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The Critical Role R&D Played in the Life-Saving COVID-19 Vaccine Race

24th September 2021

Lydia Clowney:  

Steven, would you be able to give us what some of the general R&D opportunities are within the pharmaceutical industry? 

Steven Ezell: 

Well, I’d like to maybe start with a story, if I could.  

Today, the United States leads the world in biomedical innovation of the roughly 8,000 near-the-world medicines, under development globally, everything from cancers, to Alzheimer’s, to diabetes. And more than half of those are being developed in the United States. US companies in 2019 invested, $80 billion in R&D. US life sciences industry is the world’s most R&D intensive, investing more in research than any other industry in the world.  

Currently, the US leads, but that wasn’t always the case. In fact, if you roll the tape back to the 1970s, the last part of that decade, European-headquartered companies introduced more than twice as many new-to-the-world drugs as American ones did. Only 5% of new to the world’s drugs were introduced first in the United States. Even as recently as 1990, the global pharmaceutical industry invested 50% more in R&D in Europe than in the United States. But over the past four decades, we have entirely flipped that script. And we’ve done so through a series of intentional public policy choices, such as introducing the R&D tax credit in 1981, policies like the Bayh-Dole Act, and new technologies from universities to the marketplace.  

So it’s important for your listeners to understand that America is becoming the leader in R&D and life sciences innovation was because of smart public policies and good corporate management practices. 

Lydia Clowney: 

That’s so interesting. So it’s more than just any one factor. It seems like it’s a whole suite of reasons that would go into making a country a leader in this area. Is that accurate? 

Steven Ezell: 

That’s absolutely right. There’s other facets of the US innovation system, very strong and complimentary public and private investment in the life sciences, the National Institute of Health, invests about $39 billion a year in basic life sciences, R&D, looking into how cells operate, looking for potential disease targets within the body for drugs. And then the private sector goes ahead and develops clinical compounds, tests them, and attacks those diseases. So there’s a high degree of complementarity in the life sciences and patient system, very important.  

But the R&D tax credit – it’s really important to understand that this was a ground breaking incentive for investment when it was introduced in the US in 1981. For 40 or some odd years, the United States had the world’s most generous R&D tax credit. Unfortunately, we don’t now. Today, we’re 24 out of 34 OECD countries in our R&D tax credit generosity. So we get to further strengthen our innovation system in the US if we got ourselves back in the lead. But there was no question (back then).  

You know, if you look at how much the life sciences industry invests over the past decade, the United States invested 10 times as much in life sciences R&D per year than we did in the 1980s on average. And over the past decades, even twice as much as the decade before. So we have an environment where it created the incentives for private firms to invest in life saving life sciences R&D and that’s supported by effective public policies like the tax credit, like the complimentary public investment. 

Lydia Clowney: 

So there’s really a system like you say, that goes into this. And I guess that probably extends to the individual companies doing development as well. It wouldn’t just be that they have great scientists, but also maybe the methodology that they use.  

I understand that typically in the pharmaceutical industry, you see the agile methodology being implemented. Tell us more about that methodology and how it’s distinct from other approaches to development. 

Steven Ezell: 

Agile innovation, Agile development… Of course, ‘agile’ refers to the adapting of product to the market and an agile organization is one that has a strong foundation established core practices and capabilities with a high degree of flexibility and ability to make timely course adjustments to address change.  

So you know, really we’re talking about, new kinds of organizational approaches to innovation that are characterized by a focus on team-based interdisciplinary collaboration rather than a top-down structure from a pyramidical hierarchy. Accountability tends to come from within a group and as built into the collaborations, the overall the development process is characterized by the quick change and rapid growth, easy access to resources, and are basically sponsoring ideation, inspiration, and experimentation. And that’s different from traditional approaches because especially in science-based industries like chemicals or pharmaceuticals, it has related to the scientific approaches that has been reasonably traditional relying on many or processes with one stage progressing to the next only when the previous have been completed. It’s very process oriented. 

So, you know, the agile approach is really about more flexibility, more parallel processing of innovation efforts, and a far more team-oriented approach. And there’s a wonderful article in the Harvard Business Review called ‘Why Science Driven Companies Should Use Agile’ and they talk about a company in their Boston-based PDC pharmaceuticals. And what they found was that the company’s innovation process wasted about 30 percent of their time and productivity, just with inefficiency and back and forth reporting between individuals and their bosses.   

And that when this company PTC therapeutics, put in place an agile approach within a year, it was able to sufficiently manage twice as many innovation projects while increasing the way their projects kind of all by moving to a team-based structure that focused on kind of a rapid scaling and proposition activities. So there’s a whole different new approach to thinking about innovation, you know, and it matters to this industry because the life sciences companies must be innovating and experimenting constantly. And so to keep up with, especially smaller, bio-based startups, especially the larger companies have to be innovative in their historical approach to innovation. 

