Economics Archives - Philosophy of Biology and Health

Dawn of a biotechnology renaissance… and is our society ready for it?

Novel biotechnologies and biomedical innovations are of great interest to me. Not just the science and technology but also the economics, policy, and ethical considerations. Over the past year, I have dedicated much of my blog posts to exploring novel innovations in biotechnology – the miracle of mRNA technology, COVID-19 vaccines, and the future mRNA marvels to come from such advancements. I have sought to answer critical questions such as: how we as a society have fared worse in the COVID-19 pandemic, despite the breakthroughs in technology, compared to the Spanish Influenza 100 years earlier. I explored challenges posed by the pandemic, often in real time, across ethical, business, legal and socio economic considerations. I warned early on about the chasm to go from vaccine development to vaccinations. I made a compelling case for global vaccine collaboration. I even estimated the economic business case for such global vaccine collaboration within a few million dollars of what was estimated by respected organizations such as the Rockefeller Foundation (Rockefeller Foundation).

My interest in biotechnology and biomedicine preceded the pandemic and will continue to extend well beyond. More broadly as I have been reading about the incredible advancements in biotechnology over the past four years, I have begun to develop a rather bold hypothesis:

I believe that we as a society stand at the dawn of a biotechnology renaissance. An upcoming period that has the potential, over the next decade or two, to more rapidly and meaningfully improve the health and well-being of humanity than in any other point in human history!

I will continue to elaborate on and evaluate this hypothesis in future blogs. Most importantly, whether or not we realize the full potential of these incredibly promising advancements in biotechnology will depend on whether we as a society are prepared to ethically and equitably manage these potentially life-changing biomedical innovations for the good of society at large.

As one example, recently I was struck by the positive early results to use cell therapy, not just to treat but to potentially cure type 1 Diabetes. Vertex Pharmaceuticals, a biopharmaceutical company, made headlines when its novel stem-cell therapy reversed Type 1 Diabetes in a single patient. Type 1 Diabetes has traditionally been a chronic disease in which the body cannot produce enough insulin. While the exact cause of the disease isn’t fully known, Type 1 Diabetes is considered to be caused by an autoimmune reaction – where the body’s immune system attacks the insulin-making beta cells of the pancreas (CDC). Often, people with Type 1 Diabetes are genetically predisposed. Epigenetics and outside life influences, such as a viral infection, can increase the likelihood of the disease. Once the gene is activated, the disease progresses. However, thanks to the research done by Vertex, a cure might finally be feasible.

In their first patient, a man who’d been suffering from Type 1 Diabetes for decades, Vertex’s therapy saw a resulting 91% daily drop in the required insulin doses previously necessary. They deemed it a potential “functional cure” – not necessarily a one-time cure, but one that allows the disease to be managed without consistent medication. The therapy is conducted through a series of synthetic islet cell transplants (Vertex). Islets are clusters of various cells – including beta cells – within the pancreas that help secrete Insulin. In Type 1 Diabetes, these cells are unable to naturally create the hormone. In traditional Islet transplants, Islets are isolated from 2 donors using various enzymes by a radiologist, who is able to guide these cells into the pancreas of the recipient. The goal is that these transferred cells achieve insulin independence and are able to create insulin on their own. Often, these transfusions are unsuccessful as the host body rejects the foreign Islet cells.

To solve this challenge, Vertex’s cure has Islet cells that are synthetically manufactured with novel immunoprotective devices. These devices are designed to evade recognition from the body’s immune system. This allows the cells to successfully transfer into the patient’s body. Transplantations are conducted via an injection, with an infusion of these synthetic insulin-producing cells” (clinicaltrials arena). Within 90 days post transfusion, the test patient was able to once again produce and maintain their insulin levels, effectively “curing” this disease. The potential of a stem-cell therapy as a cure for diabetes has the potential to be life-changing for millions of Type 1 Diabetes patients.

These advancements are incredibly exciting. Even curing one patient of Type 1 Diabetes is a huge accomplishment, one that I cannot wait to see replicated in future clinical trials. I will be eagerly following this novel biotechnology, its clinical trial outcomes, and broader application.

Beyond the exciting science, thinking about this advancement through my other PBH lenses raises some important questions. While this new cell therapy is still under development, I read that another breakthrough therapy from the same company for Cystic Fibrosis is priced at approximately $300,000 per patient per year (Fiercepharma). While Cystic Fibrosis is a rare disease affecting approximately 30,000 patients in the US, a chronic disease such as Type 1 Diabetes affects over 1.8 million people in the US, and millions globally. So, as I eagerly follow the incredible science and technology behind this promising new therapy, I will also be thinking about other important questions in my subsequent readings, research, and blogs:

How can novel biotechnologies like gene and cell therapies be made more affordable, especially as they help cure not just rare diseases but more common, chronic diseases?
How will patients and healthcare systems afford all these incredibly promising new therapies?
How can we – society at large – make sure that these incredible biotechnology advancements help reduce, and not increase, healthcare inequalities in our society?

