A Not-For-Profit Vaccine From Johnson & Johnson? Not so fast.

BY DAVID MITCHELL, CANCER PATIENT AND FOUNDER, PATIENTS FOR AFFORDABLE DRUGS

Ronald Reagan made an old Russian proverb famous when he said, “Trust but verify.” It’s good advice — especially when talking about Johnson & Johnson (J&J), the world’s largest health care company with a record of unethical marketing and price gouging. J&J and its CEO Alex Gorsky received positive press coverage after announcing an upcoming COVID-19 vaccine would be available on a “not-for-profit basis for emergency pandemic use.” Let’s take a closer look at that promise.

First, it is important to note that U.S. taxpayers gave Johnson & Johnson $500 million for research and development that is leading to this COVID-19 vaccine. [efn_note]In March 2020, the U.S. government agreed to pay Janssen, a Johnson & Johnson subsidiary, $456 million to support development of a COVID-19 vaccine. The $456 million taxpayer funding is in addition to $43 million the U.S. government gave J&J in 2017 to discover “innovative products to prevent or treat infections caused by emerging infectious diseases.” That funding specifically helped lay the foundation for the J&J COVID-19 vaccine candidate.[/efn_note] J&J says it will match taxpayers’ cash contribution by providing “resources, including personnel and infrastructure globally,” without mention of a cash investment in R&D. A review of academic literature and expert interviews places the cost to develop a vaccine between $135 million and $1 billion. If one assumes the highest R&D costs of $1 billion, then the taxpayer contribution of $500 million should cover half of Johnson & Johnson’s R&D costs for the vaccine.[efn_note]The estimate of the R&D investment required for a vaccine was reached based on inflation-adjusted estimates in academic literature (IOM 2002: $700 million, Journal of Biologics 2001: $200-$500 million, JAMA 2020: $985 million), recent expert interviews on COVID-19 (vaccine experts Kelly Capio and Dr. Gregory Poland both estimate $1 billion), and expertise from international NGOs (MSF: $135-$350 million). We selected the highest estimate of R&D costs ($1 billion) for the purpose of this analysis. Subtracting taxpayer contributions ($500 million) from the joint investment of $1 billion by the Biomedical Advanced Research and Development Authority (BARDA) and J&J, one arrives at a $500 million in investment by J&J. This is bolstered by the fact that Johnson & Johnson announced plans to “match taxpayers’ investment” at $456 million.[/efn_note]

Second, J&J’s Chief Scientific Officer, Paul Stoffels, said in an interview that he expects J&J to provide up to 1 billion doses at a not-for-profit price of $10 per vaccine. He also indicated that the vaccine might require a second dose a year later. Therefore, based on J&J’s own statements, the drug company stands to realize at least $10 billion in revenue from the COVID-19 vaccine at the outset, with billions more to potentially follow.

That looks like a profitable proposition on total sales of this vaccine.

If J&J wants public credit for selling the COVID-19 vaccine on a not-for-profit basis, it must take two steps:

Publicly account for the $10 billion in revenue the company plans to realize from its COVID-19 vaccine. Disclose its research and development costs, production, packaging, shipping, facilities, and other associated costs to justify its claim that $10 is a not-for-profit price.
Publicly commit to selling the drug on a not-for-profit basis permanently, not only for emergency pandemic use. Without this commitment, Johnson & Johnson can get away with a global bait-and-switch. It enjoys accolades now and then stands to reap huge profits on total product sales for years to come.

J&J and the U.S. government have both characterized their joint venture in search of a COVID-19 vaccine as a “partnership.” A $500 million taxpayer investment requires transparency in a partner’s spending and pricing. This is especially true for a company with a history of misleading the public.

If ever the Reagan adage to “trust but verify” applied, it is to Johnson & Johnson.

We think J&J and other drug corporations can make a fair profit on COVID-19 treatments and vaccines we all desperately want. But we can’t let drug corporations profiteer off a pandemic. We need transparency and joint establishment of prices especially when manufacturers will benefit from both taxpayer investment to develop drugs and taxpayer purchases of those drugs.