Ref RR and Airbus post ....15 May 2020 08:27
Given these intolerable costs and this strategy’s dependence on a vaccine or effective treatment saving lives before herd immunity is reached, it is baffling how little taxpayers are spending to find one. Cobbling together public announcements implies UK public spending of just £300m for Covid-19 vaccine development, a mere 0.1pc of this year’s likely borrowing.?
This seems ludicrous. Vaccines usually take up to a decade to bring to market and most attempts fail. Even if an effective one is found, scaling up production for global immunisation is a daunting logistical challenge. Time is money and of the essence.
A private company would usually only begin to commit to such an endeavor once it was near-certain its product was viable. Hence Bill Gates wanting to build seven potential factories, knowing full well most of them will be a waste of his philanthropic funds.
Meanwhile, after global immunisation, those same factories would likely have to be scaled down to just produce boosters or new-born vaccines. The risks to the companies are huge.
Given how costly each month lost without a vaccine is proving, we need funds to accelerate these processes and overcome these difficulties.
This is a rare example of the case for more government spending. Around the world “trillions have been spent on relief, but very little comparatively has been spent on fighting the virus with testing and vaccines,” Alex Tabarrok, an economist at George Mason University, told me.
The potential to free us of this economic and social burden means most vaccine spending would be a no-brainer from a cost-benefit perspective. It’s a case of spending “billions to save trillions,” he said.
Alongside Michael Kremer, an economic Nobel Prize winner, Tabarrok’s team of economists propose significant additional public funding for developers to alleviate risks and overcome logistical hold-ups.
The key idea is a huge government fund to deliver an “advanced market commitment.” This would be a promise by governments to purchase millions of doses of the most effective vaccines at a fixed high price.
Companies and philanthropists are already working on a vaccine and want to do good by humanity, but a strong incentive to compete to produce the best possible vaccine quickly matters, too.
Public funds should also offer large, but “partial” reimbursement for credible companies’ repurposing or building factories well before vaccines are ready. The word “partial” is crucial, as the companies must have “skin in the game” to avoid overspending.
This combination of “push” and “pull” incentives helps socialise the big risks for the companies developing vaccines. Without this support most will be building factories that prove useless. They also face the risk that governments will expropriate their product or intellectual property after their vaccine is produced. That deters investment today.
https://www.telegraph.co.uk/business/2020/05/14/virus-drag-economy-effective-stimulus-remains-
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