Search the Site

Episode Transcript

When you’re in the middle of a global pandemic, which has been destructive and disruptive on so many levels, it’s hard to have much clarity about anything. It’s even harder to have any certainty. But one thing seems at least likely, when history looks back, the Covid-19 pandemic will be divided into two eras: before the vaccine and after the vaccine. Assuming, of course, there is a successful vaccine.

After all the illness and death, the economic hardship, the frustration and the finger-pointing, a vaccine is the single event that will help us turn the page. Vaccines typically take years to develop. Not this time. A month ago, the first American vaccine candidate went into Phase 3 clinical trials, which means we could be very close. And there are a number of other promising vaccines. Today on Freakonomics Radio, we hear from the chief medical officer at the biotech firm that developed this first U.S. vaccine candidate:

Tal ZAKS: When people ask me about, well, “How has this been possible to move so fast,” there are three components.

We hear from a former F.D.A. commissioner about going from successful vaccine to successfully vaccinating billions of people.

Peggy HAMBURG: It’s like building the plane as you’re trying to fly it in gale-force winds of a pandemic vortex.

And if you are the kind of person who likes to look for a silver lining in even the darkest clouds, we hear how Covid-19 may inspire a new way to fund medical R&D:

Andrew LO: We actually have the ability to develop therapeutics for many of these diseases, if not cures. So, why aren’t we doing it? 

*      *      *

Tal Zaks, who grew up in Israel, started out in cancer research, which led to cancer-drug development at pharmaceutical firms like Sanofi and GlaxoSmithKline. And now?

ZAKS: I’m the chief medical officer at Moderna. 

Moderna is a biotech company in Cambridge, Mass.

ZAKS: And the magic sauce, if you will, it’s a place where science, medicine, and engineering find this fascinating melting pot. 

Until recently, Moderna was best known for its very successful 2018 I.P.O., and its multi-billion-dollar valuation, despite a glaring lack of success in bringing drugs to market. Some investors became frustrated as the company shifted its focus to vaccines. In the pharmaceutical industry, vaccines are considered difficult and financially unviable. After all, a vaccine is a drug that people will take only once, or maybe a few times — not every day. But now, Moderna is better known as having developed, in partnership with the National Institute of Allergy and Infectious Diseases, one of the most promising vaccines for Covid-19.

ZAKS: So, our vaccine candidate is called m.R.N.A.-1273. It is an m.R.N.A. molecule.

m.R.N.A. meaning messenger R.N.A.

ZAKS: It’s a transient instruction set, it lasts in the cell from 24 to 48 hours or so. And then it’s degraded and gone. But in that time, it coaxes the cell to produce the protein that it encodes for. And so that fundamental information, if you will, is the underpinning of our technology.

And how is it supposed to work?

ZAKS: So, what it does is it actually takes the instruction sets for part of the virus, the protein that the virus uses to attach itself to cells, and it encodes them in this messenger R.N.A., so that when we inject the vaccine into somebody’s arm, it actually causes that person’s own body to make that protein. Just that piece of the virus. So, that the immune system can get educated, can get immunized against that piece of the virus.

So, that now if you’re walking down the street and somebody sneezes on you and there’s SARS-CoV-2 in the snot, it actually doesn’t do you any harm because your immune system has seen that protein before. And it reacts very quickly to prevent the spread of the virus in your body.

In the global race for a Covid vaccine, different researchers are trying a variety of methodologies and platforms. The m.R.N.A. approach is not among the most common. More typically, vaccines are developed using a weakened or inactivated version of the virus itself. This means scientists have to grow and tweak the virus to generate a viable vaccine. An m.R.N.A. approach lets you skip that. Indeed, Moderna’s vaccine candidate entered Phase 1 safety trials just two months after Chinese health officials shared the genetic sequence for the novel coronavirus.

ZAKS: In fact, Moderna has never had the SARS-CoV-2 virus anywhere in our premises. We don’t need it. We start from the digital information of what the virus encodes for and go on from there. 

And on July 27th, Moderna became the first U.S. vaccine candidate to enter Phase 3 trials, also known as efficacy trials. That will determine whether the Moderna vaccine can reliably and safely protect against Covid-19.

ZAKS: The way the trial is set up is, we’re taking 30,000 participants, we’re trying to choose people who are at risk for infection, because if you went and vaccinated somebody like me — well, I’d go back into my own house. 

That’s because Zaks, like many of us, is working at home.

ZAKS: I’ve not been to the office since March. 

Stephen DUBNER: I assumed that Moderna was one of the exceptions, that there’s a lab, and that all the industrious people have to go there and be physically present.

ZAKS: That is absolutely true. The best thing I can do for them is to stay out. 

Which is why Zaks himself would not be a good candidate for the vaccine trial.

ZAKS: You know, the likelihood of me getting infected is going to be very low and the trial would never read out. We’re also trying to enroll participants who are at risk of severe disease should they get infected. And that has to do with the elderly people with comorbid conditions.

Participants in the Moderna trial are being recruited from nearly 100 locations across the country.

