TheEconomistAugust 8th 2020 551S
lowly butsurely the economic costs of
the covid-19 pandemic are becoming
clear. On July 30th America’s statisticians
revealed that the economy shrank by 9.5%,
year on year, in the second quarter. Output
in the euro zone fell even farther. Even
South Korea, which has managed the virus
better than almost any other country, has
not escaped a deep recession.
A vaccine would help end the economic
chaos. Scientists and pharmaceutical com-
panies have stepped up to the task. More
than 150 vaccines are being developed
worldwide, with six in final, large-scale
clinical trials. It took the vaccination effort
against hepatitis b—the disease for which
the most candidate vaccines were devel-
oped—decades to make the progress that
the attempts against covid-19 have made in
months. The public-health and economic
costs of the pandemic are such that, even as
scientists beaver away, policymakers must
grapple with two questions: how much to
spend on vaccines, in order to ensure
enough are made, and how to ensure theyare distributed fairly.
Governments so far have invested more
than $10bn in covid-19 vaccines, and made
forward purchases of about 4bn doses
(though data on deals are murky). As the
vaccines may require a course of two doses,
in theory this amount could inoculate the
world’s most vulnerable people. In fact, ef-
fectiveness is far from assured, so a large
share of purchases could turn out to be
duds. A typical vaccine in final trials has a
20% chance of failure. Some of the candi-
date covid-19 vaccines involve novel tech-
nologies, so the risk of failure could be
higher. That explains why rich countries
are backing several efforts, with deals be-
ing signed every few days (see chart 1 on
next page).
Despite the scramble in America and
Europe to get to the front of the queue,
countries elsewhere are likely to be under-
supplied, and for some time. Japan has ar-
ranged to buy enough for just one dose per
person, according to Goldman Sachs, a
bank (see chart 2 on next page). On average,emerging markets have secured enough to
cover less than a third of their citizens.
gavi, an alliance that funds vaccines for
poor countries, has set up covax, a pur-
chasing pool for several late-stage vaccine
candidates. It promises participants doses
of an effective vaccine for up to 20% of
their population by the end of 2021, with
rich countries paying for their supplies and
funding a kitty for poor ones. About 80
high- and middle-income countries have
said they want to join. But it remains to be
seen how many put money on the table:
they must pay for the first 15% of their vac-
cines by the end of the month.
Even meeting the commitments they
have already made will be a stretch for
pharma companies, much less producing
enough for the world. Existing manufac-
turing facilities can be repurposed for
some types of jabs. For others, however,
new ones must be built. These can cost
about half a billion dollars apiece, and typi-
cally take three years to get up and running.
A company normally sets up produc-
tion once a vaccine wins regulatory ap-
proval. But these are not normal times. To
speed things up, some firms have started
mass-producing vaccines that are still in
clinical trials. Companies may have prom-
ised 4bn doses, but some of their vaccines
may not pass trials and will have to be
poured away. Many experts think supply
will also be constrained by global shortages
of things like vials and syringes. They put aVaccine economicsMore hard questions
As scientists race to develop covid-19 vaccines, governments must work out how
much to spend on them, and how best to distribute the goodsFinance & economics
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