Peter DeMarzo, Hanno Lustig, Amit Seru, and Jeffrey Zwiebel
Beginning with SARS, Ebola, Zika, MERS, and now COVID-19, the world has witnessed the magnitude of the threat from the outbreak of an infectious and deadly disease. The subsequent scramble for a vaccine, and the long delays involved, makes it clear that we are unprepared. Why are we underinvesting in the R&D necessary for the rapid deployment of crucial medicines? The answer is a lack of incentives for the pharmaceutical sector to invest: the risks are high and the financial rewards from producing vaccines are low. This problem can be fixed by changing those incentives. The government should commit to a guaranteed payment for effective vaccine or drug treatments delivered in the event of an outbreak.