ZAKS: So, what we do is we vaccinate people. Half of them are going to get our vaccine. Half of them are going to get a placebo. And we basically then wait and start to see who raises their hand and says, “I don’t feel too good, doc, maybe I’ve got Covid.” And once they do, then a whole system kicks into gear to diagnose them, measure their oxygen level, make sure they’re cared for, but at the same time, start tallying up a scorecard.

How many cases occurred on the Covid-immunized arm versus how many cases are occurring on a placebo? And as you can imagine, the moment we will have sort of a statistically significant difference that will drive our determination of efficacy. 

DUBNER: Can you tell me anything about what you know so far? 

ZAKS: Well, what I know so far is two very important things. The first is, I know that the vaccine can generate neutralizing antibodies that are, on average, higher than what you see even with infection. And the second thing I know is that the safety and tolerability profile, so far as we’ve seen from Phase 1 and Phase 2 trials, is it’s pretty much what you’d expect. So, now the question is, well, what does that look like in a much larger population of tens of thousands of people? And does that immune response — that you are optimistic will prevent disease — can it indeed be shown to prevent disease? 

Shortly after Moderna’s vaccine candidate entered Phase 3 trials, there was another m.R.N.A. candidate, from the pharmaceutical firm Pfizer and their German partner BioNTech. There are other vaccine candidates in Phase 3 that use a D.N.A. mechanism, including one from Oxford University and the British-Swedish pharma firm AstraZeneca; there’s one from the Chinese firm CanSino Biologics; and the American firm Johnson & Johnson just announced that its Phase 3 trial, to begin in September, will enroll up to 60,000 participants. Other companies are going the conventional route of using an inactivated virus, including the American firm Merck. Other candidates, like the one from the American firm Novavax, use a protein-based mechanism. Each scientific approach has its upsides and downsides. In the case of the m.R.N.A. approach that Moderna is using, one downside is that it’s relatively unproven — and not just at producing a successful vaccine.

DUBNER: So, as I understand it  — and please correct me if I’m wrong — several other pharma and biotech companies have tried an m.R.N.A. approach for various treatments and abandoned it. And again, as I understand it, no m.R.N.A. drug has ever been approved for human use. So, despite your optimism on the Covid-19 vaccine that Moderna is working on, why should we believe that this one will work? 

ZAKS: Well, I think what we have done uniquely is leverage a decade of engineering and science on top of medicine to sort of break the riddle of how to get an m.R.N.A. to make enough protein. And the second element is, we already have proven time and again that we can generate neutralizing antibodies with this vaccine. So, the question ahead of us is not whether m.R.N.A. will work. The question ahead of us is whether neutralizing antibodies are going to prevent Covid-19. And I think the likelihood of that answer is very, very high.

If the Moderna trial is successful, their vaccine could be approved for emergency use as early as this fall. When you think about the successful vaccines in our collective past — for polio or measles or H.P.V. — the timeline from discovery to licensing is, on average, 10 to 15 years. The novel coronavirus that causes Covid-19, meanwhile, was identified less than one year ago. There’s obviously been huge pressure to find a vaccine in this case, since the disease has proven so communicable, sometimes fatal, and has disrupted life around the globe. Still, how has there been so much progress so fast? I asked Tal Zaks to explain the speed from the Moderna perspective.

ZAKS: There are three components. One is, our science and technology enables us. It enabled us to start in record time and it’s also enabling us to increase our manufacturing so rapidly. No. 2, the level of collaboration has meant that we don’t usually wait for the weeks and months that you typically wait in the drug-development cycle. I think we’re very fortunate in this country to have the F.D.A. that we do. They are working nights and weekends just like we are.

And the last element that I think people often don’t appreciate: one of the biggest reasons that it takes so long for developing vaccines is because, remember, vaccines are treating a healthy population, trying to prevent a really uncommon event of an infection. And so typically, you go and you treat thousands, sometimes tens of thousands, and then you sit around and you wait for years for the events to accumulate. Well, in the current transmission in the United States, unfortunately, that transmission is high. And in a very paradoxical manner, the worse it is out there, the quicker we will be able to demonstrate efficacy. 

HAMBURG: We are moving at unprecedented speed. 

That’s Peggy Hamburg. She’s a physician and public-health expert who was the commissioner of the F.D.A. from 2009 to 2015. She’s still involved with a variety of institutions, including the National Academy of Medicine, that promote vaccine development and access to vaccines.

HAMBURG: Vaccine development is a challenging process. It can be very high-risk. Most vaccines that are initiated in the R&D process go on to fail. 

Much earlier in her career, Hamburg did AIDS research — at the N.I.A.I.D., as a special assistant to Anthony Fauci. (Yes, Fauci has been there quite a while.) Later, when she ran New York City’s health department, Hamburg promoted needle-exchange programs to reduce the spread of H.I.V., the virus that causes AIDS. It is easy to forget how frightening, and fatal, H.I.V./AIDS was. We can forget because of the massive research that led to therapeutics which have made the condition treatable. But it’s also worth remembering that, despite all that research, a successful AIDS vaccine has never been discovered.

HAMBURG: Certainly, the experience with H.I.V. vaccines is a reminder that even with some of the best minds in science, and considerable investment of time and dollars, it’s a scientific challenge that has proven very, very hard to crack. It looks as though this coronavirus is probably a lot easier to make a vaccine against. But that remains to be seen. 

