Science Policy
day one project

Pandemic Readiness Requires Bold Federal Financing for Vaccines

10.25.22 | 10 min read | Text by Andrew W. Lo & Ishan Sharma


Most people will experience a severe pandemic within their lifetime, and the world remains dangerously unprepared. In fact, scientists predict a nearly 50% chance––the same probability as flipping heads or tails on a coin––that we will endure another COVID-19-level pandemic within the next 25 years. Shifting America’s pandemic response capability from reactive to proactive is, therefore, urgent. Failure to do so risks the country’s welfare. 

Getting ahead of the next pandemic is impossible without government financing. Vaccine production is costly, and these expenses will hinder industries from preemptively developing the tools needed to halt disease transmission. For example, the total expected revenues over a 20-year vaccine patent lifecycle would cover just half of the upfront research and development (R&D) costs. 

However, research suggests that a portfolio-based approach to vaccine development —  especially now with new, broadly applicable mRNA technology — dramatically increases the returns on investment while also guarding against an estimated 31 of the next 45 epidemic outbreaks. With lessons learned from Operation Warp Speed, Congress can deploy this approach by (i) authorizing and appropriating $10 billion to the Biomedical Advanced Research and Development Authority (BARDA) (ii) developing a vaccine portfolio for 10 emerging infectious diseases (EIDs), and (iii) a White House Office of Science and Technology Policy (OSTP)-led interagency effort focused on scaling up production of priority vaccines. 

Challenge & Opportunity 

The COVID-19 pandemic continues to wreak havoc across the world, with an ongoing total cost of $16 trillion and more than 6 million dead. Three conditions increase the likelihood that we will experience another pandemic that is just as disastrous: 

  1. New outbreaks of infectious diseases––like ––are emerging due to population growth, increased zoonotic transmission from animals, habitat loss, climate change, and more. Over 1.6 million yet-to-be-discovered, human-infecting viral species are thought to exist in mammals and birds.
  2. More laboratories are handling dangerous pathogens around the world, which increases the likelihood of an accidental contagion release.
  3. It is easier than ever to purchase biotechnologies once reserved only for scientists. Consequently, malign actors now have more resources to develop a human-engineered bioweapon. 

The United States and the rest of the world are still woefully unprepared for future pandemic or epidemic threats. The lack of progress is largely due to little to no vaccine development for these six EIDs, all of which have pandemic potential

Failure to produce and supply vaccines doses to Americans could undermine the U.S. government’s response to a vaccine crisis. This is illustrated in the recent monkeypox response. The federal government invested in a new monkeypox vaccine with a significantly longer shelf life. While focused on this effort, it failed to replace its existing vaccine stockpile as it expired, leaving the American population woefully unprepared during the recent monkeypox outbreak. 

An immediate national strategy is needed to course correct, the beginnings of which are articulated in the recent plan for American Pandemic Preparedness: Transforming our Capabilities. These overarching concerns were also echoed in a bipartisan letter from the Senate Health, Education, Labor, and Pensions and Armed Services Committees, urging the Biden Administration to re-establish a “2.0” version of Operation Warp Speed (OWS)––the government’s prior effort to accelerate COVID-19 vaccine production. 

The President’s recent FY23 Budget advocates for a historic pandemic preparedness investment. The plan allocates nearly $40 billion to the Department of Health and Human Services Assistant Secretary for Preparedness and Response to “invest in advanced development and manufacturing of countermeasures for high priority threats and viral families, including vaccines, therapeutics, diagnostics, and personal protective equipment.” BARDA also declared the need to prepare prototype vaccines for virus families with pandemic potential and has included such investments in its most recent strategic plan. And, the recent  calls for increased “piloting and prototyping efforts in biotechnology and biomanufacturing to accelerate the translation of basic research results into practice.”

Robust federal investment in America’s vaccine industry is especially needed since––as demonstrated by COVID-19––industries garner minimal profit from vaccine development before or during a widespread outbreak. A recent study predicted that in the unlikely scenario where 10 million vaccines are manufactured during a crisis response, pharmaceutical companies can expect to recoup only half of the upfront R&D costs. The same research states that “new drug development has become slower, more expensive, and less likely to succeed” because:

With clinical costs accounting for 96% of total investment, companies have a weak financial justification for investing in risky vaccine research. 

