Capitalisn’t: The Price of a Vaccine

David Meline: Well, the most memorable moment was the Sunday afternoon when we heard that we had 94 percent efficacy from the trial. When I heard that, I looked at my wife and I said, “I can see the end of the pandemic is on the horizon.” That is a moment I’ll remember for the rest of my life.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism, and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: So, obviously, a huge topic today are the vaccines, the development of the vaccines, the public-private partnership called Operation Warp Speed that enabled America to get vaccines very quickly, and the debate over patent rights and profit sharing that is taking place as a result of the successful vaccines. So, Luigi and I thought it would be really interesting to talk to someone at Moderna to see how they think about all of these issues, and we’re delighted to be able to talk to Moderna’s CFO, David Meline.

Luigi: Our podcast is about what is working in capitalism and what is not. We wanted to analyze a case where capitalism seems to have worked. I think that the vaccines overall have been an enormous success, and we want to understand how this is possible, and to what extent the government played a crucial role, and if there is something to learn more broadly about the possibility of partnership between the government and the private sector.

You were CFO of a large, publicly traded company, and then you went for kind of a startup, a very recent startup. What prompted you to make this change, and how different is it?

David Meline: Yeah, so, when I joined Moderna about a year ago, unexpectedly, they realized they were a company coming potentially to the market in 2020, versus about five years later, and so they needed to quickly build a commercial company, and that’s something I know how to do. But the fact is, it was such a unique and compelling lifetime opportunity to help to address the pandemic, to help bring forward a new technology that we felt was very exciting.

Luigi: So, can you give us a little bit of the numbers involved? How much money did Moderna plug into this project, and how much was part of the public-private partnership? How much was risk capital provided by investors?

David Meline: Sure. Yeah. Very good questions. The company has been developing for about 10 years this new technology platform, which is a truly disruptive technology platform that we and many believe can impact the drugs that become available to the market. So, until now, about a third of the proteins in the body were accessible with biotech drugs. This technology basically opens up all of the proteins in the body, the other two-thirds that had been unavailable to address with medical products. So, we think it has large potential.

The company invested cumulatively several billion dollars over the last 10 years, and that was largely private capital. So, there had been partnering, a very close relationship with the NIH in particular, because Tony Fauci and the NIH recognized the potential of this platform, because of the speed at which you can do development, which is unprecedented versus prior technologies. So, we were working closely throughout with NIH, but the funding was largely private until we got into the Phase 3 trial last year.

Luigi: So, you said that up to Phase 3, most of the money was private. Then, tell us a bit about Phase 3, and how much money it takes, because most people don’t know how much money it takes to go through a Phase 3 trial, which is a lot.

David Meline: Yeah. So, the company had done a $1.4 billion equity funding round in May of 2020, which was to enable it to continue to quickly progress the development of the COVID vaccine, but the Phase 3 trial that then we were facing into as we entered the summer, the cost of that trial was some $1.1 billion.

Enter Operation Warp Speed, where I think, in retrospect, they did a spectacular job of taking a portfolio approach to accelerate availability of vaccines by betting on three technologies, including mRNA, and six companies, so two companies for each technology platform. Moderna was one of those six. They funded our Phase 3 trial, as they did with others. In our case, it was quite important, given the fact that we were one of the companies that was pre-revenue. That was a key enabler, working with Operation Warp Speed, amongst several key enablers, to progress quickly to get to the market.

Bethany: Was it just the capital, or did the government also provide other forms of assistance, such as help with the Phase 3 trials, and, at least in my understanding, most importantly, being able to speed up manufacturing and get the equipment necessary to really accelerate manufacturing?

David Meline: Yeah, I would say a couple of key dimensions. One was the fact that not just for Moderna, but for all of these developments, the FDA and the regulators worked 24/7, and literally, we would work with them on Saturday, on Sunday. The people on the staff were working very closely, while always respecting the requirements and the standards, because everyone knew we had to maintain a high standard for approval to gain trust and credibility. But the speed and the focus in which the regulators, both in the US and globally, were operating was a key enabler to making this happen very quickly, so that was one.

