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The White House Prepared for a Pandemic

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New York Gov. Andrew Cuomo launched the Democrats’ broadside against the Trump administration’s Covid-19 response. “Our current federal government is dysfunctional and incompetent,” he told virtual conventioneers Monday in a recorded speech. “It couldn’t fight off the virus. In fact, it didn’t even see it coming.”

In reality, the administration was well aware of the threat of a pandemic before the novel coronavirus emerged. We helped develop a September 2019 White House report, “Managing the Impact of Pandemic Influenza Through Vaccine Innovation,” which prompted immediate presidential action that has accelerated the development of a Covid vaccine.

The report was produced by the Council of Economic Advisers at the behest of the National Security Council’s biodefense team. It detailed the large health and economic losses that could happen from flu pandemic in the U.S. The report discussed how the lack of private market incentives had led to underinvestment in developing and using innovative technologies that can quickly produce vaccines for a new virus.

Influenza vaccines have primarily been manufactured in chicken eggs for the past 70 years. The process is too slow to produce a new vaccine for a novel, unexpected virus and impairs the vaccines’ efficacy against the flu. Public-private partnerships created under a 2006 statute led to the development of newer, faster manufacturing techniques. But these vaccines are more expensive and haven’t been widely adopted.

The main issue is that vaccine developers aren’t rewarded for innovation. Their research-and-development and investment costs for improved vaccines are recovered only through sales that occur in the unlikely event that a pandemic occurs—there have only been four flu pandemics the past 100 years—even though vaccine innovation provides benefits from risk-reduction before any pandemic. Vaccines have insurance value today that provides protection against possible future damage, regardless of whether a pandemic occurs. That means the social return from innovative vaccines is greater than their private return to developers.

To overcome the problem of under-investment in rapidly produced vaccines, we proposed public investment in public-private research-and-development partnerships to promote vaccine innovation (“push” incentives) and preferential government purchase of vaccines produced domestically from those partnerships (“pull” incentives). On Sept. 19, a few days after the CEA issued its report, the president signed Executive Order 13887, which created several initiatives to modernize flu-vaccine production, including evaluation of “incentives for the development and production of vaccines by private manufacturers and public-private partnerships.”

The report and the order focused on improving vaccine production for influenza; a novel virus is a surprise by definition. Yet when Covid-19 appeared a few months later, the administration expeditiously applied the report’s lessons on the value of public-private partnerships to speed vaccine innovation and production. On March 30, less than three weeks after the World Health Organization declared a pandemic, the federal government began investing with private vaccine developers. Operation Warp Speed provided hundreds of millions of dollars to Johnson & Johnson, Moderna, and a partnership between AstraZeneca and the University of Oxford to develop vaccines and provide 100 million doses by January 2021 of each one that is approved, which the government will distribute free of charge. Similar arrangements were made later with Novarex, partners Pfizer and BioNTech, and partners Sanofi and GlaxoSmithKline. Contracts have also been signed to step up manufacturing of vaccine vials and syringes.

Read the full document at The Wall Street Journal.