David Warsh: A great victory in vaccine making and marketing
U.S. Government Accountability Office diagram comparing a traditional vaccine-development timeline to an expedited one
SOMERVILLE, Mass.
I often struggle to explain why I consider the Financial Times the best newspaper that I read. But my conviction begins with the consideration that the FT shows for my time and attention, as if it expects I have other things to do (in my case also reading The New York Times, The Washington Post and The Wall Street Journal). There are no “jumps,” all stories in the daily report end on the page where they begin. The front page displays just two stories (along with many teases of stories elsewhere in the paper); then come three pages of general news from around the world, followed by several pages of company and markets news; two pages of market data set in small type; a page of arts criticism, a full-page story (“The Big Read”); an editorial and letters page with four columns opposite, and, of course, the second most widely read page of the section, the “Lex” column of edgy newsy tidbits on the back. It is a thrifty package.
My deeper admiration, however, has to do to with the news values that the paper displays throughout. Last week presented a prime example. It takes a good deal of self-confidence to run out a story under the headline, “Trump vaccine chief proves critics wrong on Warp Speed: Industry veteran navigated political hurdles to boost drug companies’ fight against virus.”
But reporters Hannah Kuchler and Kiran Stacey had delivered a persuasive story. Since the article itself remains behind the FT paywall, I quote more extensively than I might otherwise to convey the gist. They began:
Sitting in the shadow of the brutalist health department building in Washington, with only a leather jacket for protection against an autumnal breeze, Moncef Slaoui cuts a defiant figure. Six months after the former GlaxoSmithKline executive left the private sector to become President Donald Trump’s coronavirus vaccine tsar, Mr Slaoui feels his decision has been vindicated, and critics of the ability of Operation Warp Speed to develop a vaccine in record time have been proved wrong.
“The easy answer for experts was to say it was impossible and find reasons why the operation would never work,” he told the Financial Times. But the vaccine push is now hailed as the bright spot in the Trump administration’s Covid-19 response, as products from Pfizer and BioNTech, Moderna, and AstraZeneca and Oxford university move closer to approval.
The next day, Karen Weintraub, of USA Today, produced an in-depth profile of Slaoui, a Moroccan-born Belgian-American vaccine developer and retired drug company executive. It is fascinating reading. But the authority of the FT account derived from the three experts the reporters quoted zeroing in on the management tool that Slaoui used to achieve his results, known as advance market commitments. or AMCs (and from a little Reuters sidebar that listed some of the spending on pre-approved doses by the U.S. government’s Biomedical Advanced Research and Development Authority (BARDA):
The central achievement of Operation Warp Speed had been accelerating investment in manufacturing, said Angela Rasmussen, a virologist at the Columbia University School of Public Health. “Normally, that would be a huge investment for a vaccine manufacturer to make, and potentially be a huge loss for them if they developed a vaccine that never went on to the market,” she said.
Even Pfizer, which did not take direct investment from Operation Warp Speed, benefited from having a $2bn pre-order for when its vaccine gets approved, said Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering. “Even if J&J or someone else beat them to the punch, they were going to get paid,” he said.
Stéphane Bancel, chief executive of Moderna, the lossmaking biotech which took about $2.5bn in government funding from different bodies, said the money was “very helpful”, covering the costs of trials and helping it to buy raw materials. “The entire planet is going to benefit from it,” he told the FT. “We are going to file [for approval] in the UK based on the US data paid for by the US government. We’re going to file in Europe and hopefully have a vaccine available in France and Spain and Italy, all paid for by the US government.”
Part of the charm of the story turns on its rarity; it hadn’t been easy for mainstream media to find nice things to say about the Trump administration. The road to Slaoui’s hiring probably leads back to Vice President Mike’s Pence’s appointment in February as head of the White House Coronavirus Task Force. As former governor of Indiana, Pence’s connections with the pharmaceutical industry are tight; Indianapolis is home to major firms, including Eli Lilly and Purdue Pharma. Much remains to be learned.
But the mechanism known as advanced market commitment is of comparatively recent origin. It is the discovery, if that is the word, of University of Chicago economist Michael Kremer, in a series of papers he wrote while teaching at the Massachusetts Institute of Technology and Harvard University some 20 years ago, culminating in the publication, in 2004, of Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases, with his wife, Rachel Glennerster, in 2004.