And then, the second dimension was, as you mentioned, the manufacturing. We were producing commercial product while we were doing the trial, which normally you would do this in the serial fashion. You test it, and you validate, and then you take the risk to invest. But again, because of the cooperation of Operation Warp Speed, we were in a position to take more risk to do in parallel a number of steps that involved taking risks, cutting time, and putting money at risk, which we did, both shareholder capital as well as this trial. And, of course, that was a key enabler to get to market.

And then, if I may, the final part of that second dimension is a very close relationship led by General Perna and his supply team from the military, who really were key enablers to get the supply chain lined up and prioritized in support of our development.

Luigi: So, let me ask more about the financial part. You are the CFO, so probably you were bargaining with the government on the other side, and while there is clearly a big objective, common objective, to get the vaccine out as soon as possible, you were defending the interests of your investors, and I guess Moncef Slaoui, or whoever for him, was on the other side, bargaining for the government. I don’t know to what extent you can share this, but how did the negotiation take place?

David Meline: Yeah. No, it’s a good question. In the industry, pricing is based on the benefit that you generate from a particular drug. How does it reduce the cost of disease, the cost of hospitalization, the effects of people suffering the disease? In the traditional analysis, what it showed, not surprisingly, is the value of this vaccine was probably several hundred dollars a dose, because of the dramatic impact on economies of shutting down the economy. So, the value was very high.

We made a strategic decision early to offer a product that was priced closer to more-traditional vaccines, recognizing that it was far below the economic value of the product. And in the case of the US government, the pricing that we agreed upon initially was some $15 a dose, which was the lowest announced price that we’ve offered globally to many of our international customers. The pricing we had indicated initially was somewhere, $30 a dose, or above. So, we offered a very attractive price, based on the negotiation, and in recognition, it very much took into account the support we’d gotten to underwrite the Phase 3 trials. So, when we talked about $15 a dose, well, the first 100 million doses, when they funded a billion-dollar trial, was $10 a dose, so we treated it in that way.

So, beyond that overall pricing, we’ve indicated again, we recognize our role and our responsibility, frankly, to global society, and so we’ve got a tiered pricing arrangement based on incomes by country, and the best price offer we’ve been making is to the low-income countries that are represented through a coalition called Covax, where we’ve signed a deal for 500 million doses. So, we’re seeking to balance the shareholder expectations for the company with our social and ethical responsibility to help to address the pandemic, and do it in a responsible way.

Luigi: But there is an issue, for example, of how much money you take. If I’m not mistaken, Sanofi took more money than you did and produced nothing as a result. So, there is a tension between how much money you take and what you are giving to the government for that money, and how do you price the drugs? And this is extremely difficult, because as you said, the value of the drug is probably, I don’t know, several hundred dollars per dose, probably even more, and I don’t know, and I’m not sure you want to reveal what the marginal cost is, but in between there is the ocean. There is a lot of space in between. First of all, how did you settle on how much money you asked the government for, and two, what was the quid pro quo with the government?

David Meline: Yeah. No, that’s a good question, and there’s judgment. We sought to balance, again, our responsibility to generate returns and to recover the several billion dollars that we’d invested, our shareholders had invested over the last decade, with the responsibility we had. And, you know, you should understand that this was the first launch of the first product with this technology, and we’re looking at the long term, successfully establishing the product, not only its attributes to address disease, but to be seen as a responsible participant in the global biopharma market as a new player. I mean, a year ago, people, when I told them about Moderna, they had no idea who I was working for. . . . Was also part of the whole equation. So, it’s looking short term, and it’s also looking with an eye towards creating a long-term, sustainable value proposition, and the company, with the strong reputation that I believe it deserves, to continue to develop and bring products to the market.

Bethany: Are there lessons you take away from this about public-private partnerships, and are there things that surprised you in this particular public-private partnership, and do those things transfer to normal times, or are the lessons you’ve learned a product of a wartime environment, like the one you were in, essentially?

