Vaccines Use Bizarre Stuff. We Need a Supply Chain Now. – Bloomberg

Scott Duke Kominers is the MBA Class of 1960 Associate Professor of Business Administration at Harvard Business School, and a faculty affiliate of the Harvard Department of Economics. Previously, he was a junior fellow at the Harvard Society of Fellows and the inaugural research scholar at the Becker Friedman Institute for Research in Economics at the University of Chicago.

Alex Tabarrok is the Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University.

Gotta bleed the crabs now.

Photographer: Timothy Fadek/Corbis Historical/Getty Images

Photographer: Timothy Fadek/Corbis Historical/Getty Images

Weve already seen the costs of supply-chain failures during the Covid-19 pandemic: Delays in the production of simple nasal swabs slowed testing by months even as the pandemic exploded in the U.S. The world is now eagerly awaiting a vaccine, and will need billions of doses as quickly as possible. If the vaccine supply chain fails, the economic and human cost of Covid-19 will be prolonged.

The multilinked vaccine production chain will take months to set up, which means starting now. Some parts are already seeing investment glass manufacturers, for example, are ramping up production of vials. But the supply of less obvious inputs needed earlier in the chain is uncertain.

Vaccine supply chains contain some unusual links, including horseshoe crab blood, shark liver oil and an enzyme thats one of the worlds most expensive products. Other links rely on novel manufacturing processes that have not yet been implemented at scale. Each link in the chain needs to be stress-tested and strengthened. For the potential weak spots, alternative manufacturing processes need to be considered and prepared.

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Vaccines manufacturing requires a long series of biological processes, and avoiding contamination is crucial. Endotoxins, which are dangerous molecules shed by bacteria, are one source of contamination. To detect them, each batch of vaccine, along with its vials and stoppers, is tested with a substance called Limulus amebocyte lysate. The only known natural source of LAL is horseshoe crab blood which means that the supply varies year to year, and we have to be careful not to deplete the crab population. Luckily, a synthetic version of LAL has recently been developed and approved by the U.S. Food and Drug Administration and the European health ministry. But companies need time to validate and prepare production to be ready for a Covid-19 vaccine.

Shark livers are another surprising link in the supply chain for some vaccines. The shark liver oil squalene, which is mostly used in cosmetics and sunscreens, is part of a vaccine adjuvant a factor that accompanies a vaccine and amplifies its effects by giving an extra stimulus to the immune system. We should be able to repurpose squalene from the cosmetic market to aid in vaccine production, but it might be even better to use synthetic squalene. That can be produced under highly controlled conditions, but again, we need to prepare the production processes now. We dont want vaccine delivery to fail because we dont have enough shark liver oil.

Traditional vaccines work by exposing the bodys immune system to a virus that has been weakened or killed; then, when the vaccinated immune system meets the dangerous version of the virus, its been trained to fight back. Recently, entirely new types of vaccines have been developed that use DNA and mRNA. These vaccines copy pieces of the viruss genetic material and then program the bodys own cells to produce the immune-training antigens. This approach is faster and more standardized than traditional vaccines, and it has the potential to be especially safe because it doesn't involve exposing subjects to the virus.

DNA and mRNA vaccine technologies have shown promising results, and two of the leading vaccine contenders, from Pfizer Inc. and Moderna Inc., use mRNA technology. But mRNA has never been used to produce a commercial vaccine for humans, let alone at scale. And scaling these technologies may not be easy. In particular, mRNA degrades rapidly. To prevent this, it must be capped by a very rare substance called vaccinia capping enzyme.

Just over 10 pounds of this VCE is enough to produce a hundred million doses of an mRNA vaccine but the current manufacturing processes for VCE require so much bioreactor capacity that making 10 pounds would cost about $1.4 billion. More important, global bioreactor capacity cannot support production at that level while also producing other vaccines and cancer-fighting drugs.

If we work hard now, we may be able to find more efficient means of producing VCE. Expanding bioreactor production and repurposing bioreactors from existing large-scale industrial applications will also help to lessen the pressure on the supply chains for multiple types of vaccines.

Even delivering vaccines can be complicated. Vaccines made with mRNA technology must be stored at very cold temperatures, which may be especially difficult in developing countries. DNA vaccines dont need cold storage, but they require new methods of delivery such as gene guns that shoot gold bullets. We need to be developing and testing different delivery methods now.

We don't yet know which vaccine candidates will be successful. It could be the traditional vaccines, or the newer DNA and mRNA approaches, or possibly something else. We may want more than one vaccine for use in different populations the elderly, for example, might respond better to one version than another. Meanwhile, some vaccines will be more suitable for use in developing countries than others.

Because we don't know which candidates will work and because building production capacity takes time we have to shore up the supply chain for all of these different types of vaccines at once. The world economy is losing on the order of $500 billion a month due to Covid-19, so even if building out supply chains costs billions, it's a wise investment.

Of course, we might think that private companies would have incentives to coordinate supply chains themselves and to some extent, they are doing so. But many have pledged to keep their vaccine prices close to costs, both out of altruism and because they may fear public backlash (or legal action) if they're perceived as price gouging in the middle of a pandemic. And if companies dont stand to profit much from Covid-19 vaccines, then they dont have much incentive to invest in increasing capacity. In short: If prices cant rise, then the only way to encourage companies to invest more in production is to reduce their costs and that means we need public investment.

Investments in supply-chain improvements such as refining the VCE manufacturing process have aspects of a public good because they will benefit many pharmaceutical businesses at once. Public investment in those kinds of R&D is justified in normal times and even more so in todays extraordinary moment.

Supply chains failed as the pandemic began, and we can't let that happen again with vaccines. Nobody should die because poor preparation keeps us from being able to deploy lifesaving technology quickly. We have to be ready to produce billions of doses as soon as a vaccine is approved and that means we need to invest now.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the authors of this story:Scott Duke Kominers at skominers1@bloomberg.netAlex Tabarrok at Tabarrok@gmu.edu

To contact the editor responsible for this story:Stacey Shick at sshick@bloomberg.net

Before it's here, it's on the Bloomberg Terminal.

Scott Duke Kominers is the MBA Class of 1960 Associate Professor of Business Administration at Harvard Business School, and a faculty affiliate of the Harvard Department of Economics. Previously, he was a junior fellow at the Harvard Society of Fellows and the inaugural research scholar at the Becker Friedman Institute for Research in Economics at the University of Chicago.

Alex Tabarrok is the Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University.

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Vaccines Use Bizarre Stuff. We Need a Supply Chain Now. - Bloomberg