Critical Disconnect, PBH Assessment, and Emerging Lessons

I have shared in earlier blogs my excitement and optimism for biomedical innovation across broadly applicable biotechnologies such as gene therapy, immunotherapies, mRNA vaccines. I have also discussed the critical role biomedical innovation has played in the global response to the pandemic: from rapid genome sequencing of the virus, to novel diagnostics, monoclonal antibody therapy, of course the first mRNA vaccines, and hopefully soon, antiviral pills. All this biomedical innovation at this rapid pace has been breathtaking to follow.

Why then do we, in the US, have more people dead from this pandemic in 18-months than we had US casualties in all of World War II? What good is all this innovation if more people died from COVID-19 than did from the Spanish Flu pandemic a 100 years ago?

Concept and Illustration by Rama Bhagwat

When I launched this blog site in spring of 2020, in the early days of the pandemic, I had articulated my underlying premise that our great societal challenges can not be solved by science alone. While scientific innovation is often necessary to solve these great challenges, it is not sufficient. Effective solutions need to be multidisciplinary and based on science, ethics, policy & law, and economics; my four PBH Lenses. Over time I added leadership as another important dimension to envision and then implement effective solutions.

Can I apply my PBH framework to the US response to the COVID-19 pandemic? I think it is worth testing.

This is indeed a sobering assessment. How can it be constructively used? We are still in the midst of the pandemic, especially in low and middle income countries. As I have said before, we are not truly safe, unless all of us are protected from this virus. Since the past is prologue, surely COVID-19 will not be the last global pandemic. We have already had MERS, SARS, Zika and Ebola threaten the health and well-being across countries and continents just in the past couple of decades. I believe the honest PBH assessment of our response to the current pandemic can help identify important learnings and lessons. The lessons that can help us, as a society, to be proactive – avoiding potential pandemics, limiting them to local epidemics – while also being better prepared for the inevitable next pandemic or global public health crisis.

Broadly speaking, I find myself organizing the PBH lessons learnt into two buckets:

Keep doing, further strengthen, and build on what we are doing well especially in the areas of scientific and biomedical innovation, and economics.
Aggressively and diligently fix those areas that have been lacking, especially in the areas of ethics and policy and law. The need to strengthen our public health infrastructure, capacity, and governance should be high on the list. So should the need to adopt Bioethics as a core value around which we build our public health systems.

Perhaps I will elaborate in more detail the specific lessons from the pandemic in a subsequent post. For now, I am happy that I was able to apply my PBH framework for this assessment, and that it has pointed me in the direction of potential answers to the question I raised. The reason the US has had more deaths from COVID-19 than from the Spanish Flu, in spite of all the incredible biomedical innovations over the past century, is that, we as a country, have neglected the PBH lenses of Ethics and Policy & Law while over indexing on Science and Economics. Narrow focus on science and economics alone cannot make up for the weakness in ethics, policy & law. This assessment makes the case for more comprehensive and lasting solutions, that cover ALL PBH dimensions, to effectively address our great societal challenges such as the global pandemic.

Finally on the PBH Leadership dimension: who is accountable for this tragic disconnect? I think, as a society, this Critical Disconnect represents a collective failure of leadership. Previously, in my Perspectives on Leadership, I have written of my admiration for Presidents Lincoln and FDR, who built coalitions and steered the country, and even the world, during times of crises. Can we even imagine the outcome of the Civil War or World War II without the leadership of a President Lincoln or FDR? As we face new, complex and deadly challenges, my unanswered question is: where are the Lincolns and FDRs of our time? Are we doing enough to educate and develop the next generation of multidisciplinary, transformational leaders who can comprehensively address the Critical Disconnect, and prevent it from recurring? To do so would be the most valuable lesson of all.

No-Brainer: The Economic Case for Global Vaccine Collaboration

In my last blog I made a case for protecting vaccine IP and for the rich and developed countries to work with vaccine manufacturers to rapidly increase the availability of authorized vaccines; not just for their own countries, but also to help fund the vaccines for low and medium income countries (LMICs). I am glad that the US government has since moved away from the proposal to waive COVID-19 vaccine patents and suspend aspects of WTO TRIPS.

I outlined this proposal from an ethical, legal, and public policy perspective. However, in looking through my multi-disciplinary PBH lenses, the Economics lens was not covered in my last blog. Is my proposed solution even economically feasible? Is there an economic case for such global collaboration? As I will elaborate in this blog, I believe there is a compelling economic case that makes this solution a no-brainer!