David Meline: Yeah. Well, many developments in technology and even business have come from wartime experiences that then become applicable through time. So, I think there’s some important lessons that are quite positive. In particular, in this instance, taking a portfolio approach to the development, with the recognition that there was uncertainty as to who would get to the finish line, and if you will, spreading of the bets, I think, turned out, especially compared to some other countries who made a single choice, sometimes on a national champion, it hasn’t worked out that well.

And then, secondly, we have cooperation with agencies of the government, and we’ve enjoyed that in our history, and we look forward to continuing to have that. So, I think in the US, there’s a good balance there.

Bethany: Given that some of the accelerated timeframe was because of the unique possibilities of mRNA, how much do you think Operation Warp Speed sped up the process? If the government had just said, “Private industry, you do it. We’re not getting involved at all,” can you estimate when vaccines might have been ready? Because it wouldn’t have been six or seven years, given these unique properties.

David Meline: No, that’s right. We don’t have a number. I’m sorry.

Bethany: I know.

David Meline: That’s a good question.

Bethany: But it sped it up, right? It’s fair to say that it accelerated it.

David Meline: Oh, definitely. I believe you would measure it in years.

Luigi: When you said, we are proceeding in pilot, I thought the government prebought some of the doses, no questions asked, or am I wrong there?

David Meline: Good question, yeah. So, the government placed an initial order of 100 million doses. There was a portion of that that was a prepayment that was at risk, even if it failed. In fact, all of our customers participated. The early customer group all gave us at-risk down payments that enabled us to fund ourselves, because again, this is a startup with no revenue, right? We had no revenue nor history, and we were lining up supply for hundreds of millions of dollars of commitments of supply, and so, the only way we were able to do that was to get prepayments, and again, because of the circumstance, those were at risk. So, you are correct, Luigi, that in fact, that was part of the equation that we concluded, hey, we can’t do this unless we can get some at-risk funding from our customers, which was, in a number of cases, countries had to go to parliament and have acts of parliament to get the down payment for us.

Luigi: Now, how important in all of this was the personality, the experience, of Moncef Slaoui, who was in charge of Operation Warp Speed?

David Meline: Yeah, so Moncef, I think, made a very important contribution as the leader of Operation Warp Speed. He had deep knowledge of the vaccine business, having led it for a large, multinational, leading company for many years, and so he understood those aspects of risk-taking in the business, and then worked as an advocate inside of the government to enable us to successfully get to market, while balancing risk and opportunity. So, I think he had a very important and positive role in his role leading Operation Warp Speed.

Luigi: Because we often—I am the one to be blamed—we often criticize revolving doors, because they bring some form of potential for corruption. But there is also a positive aspect, and in the case of Moncef, this positive aspect was paramount, because without the knowledge from the industry, he would never have done the job the way he did.

David Meline: That’s right, and I totally understand your concern, and can’t disagree. But to me, it’s a necessary part of being successful, creating that interface to have one plus one equal more than two, and it has to be carefully monitored, and you have to have accountabilities in doing so. But I think it’s a good case study of how it can be done successfully.

Bethany: Were there particular opportunities and challenges in that respect, given that Moncef had also been the chairman of Moderna’s board, so he knew the company?

David Meline: I think we probably benefited from the knowledge and confidence that a number of participants in Operation Warp Speed and in the government had about mRNA technology, and about Moderna’s leadership in the field, and that came from their involvement, either as Moncef had, or in the case of the NIH and Tony Fauci and his staff, close cooperation over a number of years. So, familiarity with a new technology like this was important to support taking the risk to adopt it, which I think has turned out to be quite successful on this front.

Bethany: Were you as surprised by the logistics capability of the Army, or was that something that you innately understood was part of the Army?

David Meline: Yeah, I mean, I didn’t serve in the military, so I don’t have direct experience, but it’s been quite . . . It’s been very impressive. I guess not surprising, but they’re applying principles of crises to address this civilian crisis, and it’s been very successful. It’s been fantastic.

Luigi: Now, as you said, the front line of the fight against the pandemic is moving now into developing countries. As you know, there is a lot of dispute about whether we should waive the vaccine rights, and all this stuff. So, let me start with a question. How crucially transportable is the knowledge? If tomorrow, India were to get your patent and could produce what you have developed, how easy would it be for India to produce on a mass scale?

