Only big pharma has the capital to innovate vaccines.

Yet as we sit here in the throes of a global pandemic, we must confront an uncomfortable truth: A vaccine is the only real hope for beating the coronavirus, and only the pharmaceutical industry has the human capital and physical infrastructure to create one. The difference between waiting four months and four years for a vaccine could be millions of lives and trillions of dollars.

The cost of producing a vaccine, in other words, is priceless. But expecting Big Pharma to deliver a cure means acknowledging how Big Pharma works. The economic logic that drives up drug prices and fuels constant political outrage also makes rapid drug development possible. They’re two sides of the same coin.

Multiple studies show that you can only trim pharmaceutical profits so much before innovation slows, which means fewer new medicines and diminished capacity to solve problems such as SARS-CoV-2 (the virus that causes the COVID-19 disease). The National Bureau of Economic Research has found, for instance, that cutting drug prices in the U.S. by 40 to 50 percent would lead to 30 to 60 percent fewer R&D projects. Another study found that Germany lost 23,000 pharma jobs after it implemented price controls in the 1990s, and Germany slipped from first to third place among the continent’s top drug innovators. As the nonpartisan Information Technology and Innovation Foundation concluded in a white paper last year, “For the issue of pharmaceutical drugs, an overwhelming body of academic research shows that price controls will significantly restrict the number of new drugs in the future.” Every decision involves tradeoffs.