Hamburg is impressed by the accelerated timeline of the Covid-19 efforts. Typically, many vaccine candidates don’t make it all the way through the three main phases of clinical trials. So, companies try to minimize their losses.

HAMBURG: And each of those stages is generally done in a very discrete way, where you do a stage, you sort of assess where you are, you make more vaccine so you can go on to the next stage. And that can take a very, very long time. And in this case, there’s been a real effort to compress the stages in important ways. 

In the U.S., this effort has been coordinated at the federal level by Operation Warp Speed, whose stated goal is to “deliver 300 million doses of a safe, effective vaccine for Covid-19 by January 2021.” Among the agencies involved are the Department of Health and Human Services and several constituent H.H.S. agencies including BARDA, the Biomedical Advanced Research and Development Authority, as well as the Department of Defense. Instead of the normal discrete approach that Peggy Hamburg described, Operation Warp Speed is compressing the process: Moderna, for instance, was allowed to move into Phase 3 trials even though its Phase 1 and 2 studies are still ongoing.

HAMBURG: And importantly, also, the companies and the government working together are investing in making a lot of vaccine beforehand, even not knowing whether a given vaccine candidate is going to make it through these different stages and actually cross the finish line. So, you may be creating a manufacturing facility and preparing for a large scale-up and actually making vaccine that ultimately, will end up in the garbage. But that’s going to be important, because as soon as we have a vaccine that proves that it’s safe and effective for use, you’re going to want to be able to give it to not just hundreds of thousands of people, but literally billions of people, because this is a global pandemic.

Operation Warp Speed is trying to increase the odds of success by spreading R&D money across a bunch of vaccine candidates, and not all American firms. For instance, $2.1 billion has gone to Sanofi and GlaxoSmithKline, in return for 100 million future doses. BARDA recently awarded Moderna $1.5 billion for 100 million future doses; that was on top of an earlier nearly $1 billion from BARDA. Moderna, keep in mind, is a publicly traded company whose market capitalization at one point had more than quadrupled on the news of its vaccine efforts. I asked Tal Zaks what this new tranche of government money meant to the firm, and what it entitled the U.S. government to.

ZAKS: The company has been funded over the years by billions of dollars of private investment. Those billions created the opportunity for the U.S. government to come in earlier this year and say, “I’m going to add some money to the pot to make sure that you get the development for this vaccine right.”

However, I can promise you that every one of those dollars will be accounted for. That’s not money that goes to our coffers, nor is it money that goes to our profits. That’s going to be part and parcel of our ability to manufacture and provide access to the U.S. population through what I anticipate to be central purchasing by the U.S. government, or at least I hope so. 

DUBNER: And is that purchasing, whether it’s central or otherwise, is that guaranteed? What if the U.S. government says, “We’re going to give you guys $30 a dose,” and then let’s say Saudi Arabia or China comes and says, “You know what, Tal? I’ll go $100 a dose, and I’m going to buy double what the U.S. had committed to buy.” What happens then? 

ZAKS: So, we have been very disciplined and very thoughtful back from January and February about how we do this. We’ve set a price that was reasonable and a price that allowed governments to pre-purchase access. We’ve not played any favorites. Clearly we’re domiciled in the United States. And I think the U.S. has sort of first dibs.

But we’ve also set up a manufacturing site in Switzerland to enable sort of a neutral country for rest-of-world supply. And at that point, what we’ve said is, to the governments who are interested, basically, it’s a question of time, which is to say, if you sign up now, then I can guarantee you that the first production lot, you’ll get a cut of it. And that’s how we’ve tried to be responsible to the unmet need out there. 

DUBNER: So, Moderna has been criticized for its, “secrecy,” for not sharing its methodology and results in peer-reviewed scientific settings. One scientist who used to work at Moderna says it is as much, if not more, of an investment firm than a biotech firm, or at least a biotech firm that will successfully bring drugs to market. How do we know that you’re not the next Theranos, I guess, is what I want to know. 

ZAKS: Look, that would have been a legitimate question in 2015, 2016. It’s not today, for the very simple reason that we’ve published dozens of scientific papers on everything from the underlying science of our technology to our effects in human beings. Now, it’s true that in the beginning, we didn’t publish much.

And I’ll tell you a personal story. When I joined in 2015 and I came to one of my first executive committee meetings, I said to the team, “Okay, so we’re not publishing much.” And everybody said, “Yep.” I said, “Well, why is that?” And they looked at me, said, “Well, why do you want to publish?” And I said, “Well, so that we attract good talent.” And they looked at me and said, “Well, we got good talent.” “Okay, so that you’ll attract funding.” And they looked at me and said, “Well, we’ve got funding.”

So, I have to think, “Okay, so why do we publish?” And the answer was for all of the above reasons — except for I.P. considerations. In the early days, it was very important to not publish so that we could get all of our patents, which is ultimately what value here is built on. Now, I will tell you this, my comeback, because it made me step back and think — I said, “Okay, let me just be clear. Every experiment we do in men, even Phase 1, even when it’s not required by regulations, we will publish. Otherwise, I’m not your chief medical officer.” And they said, “Yep, of course.”

