COVID-19 vaccines are chance at salvation, financial and beyond, for drugmakers
By Jesse Drucker, David Gelles and Katie Thomas
For a long time, drugmakers have been the most hated industry in America. Companies are blamed for gouging prices on lifesaving drugs and enriching themselves through the opioid crisis, among other sins.
Now, with pharmaceutical companies racing to find vaccines to end the coronavirus pandemic, the industry is hoping to redeem itself in the public’s mind.
The primary goal, of course, is to rescue the world from the grips of a vicious virus. But a big fringe benefit is to get public credit — and to use an improved image to fend off government efforts to more heavily regulate the industry.
Consider Johnson & Johnson, one of the world’s largest health care companies.
In recent years, its reputation has been battered by accusations that products like its artificial hips and talcum powder have harmed customers. In 2019, an Oklahoma judge ordered the company to pay $572 million for contributing to the opioid epidemic.
This spring, Johnson & Johnson jumped into the hunt for a COVID-19 vaccine; its candidate is now in the final stage of clinical trials. (On Monday, the company said it had temporarily paused the study after a participant became sick with an unexplained illness.)
Regardless of whether the vaccine ever comes to market, the company is looking to create a surge of positive publicity from its work. Its chief executive, Alex Gorsky, went on the “Today” show this spring and called Johnson & Johnson’s lab workers heroes. The company has produced a slick, self-promotional online video series, “The Road to a Vaccine,” featuring feel-good interviews with the company’s scientists and segments on issues like whether it is safe to send children back to school.
Johnson & Johnson’s efforts to develop a vaccine will show that “J&J is a company full of people with heart and soul who are doing this 24-7, with all their science and know-how,” said Dr. Paul Stoffels, the company’s chief scientific officer. While the company’s image at times has been “trashed,” he said, “I hope that we can get to a better reputation.”
That is a widely held sentiment across the pharmaceutical industry. Companies are looking for public makeovers as a political battle over drug price controls looms. Others are seizing the once-in-a-generation opportunity to raise money for future projects from investors and the government.
Public opinion matters. The industry is facing a fight in Washington over price controls, which could take a bite out of companies’ profits in the United States. The latest salvo came last month when President Donald Trump issued an executive order that called for capping the costs of some prescription drugs.
The industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America, is fighting back by invoking the industry’s effort to fight the coronavirus. It denounced Trump’s executive order as “a reckless attack on the very companies working around the clock to beat COVID-19.”
Kim Monk, managing director of Capital Alpha Partners, a policy research firm based in Washington, said that finding a safe and effective vaccine could help drug companies in their campaign to stave off price controls. “You don’t even need to say it,” she said. “It’s part of the strategy.”
To be sure, the race for a coronavirus vaccine is much more than a public relations play. Scientists at pharmaceutical companies take great pride in their work to combat human suffering. And there is immense prestige involved in being among the first to successfully conquer a devastating global pandemic.
There are also potentially enormous profits on the line.
Vaccines are often thought of as the pharmaceutical industry’s sleepy, low-profit backwater, but that is not always the case, said Dr. David Bishai, a professor of health economics at Johns Hopkins University’s school of public health.
Two leading drugmakers have pledged to not profit from their vaccines. But those promises are laden with caveats.
Johnson & Johnson has said it will sell the vaccine on a “not-for-profit” basis for “emergency pandemic use.” But the company hasn’t explained in detail how it will define “not for profit.” In any case, when the “emergency pandemic” phase of the crisis ends, the company will no longer be bound by its pledge. Jake Sargent, a Johnson & Johnson spokesman, said the end of the emergency phase “will be defined at a future date by global health authorities.”
Another major drug company, AstraZeneca, has made a similar pledge not to profit on its vaccine, which is also in large clinical trials, during the pandemic. But in a contract with one of its manufacturers, AstraZeneca has suggested that it can declare the pandemic to be over as soon as July 2021 — around the time that a successful vaccine is likely to be getting sold worldwide, according to the Financial Times.
“The company has committed to supplying the potential vaccine at no profit during this pandemic period,” said an AstraZeneca spokeswoman, Michele Meixell. “It is too early to determine pricing post-pandemic.”
The COVID-19 vaccine business is likely to be unusually lucrative because much of the risk has been taken out of the equation. The federal government has entered into deals with companies totaling more than $10 billion to develop, manufacture and distribute coronavirus vaccines. Drug companies usually spend small fortunes to market their products. But that will probably not be required to generate public interest in a coronavirus vaccine.
“If you get a vaccine and it gets recommended by the CDC, you barely need a sales force,” said Geoffrey Porges, the director of therapeutics research at the investment bank SVB Leerink.