Lydia Clowney: 

It seems like this past year or so has made it much more obvious how that kind of nimbleness would be important for a pharmaceutical company in particular. I mean, with COVID, it was kind of all-hands-on-deck, trying to get a vaccine going as quickly as possible. And I imagine that having that flexible structure would help a company rise to meet that that need. So how did companies past R&D activities set the table for the discovery of these life-saving vaccines? 

Steven Ezell: 

So it’s important to understand that it is these decades of R&D investments, it’s these decades worth of smart public policy choices that position the United States with an incredibly strong biotechnology sector that was able to rapidly pivot in response to the COVID-19 crisis.  

It left us with strong companies with a robust bench depth of scientific strength and STEM talent. Consider that 22 percent of workers in America, life sciences industry are directly involved in R&D research. So you had the resources, you had the facilities with facilities, aren’t things like gene sequencers, like access to high performance computers to model the effects of the proteins. So all across the board, what we were fortunate to have this benched up, to enable us to respond.  

You know, I think it’s interesting to tell that story either through a couple of examples, both on the vaccine side and the therapeutic side. Just quickly looking at the most effective COVID-19 therapeutic drug we’ve had, and that was Gilead sciences Rembesivir. But Gilead spent over a decade since 2009, investigating it as a possible treatment for infectious diseases, from things like SARS to MERS. Through the clinical trials and Ebola, it worked to a degree, but then other drugs seem to be more effective at it.   

So it’s not on the shelf, but then when the COVID-19 crisis hit Gilliad went, took it off the shelf tested it against COVID-19 and sure enough, it was shown to be a highly effective. But when you had here was a company that over a period of a decade had invested $1.3 billion of R&D into this potential drug, all taking these investments at risk before they could ever know whether the molecule becomes effective a potential treatment for a disease. So it’s a great story of a company that had made investments over time that really paid off in the COVID-19 situation, and with vaccines as well!   

If you think about Moderna and their MRNA vaccine. Moderna had been at work for a decade trying to develop MRNA based vaccines, and had to overcome a lot of rate challenging hurdles. Originally the MNRA structure is trying to insert them to cells were very brittle. They break down, the body would reject them. Moderna in total spent a billion dollars over the course of a decade, developing this technology before we ever had a thought that COVID-19 would come along. So it’s just two examples of the fact that we’ve put in place a system that incentivizes private investment in risky, difficult life sciences R&D that pays off.   

And you’ve got to remember that on average, it takes a company 12 to 14 years at a cost exceeding now $2 billion to develop a new drug. And that’s why again, this ecosystem, things like the tax credit things like robust international property rights, are vital to being able to respond on these types of crises.   

And it’s exactly why to your point, you can go through the list of the companies, it’s Johnson, Moderna, and Pfizer, it’s the US companies – obviously, BioNTech being a German partner of Pfizer. But when you consider today that there are over 229 active clinical trials tests for possible COVID-19 vaccines. And there are 60 a hundred fourth clinical trials ongoing for COVID-19 therapeutics. That’s all wonderful, but you know what? The vast majority of those are coming from US-based companies, because we’ve created an ecosystem that supports innovation. 

Lydia Clowney: 

You said something really interesting that I feel like as I’ve gotten lost in this conversation about the vaccines from Pfizer, Moderna, J&J about people have said, “Oh, well, they got produced so quickly! How could they produce them so quickly?”  

And the fact is they were working on this technology for a decade ahead of that. Is there any connection between the amount of R&D that was spent by a company prior to COVID and which companies ended up producing a vaccine? 

Steven Ezell: 

Absolutely. I think you can make that correlation.  

We did a report in 2020 called Ensuring US Bio-Pharmaceutical Competitiveness. That report ranked which of the world’s life sciences companies were the most R&D intensive, whether just an absolute R&D investment or as a share of the revenues, R&D intensity. I think that’s the overwhelming set of companies on the list where he was once. In fact if you look at the year 2017, on average US biopharmaceutical companies invested 3.5 times the amount in R&D as a share of sales that European ones did and ten times the amount of the OECD, then it should come as no surprise that Merck J and J Pfizer had the R&D talent, they had the R&D skills, they have the R&D processes in place, and this positioned them to be able to respond. 

I know it’s coming back to how amazing this is. Before COVID-19 on average, it took 14 years to develop a new vaccine. And there was a wonderful report, if you go back to GlaxoSmith Client’s 2017  they know to quote that it can take up to $1 billion in 20 to 50 years to create a fully distributed vaccine at scale. And the average was 14 years.  

