Anusuya Chatterjee, Ross DeVol
The late Steve Jobs once said, “Great things in business are never done by one person; they’re done by a team of people.” The lifesaving COVID-19 vaccines were an unprecedented development and the result of close partnership across government, academia and private biopharmaceutical companies. Usually, it takes years to bring therapies and vaccines from bench to bedside through long-term collaborations across the entire ecosystem involving substantial investment. Yet, development and deployment of the COVID-19 vaccine defied odds and for good reason. With such a quick turnaround, it is one of the most successful collaborations in recent years – one worthy of many accolades.
NIH scientists, in partnership with academia and private companies, created a prototype Coronavirus to study the spike protein by building on the decades of U.S. government tax dollars spent on research at NIH for HIV and other viruses. Further, the US government supported biopharmaceutical vaccine development by covering scale-up costs, committing to advance purchase of vaccine candidates and actively helping in clinical trial processes through Advance Market Commitments (AMC) and Operation Warp Speed (OWS). In total, it is estimated that the U.S. government directly invested $18-23 billion in the development of the COVID-19 vaccine (a tiny percentage of the economic benefit that the vaccines would come to have). In less than a year, three of America’s seven vaccine candidates achieved emergency use authorizations from the FDA and could begin being deployed.
Undoubtedly, the rapid development and deployment of vaccines during the COVID-19 pandemic lessened the impact of the virus on the economy. And while the U.S. is not yet fully out of the woods, particularly with concerns over new strands of the virus, such as Omicron, gone are the days of total shutdowns in our business, education and travel sectors. Imagine the severe economic, social and psychological impact of COVID-19 variants America would have faced today, if we didn’t have the vaccine. Accelerated development and deployment of the COVID-19 vaccine mitigated severe adverse effects of the pandemic through easing the burden on the health care system, boosting the economy and improving quality of life. Thus, it can be concluded that what we have experienced is not as severe as it would have been economically had there been no vaccine. In the world of economics, this is defined as economic savings. But can the economic implication of the COVID-19 vaccines be quantified? At Heartland Forward, we set out to do just that estimating the economic savings in the U.S. to be $438 billion in terms of 2021 real GDP gain, or 2.3% of 2021 Real Gross Domestic Product (GDP). This is an enormous economic benefit due to the unprecedented speed and efficiency of creating the COVID-19 vaccines made possible through historic public-private partnerships between the federal government, academia and biopharmaceutical companies.
These vaccines, when deployed in American arms, were able to generate significant economic gains. This was a staggering recovery after the height of the COVID-19 shut down, which saw an unprecedented 22.4 million in job losses and a GDP contraction at an annual rate of 32.9%. In 2021, even as COVID continued to spread in communities nationwide, the vaccines mitigated the economic burden of COVID-19 by minimizing the disease’s spread and severity. These benefits were likely particularly important in the 20 states within the heartland, where the impact of COVID-19 was detrimental because of high rates of chronic diseases which, especially before the vaccines, increased severe COVID-19 outcomes.
The significant economic benefits of the vaccines display the phenomenal potential of America’s innovation pipeline, fueled by public-private partnership. It’s imperative that we preserve this system to continue fighting this everchanging pandemic and potentially get through the next one. Congress is working to finalize legislation that would lower drug costs for consumers, while maintaining incentives for investment in medical innovation. This is a delicate balancing act.
Currently, after biopharmaceutical companies successfully release a new therapeutic, they can expect significant profits in the first 13-14 years because of their exclusive ownership of the drug. These profits are then reinvested in research and development for new therapeutics and vaccines. If these exclusivity windows are shortened, it could likely cut biopharmaceutical profits, potentially discouraging companies to invest and new discoveries to be made sooner than later.
While Congress faces pressure to lower the costs of prescription drugs for their constituents, it should not lose sight of the incentives private companies have to innovate and produce new therapies. Policy changes that reduce incentives to innovate might not permit us to combat the next pandemic as rapidly and allow our economy to get back on track at the speed we have been able to accomplish thus far.