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. ¹ 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.²

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:

1. 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.
2.  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. 

More in future blogs.

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