches. “It’s typical Operation Warp Speed, where everything is sort of cryptic and it’s unclear what they’re actually saying,” Peter Hotez, a vaccine researcher at Baylor College of Medicine, told Science Magazine in June. “What have these vaccines been chosen to do?”
Slaoui and Disbrow say transparency is a priority but that they’re negotiating with publicly traded companies and have to be circumspect about disclosure to avoid moving their stock prices. They say they will soon disclose extensive data from trials the companies have conducted.
“We intend to publish it in a way that does not interfere with the quality and outcome of the clinical trials,” Slaoui says. “That would be the only limitation I can think of: Would this undermine the quality of the work?”
“We have to be transparent,” he adds. “We have to be accountable, of course, of course. Don’t assume that something Machiavellian is happening. … Something beautiful is happening, which is we’re getting our act together to help humanity.”
Because the Trump administration hired Slaoui as a consultant rather than as an employee, he isn’t required to disclose his financial holdings or adhere to federal ethics guidelines. Critics say this could allow him to benefit financially from Warp Speed.
Slaoui disclosed that he sold his Moderna shares, worth at least $10 million, when he joined Warp Speed — and forfeited options that were worth about $4.2 million. He still holds about $10 million of GlaxoSmithKline shares; he says he relies on dividend payments to fund his retirement. He has promised to make a charitable donation based on any appreciation in the price of those shares during his time with Warp Speed.
HHS says it has reviewed Slaoui’s finances and business relationships and doesn’t believe there are financial conflicts that would prevent him from doing his job properly. Disbrow pointed out that Slaoui has no power to award Warp Speed contracts and that individual contracts are managed by other government employees. While Slaoui says he understands and respects the need for the scrutiny his finances have received, he also feels his honesty has been unfairly put into play. “The question is asked in a way that assumes that I’m a thief,” he says. “Doing this to enrich my former colleagues or myself. I disagree with that statement.”
Disbrow says that public service, not enrichment, is what drew him and his colleagues to Warp Speed. “I’ve worked in the government now for 14 years. This is an unprecedented collaboration,” he says. “We’re doing this for the American people and for the world. I mean, I know that may sound like a cliche, but we all have friends and family members who potentially could be impacted by this, so our No. 1 goal is to develop a safe and effective vaccine.”
Warp Speed awarded contracts after companies applied through an open solicitation process run by Barda and the Department of Defense (Gustave Perna, a four-star U.S. Army general, is Warp Speed’s chief operating officer). Disbrow says that experts across the federal government, including contracting officers, reviewed all of the proposals and financial awards.
John Shiver, the head of vaccine research and development at Sanofi, a Warp Speed participant, describes the process as involved. “There is a formal application process and a fairly detailed plan in the application on the technical aspects,” he says. “How it’s made, how it’s characterized, data that evolves, data preclinically and in development, animal immunogenicity, are all provided in great detail as well as data on manufacturing and the doses we can provide.”
Slaoui says speed was a priority in what he describes as a well-defined selection strategy, but it wasn’t the only one. Warp Speed wanted to fund a broad array of vaccine research and manufacturing in order to avoid focusing on a single approach, ensure abundant supply and hedge against possible failures. “Our first priority was, and continues to be, we must be able to have vaccines that are safe and effective, and we must have enough doses of vaccines as quickly as possible,” he says.
The government is funding two cutting-edge shots from Moderna and Pfizer that use messenger RNA or mRNA, molecules that carry genetic instructions, to turn cells into tiny vaccine factories that generate antiviral protection. These shots are easier to make than other options and have raced into clinical trials, but regulators haven’t previously approved such a vaccine.
Warp Speed is also funding more proven approaches. Sanofi’s effort relies on chunks of factory-grown virus protein made with the same process used for one of its successful flu vaccines. This vaccine is to be paired with a booster made by GlaxoSmithKline that could make it more effective and easier to produce in large volumes. Novavax is using a similar method.
In the middle of the range between brand-new and tried-and-true approaches are candidates from AstraZeneca and Johnson & Johnson. Both drugmakers are using a harmless virus to deliver material that helps the immune system recognize the novel coronavirus. There is no broadly used vaccine of this type on the market, but the approach has more human testing behind it than mRNA does. Johnson & Johnson hopes that its vaccine will work with just one shot, in contrast to the two-dose regimen required by other finalists.
Having already secured 800 million potential doses of six shots, Warp Speed plans to fund at least two more unspecified vaccines that would protect against the virus in yet another way.
Each Warp Speed participant has a bespoke deal with the government based on how well-developed its vaccine is, how much funding it needs to complete trials, and the scope of its manufacturing demands.
