Financing Vaccines for Global Health Security
38 Pages Posted: 11 May 2020 Last revised: 28 Sep 2021
Date Written: May 8, 2020
Recent outbreaks of infectious pathogens such as Zika, Ebola, and COVID-19 have underscored the need for the dependable availability of vaccines against emerging infectious diseases (EIDs). Prior to the COVID-19 pandemic, the cost and risk of R&D programs and uniquely unpredictable demand for EID vaccines discouraged many potential vaccine developers, and government and nonprofit agencies have struggled to provide timely or sufficient incentives for their development and sustained supply. However, the economic climate has changed significantly post-pandemic. To explore this contrast, we analyze the pre-pandemic economic returns of a portfolio of EID vaccine assets, and find that, under realistic financing assumptions, the expected returns are significantly negative, implying that the private sector is unlikely to address this need without public-sector intervention. However, in a post-pandemic policy landscape, the financing deficit for this portfolio can be closed, and we analyze several potential solutions, including enhanced public-private partnerships and subscription models in which governments would pay annual fees to obtain access to a portfolio of stockpiled vaccines in the event of an outbreak.
Note: Funding: Funding support from the MIT Laboratory for Financial Engineering is gratefully acknowledged, but no direct funding was received for this study and no funding bodies had any role in study design, data collection and analysis, decision to publish, or preparation of this manuscript. The authors were personally salaried by their institutions during the period of writing (though no specific salary was set aside or given for the writing of this manuscript).
Declaration of Interests: J.V. and B.K. report no conflicts. S.C. is a co-founder and chief technology officer of QLS Advisors, a healthcare analytics and consulting company. M.M. is Executive Director for Global Health Security and Biotechnology at The MITRE Corporation, a not-for-profit organization working in the public interest as an operator of multiple federally funded research and development centers (FFRDCs). She is focused on the sustainability of the biodefense industrial base and the public-private partnerships that are vital to national and global health security. A.L. reports personal investments in private biotech companies, biotech venture capital funds, and mutual funds. He is a co-founder and partner of QLS Advisors, a healthcare analytics company; an advisor to AlphaSimplex Group, Apricity Health, Aracari Bio, BrightEdge Impact Fund, Enable Medicine, FINRA, Lazard, NIH/NCATS, Quantile Health, the Swiss Finance Institute, and Thalēs; a director of Atomwise, BridgeBio Pharma, Roivant Sciences Ltd., and Annual Reviews; and a member of the Board of Overseers at Beth Israel Deaconess Medical Center and the NIH’s National Center for Advancing Translational Sciences Advisory Council and Cures Acceleration Network Review Board. During the most recent six-year period, A.L. has received speaking/consulting fees, honoraria, or other forms of compensation from: AlphaSimplex Group, Annual Reviews, Atomwise, the Bernstein Fabozzi Jacobs Levy Award, BIS, BridgeBio Pharma, Cambridge Associates, CME, Financial Times, Harvard Kennedy School, IMF, JOIM, National Bank of Belgium, New Frontiers Advisors (for the 2020 Harry M. Markowitz Prize), Q Group, Research Affiliates, Roivant Sciences, and the Swiss Finance Institute.
Keywords: vaccines fund, emerging infectious diseases, healthcare finance
JEL Classification: I11, I18, G11,G12
Suggested Citation: Suggested Citation