Coronavirus - profits from vaccines

Yahoo Finance says: Pfizer, Moderna expect billions in profits from COVID vaccines. That's a scandal

Why is it a scandal? The author Michael Hiltzik says:

"The companies stand to earn billions of dollars in profits from their COVID vaccines this year, according to investment analysts' projections. Since it's unlikely that the vaccines will provide 100% cures or eradicate the virus causing the disease, there will be more profits in later years.

While no one is saying that the companies should collect no profit at all from the COVID vaccine, that leaves open the question of how much is enough?

I’ve written already  about the stranglehold that Pfizer and Moderna have maintained on the manufacturing of their COVID vaccines, even though American taxpayers have paid billions of dollars for the basic research and early development of the technology.

Although the vaccine is to be delivered free to Americans, the government is paying what looks like top-dollar for the drugs. Pfizer's government contract for 100 million doses sets the unit price at about $20 per dose. Moderna's two contracts for 100 million doses each are set at about $15 per dose.

The actual production cost is much less. Pfizer's profit margin on its vaccine will be 60%-80%, Geoffrey Porges of SVB Leerink has estimated.

That's plainly excessive for a product with a guaranteed worldwide demand, especially one based heavily on government investment."

Firstly, Hiltzik is wrong about Pfizer receiving billions of dollars of government money for the research and development of the vaccine. Pfizer paid it from its own pocket. "Pfizer, with its German partner BioNTech, will be given $1.95 billion for 100 million doses, but received no federal funding for the research and development of their vaccine" (link).

Also, the author fails to consider the question more broadly, which he seems to believe is irrelevant. How much profit from a successful drug does a drug developer need to offset losses from developing drugs that do not make it to market? It takes a huge amount of money to develop a drug and then test it in clinical trials. If the drug doesn’t make it to market, and hence generate enough revenue to offset the sunk costs, then the company has a huge loss. Indeed, the number of losses easily outnumber the number of successes. So huge profit margins on a successful drug are to a large extent eaten up by losses on unsuccessful drugs.

The author seems to believe that a drug company should make only a small profit margin, e.g. similar to a grocery story, on its successful products, while absorbing huge losses on its unsuccessful products. He  regards each drug in isolation, having little or no concern about the unsuccessful ones. Unlike a drug developer, a grocery store can make do on a small profit margin on most sales because it doesn’t have the burden of losses to offset or overcome that a drug developer does. 

Coronavirus -- vaccine effectiveness

"Hopes are soaring that a Covid vaccine is within reach, following news that an interim analysis has shown Pfizer/BioNTech’s candidate to have 90% efficacy in protecting people from transmission of the virus in global trials.

This article was amended on 18 November 2020 to clarify that results of vaccine trials at this stage refer to “efficacy” – the performance of an intervention under ideal and controlled circumstances – not “effectiveness”, which describes performance under real-world conditions" (The Guardian).

"In Moderna's trial, 15,000 study participants were given a placebo, which is a shot of saline that has no effect. Over several months, 90 of those people developed Covid-19. Another 15,000 participants were given the vaccine, and five of them developed Covid-19" (CNN). 

News reports from other sources are very similar. 

Okay, so 90% or 95% effectiveness or “efficacy” means that of the people who got the vaccine, 90% or 95% of them did not get Covid-19. This doesn’t answer the question of how many of them were enough exposed to the coronavirus to get Covid-19. If the people in the clinical trials wore masks, washed hands often, and minimized social contact, then it should not be surprising if effectiveness falls when people who get vaccinated during the big roll-out are not so precautious. Of course, effective rates depend on the degree of presence of the virus, and herd immunity will be reached eventually.

I heard a doctor say on television that he expects effective rates will fall as the vaccine is more widely distributed. He wasn’t clear about why.

Both vaccines are type mRNA. There are many articles on the Internet about this, such as this one.

Coronavirus – clinical trials #5 (& statistics)

The New York Post reports that a clinical trial has shown another repurposed drug, baricitinib (brand name Olumiant) is effective in reducing mortality rates of Covid patients.  Other sources, such as news-medical.net report the same. 

The articles say baricitinib reduces mortality by two-thirds or 71%. I don't understand how, because 1 - 17/35 = 0.514 is significantly less. Moreover, I have seen other cases where I didn't understand how the number was calculated. 

I have heard of other metrics used for clinical trials, such as odds-ratio and Cox Proportional Hazards-model but have been unable to replicate numbers the story claimed. I couldn't calculate an odds ratio for baricitinib because the news stories do not give all the numbers needed. Anyway, the alleged number in the news story has every time been higher than the number I got using the simple method shown above.