Welcome to the Project on Government Oversight’s first newsletter tracking corruption and COVID-19
Corruption is sometimes just an isolated scandal. But the coronavirus pandemic and the government’s response are illustrating just how corrupt the functioning of our government has become — and just how high the stakes are. Unfair advantages that the well-connected and wealthy have accumulated over decades produced a system that gives the “have-mores” even more in the middle of a global health crisis.
In this weekly newsletter, we’ll dive into how corruption and its side-effects are playing out in the crisis. We won’t be looking only at bribery and other criminal misdeeds, but also at the many, less obvious — and often legal — forms of corruption that are so deeply ingrained in Washington. This systemic corruption fuels ineffectiveness in government and inequity in society. It makes government prone to fraud, waste, cronyism, discrimination, misinformation, secrecy, and the silencing of dissent.
How the Race for a Vaccine Has Been Corrupted
The coronavirus is still raging across the US, with outbreaks of COVID-19 in the Sun Belt threatening to overwhelm hospitals. With the first wave of the virus’s spread swallowing much of the country, Americans are hoping for news of an effective vaccine or treatment that enables us to restart the economy, open schools, and get our lives back.
Everything hinges on the federal government’s effort to develop and distribute a vaccine: Will it be an honest, well-managed effort based on sound scientific principles, or will it be a fiasco hampered by corruption, cronyism, and the influence of Big Pharma? Unfortunately, we are starting to see signs of the latter.
Whistleblower Rick Bright made national headlines earlier this year after he was removed from his position as director of the Biomedical Advanced Research and Development Authority. Bright alleges leadership at the Department of Health and Human Services pressured him “to ignore expert recommendations and instead to award lucrative contracts based on political connections and cronyism.”
We have limited visibility into the administration’s push for a vaccine, now dubbed Operation Warp Speed. But we do know the government has given millions of taxpayer dollars to inexperienced, untested firms, and considerable leeway to the already powerful pharmaceutical industry.
Let’s take a step back and look at the Trump administration’s push to develop a vaccine, and the red flags it has raised along the way.
Investments in Inexperienced Firms
In order to hedge its bets and secure a vaccine as quickly as possible, the government invested billions of dollars in a handful of pharmaceutical companies. On its face, there’s nothing wrong with this approach. We are desperate for a vaccine, and if a few investments don’t yield results, that’s fine. The end goal is more important.
But at least three of the companies that received government funding have never brought a vaccine to market. Let us repeat that: never.
In April, the government committed up to $483 million to Moderna, a young biotech firm that has never produced a vaccine that was approved and has never even conducted a large trial. The government’s collaboration with Moderna has been fraught with delays and disagreements over the development process and the company’s contractual obligations. Even so, the government invested an additional $472 million in Moderna’s vaccine candidate in late July and $1.5 billion this week, pushing the grand total to over $2.4 billion.
It just so happens that the Food and Drug Administration (FDA) approved Moderna for the first phase of a clinical trial just one day after the company’s CEO caught President Donald Trump’s attention at a White House roundtable event by touting how quickly his company planned to develop a vaccine. It’s also worth noting that the need for a COVID-19 vaccine came at a crucial time for Moderna, which “ended 2019 with a $514 million net loss,” according to CNN.
In July, the government invested $1.6 billion in biotech firm Novavax, which, as the New York Times noted, has “never brought a vaccine to market in its 33-year history,” and as of last year was in deep financial trouble. Novavax also tapped influential contacts when pursuing a government contract for vaccine development, the Times reported.
This past weekend, the New York Times profiled another untested biotech company cashing in on the race for a vaccine. The company, Inovio Pharmaceuticals, was not selected to produce vaccines for Operation Warp Speed. But it did receive $71 million in June from the Department of Defense to produce a vaccine injection device. The company’s CEO was also at the White House roundtable, where he touted Inovio’s capabilities directly to the president, claiming that not only had the company developed a COVID vaccine, but it had done so “within three hours.” Like Moderna and Novavax, Inovio has never brought a vaccine to market.
These deals immediately raise questions: Do these companies truly have the capability to mass-produce a viable vaccine? Or is the administration being hoodwinked by unqualified companies that have access to power and the potential to reap big profits even if their efforts don’t bear fruit?