To minimize these uncertainties and improve investment returns for vaccine and therapeutic production, the federal government should embrace two key lessons from OWS: 

  1. Guaranteed government demand enables the pursuit of innovative, speedy, and effective vaccine R&D. OWS selected companies pursuing different scientific methods to develop a vaccine, each of which possessed breakthrough potential. Moderna and Pfizer/BioNTech utilized mRNA, AstraZeneca and Janssen worked with replication-defective live vectors, and Novavax and Sanofi/GSK utilized a recombinant protein. Merck is working on a live attenuated virus that may be given orally. By frequently evaluating vaccine candidates, scientists ensured that only the most promising contenders continued to subsequent regulatory phases. This workflow dramatically expedited vaccine development. Relatedly, companies were able to invest in large-scale vaccine manufacturing during clinical trials thanks to government financial support. They not only received guaranteed investment installments, but also advanced commitments to purchase vaccines. This significantly decreased the financial risk and saved tremendous amounts of time and resources. 
  2. Public-private partnerships utilize incentives and rewards to foster highly effective and dynamic teams. OWS created a “unique distribution of responsibilities … based upon core competencies rather than on political or financial considerations.” The interests of eight pharmaceutical companies were aligned based on the potential to receive an upfront commitment from the federal government to bulk purchase vaccines. Such approaches are critical to ensuring vaccine R&D not only happens in an efficient, coordinated manner but also that such R&D yields production at scale. Moreover, it enabled a suite of approaches to vaccine development rather than one method, raising the overall probability of developing a successful vaccine. 

Repeating these lessons in subsequent EID vaccine developments would generate both significant returns on investment and benefits to society. 

Plan of Action

By incentivizing vaccine development for priority EIDs, the federal government can preemptively solve market failures without picking winners or losers. 

First, Congress should authorize and appropriate $10 billion to BARDA over 10 years to create a Dynamic Vaccine Development Fund. This fund would build on BARDA’s unique competencies as an engagement platform with the private sector. would allow for new developments to emerge 

It would also enact the following strategies, gleaned from all of which were proven to be effective in OWS: 

As illustrated by its successful history, BARDA is well-positioned to manage a large-scale vaccine initiative. Last year, BARDA announced the first venture capital partnership with the Global Health Investment Corporation to “allow direct linkage with the investment community and establish sustained and long-term efforts to identify, nurture, and commercialize technologies that aid the U.S. in responding effectively to future health security threats.” During the COVID-19 pandemic, BARDA and Janssen shared the R&D costs to help move Janssen’s investigational novel coronavirus vaccine into clinical evaluation—a collaboration supported by their previous successes on the Ebola vaccine. The Government Accountability Office reported that BARDA had also supported scaled production by identifying additional manufacturing partners. This partnership record shows that BARDA not only knows how to manage global health projects to completion but also is particularly adept at interfacing with the private sector. As such, it stands out as an ideal manager for the Dynamic Vaccine Development Fund.

With $10 billion, this Fund could not only support the vaccine economy, but also save millions of lives and trillions of dollars. Although the price tag is admittedly hefty, it is reasonable. After all, OWS had a price tag of $12+ billion––a small investment compared to the $16+ trillion cost of COVID-19. As seen in OWS, the long-term benefits of upfront, robust financing are even more impactful. One back-of-the-envelope calculation suggests immense economic returns for the Fund: 

A $10 billion down payment would allow the Fund to excel in its normal operations (see bulleted list above) and support up to 120 vaccine candidates. OWS also spawned more than just new breakthrough R&D in the use of mRNA vaccine models. It also led to a health and biotechnology innovation windfall

“Now that we know that mRNA vaccines work, there is no reason we could not start the process of developing those for the top 20 most likely pandemic pathogen prototypes” 

Dr. Francis Collins, former director of the National Institutes of Health

Ten billion dollars would ensure the Fund’s impact could be similarly force-multiplied by private sector partnerships. There would be  more time available and more opportunity for creative partnerships with the private sector. The Fund’s purpose is to lower financial risks and attract large amounts of capital from the bond market, whose size outweighs the venture capital, public equity, or private equity markets. Indeed, there has been growing interest in the application of social bonds to pandemic preparedness as a unique instrument for rapidly frontloading resources from capital markets. Though this Fund will assume a different form, the International Finance Facility for Immunisation represents a proof of concept for coordinating  philanthropic foundations, governments, and supranational organizations for the purpose of “raising money more quickly.” With seed capital, this Fund could provide a strong signal — and perhaps an anchor for coordination — to debt capital markets to make issuances for vaccines. To this end, the targeted critical mass of $10 billion is estimated to generate both tremendous societal value by preventing future epidemic outbreaks as well as producing positive returns for investors. 

Second, in executing Fund activities, BARDA should leverage investment strategies––such as milestone-based payments––to incentivize maximum vaccine innovation. When combatting EIDs, the U.S. will need as many vaccine options as possible. To facilitate this outcome, vaccine manufacturers should be rewarded for producing multiple kinds of vaccines at the same time. For example, BARDA might support the development of vaccines for a given EID by funding progress for four novel methods (e.g., mRNA, recombinant protein, gene-therapy, and live attenuated, orally-administered vaccines).  

Furthermore, these rewards should come regularly during major events––or “milestones”––during development. Initial-stage milestones include vaccine candidates that protect an animal model against disease; later-stage milestones include human clinical trials. This financing model would provide companies with clear, short-term targets, reducing uncertainty and rewarding progress dynamically. Additionally, it would support the recent executive order, which calls for “increasing piloting and prototyping efforts in biotechnology and biomanufacturing to accelerate the translation of basic research results into practice.”