David Meline: Yeah, unfortunately, or fortunately, it wouldn’t be possible. First of all, we announced last October that during the pandemic period, we would not enforce our intellectual-property rights for exactly this reason, that we felt the number one need in the global economy was to address the pandemic, and the mRNA technology, which we were a leader in developing, we felt was an important solution. So, we were not going to stand in the way and get into patent disputes. So, that’s point number one.

Point number two is, the limitations that exist in this regard, and I think I mentioned earlier, in that it’s a new technology, the available quantities of material supply in the world were very limited amongst a very few suppliers. And so, even if you had new producers, they could not . . . It takes years to develop this supply capability, which as I said, we’ve been investing in for over a decade. And so, it’s not a simple matter of patent protection, but it’s around the whole supply chain and the know-how that exists to produce the product successfully, which is not always patented. It’s just the knowledge of people who are involved with these processes to be able to, especially with the new technology, bring product to market.

So, it’s our view that the patent issue, at the present time, for the present situation, is really not the most relevant factor here, but it’s in fact the availability of capacity in factories and raw materials, and then the know-how to produce, and the best way to ramp up that is to support us in doing so.

Bethany: So, what are the biggest challenges going forward? What occupies your mind now?

David Meline: Yeah, that’s a good question. The first priority is to address the pandemic, and there’s really a couple of big, open issues. The first one is, we’re far from resolving the pandemic. Things are progressing well in several regions of the world, but the vast majority of the global population is still awaiting a solution. So, we’re working hard to continue to ramp up our production capacity. We’re working towards 800 million to a billion doses this year, and we’ve announced that we’re adding capacity to enable us to produce upwards to three billion in 2022, and we think the pandemic will continue through 2022. So, that’s priority one.

Priority two is the onset of these variants, and fortunately, mRNA technology seems well-suited to the shifting course of the virus, where it’s mutating into different forms. And so, we’re testing right now some booster shots that are specifically targeted to these changing variants. The good news so far is, our original vaccine thus far is still showing to be very effective against all variants of concern, but we’re cognizant of the likelihood that this could mutate further, and we need to be ready for that, so that’s the second key priority.

And then, thirdly, we have 24 products in development, and it would be quite easy for a small company like ours to shoot up to 100 percent of our effort to this one, but we’ve been very careful to seek to ring-fence a number of our scientists to allow them to continue on their mission to develop other products off of this platform, which has now been validated. We’re very excited about the potential for additional products, such as a vaccine for CMV, which is the leading cause of birth defects in the world, and secondly, we’ve also indicated we’re working on a flu vaccine that we hope to have out either this year or next year, which given this technology platform we’re working with, we think could have an improved efficacy versus traditional solutions.

Luigi: So, I think we’re running against the clock. Let me finish with one question that I like to ask all our alumni. You are a proud alum of Chicago Booth, or what used to be Chicago GSB in your time. I always ask, what is one thing that you learned that is useful, and what is one thing that you wish you had been taught and you weren’t?

David Meline: That’s great. Yeah, I mean, to me, the most useful grounding I got at University of Chicago was really a bias toward . . . If you were in meetings with me, you’d always hear me say, “Let’s start with the facts, OK?” A bias towards fact-finding, towards analytics and analysis, because strategies often become quite straightforward when you lay out the facts in advance, whereas people often are tempted to jump right to solutions with very limited actual factual background. So, the orientation I got at Chicago, which was a very fact-based, analytical approach to problem-solving, has been something that’s been a key for me over now several decades.

What I wish I would have learned? I mean, there’s no substitute for experience, so you go through life, and often your experiences are the ones you barely survive. Sometimes I thought I was going to barely survive the University of Chicago, but I guess maybe I got through it, so that’s good.

Bethany: Thank you so much for your time. This was really helpful.

David Meline: OK, thanks, guys.

Luigi: This was fantastic, David. Thanks a lot. Bye-bye.

David Meline: All right, good. See you.

