Covid-19: The real prize for big pharma may be reputational but the risks are high

Adrian Tombling and Dr Nicholas Jones - partners and patent attorneys at Withers & Rogers discuss the risks pharmaceutical companies are taking developing Covid-19 vaccines.

With dozens of clinical trials progressing around the world, the pharmaceutical companies involved in the search for a vaccine to prevent the spread of Covid-19 will be eyeing their potential prize. However, the direct commercial rewards for being the first to develop an effective treatment could be underwhelming, so should the industry be looking for value elsewhere?

There are at least 51 vaccines currently under development around the world, and more than 30 of them have reached significant clinical trials. The fact that so many companies are simultaneously investing in the development of different candidates for the same indication may be unprecedented, and is a direct response to the current health emergency. Despite the efforts being made, the commercial rewards for developing a vaccine and securing regulatory approval are likely to be small. This is mainly due to pressure from governments, some of which have provided funding to research programmes, as well as the World Health Organisation (WHO), which is aiming to ensure equitable access for all. Earlier this year, the WHO launched its COVAX plan, which sets out a ‘fair allocation mechanism’ to distribute the vaccines on a country-by-country basis as soon as they become available. In the first phase, the number of doses given to each country will be proportional to its population, with the first 3% used to protect frontline workers.

At a time of heightened global concern about the spread of Covid-19, the pharma industry has responded by waiving certain IP rights and collaborating with competitors to accelerate research programmes, where there is opportunity to do so. Illustrating the depth of the collaboration that is taking place, Sanofi and GSK are currently running clinical trials for a protein-based vaccine and anticipating results in early December. They have also established a supply collaboration with the EU’s COVAX facility and signed a contract to supply member states with up to 300 million doses of its vaccine.

At the point of market entry, pricing decisions for Covid-19 vaccines are likely to face close scrutiny. Clearly, the ‘winner’ of the innovation race will be hoping to at least cover their costs. However, setting the right price will involve a complex set of considerations based on the shelf-life of the vaccine, the cost of manufacture, its efficacy and how it will be administered. For example, flu vaccines are typically unstable, biological formulations that need to be administered by injection within a defined time period, which means they have to be produced and distributed regionally. Distributing a vaccine for Covid-19 will probably require a similar approach. While definitive decisions on pricing can’t really be reached until an effective vaccine is found, Sue Middleton, president of the executive board of Vaccines Europe, has recently suggested that a price range of $6-18 per dose is ‘reasonable’ for Covid-19 vaccines.

To avoid a scenario where a pharma company that develops a vaccine for Covid-19 is forced to produce and distribute it at a loss, some protections are urgently needed. For example, the company should at least be able to cover its costs, perhaps based on an agreement that any excess profits are ploughed back into other coronavirus-related research programmes. In addition, pricing decisions taken during the pandemic should be time limited, so there is flexibility to increase prices in the future if necessary. Without these protections, the industry could be facing an uncertain future and some businesses that have invested heavily in coronavirus-related R&D could be rendered unviable.

For pharma companies involved in the global race to find a vaccine, the stakes are high – from both a global health and commercial perspective. For those that succeed in bringing a vaccine to market, the rewards are likely to be more reputational initially, although this could bring commercial benefits in the longer term. For those that are forced to drop out of the race however, the commercial costs could be considerable.

To remain viable and continue to thrive in the future, pharma companies need to be afforded some protections and their commercial interests must be considered fairly. Much has been done to date to accelerate the search for a vaccine and this must continue. However, it is also becoming apparent that businesses need to spread risk by maintaining a healthy innovation pipeline, which they can pick up once a vaccine is found. A well-managed intellectual property portfolio will be critical to bouncing back profitably when the time comes.

*This article was submitted to our November/December issue of European Pharmaeutical Manufacturer before the news relating to the efficacy of certain Covid-19 vaccines had been released.