Concerns About the Decision-Makers
Leading Operation Warp Speed is former GlaxoSmithKline executive Moncef Slaoui. Slaoui, who until May sat on the board of Moderna, has extensive investments in the pharmaceutical industry — which he’ll be allowed to keep, even as he makes decisions about contracts with vaccine developers. Slaoui still owns stock in GlaxoSmithKline, which will receive up to $2.1 billion from the government to develop a vaccine in partnership with Sanofi. What’s more, Slaoui, as a contractor consultant, will not be required to file ethics disclosures officially revealing his potential conflicts of interest.
The Trump administration has hired several other former pharmaceutical executives to work on Operation Warp Speed under similar arrangements that allow them to skirt federal ethics rules.
On top of that, as Bright warned in May, the administration is sidelining experts in its quest for a vaccine. Top scientists who sit on a committee formed by the National Institutes of Health to help the government run vaccine clinical trials say they were not consulted when the administration chose Moderna and the other firms.
Those scientists and other experts are worried that the administration is putting speed ahead of safety. Some experts have expressed concerns that the administration will cut corners, and the New York Times reported worries that the White House, including Trump son-in-law and senior adviser Jared Kushner, is pressuring government researchers and regulators to have a vaccine available before the election.
We’ve already seen pretty clearly how pressure from Trump and Kushner can influence the pandemic response. Just take Trump’s promotion of hydroxychloroquine and, more recently, the administration’s pending loan to Kodak. In the latter instance, the president used the Defense Production Act and a small federal agency run by Kushner’s former roommate to initiate a loan to the photography company to start producing drug components. Kodak and its executives are now under scrutiny for possible insider trading surrounding the potential loan.
These two examples, paired with the concerns aired by government scientists, certainly leave us worried about the potential for political influence in the vaccine effort. The FDA commissioner recently penned an op-ed assuring the public that he would “adhere to standards that will ensure any covid-19 vaccine’s safety and effectiveness,” but it’s worth noting that he didn’t rule out the possibility of approving a vaccine with an emergency use authorization, a process that requires less data and a more limited review than is typical.
The Power of Big Pharma
Members of Congress and civil society groups have complained about the lack of transparency in the effort to develop a vaccine. The administration has not explained its process for choosing candidates or how many contracts it has awarded.
What we do know is the government is giving favorable treatment to pharmaceutical companies, which already wield immense power over this country’s healthcare system.
For example, several contracts limit the government’s ability to intervene if the companies ultimately charge unreasonable prices for vaccines. So even if these companies promise to offer fair prices, the government has no recourse if they go back on their word.
With the companies and their executives poised to reap huge profits, the federal government should not be handing them even more power to control prices.
And yet, when crafting coronavirus relief legislation back in March, the government did just that. Congress initially pushed for a provision that would have given the government the power to limit companies’ intellectual property rights if they charged unreasonable prices for drugs or vaccines. But the pharmaceutical industry successfully lobbied to nix that provision, and added one that keeps the government from delaying vaccine or treatment development if pharmaceutical companies set prices too high.
Pharmaceutical companies are now enjoying favorable legislation and large contracts, all while company executives use their association with Operation Warp Speed to make quick fortunes in the stock market.
With the power to set prices at will, Pfizer has declined to publicly commit to setting fair prices. And even though some companies made a no-profit pledge, there’s no way to know whether they will follow through. Moderna’s president has stated that the company would not price its vaccine at cost, and in early August the company revealed that it will price its vaccine at as much as three times the cost of what other drug makers have said they plan to charge.
Congress can still combat the pharmaceutical industry’s immense control over drug and vaccine prices. Even without major legislation to address prescription drug pricing, lawmakers can enact bills giving the government more power over the price of vaccines, as well as more transparency over the whole vaccine development effort.
While it may be impossible to go back and fix contracts the government has already signed, the search for a vaccine is still months — possibly years — from ending, and lawmakers can prevent other companies from overcharging. Congress has the power to demand greater oversight and transparency from the administration and its contracts with pharmaceutical companies.
Corrupted: The COVID-19 Response dives into corruption in the time of coronavirus. At a time of high government spending, we aren’t just looking at illegal corruption (like bribery and criminal scheming), but also at the many, less obvious forms that systemic corruption can take. Have something to share? Let us know what you think at email@example.com