Government officials should have poured much more money into producing and distributing COVID-19 vaccines to save more lives and rescue the economy faster, according to new research co-authored by 16 researchers including Harvard Business School professor Scott Duke Kominers.
Although government officials took steps to speed vaccine development last year, the United States and other countries could have paid to build manufacturing infrastructure and shore up the supply chain needed to produce vaccines at higher capacity. That extra investment could have saved billions or even trillions of dollars in value, Kominers and his co-authors reported in Market Design to Accelerate COVID-19 Vaccine Supply in the March 12 issue of Science.
“The value of being able to produce vaccines at scale the minute they clear trials is extremely high in a pandemic,” says Kominers, the MBA Class of 1960 Associate Professor of Business Administration at HBS. “You are losing hundreds of billions in raw economic activity each month—and that’s not even accounting for all the other forms of loss the pandemic has caused. So you can put a lot of money into building factories in advance, just to have ones ready to produce the vaccine that works.”
Even as vaccine efforts gain momentum around the world, hundreds continue to die each day. The pandemic, which shrank the global economy by 4 percent in 2020, has also pushed more than 119 million people into extreme poverty, according to the World Bank. And in the United States, the Federal Drug Administration this week advised states to pause the use of the Johnson & Johnson vaccine after six women developed a rare blood-clotting disorder, raising new concerns about total vaccine supply.
Losses that could have been avoided
Kominers spent the early months of the pandemic writing about marketplace design tactics that could provide support—for example, by leveraging delivery marketplaces to bring food to the elderly or by distributing hand sanitizer more equitably.
Kominers joined Accelerating Health Technologies—a group of academics analyzing ways to speed COVID-19 vaccination—to dig into the economics of the virus. The group noted in the paper that many countries worked to ramp up vaccine development and production over the last year. The US, in particular, launched Operation Warp Speed, which invested in promising vaccine candidates and committed to buy hundreds of millions of doses of successful vaccines, providing a guaranteed market for the shots.
"I couldn’t be on the front lines treating patients. But at least I could try to help with some of the market design challenges."
“I don’t have a medical degree. I couldn’t be on the front lines treating patients. But at least I could try to help with some of the market design challenges,” Kominers explains.
But the team found that government officials didn’t invest nearly enough. Their study estimates the world is on track to be able to produce 3 billion courses of vaccine per year, reaching half that production capacity in January and the rest by the end of April. Yet if governments had invested enough upfront to bring the second half online just three months earlier, the economic savings would have topped $700 billion in gross domestic product alone.
A more comprehensive accounting that includes health care costs puts the savings figure closer to $1.3 trillion. And capacity to produce an additional 1 billion vaccine courses could similarly be worth on the order of $1 trillion. “Astoundingly, even those are pretty conservative numbers,” Kominers says, noting the model doesn’t take into account more subjective measures of well-being, such as quality of life.
Sticker shock may have hampered investment
The unprecedented scale and cost of the global pandemic may have made governments shy about investing more early on, Kominers says.
“Some of it had to be sticker shock,” says Kominers, who explored that disconnect in another co-authored paper forthcoming in AEA Papers and Proceedings. “We’re not used to assessing benefits on the scale of hundreds of billions to trillions, so when you are already spending tens of billions, it’s hard to feel like you’re not spending enough.”
Government officials also may have worried they were gambling too much on vaccines that might not pan out. “Additionally, if you build production capacity far in advance, you might end up not using some of it because a vaccine turns out not to work,” he says. “The usual instinct is to wait until you know which vaccine works and then scale up production. But that wasn’t the right instinct here.”
In addition, governments may have been wary about putting taxpayer money toward building infrastructure for private corporations—even if they did recoup the investment in the form of reduced vaccine costs. But again, in the case of COVID-19, the value of these investments would have far outstripped the potential costs.
Time to invest in horseshoe crab blood?
Beyond building factories, future government investment could include creating specialized equipment, such as large bioreactors necessary to produce vast quantities of vaccines. Governments could also invest in parts of the supply chain necessary for making vaccines. One input, for example, is a chemical necessary for detecting toxins in vaccines, which in nature is only found in horseshoe crab blood.
"They're literally bleeding hundreds of thousands of horseshoe crabs a year."
“They’re literally bleeding hundreds of thousands of horseshoe crabs a year,” Kominers explains. A synthetic version of the chemical has recently become available, but has never been used at scale, creating an opportunity for governments to step in to regulate and fund the chemical’s production.
In addition, governments could use existing vaccine stores more effectively through cooperative agreements with other countries and initiatives such as COVAX, which aims to distribute vaccines more equitably, Kominers says. Widespread vaccination—especially in developing countries—could reduce the incidence of new virus variants that threaten immunity everywhere.
“There’s a real need to spread vaccination around the world,” Kominers says. “If we or other countries have vaccine doses that we are not going to use, then we should be giving those doses to other countries.”
Preparing for the next pandemic
Kominers believes the lessons learned from the COVID-19 pandemic will leave countries better prepared in the future—“so we build the capacity to produce vaccines at scale as early as possible,” he says.
"Even if we convince just one government to invest more, the social returns could be enormous."
For now, Kominers hopes the research team’s analysis sends a clear message: When it comes to vaccinating the public during a pandemic, we shouldn’t cut corners.
“I would love to see real shifts in how we finance, produce, and distribute vaccines,” he says. “Even if we convince just one government to invest more, the social returns could be enormous.”
About the Author
Michael Blanding is a writer based in the Boston area.
[Image: iStockphoto/Nordroden]
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