Vaccine development is a case of ‘market failure’. Here’s why

Reliance on the private market to develop vaccines has failed, leaving us vulnerable to pandemics such as COVID-19, public health experts say.

The Age revealed on Sunday at least three SARS vaccines that may have prevented COVID-19 were cut off from funding as they were about to go into clinical trials.

Professor George Lovrecz in the CSIRO’s Clayton manufacturing facility where the first pilot batch of UQ’s coronavirus vaccine will be made.Credit:Scott McNaughton

Meanwhile, the global coalition spearheading the race towards a COVID-19 vaccine warns it could run out of funding as early as the end of the month.

Vaccines are far more expensive to develop and produce than other drugs, and many of the potential customers are the global poor, making big pharma companies reluctant to invest.

Nobel laureate and immunologist Professor Peter Doherty said the world needed to change its funding model for vaccine development.

“There is just not enough profit margin in it for pharma companies," he said.

"They live by profits and the rules of capitalism. And capitalism has no interest in human beings other than as consumers.”

Professor Mark Sullivan, managing director of Medicines Development for Global Health, a vaccine development company based in Melbourne, described the vaccine development landscape as a “market failure”.

“The problem is this market failure is our only method of developing medicines,” he said.

Vaccines cost between $US500 million and $US1 billion to develop, plus the cost of building a specialised manufacturing plant to make the doses.

The final study needed for a vaccine to be approved is much more expensive than a similar study for a drug because the study needs to be huge – “tens of thousands to hundreds of thousands of participants”, said Professor Sullivan.

Three SARS vaccine projects, which may have yielded important insights for a COVID-19 vaccine as the viruses are closely related, stalled at this stage.

And manufacturing a vaccine is much more expensive than making a drug, because they are often made by feeding bits of genetic code to bacteria which then produce the vaccine – a difficult and costly process.

Because of all those factors, pharmaceutical companies have been largely unwilling to invest in vaccines for the last 30 years.

To solve the problem, two charities were set up: the Coalition for Epidemic Preparedness Innovations, to fund vaccine research, and Gavi, which works to distribute vaccines to the poor.

Dr Seth Berkley, CEO of Gavi, said it was very difficult to get funding for research on vaccines for viruses that have not yet become pandemics.

“We have enough land-based nuclear missiles to destroy the world. And in case that does not work, we keep air-based missiles and submarines. And that’s to prevent something much less likely than the evolutionary certainty that is a pandemic virus.”

Australia has pledged $250 million for Gavi between 2016 and 2020, and had given $6.5 million to CEPI before the start of the current pandemic.

CEPI is funding several COVID-19 vaccines, including two being tested at the CSIRO’s high-security Geelong lab and a third vaccine developed by the University of Queensland.

But the coalition has warned it may exhaust its funding by the end of March. At least $US2 billion more will be needed to finish the project, the coalition said.

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