The new mechanisms they advocated were similar to those that in the 18th Century gave rise to the development of the naval chronometer, necessary to determining longitude at sea. Governmental “pull” methods could complement the inherently risky “push” of private research and development. AMCs – legally binding commitments to buy specified quantities of as yet unavailable vaccines at specified prices – were the most promising of the lot for bringing into existence medicines that otherwise might not pay. I wrote in 2004 that the general line of argument of the book was “one more example of why, more than ever, governments today need talented and sophisticated regulators. Technology policy has become as important as monetary policy – in some respects, maybe more so.” (I am told that governmentally guaranteed long-term purchase contracts were the backbone of creating the Indonesia-Japan LNG trade, and developing so-called private power generation in the U.S.)
I asked Kremer last week if he had been involved in the Warp Speed journey, The answer was no. He and co-authors had spoken to staff at the Council of Economic Advisers in the run-up to the creation of Operation Warp Speed. They had co-authored an op-ed article in The New York Times last May. But they had not met with Slaoui. He seems to have imbibed the basic idea as long ago as 2013, when he organized a session on the industry’s stock of common knowledge for the Aspen Ideas festival
Kremer was recognized with a Nobel Prize in economics, with two others, in 2018, for work on policy evaluation, including the work on vaccines. But I was struck when Wall Street Journal editorial-page columnist Daniel Henninger suggested last week that the scientists at the pharmaceutical companies who developed vaccines against COVID-19 were “the obvious recipient for 2021’s Nobel Peace Prize.”
There’s no doubt that we owe a considerable debt of gratitude to the scientists. But it was the administration’s Operation Warp Speed that organized their successful quests. A Peace Prize for the swift development of vaccines is a very good idea, not for President Trump or for Vice President Pence, nor even, to make a needed point, for Moncef Slaoui. It is a pretty thought, but remember that Russian and Chinese scientists also produced vaccines. Let the Norwegian parliament figure it out!
David Warsh, an economic historian and a veteran columnist, is proprietor of Somerville-based economicprincipals.com, where this column first appeared.
Rachana Pradhan: How big pharma money colors Operation Warp Speed
April 16 was a big day for Moderna, the Cambridge, Mass., Massachusetts biotech company on the verge of becoming a front-runner in the U.S. government’s race for a coronavirus vaccine. It had received roughly half a billion dollars in federal funding to develop a COVID shot that might be used on millions of Americans.
Thirteen days after the massive infusion of federal cash — which triggered a jump in the company’s stock price — Moncef Slaoui, a Moderna board member and longtime drug-industry executive, was awarded options to buy 18,270 shares in the company, according to Securities and Exchange Commission filings. The award added to 137,168 options he’d accumulated since 2018, the filings show.
It wouldn’t be long before President Trump announced Slaoui as the top scientific adviser for the government’s $12 billion Operation Warp Speed program to rush COVID vaccines to market. In his Rose Garden speech on May 15, Trump lauded Slaoui as “one of the most respected men in the world” on vaccines.
The Trump administration relied on an unusual maneuver that allowed executives to keep investments in drug companies that would benefit from the government’s pandemic efforts: They were brought on as contractors, doing an end run around federal conflict-of-interest regulations in place for employees. That has led to huge potential payouts — some already realized, according to a KHN analysis of SEC filings and other government documents.
Slaoui owned 137,168 Moderna stock options worth roughly $7 million on May 14, one day before Trump announced his senior role to help shepherd COVID vaccines. The day of his appointment, May 15, he resigned from Moderna’s board. Three days later, on May 18, following the company’s announcement of positive results from early-stage clinical trials, the options’ value shot up to $9.1 million, the analysis found. The Department of Health and Human Services said that Slaoui sold his holdings May 20, when they would have been worth about $8 million, and will donate certain profits to cancer research. Separately, Slaoui held nearly 500,000 shares in GlaxoSmithKline, where he worked for three decades, upon retiring in 2017, according to corporate filings.
