Pull Funding May Combat COVID-19 Vaccine Development Challenges

A recent Health Affairs study suggested that a “pull funding” program that incentivizes late-stage development for COVID-19 vaccine development may combat challenges with speed, scale, price, and distribution. 

For more coronavirus updates, visit our resource page, updated twice daily by Xtelligent Healthcare Media.

In contrast to a push funding system of direct cost reimbursements for drug development, a proposed pull program would award advance purchase commitments to bidding firms. 

In baseline simulations, the optimal pull program induced the participation of all ten COVID-19 vaccine candidates and generated net benefits of $2.8 trillion, nearly double that generated by the free market.

The savings are based on an average of $50 per vaccine dose, or $110.4 billion in total, to obtain an average of 2.2 billion doses. 

“These numbers exceed funding levels proposed for international and national procurement programs and allows installs nearly all available capacity and allows more people to be vaccinated with less delay,” researchers stated in the study. 

Researchers collected and analyzed data from various sources to estimate demand and cost in the market for a COVID-19 vaccine. The timeframe for their studies spanned two years from January 2020 to December 2021. 

For vaccines in general, public support can either come in the form of push funding, which takes the form of up-front reimbursement for research, development, and production expenditures, or pull funding, which constitutes payment for successful products.

Push funding has been a dominant program mainly because it incents stakeholders to develop solutions for problems like neglected diseasesthrough reduced industry costs during the research and development stages, according to Cheri Grace, health economist and lead specialist at Health and Life Science Partnership. 

Small organizations, including biotechs, do respond well to push incentives in neglected disease markets.

Therefore, businesses have turned to push funding over pull funding because it proves to be significantly more effective throughout the development pipeline within the neglected disease areas, and not strictly in earlier development stages, Grace concluded.

Although push funding has been supported in the past, there may be challenges with this method in the future.

Programs relying on push incentives can be complicated by the funder’s inability to observe firms’ private cost information.

And researchers in the Health Affairs study explained that push funding could require the funder to predict “winners” before it is known if they can produce a safe and effective vaccine, elicit accurate cost information from these firms, and micromanage the development process.

A pull program can help to combat these challenges with vaccine development.

“Because this pull program only pays for successful products, it puts the onus on firms to assess their prospects for success before putting their own capital at risk. Because the reward is a set ex post payment, not a cost reimbursement, it relieves the funder from having to elicit firms’ cost information,” researchers explained.

The COVID-19 pandemic could claim 40 million lives and reduce global economic output by $9 trillion, researchers said. 

Although a widely accessible vaccine is vital to mitigate the health and economic consequences of COVID-19, there is a concern that private markets fail to incentivize vaccine investments, specifically at the speed or scale required during a pandemic.

Competition among countries for limited supply may also increase prices and undercut efficient distribution of products.

In general, a candidate is ready to be furthered developed after it has proven effective in phase-3 trials. But during a pandemic like COVID manufacturing capacity investments must be made in parallel with trials.

The pull program intends to address these challenges. If the program makes waves, it can incentivize late-stage development (i.e., phase-3 trials and manufacturing) for COVID-19 vaccines by awarding advance purchase commitments to bidding firms.