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Corporate consolidation could spell trouble for COVID-19 vaccine production

Has a lack of competition created potential bottlenecks in manufacturing everything we need to vaccinate the country?

Corporate consolidation could spell trouble for COVID-19 vaccine production
[Source Photos: Zakharova_Natalia/iStock, writerfantast/iStock]
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While initial news about Pfizer’s and Moderna’s vaccine developments is promising, we have many steps left to go before those vaccines enter arms. Still ahead are the manufacture and distribution of roughly 650 million doses. Along with that feat of pharmaceutical production, we also need to make millions of ancillary products such as chemical additives, vials, syringes, and rubber stoppers. Do we have the capacity?

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“America’s economic model for producing vaccines is broken,” reads a new report from the Open Markets Institute, an anti-monopoly nonprofit that aims to promote guards against extreme concentrations of power. The OMI argues that vaccine production could hit a roadblock partly due to America’s economic system and lack of regulation. For the past 35 years, the report says, the government’s rollback of antitrust enforcement has suppressed competition and created monopolies across industries. In the vaccine industry, those monopolies could lead to a lack of preparedness that may be exposed as the daunting task of manufacturing begins. “How bad it’s going to be remains to be determined,” says Barry Lynn, the group’s director. “It’s going to be worse than it should have been. It’s going to take longer than it should have.”

The scientific piece of the puzzle isn’t the concern. Lynn says the discovery of the COVID-19 vaccines has proven successful, and he attributes that to the competition between vaccine developers promoted by Operation Warp Speed. “It’s the manufacturing apparatus where we have a problem,” he says. There are now relatively few suppliers of the various elements needed for vaccines, meaning corporations may not have the supply and capacity for surge production during a crisis. “The lack of antitrust is perhaps the dominant factor,” he says, in that it has allowed “the monopolist to concentrate control over capacity. As a society, we’ve lost the ability to engineer competition to deliver us the things that we need,” he says. “This was what America did with fantastic success for 200 years—right up until Reagan came to power.”

Crucially, he says, the Reagan administration began a trend of cutting back on antitrust regulation, leading to a series of mergers and acquisitions, and consolidation of market power in a few corporations. A few corporations could monopolize one vaccine and refuse to challenge others. Government agencies such as the FDA were stripped of funding to regulate production. Vaccine prices began to skyrocket, and, according to the report, only eight firms and laboratories by 1996 still produced the recommended childhood vaccines for the U.S. market; by 2002, there were only four.

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The decline in vaccination preparedness was exposed during the 2009 H1N1 pandemic, after which Obama advisors estimated that about 2,000 lives could have been saved had they been able to begin vaccinations just one month earlier, but they were prevented by subpar production capacities that were available. Lynn expects similar choke points as COVID-19 vaccination production begins. Normal production levels won’t generate enough of some of the products necessary for vaccination fast enough for pandemic surges. “When you have a monopolized system, you don’t know what you’re lacking until the crisis comes,” Lynn says. “So, we don’t know exactly where the crunch is going to come. We can just be pretty sure there’s going to be crunches.”

The institute calls for a system overhaul, in the creation of a “pluralistic but government-directed political economy,” which would welcome multiple private companies in competition, but with the government playing a key oversight role. Anti-monopoly rules would ensure a certain number of corporations would have the capacity for excess production, a robust supplier base could sell to multiple corporations, and more workers could fulfill the demand.

All this would require, as before, strict regulation by well-funded federal agencies like the FDA. “We just have to get back into the habit of using our agencies to make sure that the corporations that we depend on are delivering us what we need,” Lynn says. For vaccines specifically, the government could set up a network of government-owned production facilities as backups to private ones—or even to spur healthy competition with private companies. Once locked into place, these strong policies could last from administration to administration—and prepare for future pandemics.

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Biden can make a rapid start on antitrust reform just by executive action, by appointing anti-monopoly commissioners to the Federal Trade Commission and Department of Justice, which can establish fairer marketplace rules and restore strict anti-merger directives. Open Markets Institute recently had a call to discuss this issue with the Biden transition team, which Lynn says was encouraging. He’s optimistic that the incoming administration will make necessary changes: “These people have a much better understanding of the problem,” he says.