BARDA could expand the milestone-based financing mechanism further by employing early-stage challenges. In this scenario, it would only fund the first two of three candidates that successfully complete small-scale clinical trials. The final milestone stage––which should only be offered to a limited number of candidates––should provide an advanced market commitment to house complete vaccines within U.S. storage facilities, based on the interagency effort (described in the paragraph below). The selections process would retain sufficient competition throughout the development process, while ensuring a sustainable method for scaling up certain vaccines based on mission priorities.

Third, to support Fund activities towards late-stage clinical trials, the White House Office of Science and Technology Policy (OSTP) should coordinate a larger-scale interagency effort leveraging advanced market commitments, prize challenges, and other innovative procurement techniques. OSTP should be a coordinator across federal agencies that address pandemic preparedness, which might include: the Department of Defense, BARDA, the U.S. Agency for International Development, the National Institute of Allergy and Infectious Diseases, the Federal Emergency Management Agency, and the Development Finance Corporation. In doing so, the OSTP can (i) consolidate investments for particular vaccine candidates, and (ii) utilize networks and incentive strategies across the U.S. government to secure vaccines. Separately––and based on urgent priorities shared by agencies––OSTP should work closely with the Food and Drug Administration (FDA) to explore opportunities for pre-approval of vaccines as they develop through the trial phase. 


Vaccines are among the most powerful tools for fighting pandemics. Unfortunately, bringing vaccines to market at scale is challenging. However, Operation Warp Speed (OWS) established a new precedent for tackling vaccine innovation market failures, laying the groundwork for a new era of industrial strategy. Congress should take advantage and supercharge U.S. pandemic preparedness by enabling the Biomedical Advanced Research and Development Authority (BARDA) to build a Dynamic Vaccine Development Fund. Embracing lessons learned from OWS, the Fund would incentivize companies to create vaccines for the six emerging infectious diseases most likely to cause the next pandemic.

Frequently Asked Questions
If it takes so long to approve a new vaccine, why should we invest in developing vaccines ahead of time?

The regulatory process for approving vaccines is even more reason to develop them ahead of time—before they are needed, rather than after an outbreak. Having access to an effective vaccine even days sooner can save thousands of lives due to the exponential rate of growth of all infectious diseases. Moreover, the FDA approval process—especially its Emergency Use Authorization Program—is extremely efficient, and is not the bottleneck for vaccine development. The main delay involved in vaccine development is the time it takes to conduct randomized clinical trials. Unfortunately, there are no shortcuts to this process if we want to ensure that vaccines are safe and effective. That is why we need to develop vaccines before pandemics occur. The idea here is simply to develop the minimum viable product of vaccines for priority EIDs that positions these vaccines to rapidly scale in the event of a pandemic.

Has this large-scale, multi-use investment program been deployed elsewhere?

Yes, there are several examples of vaccine initiatives using this strategy. To list a few:

  1. The Coalition for Epidemic Preparedness Innovations (CEPI) has a “megafund” vaccine portfolio (i.e., they have 32 vaccine candidates as of April 2022). This portfolio spans 13 different therapeutic mechanisms and five different stages of clinical development, from preclinical to “Emergency Use Listing” by the World Health Organization. 

  2. BridgeBioRoivant Sciences have used portfolio-based approaches for drug development.

  3. The National Brain Tumor Society is also leveraging this approach to finance novel drug candidates that can treat glioblastoma.

Where and how would you safely store a large vaccine stockpile? When we tried this before, didn’t 20 million doses of monkeypox vaccines expire?

Ideally, vaccines in the final milestone stage would be stored in the United States and in line with new CDC guidance in the Vaccine Storage and Handling toolkit. This prevents the scenario where vaccines are held up in transit due to complex international negotiations and, potentially, expire during the lengthy proceedings. This exact scenario occurred when the 300,000 doses of monkeypox vaccine held in a Denmark-based facility were slowly and inconsistently onshored back to the U.S. 

In addition, vaccines that are financed through the Fund would not always be final products. Instead, they would potentially be at varying stages of development thanks to the milestone-based payment strategy and frequent progress reviews. This would make it easier for the federal government to closely coordinate vaccine development with manufacturing professionals and rapidly increase vaccine production if necessary. The strategy offered in this memo lowers the risk of a similar situation occurring again.

We recommend that the executive order on biomanufacturing continue exploring this issue and investigate ways to securely store completed vaccines. The Government Accountability Office, for example, recently suggested several promising and discrete changes to update the requirements and operations of the Strategic National Stockpile.

Why did you select these six emerging infectious diseases?

This list was derived from justifications listed on CEPI’s website, linked here

Why not develop a vaccine against all potential viral threats?

There are simply too many infectious diseases in nature, and most of are too rare to pose a significant threat. It would be scientifically and financially impractical––and unnecessary––to develop vaccines against all of them. However, we can greatly increase our readiness by widening our scope and developing a library of prototyped vaccines based on the 25 viral families (as called for by CEPI). Doing so would allow us to respond quickly against even unlikely pandemic scenarios.