Pharmaceutical and biotech companies, in collaboration with scientists in academia and government, are working flat-out to develop drugs and vaccines to treat or prevent COVID-19. Although a vaccine is still months away, policymakers and the public should ask now: If and when their efforts succeed, will there be sufficient manufacturing capacity to meet the likely enormous demand?  

Fortunately, thanks to legislation passed by
Congress back in 2004, President Donald Trump and his administration already
have the authority they need to support and incentivize private companies with
the relevant expertise and skills to build out manufacturing capacity as
quickly as humanly possible.

Private industry faces significant risks in
building manufacturing capacity at this stage. Given the national interest in
making a vaccine available, the president should task his administration with
acting now to prepare this capacity. 

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How It Works

The Project BioShield Act of 2004 gave the
Department of Homeland Security authority to determine if a chemical,
biological, or radiological agent presents “a material threat against the
United States population sufficient to affect national security.”

Any such determination by DHS automatically triggers additional authority under the law for the government to issue contracts to purchase countermeasures for the designated threat, such as drugs or vaccines, using the Strategic National Stockpile and the BioShield Special Reserve Fund.

The law also specifies modifications to standard federal procurement rules in such circumstances, to enable applicable agencies to acquire those countermeasures quickly.

Importantly, the law further specifies that
the federal government can use these powers to purchase countermeasures not yet
approved by the Food and Drug Administration, but for which the Department of
Health and Human Services finds that there is sufficient scientific data to
“support a reasonable conclusion that the countermeasure will qualify for
approval or licensing within 10 years.”

What This Means

The Trump administration can exercise authorities
under the BioShield Act to contract for bulk purchases of promising new
therapies and vaccines.

Doing that would create powerful incentives immediately
for the private sector to invest in quickly adding, or repurposing,
manufacturing capacity to meet demand. 

Because this authority enables the government
to “preorder” products before companies even have formatted them into finished
dosing suitable for mass production, work on building out manufacturing capacity
can start as soon as a contract is signed.

By committing in advance to buy large volumes
of promising therapies and vaccines, the federal government would, in effect, be
offering to share with pharmaceutical and biotech companies (and, by extension,
any banks or investment funds that they go to for additional capital) the
potential downside risk that some products might later prove to be less
effective than anticipated. In other words, large preorders from the federal
government immediately would shift the risk/reward calculus for private
investment in expanded manufacturing capacity from “caution” to “full speed.”

Drug manufacturing is a complex and
technically sophisticated field, and the manufacture of biologic products (such
as vaccines) is even more so. Given that virtually all of the relevant
expertise, and associated highly skilled workers, are found in private
companies, policymakers must rely on those companies to provide the necessary
production.

The simple fact is that no one else can do it
either as well or as fast. And as previous experiences with wartime procurement
shows, the government’s contracting for large quantities of a product is the quickest
and most effective mechanism for incentivizing manufacturing capacity
expansions in any industry.

Additional Benefits

Beyond rapid expansion of manufacturing
capacity, this approach offers other benefits as well.

One important ancillary benefit is that prices
would be lower than what they might be otherwise. When the federal government
negotiates a large purchase contract with a private company, both sides know
that successfully reaching agreement will result in significant cost savings
from efficiencies associated with larger-scale manufacturing, as well as a
lower per-unit premium needed to give the innovator company an attractive
return on the substantial investments it made to create the product.

The result is a contract for large quantities at
a lower unit-price—a win-win for both sides.

Another potential benefit is that others could
“piggyback” on the U.S. government’s “first-mover” action by entering into their
own bulk purchase contracts, on similar terms, with the same companies for the
same products. That might include not only governments of other nations but
also private actors, such as charitable organizations that provide medical
assistance in poor countries.

To the extent that occurs, companies would
have an even clearer picture of the total expected demand, and even more
private funding would be attracted by the investment opportunities presented by
such demand. It also would reduce the likelihood of shortages that might lead
nations to impose export controls or otherwise try to divert supply.

What Policymakers Should Do

—The
Department of Homeland Security should issue a determination that the COVID-19
virus is a “biologic agent” that constitutes a “material threat,” exercising
the process provided for in the BioShield Act.

—The
Department of Health and Human Services should build on its work with private
companies developing COVID-19 vaccines and therapies to identify as soon as
possible products that meet the law’s tests for being promising
“countermeasures.”

—The
departments of Homeland Security and Health and Human Services should take
steps to be ready to contract as soon as possible for large quantities of any
promising countermeasures, such as by developing projections for likely demand
and by drawing up distribution priorities. Of course, those projections and
priorities will vary based on whether a given product is focused on prevention
or treatment, as well as the specific illness effects and degree of severity targeted
by the product.

Even so, preliminary projections and
priorities can be developed now and then updated as researchers and clinicians
learn more about the disease itself and companies test the products they are
developing.

—The
president should advise Congress on whether additional funding is needed for these
purposes—particularly for the Strategic
National Stockpile and the BioShield
Special Reserve Fund—and if so, specify recommended amounts, agency
allocations, and how all or part of the request can be met via transfers from
lower-priority programs funded in Congress’ recent COVID-19 relief bills.

We don’t yet know which of the hundreds of
drugs or vaccines now in development for COVID-19 will be successful.

The good news is that, as scientists race for
a cure, the government already has the tools it needs to identify any leaders
as they emerge from the pack and then partner with the private sector to speed
drugs or vaccines as soon as possible to those who need them.