Frst, let me recap the solution I proposed in my earlier blog. The most important points are:

The COVID-19 pandemic is a global public health emergency; no country is truly safe unless all countries have vaccinated the majority of their population
It is not fair nor ethical for developed countries to not help developing countries and LMICs rapidly gain access to approved and effective vaccines
IP of the vaccine manufacturing companies should be protected; they should be reasonably rewarded for developing highly efficacious and safe COVID-19 vaccines in record time to help save lives and reopen economies
Rich, developed countries and vaccine manufacturers should jointly work on a global solution for this pandemic; work collaboratively to create a win-win solution

Although this blog will focus on economics, I do not want to diminish the extensive human cost and suffering endured throughout the COVID-19 pandemic. I have discussed this cost extensively in my earlier blogs. I am presenting the economic case with the goal to bring us closer to the end of this pandemic, and ensure recovery is faster and more fair for all across the globe.

Having taken four semesters of business electives in high school, I will try to make the economic case. My intent isn’t to be precise, as there is so much varying raw economic data available. I will be using estimates, in order to see if the solution I have proposed for months is economically justifiable. To accomplish this, I will attempt to look at the economics business case in terms of both macroeconomics and microeconomics.

Macroeconomic Lens:

From a macro-level, the solution I proposed can be justified by comparing three values. These are: the cost of financing the vaccinations for LMICs, compared to the economic cost of the pandemic and the cost of post-pandemic recovery in terms of government stimulus. Given the recent high-profile G7 meeting in the UK that was in the news, I thought I would use the G7 countries to represent the rich and developed countries.

Analysis and illustration by Rama Bhagwat

The cost of providing vaccines for low to middle income countries, by my estimation, is approximately $52 billion. I came up with this estimate as follows:

The current world population is about 7.75 billion, split into: ~1.25 billion in high-income countries; ~6.5 billion in low and middle income countries
Serum Institute of India (SII) is one of the largest vaccine manufacturers and makes several WHO approved vaccines for LMICs. The per person price of a 2-dose WHO authorized SII COVID-19 vaccine can be estimated to be $10 per person (Indian Rupees (INR) 600 for two doses (Times of India), which translates to $8.1. Plus say an additional manufacturer profit of $1.9 = $10 per person)
Assuming a realistic goal of vaccinating 80% of the LMIC population, that translates to a goal to vaccinate 5.2 billion people
Vaccine cost to reach this LMIC goal: ~$52 billion. Even if higher costing vaccines, like Pfizer, are considered, this will still be a small fraction of the cost to the G7 economies.

Next, we can look at the cost of the pandemic to developed, high income countries in two ways. We can focus on the most developed countries; the Group of Seven (G7) countries. These include the US, Japan, Germany, France, UK, Italy and Canada. The G7 GDP in 2019 was approximately $40 trillion. Assuming that in 2020 – due to COVID-19 pandemic – the G7 economies shrank on an average 4.2% (The Guardian), we can calculate an approximate GDP loss of $1.7 trillion.

Another way to look at the cost of the pandemic on G7 countries is to look at the extra relief and stimulus spending undertaken by these countries, due to the pandemic. By looking at each of the G7 countries’ GDP and their respective COVID-19 fiscal stimulus – as a percentage of GDP – this is estimated at ~$11 trillion (Atlantic Council) (Nation Master).

If helping vaccinate those in low and middle income countries can help prevent the resurgence of the pandemic, then $52 billion seems like a good investment. This would prevent G7 countries from losing $1.7 trillion in economic output (GDP), or having to spend $11 trillion in pandemic relief or stimulus, due to a prolonged or recurring pandemic.

Microeconomic Lense:

It’s also important to look at my proposal from a microeconomic perspective. This solution – where developed countries partner with and fund the purchase of low-cost effective vaccines for LMICs – should also work for the vaccine manufacturing companies.

Let’s take India’s SII, for example. SII offered to sell the Indian government two doses, at prices ranging from INR 300 to INR 600. While we could assume that INR 300 is the cost to manufacture for the company, a more conservative assumption would be to take the midpoint: INR 450 ($6.1) as the cost of two doses of the vaccine for SII. Earlier we assumed the price of the two doses as $10. Using this assumption, it translates to a profit of $3.9 per 2-doses of the vaccine for the vaccine manufacturers. Based on the 5.2 billion person LMIC vaccination target, mentioned above, that should translate to a profit for the vaccine manufacturers of approximately $20 billion, on a revenue of $52 billion. I am using SII as one example of a LMIC vaccine manufacturer. The volume, revenue and profit estimate is a combined estimate for all LMIC vaccine manufacturers.

