A Perfect Storm: How the Public and Private Sectors Came Together to Save the World From COVID

Health care policy experts gathered for a panel discussion, “If the NIH Funds the Research, Should There Be a 'Government Discount?” focused on key questions regarding government funding for research, vaccine pricing, incentives and innovation.

Health care policy experts gathered for a panel discussion at the AcademyHealth 2021 Datapalooza and National Health Policy Conference in February to discuss key questions regarding government funding for research, vaccine pricing, incentives and innovation.

The panel session, “If the NIH Funds the Research, Should There Be a 'Government Discount?” was moderated by National Pharmaceutical Council (NPC) Interim President and CEO Robert Dubois, and featured Northwestern University’s Craig Garthwaite, Brigham and Women's Hospital’s Aaron Kesselheim, University of Minnesota’s Stephen Parente, and the Milken Institute’s Kristin Schneeman.

After Parente provided background on how the government put together the Warp Speed program to accelerate the development of a COVID vaccine, Dubois pointed out that the topic of government funding of biomedical research, and what the pricing of medical innovation should be, was a popular topic before COVID and became an even more popular topic during the pandemic.

“Has government funding for COVID treatments and vaccines been a success and has the price been acceptable?” asked Dubois. “Given the learnings from COVID, are there collaborations and public-private partnerships that should be a part of life moving forward?”

Schneeman said it’s undeniable that we developed a cure more quickly, noting that many barriers seemed to melt away throughout the year, including barriers to product development, acceleration to research collaboration and deployment of clinical trial innovations.

“I’m sure if anybody had told any one of us a year ago that this could happen, I think we wouldn't have believed it understanding the pace of vaccine development up to that point in time,” she said. “We all know that it’s been a very symbiotic relationship and system between government funding and private sector investors.”

Kesselheim said that so far, the price of the vaccine has not been a hurdle to getting the vaccine out to the public. “Given how effective the vaccine is and the fact that the price was set ahead of time, it seems like so far it's been a fair price for what we're getting,” he said.

Dubois then asked the panelists about the length of time this pricing should stay in place. “Does the government get a huge discount forever or just during the period of time that is critical to get society back to work?”

Kesselheim suggested that going forward, vaccine pricing should be based on a cost-plus or a cost-plus-plus model, where an additional amount is added to the cost of the vaccine so that manufacturers will be able to make a reasonable return on their investment.

Garthwaite, however, disagreed with that suggestion and with the idea of placing price regulations that were not in the initial contracts with biopharmaceutical companies:

Dr. Craig Garthwaite of Northwestern University discusses why government price controls can be problematic.

Parente pointed out that the NIH funds basic scientific research and some translational science that allows the private sector to take it to the next level and eventually gain a patent on the medicines they develop and put on the market. “We’re essentially still rewarding an entrepreneurial model,” he said.

But Garthwaite argued that it’s not just about the patent because innovation benefits everyone. He said innovation in pharmaceuticals provides insurance value to all of society, particularly innovations for unmet needs that transform uninsurable health risks into insurable financial risks.

“I view the private market as a complement to the NIH. The funding is not a substitute,” said Garthwaite. “The idea is that the NIH helps us understand more about how things work inside the human body and then private markets figure out how to use that information to develop a drug and then get that drug to work in our body. The private market investments are substantial. They're much larger than the NIH investments,” he said.

Schneeman said it’s important to keep in mind the patient’s perspective in all of this. “Innovation versus access to health care is becoming a very different conversation for the patient community than it has been in the past,” she said.

In the end, all the panelists agreed that when there is a very well-identified target that everyone zeroes-in on, government-directed funding can be very effective. “It's much easier to make these types of government-private sector relationships work under the pandemic situation,” said Dubois. “It was in a positive way, a perfect storm to get everybody to work together.”