Column | Financial Sustainability

U.S. stands at the forefront of efforts to develop a COVID-19 vaccine

Column | Financial Sustainability

U.S. stands at the forefront of efforts to develop a COVID-19 vaccine


As of July 27, 2020, the total number of persons infected by the novel coronavirus reached almost 16.9 million, with more than 650,000 deaths attributed to COVID-19 across more than 200 countries.a And many healthcare experts believe those figures are materially understated.

COVID-19 is highly transmissible, spread by even asymptomatic individuals. And it is “wily,” as it has mutated over a dozen times. In short, it constitutes an unprecedented challenge for all of humankind. The result has been a worldwide effort of historical dimensions to develop and manufacture an effective vaccine that will eradicate the threat of the coronavirus.

The importance of a vaccine

While proper hand hygiene, personal protective equipment, social distancing, testing and therapeutics are all valid and useful measures in the battle against SARS-CoV-2, the virus that causes COVID-19, a safe, effective vaccine is the only path to normal. It is the ultimate game-changer, the one development, if implemented extensively, that could greatly reduce the threat of infection and bolster consumer confidence to reengage with the healthcare system as before.

Given the importance of finding a vaccine, more than 40 governments, including the U.S federal government in a prominent role, are subsidizing the development efforts with unheard-of levels of funding.

Operation Warp Speed

Unveiled by President Donald Trump in mid-May 2020, Operation Warp Speed is a public–private partnership initiated by the federal government to facilitate and accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics. The project has a budget of at least $10 billion. To put that figure in perspective, it’s about 40% more than the average annual total budget for the Centers for Disease Control and Prevention for fiscal years 2016 through 2019.

Investments in developing and manufacturing vaccines

To date, Operation Warp Speed has invested almost $4 billion in vaccine developers Moderna, AstraZeneca (working with Oxford University), Johnson & Johnson, INOVIO Pharmaceuticals, Merck, Novavax and Sanofi.b And more funding for vaccine development is forthcoming.

Of course, a COVID-19 vaccine deemed safe and effective does no good if it cannot be distributed to millions of people in the U.S. and billions of people worldwide. To that end, the U.S. government has also provided funding for manufacturing of COVID-19 vaccines, including:

  • $628 million to contract manufacturer Emergent BioSolutions to support vaccine productionc
  • $204 million to glassmaker Corning to increase the manufacturing capacity of its vials that will be used to store coronavirus vaccines and treatmentsd
  • $143 million to SiO2 Materials Science to boost the production of its vials and syringese
  • $138 million to ApiJect Systems America to create a high-speed supply chain for prefilled syringes.f

High stakes

The development of a COVID-19 vaccine has been likened to a horse race, and a huge one at that, as there are currently more than 140 candidate vaccines at various stages of development. Given the unprecedented loss of life caused by the novel coronavirus and the damage it has done to almost every area of the U.S. economy, the stakes are huge.

Likewise, the potential for failure is significant. One need only look at unfruitful efforts by the world’s scientific community to develop vaccines for severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS), both of which are caused by coronaviruses. Also consider the often-repeated caution by Anthony Fauci, M.D. director of the National Institute of Allergy and Infectious Diseases: “There’s no guarantee that the vaccine is actually going to be effective.”g

Given the enormously high stakes and always-uncertain outcomes of vaccine development efforts, the U.S. government is seeking to mitigate risk by placing multiple educated bets in this critical horse race. But unlike a real horse race, in which there’s a single winner and many losers, there could be more than one winner in the race to develop a COVID-19 vaccine, and a win for all of humanity. 

Footnotes

a Statista, “Number of novel coronavirus (COVID-19) confirmed cases and deaths as of July 28, 2020, by region,” July 28, 2020.

Taylor, P., “US government gives Moderna $483m for COVID-19 vaccine,” pharmaphorum, April 17, 2020; Cohen, E., and Vigue, D., “U.S. taxpayers are funding six COVID vaccines. “Here's how they work,” CNN, June 22, 2020; INOVIO Pharmaceuticals, Inc., “INOVIO receives $71 million contract from u.s. department of defense to scale up manufacture of CELLECTRA® 3PSP smart device and procurement of CELLECTRA® 2000 for COVID-19 DNA vaccine,” CISION PR Newswire, June 23, 2020; Paton, J., “Novavax COVID vaccine gets $1.6 billion in U.S. funding,” Bloomberg, July 7, 2020.

c U.S. Department of Health and Human Services, “HHS adds $628 million to contract with Emergent Biosolutions to secure CDMO manufacturing capacity for operation warp speed,” News release, June 1, 2020.

d Corning, Inc., “U.S. Departments of Defense, Health & Human Services select Corning Valor® Glass packaging to accelerate delivery of COVID-19 vaccines,” News release, June 9, 2020.

e Hargreaves, B., “U.S. government doubles down with $143m syringe investment,” BioPharma-Reporter.com, June 9, 2020.

f U.S. Department of Defense, “DOD awards $138 million contract, enabling prefilled syringes for future COVID-19 vaccine,” News release, May 12, 2020.

g Feiner, L., and Lovelace, B., “Fauci tells Congress: ‘There’s no guarantee that the vaccine is actually going to be effective,’” CNBC, May 12, 2020.

 

COVID-19’s impact on U.S. hospital finances underscores the urgency for a vaccine

The novel coronavirus has also wreaked havoc on U.S. hospital and health system finances. A May report from the American Hospital Association estimates losses resulting from COVID-19 expenses and lost revenue for hospitals and health systems for March through June exceeded $200 billion, an average of over $50 billion per month.a

Although the executive orders from at least 35 governors suspending elective surgical procedures certainly contributed to the revenue losses, a longer-term concern for healthcare providers is the public’s reluctance to visit hospitals and other healthcare facilities, which two polls conducted in May found.

According to one poll, 79% of its respondents would avoid going to a hospital at any cost.b Similarly, a national survey conducted by Leede Research found that 72% of its respondents have dramatically changed their use of traditional health services, 42% say they feel uncomfortable going to a hospital for any kind of medical treatment, 38% would delay scheduling elective procedures for at least six months, and 27% would delay scheduling diagnostic procedures or tests in a hospital setting for at least six months.c

Footnotes

a American Hospital Association, “New AHA report finds financial impact of COVID-19 on hospitals and health systems to be over $200 billion through June,” Special bulletin, May 5, 2020.

b Verdict Hospital, “Public reluctant to visit hospitals during COVID-19 emergency: Poll,” May 20, 2020.

c Lagasse, J., “Most consumers have changed healthcare usage since COVID-19 pandemic, survey shows,” Healthcare Finance News, May 22, 2020.

 

 

About the Author

Ken Perez

is vice president of healthcare policy, Omnicell Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter. 

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