Moderna, a relatively new biotech company, has generally been seen as America’s top competitor to developing a coronavirus vaccine, although it follows several Chinese companies. Regardless of whether your vaccine is valid or not, you should definitely receive an award for milking the government.
He was the big winner in the initial contracts, earning $ 483 million in April for developing a vaccine. While that may have seemed adequate to get through the development and testing process, the company decided to return to depression and have the government pay $ 472 million for the Phase 3 trial of the vaccine.
Together, these payments virtually guarantee that the company will make substantial profits in its development and testing of the vaccine. However, Moderna will continue to gain a monopoly on the vaccine patent, allowing it to charge people in the United States and in other parts of the world as much as they want for the vaccine.
Some simple arithmetic calculations show that Moderna has almost certainly already made a profit.
We are paying Moderna twice. We first took the tab for research and testing and now we give the company a monopoly on the patent so that it can charge people all over the world as much as they want for the vaccine.
The company reported that it had 892 employees at the end of 2019. Suppose they each paid $ 20,000 per month for the three months between signing the contract and the first round of clinical trials. (Actually, it was more like two months). That would come to $ 53,520,000. If we double this for equipment and other supplies, we get $ 107,040,000.
Phase 3 trials are projected to involve 30,000 people. Recent research indicates that the average cost per person in a phase 3 trial for vaccines is $ 10,000. That would come to $ 300 million.
Let’s increase this by 50 percent because Moderna is in a hurry, that gives us $ 450 million.
Given that the government paid $ 483 million for preclinical research and $ 472 million for Phase 3 trials, it appears that Moderna is reaping a healthy benefit in both. However, the government continues to grant Moderna a monopoly on the patent, which means it will arrest anyone who attempts to produce the vaccine without Moderna’s permission.
(To avoid literalists some problems, people are not arrested for patent infringement. They are issued a civil court order that tells them to stop violating the patent. They could then be arrested for defying the order if they continue to produce the vaccine without Moderna’s permission.)
If we go back to Econ 101, the justification for the government to grant patent monopolies to pharmaceutical companies or anyone else is to encourage them to research and develop new products. The monopoly will allow them to recover the research costs and compensate them for the risk that they do not have a successful product.
Moderna’s history will not fit here. It has already been compensated for its investigation costs by the government. In addition, it has zero risk. If your vaccine turns out to be ineffective or has harmful side effects, the company has already been paid for its work.
The patent monopoly means that we are paying Moderna twice. We first took the tab for research and testing and now we give the company a monopoly on the patent so that it can charge people all over the world as much as they want for the vaccine.
This should be a big scandal, but I guess everyone knows that the pharmaceutical companies are cheating on us. Also, economists and the media are too busy worrying about unemployed workers making too much money.
Dean Baker is one of the founders of the Center for Economic and Political Research, which studies how economic policies affect citizens. Baker earned his Ph.D. in economics from the University of Michigan. He has been an assistant professor at Bucknell University and a consultant to the World Bank, the Joint Economic Committee of the United States Congress, and the Trade Union Advisory Council of the Organization for Economic Cooperation and Development (OECD).