And then I went a step further, said, “Okay, so when we get into the clinic, we should be publishing the preclinical basis for our clinical experiment. Do you agree with that?” And everybody looked at me and said, “Yep, that makes sense. That’s got nothing to do with our I.P.” And we’ve done that. I would challenge you to find any other company who is entering Phase 3 trials today who have been as transparent about their clinical activities as we have.

LO: The comment that Moderna looks as much like an investment company as a drug company, from a financial economist’s point of view, I have to say, “Is that a bad thing?”

That is Andrew Lo, who happens to be a financial economist, at M.I.T. He is, among other things, a leading scholar in the field of risk.

LO: Any biotech company — and I don’t have any particular inside information about Moderna — but any biotech company has to manage their finances properly. In the same way that you and I have to make sure that we are spending within our budget and we are saving for retirement, a company has to be equally responsible. With a biotech company, this is even more important because funding is the lifeblood of a biotech company. Without money, they can’t conduct clinical trials. They can’t do research. And so, all the progress that we see will stop if they run out of money. And the asset that they worked so hard to develop actually gets destroyed.

You know, if you’ve got a parking lot and you go bankrupt — well, the parking lot gets transferred to your creditors and they’ll develop the parking lot. No big deal, no loss. But if you’re developing a drug and you go bankrupt, and all the expertise that’s involved in developing the drug go off to other areas and other pursuits, because they’ve got families to feed, the value of that asset — even though you’re close but not quite there — it’s destroyed.

It’s like building half a bridge. A half a bridge is not half as good as a full bridge. So, based on an outsider’s perspective looking in, Moderna has managed their finances quite successfully. They have a lot of cash. Their cash is going to be used to develop not just this vaccine, but a number of other vaccines. But there is tremendous amounts of risk. If they’re successful, I hope they’ll make a lot of money. If they’re not successful, then the investors could literally lose everything. 

I asked Lo how he’d come to be interested in the economics of drug development.

LO: Well, I got interested in medicine a few years ago when a number of friends and family were dealing with various kinds of cancer. And the more I looked into the situation, the more I realized that finance actually plays a pretty big role in drug development and delivery. And so, I’ve been working over the last few years on applying concepts of financial engineering — things like portfolio theory, securitization, risk management — to seeing whether or not we can actually come up with better business models for developing drugs and getting better drugs to patients faster and ultimately cheaper. 

So, he’s been exploring what kind of incentives will best lead drug companies to invest in the risky and costly business of vaccines. 

LO: Exactly. The question is, what is a particular drug worth, and therefore, what are you willing to pay for? It’s a very difficult question because it varies. And frankly, when I started studying the economics of these different drugs, I was quite surprised that vaccines were priced so cheaply. I mean, to give you an example, for flu, it’s on the order of $10 to $20 a dose. For some of the rarer diseases, maybe it’s up to $100 a dose. That’s in the United States. In third-world countries, it tends to be much less. You can get vaccines for a few pennies a dose in certain cases.

And it always struck me as odd because if you think about what a really effective vaccine does — what would you pay for something that basically eliminates the risk of getting a disease permanently? I would have thought you’d pay a lot. For example, if you have cancer, God forbid, if there is a cure, you would pay a lot for that cure. The typical cost of a leukemia patient for taking Gleevec is on the order of $100,000 to $150,000 a year. And yet, we’re balking at paying, I don’t know, $50 or $100 for vaccines, even though it actually will prevent you from getting the disease for a very, very long time, if not for the rest of your natural life. 

DUBNER: So, there are many firms and institutions seeking to develop a successful Covid-19 vaccine right now, obviously. Let’s assume that one or more are successful relatively soon. Fingers crossed. What can your research tell us about the most successful way to coordinate distribution, how to balance medical need with the economics? What can you tell us about who gets it, when do they get it, who pays for it, and so on?

LO: I wish I had a good answer for you but let me first start out by saying that part of the challenge of thinking about these issues is that it’s not just about the economics. The fact is that when you’re dealing with life-and-death issues like Covid-19, there are ethical issues that come into play that have nothing to do with economic considerations. Or rather, they shouldn’t have anything to do with it.

So, I think what we can say is that it’s important to get the economics right, meaning it’s important that we get the pricing of these vaccines correct so that they provide both a reasonable rate of return to investors who have risked their capital to develop these vaccines, while at the same time making sure that there’s no price gouging going on and that ultimately we provide access to everybody. So, that’s the balance that I think we have to strike.

DUBNER: I hate to say it, that sounds impossible to me. I mean, your brain is obviously much larger than mine, but those sound like they are often quite competing forces. 

LO: They are. But I think we’ve been able to thread this needle in many other contexts. For example, we have drugs for cancer, for diabetes, for heart disease. And the kind of social contract that we’ve struck is that we are willing to let pharma companies and biotech companies make a lot of money, in some cases crazy amounts of money, in exchange for eventually giving society the underlying secrets of their sauce for free.