Carlo de Notaristefani, an Operation Warp Speed adviser and former senior executive at Teva Pharmaceuticals, owned 665,799 shares of the drug company’s stock as of March 10. While Teva is not a recipient of Warp Speed funding, Trump promoted its antimalarial drug hydroxychloroquine as a COVID treatment, even with scant evidence that it worked. The company donated millions of tablets to U.S. hospitals and the drug received emergency use authorization from the Food and Drug Administration in March. In the following weeks, its share price nearly doubled.
Two other Operation Warp Speed advisers working on therapeutics, Drs. William Erhardt and Rachel Harrigan, own financial stakes of unknown value in Pfizer, which in July announced a $1.95 billion contract with HHS for 100 million doses of its vaccine. Erhardt and Harrigan were previously Pfizer employees.
“With those kinds of conflicts of interest, we don’t know if these vaccines are being developed based on merit,” said Craig Holman, a lobbyist for Public Citizen, a liberal consumer advocacy group.
An HHS spokesperson said the advisers are in compliance with the relevant federal ethical standards for contractors.
These investments in the pharmaceutical industry are emblematic of a broader trend in which a small group with the specialized expertise needed to inform an effective government response to the pandemic have financial stakes in companies that stand to benefit from the government response.
Slaoui maintained he was not in discussions with the federal government about a role when his latest batch of Moderna stock options was awarded, telling KHN he met with HHS Secretary Alex Azar and was offered the position for the first time May 6. The stock options awarded in late April were canceled as a result of his departure from the Moderna board in May, he said. According to the KHN analysis of his holdings, the options would have been worth more than $330,000 on May 14.
HHS declined to confirm that timeline.
The fate of Operation Warp Speed after President-elect Biden takes office is an open question. While Democrats in Congress have pursued investigations into Warp Speed advisers and the contracting process under which they were hired, Biden hasn’t publicly spoken about the program or its senior leaders. Spokespeople for the transition didn’t respond to a request for comment.
The four HHS advisers were brought on through a National Institutes of Health contract with consulting firm Advanced Decision Vectors, so far worth $1.4 million, to provide expertise on the development and production of vaccines, therapies and other COVID products, according to the federal government’s contracts database.
Slaoui’s appointment in particular has rankled Democrats and organizations such as Public Citizen. They say he has too much authority to be classified as a consultant. “It is inevitable that the position he is put in as co-chair of Operation Warp Speed makes him a government employee,” Holman said.
The incoming administration may have a window to change the terms under which Slaoui was hired before his contract ends, in March. Yet making big changes to Operation Warp Speed could disrupt one of the largest vaccination efforts in history while the American public anxiously awaits deliverance from the pandemic, which is breaking daily records for new infections. Warp Speed has set out to buy and distribute 300 million doses of a COVID vaccine, the first ones by year’s end.
“By the end of December we expect to have about 40 million doses of these two vaccines available for distribution,” Azar said Nov. 18, referring to front-runner vaccines from Pfizer and Moderna.
Azar maintained that Warp Speed would continue seamlessly even with a “change in leadership.” “In the event of a transition, there’s really just total continuity that would occur,” the secretary said.
Pfizer, which didn’t receive federal funds for research but secured the multibillion-dollar contract under Warp Speed, on Nov. 20 sought emergency authorization from the FDA; Moderna just announced that it would do so. In total, Moderna received nearly $1 billion in federal funds for development and a $1.5 billion contract with HHS for 100 million doses.
While it’s impossible to peg the precise value of Slaoui’s Moderna holdings without records of the sale transactions, KHN estimated their worth by evaluating the company’s share prices on the dates he received the options and the stock’s price on several key dates — including May 14, the day before his Warp Speed position was announced, and May 20.
However, the timing of Slaoui’s divestment of his Moderna shares — five days after he resigned from the company’s board — meant that he did not have to file disclosures with the SEC confirming the sale, even though he was privy to insider information when he received the stock options, experts in securities law said. That weakness in securities law, according to good-governance experts, deprives the public of an independent source of information about the sale of Slaoui’s stake in the company.
“You would think there would be kind of a one-year continuing obligation [to disclose the sale] or something like that,” said Douglas Chia, president of Soundboard Governance and an expert on corporate governance issues. “But there’s not.”
