From 3M Health Information Systems
Insulin and the COVID-19 vaccine: What is the connection?
Before the discovery of insulin in 1921, a person diagnosed with Type 1 diabetes could expect to live no more than three years. The three Canadians credited with its discovery, Banting, Best, and Collip, wanted to make it available to everyone that needed it. Dr. Banting refused to even have his name on a patent, believing that it was inconsistent with the Hippocratic Oath; while Best and Collip sold the patent to the University of Toronto for one dollar.
The demand for insulin was so great, however, that the University agreed to partner with pharmaceutical companies to increase availability. This arrangement allowed drug manufacturers to take U.S. patents on continuous manufacturing improvements, thereby preventing generic competition. Today a vial of insulin that costs $3-$6 to produce is sold for $340 in the United States, but only $30 in Canada. If Banting, Best, and Collip were alive today, they would be shocked.
The story of some vaccines has been different. The year before Dr. Jonas Salk announced his successful test of a polio vaccine in 1953, there were 58,000 new cases of polio reported in the United States along with 3,000 deaths and 20,000 paralytic victims. When Salk was asked who owns the patent for the vaccine, he replied, “Well, the people I would say. There is no patent. Could you patent the sun?” Today, each of the four doses of polio vaccine recommended by the CDC costs a reasonable $35 per dose and delivers lifelong immunity.
What does this mean for the eventual development of the COVID-19 vaccine? Some have raised concerns that the nearly $10 billion the government has invested in COVID-19 vaccine research and development will not result in an affordable supply of the vaccine. None of the major drug companies have committed to selling a vaccine for no profit.
However, affordability and profit can coexist. The CEO of Pfizer announced that it would charge the U.S. government $19.50 per dose for the first 100 million doses of a COVID-19 vaccine once developed. Pfizer’s profit would be substantial at this price point, equaling the profit made on its blockbuster drug, Lipitor, during its best-selling year. Yet depending on how often the vaccine needs to administered, $20 per dose seems like a reasonable price, putting it in a similar range as many other life-saving vaccines. However, the 100 million dose limit does call into question the price for the remaining 230 million doses needed to vaccinate the rest of the U.S. population, assuming that each person only needs one dose.
Most Americans would argue that there is nothing wrong with a company making a reasonable profit on their investment. The issue is how much profit is considered “reasonable.” Past experience that includes an $84,000 drug regimen to cure hepatitis C, a $600 EpiPen, and a Daraprim price increase from $13.50 to $700 per pill suggests that pharmaceutical companies are not aligned with the average American in their interpretation of what constitutes a reasonable profit.
An executive order issued by the U.S. government in July 2020 addressed the high price of insulin and the need to make it affordable. The directive targets uninsured or underinsured low-income patients obtaining treatment from certain federal community health providers. While this is a step in the right direction, there is no plan for implementing this change, nor an indication of how much insulin prices would drop.
Unfortunately, we have learned over the past 100 years that the term “reasonable price” can have different interpretations, and the consumer’s interpretation is not always the one that prevails.
Steve Delaronde is manager of products for Population and Payment Solutions at 3M Health Information Systems.
During a pandemic, information is gathered, studied, and published rapidly without the usual processes of review. Our understanding is rapidly evolving and what we understand today will change over time. Definitive studies will be published long after the fact. We share our thoughts and expertise based on currently available information.