There are companies that have made tremendous amounts of money based upon patents for certain drugs. But at some point, those patents expire. And when they do, the drugs become essentially free. That’s happened with statins, for example, that deal with heart disease. But nevertheless, because infectious diseases are a public-health issue, governments have to be involved in ways that for other drugs they don’t.

And so, we need to be careful that while we want to give everybody access at a reasonable price, we also want to make sure that these biotech and pharma companies that have risked their investors’ capital are able to continue doing so in the future. That’s the balance that I think we have been able to strike in the past for private-sector initiatives. And for public-health initiatives, I believe that collectively we have big enough brains to figure out exactly how to thread that needle.

Here’s what we know so far about the pricing of a prospective Covid vaccine. At a Congressional hearing in July, AstraZeneca and Johnson & Johnson said they would sell their vaccines at cost, at least during the pandemic. Merck, Pfizer, and Moderna have said they plan to make a profit. Pfizer estimated a price of $19 per dose for a two-dose vaccine, but priced less for low-income countries. Moderna priced their vaccine at around $25 to $30 a dose, although the implied price based on their Operation Warp Speed deal is slightly lower. I asked Moderna’s Tal Zaks how his firm has been thinking through the pricing of what could be its first blockbuster drug. 

ZAKS: I think of it as three elements. The first is, what do I think the value that this vaccine brings? The second is, what is my responsibility to society in the context of a pandemic, of this unheard-of crisis? And the third is, where do I objectively land up in the real world? And so let’s start with those. In terms of value, it’s pretty clear that even if you take away the value to the economy and take away the value to society and just stay with the hardcore direct health-care benefits that this vaccine is expected to prevent, you’re going to come to a very expensive price.

Now, it’s going to be a price that none of us are going to be comfortable paying, which is where the second element comes in. Okay, this is a pandemic. I’ve got a responsibility to society. So, most of that value will go to society. I will actually end up with a small proportion of that. And then the third element for me is, okay, what makes sense. And I have to tell you, when I step back and I see that our price range and what we’ve disclosed is actually cheaper than a diagnostic test, I feel good about it, because think about it — every time you get a fever, you get sick, and you’re worried about it, you have to go get tested, you’re going to use a diagnostic test probably more than once or twice. Whereas a vaccine, you get two doses, you should be good for a while.

*      *      *

The former F.D.A. commissioner Peggy Hamburg warns that developing a successful Covid-19 vaccine isn’t the only hard part of immunizing the population.

HAMBURG: Just because you can make a vaccine and even test it doesn’t mean that you can scale it up to the kinds of huge numbers that we’re talking about. And lots of things can go wrong in that process. It’s having all of the tools that you need to package it into the glass vials with the rubber stoppers, having the needles and the alcohol swabs to administer it, and then getting it to the people who need it.

The supply of a successful vaccine is bound to be limited, at least in the beginning. This gets to the question of who gets it first — which countries, and which individuals within a country. Hamburg sits on the board of GAVI, the Global Alliance for Vaccines and Immunizations. 

HAMBURG: Yeah. Well, GAVI is an organization that has now existed for several decades. It was created through a combination of philanthropy and support from a range of nations in order to provide this well-proven public-health tool of vaccines to the poorest countries of the world who otherwise might not have access. 

In normal times, GAVI shares the cost of vaccines with developing countries, and also negotiates lower prices with drug manufacturers. For the Covid-19 pandemic, GAVI created what’s called the COVAX Facility, which encourages high-income countries to fund a portfolio of promising vaccines. Those countries would guarantee themselves future doses while their money would subsidize vaccine purchases for lower-income countries.

DUBNER: And can you describe the incentives that COVAX gives high-income countries and whether, in this case of Covid-19, it’s going to be enough? You know, if supplies are limited, what’s to prevent a government from going outside of COVAX, even if they have contributed, and making their own deal with pharma companies and buying up supply?

HAMBURG: Well, at present, while many countries have expressed interest in supporting COVAX, the United States has not made any such commitments. It is understandable that the United States and many other nations are pursuing strategies to help ensure vaccine development and access within their own countries. But I think there is a very strong and powerful argument for why it is in the U.S. interest and in the interest of other nations to also invest in and support access to Covid-19 vaccines in countries around the world.

This is a global pandemic. Virus and disease anywhere puts us all at risk. In addition, we just were talking about how vaccine development is an uncertain, high-risk prospect — we don’t know which vaccine strategies are going to work. So, in fact, you can argue that while you might make some big investments in companies that you’ve prioritized and vaccine candidates that you as a country believe hold the most promise, you’re better off if you diversify your portfolio. 

DUBNER: But you must be frustrated that COVAX is not getting greater buy-in than it is, yes?

HAMBURG: Well, it’s an extraordinary undertaking and I think reflects the kind of global coalition that we need to address a global pandemic and that, frankly, we need in a globalized world. But— 

DUBNER: But isn’t it inherently hard to build that coalition once you’re in the pandemic?

HAMBURG: It’s very hard to build that kind of coalition ever. And it’s especially hard when you’re in the midst of a crisis. It’s like building the plane as you’re trying to fly it in gale-force winds of a pandemic vortex. But I think that this is, really, also the time to be doing it before we have clear winners and losers in the vaccine race. Because that’s when, in fact, the argument for “What’s in it for me? What’s in it for the U.S.?” in some ways is the strongest. Because it may be that there are vaccines being developed in other countries that will, in fact, cross the finish line first.

