Market design to accelerate COVID-19 vaccine supply

By multiple authors including Susan Athey, Michael Kremer & Alex Tabarrok.

"Abstract

Build more capacity, and stretch what we already have

Each month, COVID-19 kills hundreds of thousands of people, reduces global gross domestic product (GDP) by hundreds of billions of dollars, and generates large, accumulating losses to human capital by harming education and health (1–4). Achieving widespread immunization 1 month faster would thus save many lives and mitigate short- and long-run economic harm. Although the value of vaccines may seem obvious, government action and investment in vaccines have not been commensurate with the enormous scale of benefits, with many countries not likely to achieve widespread immunization until the end of 2022.

We estimate below that installed capacity for 3 billion annual vaccine courses has a global benefit of $17.4 trillion, over $5800 per course. Investing now in expanding capacity for an additional annual 1 billion courses could accelerate completion of widespread immunization by over 4 months, providing additional global benefits of $576 to $989 per course. This dwarfs prices of $6 to $40 per course seen in deals with vaccine producers, indicating the wide gap between social and commercial incentives. We urge governments and international organizations to contract with vaccine producers to further expand capacity and encourage measures described below to “stretch” existing capacity (such as lower-dose regimens) and efficiently allocate courses (such as a cross-country vaccine exchange).

Our analysis involves two exercises, first estimating the global benefits from vaccine capacity already in place, then estimating the benefits of undertaking additional capacity investment starting now [see the supplementary materials (SM) for all data and methods]. The enormous estimates from both exercises provide a wake-up call relevant for the current pandemic—that it is not too late to invest in more capacity—and future pandemics—that preparations to shorten delays in rolling out vaccines, treatments, and other countermeasures at global scale could prevent enormous harm."