Luigi: So, Bethany, I thought, how do you go about pricing the vaccine, when all the estimates of values are astronomical? I looked a bit at the growing economic literature, and they go from $12,000 per dose to $1,000 per dose, just to accelerate . . . actually, per course, not per dose, just to accelerate the production of the vaccine by a few months. So, the value is enormous, and the marginal cost, as we know, is very low. So, a pretty big range over there. A pretty difficult decision, if you are a CFO.

Bethany: Yeah, very difficult decision. I thought it was really interesting that they think of themselves . . . Moderna is a smart company, in that they think of themselves as being long-term greedy, rather than short-term greedy. They didn’t try to . . . Whether we think the pricing of the vaccine is fair and correct or not is a different story, but they did not try to extract every dollar of value out of it that they could have. They thought about how to be in this for the long haul, and I thought that was interesting.

I was also thinking about it after the conversation, that there is some degree of, this was a bet-the-company move. If the vaccine had failed, if something had gone wrong in clinical trials . . . They knew mRNA was going to work, in the sense that it would generate an antibody response, but they didn’t know whether the efficacy would be 95 percent, as it turned out, or 30 percent. And if the headlines about Moderna had been, this company is a failure, and the technology doesn’t work . . . It was a bet-the-company move to do this, and I think there’s some element of that that has to be taken into account as well.

Luigi: Huge, because it is true that when all is said and done, they got $6 billion from the government, but they got $6 billion in exchange for, what, 150 million doses? So, the government got a bargain overall, and they raised $1.2 billion in equity money to accelerate the process. Had something gone wrong, they would have lost $1.2 billion. So, that was not a minor risk that they took.

I think that a lot of kudos should be given to the government in this case, because the portfolio approach that they chose was very smart, both from a standard diversification point of view. They bet on three different technologies, and two provided a superior technology, which gave them some room to face risk and failure. Overall, actually, the success was remarkably high for all the technologies, but we’ve seen that some technologies are better than others. Certainly, the AstraZeneca is less robust to variants, for example, than others.

It was also smart from the bargaining point of view, because, in pricing the drug, Moderna also had to face the fact that there was Pfizer on the other hand, and Pfizer did not take early money. They did get some guaranteed contracts, but they did not take early money. And so, they priced the vaccine a little bit higher, and Moderna could not go wild, because there was some benchmarking.

Bethany: Yeah.

Luigi: But it’s also interesting that the Trump administration was not particularly nationalistic, because if I read the documents correctly, I think almost $2 billion went to Sanofi, which not only did not produce anything good but is not even American. So, I think they were ready to take a bet in a diversified way, unlike what the European Union did and also what England did. England bet everything on AstraZeneca, and that was pretty dangerous, and now I fear that with the variants, it might be a problem.

Bethany: Yeah. It is very interesting how the money Moderna raised, that $1.3 billion in risk capital that they raised in order to expand their manufacturing, a good chunk of that came from overseas investors. So, we want to believe it was America and American money, but it really wasn’t. It was global money. And it’s interesting, in light of the widespread availability of the vaccines here, and then the lack of availability elsewhere.

Luigi: So, for once, it was global capitalism at work, and at work in the best possible way. But it is interesting that the production was America-first, and so the investors from other countries, they got kind of derailed or delayed vis-à-vis the US. But they are benefiting, because now Europe is buying a lot of Moderna vaccines, and the Biden administration even promised to distribute them to the rest of the world. So, everybody, eventually, will benefit from it. The problem is the “eventually.” There is a timing issue, which is not treated.

Bethany: Yeah. The “eventually” is interesting. The investors who were overseas investors got the return on their money, which is what they were supposed to get in a capitalist environment. What they didn’t get is the social good, at least . . . Well, they are going to get the social good, but on a delayed basis, where America got the social good first. And there is something, I guess America uniquely understood the manufacturing issues with vaccines, that it isn’t just a question of . . . And this plays into the patent-rights issue, which we’re getting to. But it isn’t just a question of being able to design a vaccine that works. The almost bigger issue is being able to manufacture the vaccines. It is interesting, given there’s so many questions about America’s manufacturing prowess today, and it is sort of interesting on a broader note that, I guess, when we choose to do it, we can.