DUBNER: Yeah. We’ve been reading lately that current F.D.A. Commissioner Stephen Hahn is “caught between scientists and the president,” as The New York Times put it. I’m curious how you would describe what you see to be his dilemma.

HAMBURG: Well, there’s no doubt that these positions in public-health leadership and especially, I think, the F.D.A. — you are operating at the interface of science, medicine, public health, and politics. And that can be a dangerous interface. I had the opportunity to talk with him before his confirmation process. And I told him then that he absolutely needed to stand by the science, that he would be pushed in many different directions, many competing priorities, many different stakeholders, many with loud voices and sometimes sharp tongues. But that, at the end of the day, what enables you to keep on track is using science as your North Star.

He sits at the head of a unique and essential public-health agency that was put in place over 100 years ago to promote and protect the health of the American people. It is a regulatory agency that, in fact, is the gold standard for the world. The responsibility is huge, but the opportunity to make a difference by doing the right thing is also huge.

DUBNER: Putting aside the supply of a Covid-19 vaccine, what about the demand? So, presumably if the F.D.A. did not approve a vaccine but somehow the White House said, “No, this is the one, let’s all take it,” presumably that would dampen the public’s appetite for a Covid vaccine. But even, let’s say, the F.D.A. approves, I’ve seen research suggesting that only half of Americans at the moment say they would take it. Can you talk about that for a moment, general appetite for vaccines? What happens if take-up rate is only, let’s say, 30 to 50 percent?

HAMBURG: Well, vaccine hesitancy has been a longstanding concern. It’s been fueled by a strong anti-vaccination movement in this country and elsewhere. But also, in the case of the current public-health crisis, there have been concerns because of the politics of the situation and the acceleration of the R&D process that’s been much discussed — people who normally are supportive of vaccines, asking questions of, “Can we really trust it? Will it be safe? And if they say it’s effective, can we really believe that?”

And, of course, there are populations that over time, not because of the anti-vax movement, but because of other experiences, that have questioned certain kinds of medical research and medical programs. You know, many in the Black community remember the Tuskegee experiments and other situations of exploitation. So, this is the moment now to get out there and start engaging the many different constituencies that we would want to get vaccinated that may have questions.

DUBNER: I know that in 2008, you co-wrote a report called “Germs Go Global: Why Emerging Infectious Diseases Are a Threat to America.” You and your co-authors advocated for more public-health capacity, more monitoring of infectious disease, more international coordination, and also urged Congress to add incentives for vaccine and diagnostic R&D. So, tell me, how much of that actually happened? And for that which didn’t happen, why not? 

HAMBURG: Well, that report was reflecting experience with both SARS and the biological threat of anthrax as a deliberate cause of disease. It also was reflecting back on experience I’d had as New York City health commissioner, dealing with what was then still an emerging pandemic of H.I.V. disease, as well as the resurgence of tuberculosis there, now in a more dangerous, drug-resistant form. And all of those experiences led me early on to be focused on vulnerabilities to infectious-disease threats that had the capacity to be catastrophic.

Many thought I was crazy early on. And some high-level people in science, medicine, and public health did sort of pat me on the shoulder and say, “You should really work on real world issues. Maybe you’ve been reading too many science fiction books.” But Covid-19 is the living experience of some of our greatest concerns. It has been surprising to me that we haven’t done better in our response, surprising and deeply saddening and scary. 

I asked Andrew Lo, the M.I.T. economist who studies risk, why he believes the U.S. was so underprepared for a pandemic like Covid-19.

LO: Well, I would say that it’s two things. It’s a market failure, certainly, because, after all, infectious diseases are a public-health issue and there is an element of a public-good aspect. You don’t want people to be infected, not just for their own benefit, but you don’t want them to be infecting others. But there’s also a behavioral failure. And the behavioral failure is that we don’t like paying for things that we don’t really need right away.

DUBNER: Flood insurance, for instance. 

LO: Exactly. Out of sight, out of mind. And so, until recently, infectious diseases have been pretty much out of mind. And historically, particularly over the last 10, 20 years, governments have not been willing to pay for a number of vaccines, particularly those for diseases that have not yet broken out. In other words, they don’t stockpile vaccines. And a number of organizations have pointed out that that’s probably not a good idea. We probably need to think more proactively about developing vaccines for infectious diseases that might break out in the near future.

That need gave Lo an idea: to increase the financial incentives for pharma and biotech companies by setting up targeted investment funds.

LO: Let’s back up and just think about how a drug gets developed. A typical cancer drug takes about $200 million in out-of-pocket costs. That’s the kind of cash you would need to take a drug from the preclinical stages all the way through clinical trials — Phase 1, Phase 2, Phase 3 — and then get it approved by the F.D.A., if you’re lucky. The process of doing that, this $200 million, is actually fraught with a great deal of risk. In fact, for cancer, historically, the probability of success is about 5 percent. So, in other words, if you start out with a $200 million investment, you wait 10 or 15 years for the clinical trials to be done, and then at the end of that process, you’ve got a 5 percent chance of getting any kind of economic return.

