The economics of developing and pricing a vaccine : Planet Money : The Indicator from Planet Money Governments and drug companies agree: We need to develop a vaccine for COVID-19. But their motives for developing a vaccine are different. And that will have a big effect on the vaccine's price.

The Economics Of Vaccine Pricing

The Economics Of Vaccine Pricing

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BEN STANSALL/AFP via Getty Images
An employee works at the Stabilitech laboratory in Burgess Hill south east England, on May 15, 2020 where scientists are trying to develop an oral vaccine for the COVID-19 illness. (Photo by BEN STANSALL / AFP)
BEN STANSALL/AFP via Getty Images

We all agree that we need a vaccine for COVID-19 — for public health, and to stop its devastating effects. And also because without one, it's going to be difficult for our economy to reopen fully. But developing a vaccine isn't as easy as it might sound. For one thing, you have to think about who actually develops the vaccine. In the U.S., it's not some government agency; it's pharmaceutical companies. And pharma companies work for a profit. They're going to want to price that vaccine as high as they can. The government, on the other hand, wants to keep the price of a vaccine as low as possible, to make sure everyone gets vaccinated.

Aligning the incentives of pharma companies with the needs of the public and the government is complicated. And finding a sweet spot for pricing a vaccine is vital.

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