We wrote the attached draft article, Valuing the Vaccine, in the context of debates over whether contracts to COVID-19 vaccine manufacturers for less than $40 per course were overcompensating those producers. In short, we argue that the right lodestar for valuing medical innovations is social value—not compensating R&D costs—and that even with low-end estimates of social value, current prices reward developers with a small fraction of those estimates.
During the talk, I will also explain our plans to extend this argument in a broader paper, tentatively titled Valuing Medical Innovation. Although cost-based pricing has attracted significant attention from scholars concerned with U.S. pharmaceutical pricing, our arguments for value-based pricing are not limited to the COVID-19 vaccine context. In some cases, such as drugs without rigorous evidence of comparative clinical efficacy, value-based pricing suggests that current rewards are too high. In other cases, such as for preventative medicines and treatments that require lengthy clinical trials, evidence suggests that current rewards are too low.
Contact Person: Lucy Xiaolu Wang