HHS declined to provide documentation confirming that Slaoui sold his Moderna holdings. His investments in London-based GlaxoSmithKline — which is developing a vaccine with French drugmaker Sanofi and received $2.1 billion from the U.S. government — will be used for his retirement, Slaoui has said.
“I have always held myself to the highest ethical standards, and that has not changed upon my assumption of this role,” Slaoui said in a statement released by HHS. “HHS career ethics officers have determined my contractor status, divestures and resignations have put me in compliance with the department’s robust ethical standards.”
Moderna, in an earlier statement to CNBC, said Slaoui divested “all of his equity interest in Moderna so that there is no conflict of interest” in his new role. However, the conflict-of-interest standards for Slaoui and other Warp Speed advisers are less stringent than those for federal employees, who are required to give up investments that would pose a conflict of interest. For instance, if Slaoui had been brought on as an employee, his stake from a long career at GlaxoSmithKline would be targeted for divestment.
Instead, Slaoui has committed to donating certain GlaxoSmithKline financial gains to the National Institutes of Health.
Offering Warp Speed advisers contracts might have been the most expedient course in a crisis.
“As the universe of potential qualified candidates to advise the federal government’s efforts to produce a COVID-19 vaccine is very small, it is virtually impossible to find experienced and qualified individuals who have no financial interests in corporations that produce vaccines, therapeutics, and other lifesaving goods and services,” Sarah Arbes, HHS’s assistant secretary for legislation and a Trump appointee, wrote in September to Rep. James Clyburn (D.-S.C.), who leads a House oversight panel on the coronavirus response.
That includes multiple drug-industry veterans working as HHS advisers, an academic who’s overseeing the safety of multiple COVID vaccines in clinical trials and sits on the board of Gilead Sciences, and even former government officials who divested stocks while they were federal employees but have since joined drug company boards.
Dr. Scott Gottlieb and Dr. Mark McClellan, former FDA commissioners, have been visible figures informally advising the federal response. Each sits on the board of a COVID vaccine developer.
After leaving the FDA in 2019, Gottlieb joined Pfizer’s board and has bought 4,000 of its shares, at the time worth more than $141,000, according to SEC filings. As of April, he had additional stock units worth nearly $352,000 that will be cashed out should he leave the board, according to corporate filings. As a board member, Gottlieb is required to own a certain number of Pfizer shares.
McClellan has been on Johnson & Johnson’s board since 2013 and earned $1.2 million in shares under a deferred-compensation arrangement, corporate filings show.
The two also receive thousands of dollars in cash fees annually as board members. Gottlieb and McClellan frequently disclose their corporate affiliations, but not always. Their Sept. 13 Wall Street Journal op-ed on how the FDA could grant emergency authorization of a vaccine identified their FDA roles and said they were on the boards of companies developing COVID vaccines but failed to name Pfizer and Johnson & Johnson. Both companies would benefit financially from such a move by the FDA.
“It isn’t a lower standard for FDA approval,” they wrote in the piece. “It’s a more tailored, flexible standard that helps protect those who need it most while developing the evidence needed to make the public confident about getting a Covid-19 vaccine.”
About the inconsistency, Gottlieb wrote in an email to KHN: “My affiliation to Pfizer is widely, prominently, and specifically disclosed in dozens of articles and television appearances, on my Twitter profile, and in many other places. I mention it routinely when I discuss Covid vaccines and I am proud of my affiliation to the company.”
A spokesperson for the Duke-Margolis Center for Health Policy, which McClellan founded, noted that other Wall Street Journal op-eds cited his Johnson & Johnson role and that his affiliations are mentioned elsewhere. “Mark has consistently informed the WSJ about his board service with Johnson & Johnson, as well as other organizations,” Patricia Shea Green said.
Johnson & Johnson’s vaccine is in phase 3 clinical trials and could be available in early 2021.
Still, while they worked for the FDA, Gottlieb and McClellan were subject to federal restrictions on investments and protections against conflicts of interest that aren’t in place for Warp Speed advisers.
According to the financial disclosure statements they signed with HHS, the advisers are required to donate certain stock profits to the NIH — but can do so after the stockholder dies. They can keep investments in drug companies, and the restrictions don’t apply to stock options, which give executives the right to buy company shares in the future.