In summary, an investment of ~$52 billion could prevent economic costs in excess of $1.7 trillion, while generating a healthy, but not excessive, profit for the innovative vaccine manufacturers. Rewarding the vaccine manufacturers for their innovation and protecting their IP while saving millions of lives at a reasonable price. This to me is a win – win – win solution for the developed countries, LMICs, and vaccine companies. From an economic perspective, this solution is a no-brainer!

Bridging the Chasm: From Vaccines to Vaccinations

8 months ago when I started this PBH blog, my underlying premise was that scientific breakthroughs and science alone, while necessary, are not sufficient, for solving many of the health-related challenges facing our society. I believe that nowhere is this more true than in bridging the chasm from the discovery and development of the COVID-19 vaccines, to the vaccinations in large numbers sufficient to achieve herd immunity. Effectively addressing significant challenges, such as the COVID-19 pandemic, requires multi-faceted solutions that include considerations across Science, Ethics, Policy & Law, and Economics.

In my last blog, I shared my excitement about the tremendous accomplishment of utilizing novel mRNA technology to develop safe and effective COVID-19 vaccines in record time. Recent headlines have tempered that excitement. It has been disheartening to see the recent reports about vaccines not being used, sitting in freezers, or even going to waste. As of mid-January, on average across the US, only 35% of the distributed vaccines have been administered (CBS News). California, which according to the John Hopkins Covid Tracker has nearly 40,000 new daily cases and over 700 daily deaths, has only administered 26% of the vaccines they have received. Georgia has only administered 20% of the vaccines received. How is this acceptable in our country, one of the richest and most developed in the world?

Many other countries are doing a lot better at vaccinating their citizens (OurWorldData). As of mid-January, Israel, for example, has vaccinated approximately 25.8% of their population, as compared to 3.7% in the United States! Even the United Kingdom is doing much better, at 5.9% of their population.

More people are dying in the US, in a single day, than died from the terrorist attacks on 9/11. That day transformed the way the US deals with intelligence gathering and terrorism threats. This pandemic must be the crisis that transforms healthcare in the US. Clearly just scientific and technological advances, such as mRNA vaccines, are not sufficient. My hypothesis is that we need a multifaceted approach. We need continued contributions from science and technology to now develop effective, 1-dose vaccines that are more stable and easier to store and distribute.

From a Policy & Law Lense, short-term, I think that the United States needs to develop a much stronger and more streamlined vaccination plan. Currently, there is little coordination between federal and state governments on the most effective method for COVID-19 vaccinations. Each state is responsible for administering their allocated vaccines, developing priority groups, maintaining lock-downs, and scheduling the second-dose appointments. Developing a national plan that’s congruent across all states and territories, developed by heads at the HHS, FDA and CDC, and consistently implemented using say the national guard in each state would provide the structure needed to maximize the timely use of all available vaccine doses. Looking at learnings from countries like Israel and the UK, both the countries seem to have benefited from a national health system. Perhaps it is time for the US to establish an effective national health system.

From an Ethical Lense, we need to continue to make sure that the vaccines for this pandemic are available for free to all citizens. Some recent reports claim that elite medical schools have received an excessive number of vaccines, and people socially well-connected and rich have found ways to receive the vaccine early. Could the HHS or CDC establish a special office, not just to provide consistent ethical guidelines for vaccine distribution, but also to track their implementation, and, through the influence of the federal government that is supplying these vaccines, ensure compliance to these fair and ethical vaccination policies across all states? Beyond the US, the world must come together to make it easier for all countries to have the option to manufacture the COVID-19 vaccines in their own country, at a lower cost. An important step will be to make a one-time ethical and humanitarian exception for the IP associated with the COVID-19 vaccines.

From an Economics Lense, it is good that this first round of vaccines is being given for free in the United States. Given the shared public health implications of this pandemic, we need to ensure that the COVID-19 vaccines will continue to be available for free even if we find out that our entire population needs to be vaccinated for multiple years to come. Governments need to budget for this while also working with pharmaceutical companies to reduce the cost to manufacture the vaccines and the price the governments have to pay for them. Hopefully, economies of scale and increased competition with multiple safe and effective vaccines will help reduce the price over time.

These are my early thoughts based on reactions to recent news headlines. The COVID-19 pandemic has given us a real-life view into why focusing solely on scientific and technological innovations doesn’t automatically solve our greatest health challenges. By looking at all four of my PBH lenses – Science, Ethics, Policy & Law, and Economics – I am optimistic that with time and dedication, the United States and the world can bridge the chasm from vaccines to vaccinations, and a safer, healthier society.