So if you think about the fact that Moderna was able to design their MRNA vaccine in two days, once they received the gene sequence; they were able to get it into clinical trials in 45 days, they were able to get approval in under a year for the drug; and that within about two years, we’re going to produce by the end of 2021 unexpected 11 billion doses of vaccine globally. This is an incredible testament in industry to the power of lifetime commitment to the patient. 

Lydia Clowney: 

It is incredible. I mean, I think we said a miracle of modern science, and it sure sounds like, I mean the amount of work that has gone into producing these. And like you say, not just after we needed it, but laying the groundwork for a decade beforehand… 

These companies they’ve been working on these initiatives for a long time. They spent all this time and money putting together these vaccines and getting them tested and getting them produced. Obviously they’re hoping for some kind of payout there also typically that comes through a patent situation through those IP protections. Now President Biden recently signaled support for a global patent waiver on the COVID-19 vaccines, so that they can be more widely developed around the world. And we are seeing some pushback on this, certainly from the pharmaceutical companies saying will affect the development of new drugs in the future, and also pushed back from some other countries, nations in the EU for instance who don’t support a waiver.  

Can you talk a little bit about why there’s so much pushback against this? 

Steven Ezell: 

Well, I think the pushback is warranted and that’s because in the call that India, South Africa, and other civil society advocates had made for a COVID 19 TRIPS waiver of intellectual property rights pertaining to the vaccines products relating to COVID 19. It’s just simply misguided, unnecessary, and unwarranted.  

And when you look back to the actual petition that was first filed by India and South Africa in 2020. This is one of the actual petition says, “To date, there is no vaccine or a medicine to effectively prevent or treat COVID-19.” So why then was there a need to wave intellectual property rights for technologies and innovations that didn’t even exist. If you further read the petition, they can’t really find a single credible instance in which intellectual property rights represented a barrier to access or to manufacturer distribution of the vaccines.  

And the reality is that the only point in this COVID-19 pandemic in which intellectual property has ever been a problem was at the beginning, when we didn’t have the intellectual property, we needed to be able to respond. We had to create the IP, really create the vaccines, create the therapeutics, create the diagnostics.  

So the notion that the intellectual property constitutes kind of a barrier is really a solution in search of a problem. In fact, the reality is quite the opposite. The reality is that the intellectual property rights attached to COVID-19 vaccines and therapeutics, have actually created a framework that have been vitally important in facilitating the responsible transfer of IP rights through voluntary licensing.  

Now there are well over 100 examples of companies licensing their IP, whether it’s Johnson & Johnson working with the Serum Institute.. You know, as Adar Poonawalla, the CEO of the Serum Institute said when he was recently asked about this – he was asked if the vaccine rollout was slowed because vaccine patent holders were licensing too few to manufacturers to make them. He said, “No, there are enough manufacturers. It just takes time to scale up.”  

And by the way, I’ve been blown away by the collaboration between the public and private sectors over the last year, developing vaccines. And even the director of medicine sounds frontier is I acknowledged in a BBC interview that quote, suspending patent rights, wouldn’t produce millions of more vaccines. In other words, the problem is manufacturing at scale. It’s not the IP, it’s manufacturing at scale.   

So how do you do that? Well, instead of forcing companies to divulge their intellectual property or enter into compulsory licensing agreements with other manufacturers, companies should have the right to evaluate potential partners to ensure they’re sophisticated enough to handle the extreme complexity of manufacturing these vaccines, and that they can meet the production standards required to do it safely and reliably. And there’s just absolutely no evidence that invalidating IP rights would achieve more than the hundreds of licensing agreements that have already been forged between innovators and reputable best vaccine manufacturers across the world. 

So this is why the leaders of a number of countries have pushback on elements of the proposed TRIPS waiver. It’s why Chancellor Merkel in Germany has expressed a view that patents aren’t the challenge to vaccine production, but rather providing more tangible resources and production capacity at high quality standards. It’s why European Commission President Ursula von der Layen has worked for other alternatives to promote greater manufacturing of vaccines than having to turn initially to the TRIPS waiver. So the developed world has a moral responsibility and obligation to assist developing countries to ensure that all citizens of the world have access to the COVID-19 vaccines and therapeutics. They need as quickly as possible. But the reality is that it’s not intellectual property rights that are standing in the way of that. It’s a challenge of manufacturing at scale. 

And so what’s needed then is another thing. It’s coordination among governments to smartly identify where the bottlenecks in these production chains are and how they can be addressed by alternative sources of supply, providing funding, if necessary, to developing countries to purchase vaccines.  

One thing we should be doing: There are still over a hundred export bans for various PPEs or metal devices that companies have in place since it started, the pandemic. Now, rolling back to those types of barriers or what we need to address this challenge, not trying to appropriate the international property that others have invested across the globe.