Luigi: Of course, we can. The manufacturing process is an important bottleneck. I thought that David was politically astute when he said, we waived the patent right on the vaccine, but the fact is that nobody can produce it, because only we have the technology to do that.

Bethany: Right. I mean, it’s funny, I was just reading a book that congratulated Moderna for waiving the patent rights to its vaccines but didn’t note that it really was a lovely gesture, but ultimately more of a public-relations gesture than a meaningful one.

Luigi: But imagine for a second that production capacity was not a bottleneck. Do you think it’s fair to waive the vaccine right all over the world, or not?

Bethany: I’m really torn on it. I do not think it sets a good precedent, no. But yet, in a global health emergency like this, and where, from a purely pragmatic point of view, we really are all in it together, if a patent right is holding back production, we’re really putting the fate of our world in jeopardy. So, I’m not sure. What do you think?

Luigi: I think you said the magic word. If the patent right holds back production, there is a justification to waive it. And I remember when there was the anthrax scare, the production of the only antibiotic that works against anthrax is linked to a Canadian company, and the American government was ready to unilaterally violate the vaccine in order to produce in mass quantity. So, if there is a bottleneck, and the company’s not adapting, et cetera, I think there is a justification to waive the vaccine, but otherwise, either we entirely change the way we produce future drugs, or we need to retain these scientists to produce them. If we value—and we should value—the health of the entire world, we should pay for it. At the end of the day, the amount of money we’re talking about is relatively limited, especially if this is a consortium done by most of the developed world, et cetera. And I don’t know why we should do it at the expense of the people who took the risk and actually succeeded, because the fear is that in the next pandemic, there is not a Moderna waiting in the wings to produce something, because they could say, if I succeed, I get expropriated. Why should I do it?

Bethany: I agree with you. Waiving the patent rights does set a precedent. It’s hard to say this is just a unique situation and we’re only doing it here. I think it does set a precedent for the way patents work in all sorts of other diseases that are important. Back to the HIV/AIDS debates of the ’90s and early 2000s, where it was an Indian company that started making cheap, cheap doses, because American companies wouldn’t do it.

Luigi: I thought that what is interesting is how much cooperation and focus, et cetera, there was in this public-private partnership . . . I am the first to point to a conflict of interest, and there were plenty of conflicts of interest in that particular case. I think that the reason why it went well overall is because there was an enormous sense of mission. Everybody knew that the world literally depended on them. But also, there was enormous visibility, and a spotlight, that if you make a mistake here, you can ruin your reputation forever. So, I’m afraid that you can’t extend this idea easily to other situations, because if you were to plan for some infrastructure project in the middle of America, there’s not a lot of visibility. The sense of mission is not as high. The ability to abscond with money, or to pad so that you get much more than is needed, et cetera, is much, much larger. So, I’m afraid that it’s not that easy to extend this to other examples.

Bethany: I agree with you wholeheartedly. I wish I didn’t. I wish I could offer up some argument, but I think that’s exactly right. I wanted to believe, going into this conversation and into thinking about this, that this did have larger lessons for public-private partnerships and when they could be valuable, and I think it does not.

Luigi: But one thing that is important, and it was emphasized by David, is the need for government expertise. The reason why this works so well is because, as czar, Slaoui was an expert in the field. You compare with the European Union, where they did not have this apparatus. They gave it to a bureaucrat who was not even an expert in doing this kind of transaction, and it did not work as well.

Bethany: I think so, too, and it is actually interesting, if you think about the Trump administration, that the person they effectively put in charge of this, Moncef Slaoui, is an immigrant and not a Republican. His chief claim is that he had brought 14 vaccines successfully to market before this. He knew exactly what was required and exactly what needed to be done. And so, while we talk in big-picture terms about public-private partnerships, in the end, the fact that this worked did come down to the selection of people.

