Vaccines, Incentives, and Innovation: The Lessons of COVID-19 for the Pharmaceutical Industry
What can the successful development of multiple COVID-19 vaccines tell us about the current state of the pharmaceutical industry? Can it offer new lessons for how we might catalyze innovation and reassess the relationship between life sciences companies and regulators?
To shed light on these questions, Managing Principal Jee-Yeon Lehmann spoke with Michael Kinch of Washington University in St. Louis. Professor Kinch, who directs Washington University’s Centers for Research Innovation in Biotechnology and Drug Discovery, is an expert in drug research and development who has published extensively on the commercialization of biopharmaceutical products.
How would you assess the pharmaceutical industry’s success in its discovery and development of the COVID-19 vaccines?
Michael Scott Kinch: Professor of Biochemistry and Molecular Biophysics, and Director of the Centers for Research Innovation in Biotechnology and Drug Discovery, Washington University in St. Louis
The development of the COVID-19 vaccines was unprecedented in its speed and scale. As I discuss in my book Between Hope and Fear: A History of Vaccines and Human Immunity, pandemics, by necessity, drive innovation. This was clear with the Spanish flu of 1918, from which you can draw a direct line to the creation of the biotech industry. And it’s clear with COVID-19 as well.
One of the more intriguing changes brought about by this pandemic is the phenomenal partnership between the FDA [Food and Drug Administration] and the pharmaceutical industry, which was mutually beneficial. Like most new technologies, there were many unknowns with the mRNA technology underlying the Pfizer-BioNTech and Moderna vaccines. A year ago, we didn’t know if that technology would work for vaccine development. The successful development of multiple vaccine programs within a fraction of the time required to develop previous vaccines is largely the result of open communication and increased coordination between the regulators and the scientists and professionals in the pharmaceutical industry.
Are there lessons we can take away from that experience?
Absolutely. There are important lessons to learn not only from the scientific and technological advancements that were made but also from the processes that led to the rapid and successful development of these vaccines. In particular, this experience may be the catalyst for taking a fresh look at the opportunities created by collaboration across different stages of the regulatory and drug development process, as well as open communication among different stakeholders in that process.
Taking a step back, what does the success of the COVID-19 vaccine development programs tell us about the current state of vaccine development more generally?
There’s one trend I’m especially concerned about. Since the mid-1990s, although the number of new vaccines has grown fairly steadily, the number of pathogens – that is, the net number of disease-causing organisms that we can prevent with vaccines – has been stagnant. That’s not to say that we’re not developing new vaccines; we are. With the exception of COVID-19, however, these new vaccines are in most cases only improvements on existing vaccines, not drugs that will protect us against new pathogens.
If you examine what’s happening at the company level, you’ll also see that over the same time period, many of the companies (on the order of 80% or so) that were previously involved in vaccine development have gotten out of that business.
“The successful development of multiple [COVID-19] vaccine programs within a fraction of the time required to develop previous vaccines is largely the result of open communication and increased coordination between the regulators and the scientists and professionals in the pharmaceutical industry.”
– Michael Kinch
That’s a very significant drop. What do you think explains it?
It has to do not only with the rising cost of drug development, a phenomenon that we’ve all become familiar with, but also with the increasing amount of time it takes to bring a vaccine to market. Not only is it taking longer to do the science and develop a vaccine product that can successfully pass through clinical trials and the approval process, but you only have a few years of patent exclusivity to recoup the cost of investment. Many companies looked at the math and decided that the numbers just didn’t add up for them to stay in the vaccine business.
If we zoom out further, what does this tell us about the pharmaceutical industry as a whole?
The industry is clearly in a state of critical flux right now. The fundamental challenges that it faces stem from what’s known as Eroom’s Law – so named because it’s the reverse of Moore’s Law, the law of increasing efficiency in computing. In the pharmaceutical industry, it’s the opposite: R&D has become progressively less efficient since the 1950s, largely because of the combination of increasing complexity in the technologies involved and increasingly rigorous requirements of the regulatory approval process. Many of the attempts to try to reverse the explosion of costs – industry consolidation, for example, or outsourcing – have at times backfired and made the cost increases worse instead.
What are the real-world consequences of this rise in R&D costs for the industry?
Look at the recent history of antibiotics, where some companies have also elected to dismantle their R&D capabilities. From a business standpoint, it makes complete and total sense, but of course there are serious consequences from a public health standpoint. And that, to me, is the fundamental tension that applies to both vaccines and antibiotics, which is that we have a situation where the public health needs and the business needs run exactly opposite of one another.
Can the lessons of the COVID-19 vaccines help us reverse some of these trends?
I’m a big believer in incentives. I think the fundamental question is: How do we get people to work together so that we can create incentives that empower collaboration, such as those we saw during COVID-19, and make much-needed treatments viable from both financial and public health perspectives? How do we align both of those factors?
I think it all begins with creating the right kinds of incentives for catalyzing innovation. We essentially did that for the COVID vaccines. The government said, we’ll underwrite some of your costs and we’ll guarantee you a market if you can deliver the product. Many companies that I think would have otherwise been hesitant to make the investment said, okay, I’ve got a guaranteed market, I’m going to enter this space. I’m going to develop and use a novel technology.
In part, both the government and the private sector were motivated by the dire need for the public good. But I think the approach also created the financial rationale that companies could use to go to their shareholders or boards and say, there’s actually money to be made on creating a new vaccine for COVID.
To me, what this means is that it’s important to help create a market for the product. Why not apply the same principle to Zika? Why not apply the same principle to malaria? And I’m hoping that perhaps we’ll be led in part by some examples from COVID-19 and learn that, in some instances, getting the product to the market is actually a pretty darned important thing, whether you’re the first entrant or not. ■