That’s not very attractive. And so, financial engineering takes that and says instead of doing one at a time, maybe you do a whole bunch of them at a time. For example, if you did 150 of them at a time, even if individually they have a 5 percent chance of success, out of 150 independent trials, each with a 5 percent chance, you’ll actually have the probability of producing at least three hits with a probability of 98 percent. So, this is basically Moneyball applied to cancer-drug development. 

What Lo is suggesting here is not so different from the portfolio the U.S. government has been building with Covid-19 vaccine candidates. It’s just on a larger scale, with a more systematic approach. Lo believes this concept could be applied to drug R&D of all kinds. In one recent paper, he and his co-authors explored the idea of a megafund devoted to vaccines. 

LO: It turns out that for the cost of something on the order of $25 to $50 billion, we could actually develop a portfolio of vaccines for nine of the most serious infectious diseases, as identified by experts like the World Health Organization. And from my point of view, that is a wonderful, wonderful bargain. Because if you look at what’s happened now with Covid-19, with SARS in the past, with MERS, with some of the other threats, any of which could break out and spread very, very quickly, this is a good investment for society. 

DUBNER: Were any of those nine somewhat close to what turned out to be this novel coronavirus?

LO: Yes, there was at least one that was similar to a coronavirus.

DUBNER: When did you write this paper?

LO: Well, we actually wrote the paper three years ago, but we struggled to get it published because there wasn’t nearly the interest that there is now. And so we just posted it a few weeks ago on medRxiv. 

DUBNER: So, I don’t mean to be a conspiracy theorist or a pure speculator. But let’s say you had published that paper a few years ago and that had led to the development of said fund of, let’s say, $50 billion. Would there have been a Covid-19 vaccine before Covid-19 started to do so much damage?

LO: Well, you know, it’s easy to say, “Could have, would have, should have.” And I think that nobody really knows for sure. But I think it is possible to conclude that had such a fund been set up even a year ago, there would be a lot more focus and attention on these issues and we would have been able to react much more quickly. $50 billion is literally a drop in the bucket when it comes to being able to deal with these kinds of threats. And the thing that really frustrates me is that it’s not as if we don’t have the scientific expertise. We actually have the ability to develop therapeutics for many of these diseases, if not cures. So, why aren’t we doing it?

ZAKS: Well, I think Monday morning quarterbacking is always easy.

That again is Tal Zaks, the chief medical officer at Moderna.

ZAKS: I think it’s pretty clear to all of us that no country in the world has been prepared in terms of the infrastructure required to deal with this pandemic.

DUBNER: Now, if I’d come to you and Moderna, let’s say five years ago, and said, here is $30 billion — which is roughly the market cap of your company right now — and said, I want you to use this to develop a stockpile of vaccines for, let’s say, the 10 or 20 most likely infectious diseases to emerge over the next five to 10 years. Could you’ve done that?

ZAKS: I believe so. Internally, we already have this project, we call it the Never Again Project, of how do we ensure that we sustain ourselves and the platform, the manufacturing, the science capabilities, because there will be a SARS-CoV-3. Now, that being said, of course, there is a very difficult, inherent commercial challenge here, or economic challenge, of how do you prepare yourself for a need that actually isn’t there today? Somebody has got to bear the cost of that. 

DUBNER: To a federal government of a country the size of the U.S., a $30-billion rainy day vaccine fund doesn’t seem very expensive, does it?

ZAKS: Look, $30 billion is still a lot of money when you look at all the competing priorities at the federal level. If you think back to how we all were walking around in October, November of 2019, I think $30 billion to do that would have sounded like a large number for us. I think our perspectives have irrevocably changed.

LO: The difficulties are it’s kind of hard to think and make decisions when you’re under pressure.

Andrew Lo again.

LO: You know, if I asked you to do some math problems and put a gun to your head, you might make more careless mistakes than usual. And I think the same is true. We have a very big gun to our head. People are dying every single day and we need to get a vaccine and other therapeutics to those patients as soon as possible. The benefit, on the other hand, is that now everybody is focused on this issue. And certainly, in the scientific community, scientists and clinicians have come together like never before.

DUBNER: Can you talk about how you see Covid-19 and a vaccine potentially changing the way we think about access to health care generally? Not everybody will have pancreatic cancer. Not everybody will have type II diabetes. But everybody will presumably need — or many people will want, at least — a vaccine for Covid-19. So, do you think about access to certain strains of health care more like access to utilities, where it can be privatized to a large degree, but the government is involved in regulation and pricing?

LO: The question that you’re getting at is, is health care a right or a privilege? If we believe that health care, or certainly access to Covid-19 therapeutics, is a right, then we have to change the way we go about developing those things. You know, it’s a lot like utilities that we take for granted. Many decades ago, we decided as a society that electricity was so important, that everybody in this country has a right to electricity, that we actually took electricity off the table from the private sector. Electricity does not get charged whatever the market will bear. We tell the electric companies what they can charge. We set the price through a process involving the government.