“This is a poorly drafted agreement,” said Jacob Frenkel, an attorney at Dickinson Wright and former SEC lawyer, referring to the conflict-of-interest statement included in the NIH contract with Advanced Decision Vectors, the Warp Speed advisers’ employing consulting firm. He said documents could have been “tighter and clearer in many respects,” including prohibiting the advisers from exercising their options to buy shares while they are contractors.
De Notaristefani stepped down as Teva’s executive vice president for global operations in October 2019, but according to corporate filings he would remain with the company until the end of June 2020 in order to “ensure an orderly transition.” He’s been working with Warp Speed since at least May overseeing manufacturing, according to an HHS spokesperson.
When Erhardt left Pfizer in May, U.S. COVID infections were climbing and the company was beginning vaccine clinical trials. Erhardt and Harrigan, whose LinkedIn profile says she left Pfizer in 2010, have worked as drug industry consultants.
“Ultimately, conflicts of interest in ethics turn on the mindset behavior of the responsible persons,” said Frenkel, the former SEC attorney. “The public wants to know that it can rely on the effectiveness of the therapeutic or diagnostic product without wondering if a recommendation or decision was motivated for even the slightest reason other than product effectiveness and public interest.”
Rachana Pradhan is a Kaiser Health News correspondent.
Looking across the Charles River toward Kendall Square, Cambridge, headquarters of Moderna and other tech companies.
Liz Szabo/JoNel Alecia: Trump may try to rush in COVID-19 vaccine before election
It “seems frighteningly more plausible each day.’’
— Dr. Jerry Avorn, Harvard Medical School
President Trump, who seems intent on announcing a COVID-19 vaccine before Election Day, could legally authorize a vaccine over the objections of experts, officials at the Food and Drug Administration and even vaccine manufacturers, who have pledged not to release any vaccine unless it’s proved safe and effective.
In podcasts, public forums, social media and medical journals, a growing number of prominent health leaders say they fear that Trump — who has repeatedly signaled his desire for the swift approval of a vaccine and his displeasure with perceived delays at the FDA — will take matters into his own hands, running roughshod over the usual regulatory process.
It would reflect another attempt by a norm-breaking administration, poised to ram through a Supreme Court nominee opposed to existing abortion rights and the Affordable Care Act, to inject politics into sensitive public health decisions. Trump has repeatedly contradicted the advice of senior scientists on COVID-19 while pushing controversial treatments for the disease.
If the executive branch were to overrule the FDA’s scientific judgment, a vaccine of limited efficacy and, worse, unknown side effects could be rushed to market.
The worries intensified over the weekend, after Alex Azar, the administration’s secretary of Health and Human Services, asserted his agency’s rule-making authority over the FDA. HHS spokesperson Caitlin Oakley said Azar’s decision had no bearing on the vaccine approval process.
Vaccines are typically approved by the FDA. Alternatively, Azar — who reports directly to Trump — can issue an emergency use authorization, even before any vaccines have been shown to be safe and effective in late-stage clinical trials.
“Yes, this scenario is certainly possible legally and politically,” said Dr. Jerry Avorn, a professor of medicine at Harvard Medical School, who outlined such an event in the New England Journal of Medicine. He said it “seems frighteningly more plausible each day.”
Vaccine experts and public health officials are particularly vexed by the possibility because it could ruin the fragile public confidence in a COVID-19 vaccine. It might put scientific authorities in the position of urging people not to be vaccinated after years of coaxing hesitant parents to ignore baseless fears.
Physicians might refuse to administer a vaccine approved with inadequate data, said Dr. Preeti Malani, chief health officer and professor of medicine at the University of Michigan in Ann Arbor, in a recent Webinar. “You could have a safe, effective vaccine that no one wants to take.” A recent KFF poll found that 54 percent of Americans would not submit to a COVID-19 vaccine authorized before Election Day.
After this story was published, an HHS official said that Azar “will defer completely to the FDA” as the agency weighs whether to approve a vaccine produced through the government’s Operation Warp Speed effort.
“The idea the Secretary would approve or authorize a vaccine over the FDA’s objections is preposterous and betrays ignorance of the transparent process that we’re following for the development of the OWS vaccines,” HHS chief of staff Brian Harrison wrote in an email.