Pricing is also a pivotal issue. Warp Speed companies are, for the most part, hugely profitable enterprises that charge Americans the highest drug prices in the world. With the government absorbing much of the financial risk these companies usually point to as justification for lofty prices, the expectation is that any vaccine that emerges from Warp Speed should come with a rock-bottom price. Although the vaccines will be free to the public, the ultimate cost to taxpayers is still important.
AstraZeneca, which has pledged to forgo profits from any vaccines it sells during the pandemic, plans to deliver 300 million doses to the government in exchange for $1.2 billion in total funding — about $4 a dose.
Moderna has received nearly $1 billion and is slated to get as much as $1.525 billion more if it can deliver 100 million doses — about $25 per dose.
Disbrow argues that Warp Speed isn’t paying only for shots. The initial $1 billion for Moderna, for example, was a one-time payment to fund clinical trials and factories. Americans will benefit if this helps speed a vaccine to market, and the spending could pay off over time if Moderna produces additional doses. (The company will get less federal money if it doesn’t get an approval by Jan. 31.) Even so, Moderna’s proposed pricing has been especially controversial, and not only because it’s relatively high. Taxpayers have been helping finance Moderna’s vaccine research since long before Warp Speed came along. The NIH, as Axios and Public Citizen have reported, has been such a significant backer of Moderna that it may own a stake in the intellectual property undergirding the company’s coronavirus vaccine.
In that context, it’s reasonable to expect Moderna to set a lower price.
Representative Lloyd Doggett, a Texas Democrat who is a frequent critic of high drug prices and heads a powerful House subcommittee that deals with health-care funding, is not a fan of Warp Speed’s Moderna deal. “For Moderna, the first billion was just not enough,” he wrote in a public statement about the contract. “After American taxpayers gave it over $1 billion to develop, test and manufacture a vaccine, Moderna offers us the privilege of purchasing that same vaccine we already paid for with another $1.525 billion and an option to pay even more for additional doses.”
While not addressing Moderna’s deal specifically, Slaoui argues that the government is getting a solid return on its Warp Speed investments because vaccine recipients will ultimately get a low-cost treatment.
Warp Speed’s contracts are clearly preferable to possible alternatives, he says: research delays and dose costs closer to the $100-plus prices of some vaccines. Without Warp Speed’s deals, the U.S. might have had to compete with other countries for a limited supply of vaccines — boosting prices even further and delaying inoculations.
Also unresolved, and potentially troubling, is the way in which vaccines will be priced after Warp Speed companies deliver their first batch of treatments. If Covid-19 flares up seasonally and initial vaccine protections fade, booster shots may become expensive. Pfizer and Moderna have both indicated that they might charge higher prices for their vaccines post-pandemic.
Slaoui concedes that future prices for a vaccine are likely to go up.
Warp Speed isn’t perfect. A bidding process or public auction for contracts might have saved taxpayers’ money. Joining forces with other countries could have allowed for more substantial investments in new vaccines and helped ensure more equal distribution of vaccines worldwide.
Nevertheless, creating a coronavirus vaccine is crucial. Years of underinvestment in public health and corporate preferences for pricey drugs over other medical necessities have left vaccine research in a state of neglect. Now, with a pandemic ravaging the country, the only option is to gamble on technology.
In years ahead, it will be “unsustainable” for countries to rely on stopgap programs like Warp Speed, Slaoui says. In a world where pandemics happen again and again, he says, governments will need “dedicated organizations” that specialize in developing vaccines.
To be sure, those organizations already exist — the NIH, for example, and foundations such as the Coalition for Epidemic Preparedness. Unfortunately, these institutions aren’t funded or empowered at the level required to meet a Covid-sized crisis.
All things considered, Warp Speed’s progress has been impressive. Moderna and Pfizer are already enrolling patients in clinical trials. AstraZeneca will start a Phase 3 trial soon. It’s possible that a viable vaccine will be ready in the first quarter of 2021.
“Everything that people do is fraught with challenges and problems,” Sanofi’s Shiver says. “I have to say that this has gone about as well as anything could, the collaboration that I’ve seen between government groups and industry is tremendous, and there’s a great amount of goodwill.”
Goodwill is going to be a valuable commodity for Warp Speed, even if it develops a coronavirus vaccine in record time. Millions of doses will do no good if they don’t end up in people’s arms — and that means Warp Speed’s architects will also have to convince Americans traditionally skeptical of public-health initiatives that the government’s vaccine is safe and necessary. Transparency now will help that effort down the road.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
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