Column | Healthcare Business Trends

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

Column | Healthcare Business Trends

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


As of Sept. 21, 2020, the total number of persons infected by the novel coronavirus reached almost 31.2 million, with more than 960,000 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 $10.2 billion in AstraZeneca (working with Oxford University), GlaxoSmithKline, INOVIO Pharmaceuticals, Johnson & Johnson, Merck, Moderna, Novavax and Sanofi for vaccine development, manufacturing and distribution.b

In addition, to date, the U.S. government has also provided over $1.5 billion in funding to support other aspects of the manufacturing and distribution of COVID-19 vaccines, including:

  • $628 million to contract manufacturer Emergent BioSolutions to support vaccine production
  • $265 million with Texas A&M University and FUJIFILM to bolster domestic manufacturing capabilities and capacity
  • $160 million to Grand River Aseptic Manufacturing Inc. for aseptic fill and finish manufacturing capacity
  • $138 million to ApiJect Systems America to create a high-speed supply chain for prefilled syringes.
  • $204 million to glassmaker Corning to increase the manufacturing capacity of its vials that will be used to store coronavirus vaccines and treatments
  • $143 million to SiO2 Materials Science to boost the production of its vials and syringes

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 180 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.”c

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 humanity. 

Footnotes

a. Johns Hopkins University & Medicine,  “COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU),” Sept. 21, 2020.

b. U.S. Department of Health & Human Services, “Fact Sheet: Explaining Operation Warp Speed,” accessed Sept. 21, 2020.

c. Feiner, L., and Lovelace, B., “Fauci tells Congress: ‘There’s no guarantee that the vaccine is acutally 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.

Among respondents to one poll, 79% said they 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, 202

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. 

Sign up for a free guest account and get access to five free articles every month.

Advertisements

Related Articles | Healthcare Business Trends

News | Strategic Partnerships Mergers and Acquisitions

Healthcare M&A activity for Q3 remains low in volume but high in impact, firms report

The number of M&A transactions involving hospitals and health systems remained at historically low levels, but the average revenue involved was far higher than in recent years.

News | Strategic Planning

Consumerism and the transition to value are among the trends drawing strategic reactions from healthcare providers, survey finds

A recent survey finds healthcare providers working to ensure their strategic planning incorporates key trends, spurring innovations in care delivery models.

White Paper | Artificial Intelligence

Revamping prior authorization: How AI and automation could boost care and revenue

Prior authorization is the most time-consuming transaction for medical providers, taking up to an hour to complete manually. Find out how providers and health plans can save up to $417 million annually be automating prior authorizations.

Column | Finance and Business Strategy

Reframing health as an investment: What we stand to gain

FMA President and CEO Joe Fifer discusses the implications of reframing health as an investment rather than an expenditure.