Steven Hamilton Richard Holden
This once-in-a-century pandemic has conferred very high returns on out-ofthe-box thinking.
Nowhere has the inadequacy of conventional thinking been more exposed than in Australia’s vaccine strategy. The cost of maintaining our current course couldn’t be higher.
In any normal time, the government’s strategy might seem sensible. Rather than order all the leading vaccine candidates, they selected one from each technology – Pfizer over Moderna (mRNA vaccines); AstraZeneca over Johnson & Johnson (viral vector vaccines); and Novavax over Sanofi (protein vaccines). They also favoured vaccines that could be produced locally – initially, the University of Queensland’s sincefailed candidate and, subsequently, AstraZeneca’s vaccine, which is to be produced here by CSL.
You could be forgiven for thinking that three or four vaccines would be sufficient. But amid a pandemic that has claimed millions of lives and trillions of dollars of global economic output, you’d be wrong. By a lot.
The trouble with our strategy is it fails to match the truly massive cost the pandemic continues to impose on our economy and society. The Health Department bureaucrats and McKinsey consultants in charge of devising our vaccine strategy aren’t accustomed to benefit-cost ratios of this magnitude. They’re used to protecting the public purse against dubious boondoggles. But a pandemic is no time for thrift. Ordering many more vaccines than we need might seem imprudent. But it isn’t.
Backing eight vaccine candidates, rather than four, would have cost us perhaps billions of dollars. But that would have been prudent insurance against the risk the winners we’d picked might lose. And, indeed, we’re bearing those costs now.
The University of Queensland vaccine faltered out of the gate. The AstraZeneca vaccine, on which we’ve pinned much of our hopes, has far lower efficacy than the leading Moderna, Pfizer and Novavax vaccines. And its stage-three trials generated uncertainty about when a second dose should be administered and its efficacy for older recipients.
We’ve failed to order a single dose of the world-leading Moderna vaccine. And we’ve ordered only enough of the next-best, Pfizer, to cover one in five Australians. We’ve 50 million doses of the third-best, Novavax, but have chosen not to produce it locally even though it’s better than AstraZeneca. And we have no orders for the Johnson and Johnson vaccine, which requires only a single dose.
It didn’t need to be this way. Back in March 2020, Microsoft founder Bill Gates recognised the stakes, funding the manufacture of seven of the leading contenders – he reasoned any waste would be far less costly than any delay.
Many countries got it right. Israel, with no vaccine manufacturing capability, has already administered 5 million doses to its 9 million inhabitants. The United Arab Emirates, Britain and the US, among others, have also vaccinated millions.
Had we secured more of the leading candidates and not insisted on duplicating the approval processes already completed overseas, we could have begun vaccinating by Christmas. But what can we do now?
We recently failed to reach an agreement with Moderna. It’s hard to conceive of any terms they might demand that we shouldn’t be willing to accept. And we seemingly haven’t tried to secure any agreement with Johnson and Johnson.
Meanwhile, the US government recently secured an additional 100 million Pfizer and Moderna vaccines.
While the Prime Minister announced funding for the vaccine rollout, none of it will go towards additional or accelerated vaccine supplies. The government seems content with the very slow rollout. But this is no time for complacency.
We need to do whatever it takes to secure additional doses. We should be willing to pay an obscenely high price – and any vaccine that has already been approved by Britain, the EU and the US should automatically receive approval in Australia.
We must treat our vaccine rollout like the wartime effort it is. Despite our early victories, the war is far from won.
Steven Hamilton is assistant professor of economics at George Washington University and Richard Holden is professor of economics at UNSW.