And so, I think that this is the question we have to answer: Are some drugs so important to public health that we don’t want to have the private sector solely in control of their pricing and their manufacturing. And I don’t know what the answer is, because this is obviously not just an economic question. It’s a political question, an ethical question, and a cultural question. But it’s one that we haven’t been dealing with, we sort of pushed it off. And I think that Covid-19 has brought it to the forefront. 

DUBNER: So, let’s extend that thought for a moment. When you make a comparison between, let’s say, an infectious-disease vaccine and electricity, I think, “Okay, but the R&D on electricity has been done.” Maybe there’s some slight upgrades happening every year. I have no idea. But we’re talking about funding and maybe offering future access to medicines that don’t exist yet. So, if we think about certain pieces of health care like vaccines in the future as more right than privilege, how would that change the upstream funding situation? 

LO: It would mean that governments now would have to be involved in funding basic R&D for vaccine development and general research on infectious diseases. Now, I have to say that we already do some of that. The N.I.H. in particular spends between $35 and $40 billion a year on basic medical research and science. And so, that’s actually very important. And a lot of the reasons that we know as much as we do about Covid-19 is because of that funding. But that’s not enough.

Because of the public-health nature of infectious diseases, I think we’re going to have to have the government playing more of a role in that commercialization process. There’s a so-called valley of death between basic science and an actual commercial product. And that valley of death really represents a lack of funding because the risks of taking an idea out of the laboratory, into the clinic, into human trials, that’s a tremendous amount of risk that, for a variety of reasons, investors aren’t always comfortable with. The government can play a very valuable role in helping to de-risk that portion of the development cycle. 

Even so, there’s still an element of risk and uncertainty. The SARS-CoV-2, which causes Covid-19, is, remember, a novel coronavirus. When a new disease emerges, there would still be R&D needed to make a precise vaccine. But the idea is that you could get a head start by preparing for similar types of diseases. In some ways, that’s what happened with Moderna and its Covid-19 vaccine candidate.

HAMBURG: In terms of long-term preparedness, Moderna and its vaccine is kind of an example of a strategy that works.

That, again, is Peggy Hamburg.

HAMBURG: It was receiving support for developing a MERS vaccine from an organization called CEPI, the Coalition for Epidemic Preparedness and Innovation, which was started after the Ebola outbreak. 

 MERS, or Middle East Respiratory Syndrome, was also a coronavirus.

HAMBURG: Because of those investments, in fact, Moderna was able to quickly switch over to a vaccine candidate against the SARS-CoV-2. And the Moderna vaccine was the first to go into clinical studies nine and a half weeks after the genome was posted.

DUBNER: In other words, there are big payoffs for early investment, yes? 

HAMBURG: Early investment. And it’s not just in specifically developing candidate vaccines against pathogens of pandemic potential, but it’s also developing new platforms for vaccines, new strategies for vaccine development that can quickly be built up when disease X or Y emerges.

DUBNER: Do you think it’s possible, if we were looking back at now from, let’s say, five years hence, that there will be mechanisms developed, networks built in the pursuit of a Covid-19 vaccine, that will prove really beneficial in the treatment of other diseases?

HAMBURG: I absolutely do. Covid-19, marks a hugely important moment in time when the scientific research community came together across disciplines and sectors and borders. And I hope we won’t lose that spirit of collaboration, because we really have disadvantaged ourselves by working in a much more siloed way. And if we can break that down and really collaborate, as we are doing in important ways with the Covid-19 vaccine R&D efforts, I think it will be a huge, huge breakthrough for the future. I think also, if we can really demonstrate that you can compress some of the stages of vaccine development, then I think it won’t be acceptable to go back to having vaccines take 10, 12 years to develop.  

DUBNER: So, the solutions that you’re proposing, while deeply rational and desirable, sound perhaps close to impossible because there’s so much coordination that would need to happen among governments and institutions that typically aren’t great at that. I’m not saying the markets have done a great job either, but I am curious why you’re so optimistic when the past would suggest otherwise.

HAMBURG: Well, you know, I like to find optimism where I can. And frankly, the last months have been rather grim. I think a component of what we do as a nation needs to be reflective of the fact that science is a global enterprise, and that we have many, many shared interests and concerns and opportunities around the world, and that we need to be working in concert with others.

And I do think that recent years have been made more complicated by the kind of nationalism that we’ve seen in our country, and in other countries as well. And I’ve been a little saddened that a global pandemic has not overcome some of that way of thinking in our country. But I think the future, whether it’s addressing infectious disease threats or some of the other huge challenges before us, from climate change, to energy security, to food and water security, to nuclear nonproliferation, all require global commitments as well as the application of a concerted scientific strategy to finding meaningful and sustainable solutions. 

*      *      *

Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Daphne Chen. Our staff also includes Alison CraiglowGreg RippinMatt HickeyCorinne Wallace, Mary Diduch, and Zack Lapinski. Our intern is Emma Tyrrell. We had help this week from James Foster. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple PodcastsStitcher, or wherever you get your podcasts.

Read full Transcript


  • Tal Zaks, chief medical officer of Moderna.
  • Peggy Hamburg, physician and public-health expert and former F.D.A. commissioner.
  • Andrew Lo, finance professor at M.I.T.