The other part of the expertise that the US government contributed, it wasn’t just money and Moncef Slaoui, but it was the Army’s logistical ability. And I find that fascinating, too, because it goes back to this question of manufacturing, that if you think about a vaccine, there really are two parts to it. There’s the development of a vaccine that works, and then there’s the manufacturing of it, and the components involved in manufacturing vaccines are tricky and hard to source, and if it hadn’t been for the logistical expertise of the US Army, the vaccine wouldn’t have been produced at scale and at the speed which it was. And that’s also a pretty unique situation, right? Where the Army has something to contribute to a manufacturing process.

Luigi: Yeah. Now, the sad part is, the Army is so efficient is because you have war so often and so continuously. If you were to go to Europe, to Italy or Germany, I would suspect the Army is much less efficient, because they’re not constantly at war. There is this point of the so-called state capacity, which actually, Tyler Cowen brought up in a post at the beginning of 2020, so before the pandemic. He was saying that even the most Libertarian people now recognize that the government needs some capacity. I thought it was insightful to say it before the pandemic, because of course the pandemic made it much more salient to everybody.

But then, the question is, how do you ensure that the state with capacity does not tend to use it too much? Because, after all, if you have a very powerful army, you’re more tempted to use it. Germany does not have a powerful army. They don’t use it.

Bethany: I was thinking when you were talking of the old saying, nature abhors a vacuum, and I was thinking, capability abhors a vacuum. It will find a way to exercise and show itself if the capability is established. But that does raise an interesting point about capacity, because there were many people arguing before the pandemic that we needed to invest in manufacturing capacity for our vaccines, and there were people arguing for pandemic preparedness, around masks, around the whole deal. And it is something that our capitalist system for sure does not do well, which is plan for the long term. And even if we get organized to plan for the long term, once the immediate threat passes, as it did with anthrax, as it did with the original SARS and MERS, there is a temptation for subsequent administrations to come in and say, “Oh, there are some savings. Let’s get rid of that. We don’t need to fund that. We can take pieces out of that.”

And so, it is a long-term question about how a very short-term-driven, capitalist economy builds resilience and sustainability, and invests for eventualities that, should they come to pass, could destroy us. But the chances of them coming to pass are small. And how we, as a country, can come together around the notion that we still need to do this, even if it appears to be a cost with . . . even if it appears to only be a cost.

Luigi: Anything else, Matt?

Matt: How much money do you think he made?

Luigi: A lot. I don’t know how much, but a lot.

Bethany: Maybe we should touch on that. The rewards, of course, in the production of the vaccine are not just to the company itself. They have come in the form of stock sales, and Moderna has generated headlines for people selling stock.

Luigi: Yeah, but I don’t feel bad that they got rewarded for that, because you mentioned earlier the short-term nature of some capitalist activity. This is really long-term nature. This company has been investing in this technology for years and not seen a dime yet. So, it takes a lot of long-term commitment and a lot of risk. Part of the reason why people, or most of the reason why people take these risks, is because they expect a reward. So, this is one of the few cases in which you do well by doing good.

Bethany: I think that’s fair, and it really was an enormous risk. If you think about raising $1.3 billion to invest in developing manufacturing capability that you do not need unless this vaccine works, and really, really works. I mean, it would have been, the money would have been completely lost.

Matt: Yeah. I think there’s a gut instinct to feel worse about it.

Bethany: I know, I have the same gut instinct to feel a little bit off about it, because there is something about profiteering off disaster that feels wrong, even though, in a sense, we all do it. I mean, I’m writing a book about the pandemic, right? In a sense, I’m profiteering off disaster. A couple of my other books have been about disasters, namely the financial crisis and Enron. So, in a sense, I profiteered off things that cost other people a great deal of money. And even as I say that, I think, ew! And yet, that’s how it worked.

Luigi: Yeah, but the point that many people miss is one of the reasons why the capitalist system is not investing enough in preparation for these extreme events is because people expect that in those events, whoever has made the right decision gets expropriated. So, if you are investing a lot, hoping that by the time the vaccine comes out, you make a lot of money, and in return, you’re expropriated, next time, people don’t invest in the vaccine.

Bethany: I agree, and it’s actually an interesting dichotomy, because as short term as the capitalist world is, the capitalist world also has very, very long memories about that kind of expropriation.