White House spokesperson Judd Deere dismissed the scientists’ concerns, saying Trump cared only about the public’s safety and health. “This false narrative that the media and Democrats have created that politics is influencing approvals is not only false but is a danger to the American public,” he said.
Usually, the FDA approves vaccines only after companies submit years of data proving that a vaccine is safe and effective. But a 2004 law allows the FDA to issue an emergency use authorization with much less evidence, as long as the vaccine “may be effective” and its “known and potential benefits” outweigh its “known and potential risks.”
Many scientists doubt a vaccine could meet those criteria before the election. But the terms might be legally vague enough to allow the administration to take such steps.
Moncef Slaoui, chief scientific adviser to Operation Warp Speed, the government program aiming to more quickly develop COVID-19 vaccines, said it’s “extremely unlikely” that vaccine trial results will be ready before the end of October.
Trump, however, has insisted repeatedly that a vaccine to fight the pandemic that has claimed 200,000 American lives will be distributed starting next month. He reiterated that claim Saturday at a campaign rally in Fayetteville, N.C.
The vaccine will be ready “in a matter of weeks,” he said. “We will end the pandemic from China.”
Although pharmaceutical companies have launched three clinical trials in the United States, no one can say with certainty when those trials will have enough data to determine whether the vaccines are safe and effective.
Officials at Moderna, whose vaccine is being tested in 30,000 volunteers, have said their studies could produce a result by the end of the year, although the final analysis could take place next spring.
Pfizer executives, who have expanded their clinical trial to 44,000 participants, boast that they could know their vaccine works by the end of October.
AstraZeneca’s U.S. vaccine trial, which was scheduled to enroll 30,000 volunteers, is on hold pending an investigation of a possible vaccine-related illness.
Scientists have warned for months that the Trump administration could try to win the election with an “October surprise,” authorizing a vaccine that hasn’t been fully tested. “I don’t think people are crazy to be thinking about all of this,” said William Schultz, a partner in a Washington, D.C., law firm who served as a former FDA commissioner for policy and as general counsel for HHS.
“You’ve got a president saying you’ll have an approval in October. Everybody’s wondering how that could happen.”
In an opinion piece published in The Wall Street Journal, conservative former FDA commissioners Scott Gottlieb and Mark McClellan argued that presidential intrusion was unlikely because the FDA’s “thorough and transparent process doesn’t lend itself to meddling. Any deviation would quickly be apparent.”
But the administration has demonstrated a willingness to bend the agency to its will. The FDA has been criticized for issuing emergency authorizations for two COVID-19 treatments that were boosted by the president but lacked strong evidence to support them: hydroxychloroquine and convalescent plasma.
Azar has sidelined the FDA in other ways, such as by blocking the agency from regulating lab-developed tests, including tests for the novel coronavirus.
Although FDA Commissioner Stephen Hahn told the Financial Times he would be willing to approve emergency use of a vaccine before large-scale studies conclude, agency officials also have pledged to ensure the safety of any COVID-19 vaccines.
A senior FDA official who oversees vaccine approvals, Dr. Peter Marks, has said he will quit if his agency rubber-stamps an unproven COVID-19 vaccine.
“I think there would be an outcry from the public health community second to none, which is my worst nightmare — my worst nightmare — because we will so confuse the public,” said Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, in his weekly podcast.
Still, “even if a company did not want it to be done, even if the FDA did not want it to be done, he could still do that,” said Osterholm, in his podcast. “I hope that we’d never see that happen, but we have to entertain that’s a possibility.”
In the New England Journal editorial, Avorn and co-author Dr. Aaron Kesselheim wondered whether Trump might invoke the 1950 Defense Production Act to force reluctant drug companies to manufacture their vaccines.
But Trump would have to sue a company to enforce the Defense Production Act, and the company would have a strong case in refusing, said Lawrence Gostin, director of Georgetown’s O’Neill Institute for National and Global Health Law.
Also, he noted that Trump could not invoke the Defense Production Act unless a vaccine were “scientifically justified and approved by the FDA.”
Liz Szabo and JoNel Aleccia are Kaiser Health News reporters.
Liz Szabo: lszabo@kff.org, @LizSzabo
JoNel Aleccia: jaleccia@kff.org, @JoNel_Aleccia