How Trump’s deal with Moderna hampers the global vaccine effort

As the coronavirus tore through the U.S. in August 2020, Trump administration officials, desperate for a vaccine, cut a generous deal with a tiny company that had received extensive aid from the federal government.

The pharmaceutical firm, Moderna, had already gotten a jump on designing a Covid-19 vaccine thanks to a partnership with the National Institutes of Health. Propelled by government scientists, it developed a promising candidate within weeks. And fueled by nearly $1 billion in federal funds for research and development, the company was closer than ever to delivering on the first drug of its decadelong existence. The deal the administration was proposing now would add another $1.5 billion to Moderna’s haul in exchange for up to 500 million doses of the vaccine — giving the U.S. first rights to a shot made possible by its own taxpayers.

But beyond that, the government asked for little in return. Moderna got full ownership of the lucrative technology critical to the vaccine’s success, despite its reliance on years of NIH research. The company would face no obligation to share those details with the U.S. — even as it reaped profits from vaccinating millions of Americans.

Perhaps most significantly at the time, the agreement came with a catch for the government: No doses delivered to the U.S. could be shared with the rest of the world — a restriction that cleared the way for Moderna to negotiate its own prices to sell its vaccine on the international market, four people with knowledge of the provision told POLITICO.

The pact transformed Moderna. A company that once struggled to attract investors, it's since been valued as high as $140 billion. Stéphane Bancel, its CEO, is a multibillionaire, while three others with ties to Moderna rank among the 400 richest people in the country.

Yet as vaccines rolled out at home and the government’s priorities shifted to vaccinating the world — the only way to truly end the pandemic and prevent new variants from roiling the U.S. — the deal the Trump administration negotiated with Moderna has become a key stumbling block in the global fight against Covid-19.

Armed with the generous language in its contract, the company has refused to grant access to its technology to vaccine manufacturers serving the developing world and at multiple points resisted pleas to increase aid to the neediest countries, angering critics who say the Trump administration should have driven a tougher bargain with Moderna when it had the chance.

“The U.S. made a deal that was extraordinarily beneficial to Moderna and also beneficial to the United States," said Lawrence Gostin, a global health law professor at Georgetown University who has advised the World Health Organization and other international organizations on the Covid-19 response. "But it negotiated a horrific deal for the world that in fact impeded the world’s ability to respond and end the pandemic.”

Indeed, federal officials were so focused at the time on stockpiling vaccines to combat the pandemic at home that there was relatively little thought given to the global reverberations, according to a dozen current and former officials and others with knowledge of the process who spoke with POLITICO for this article.

“We were 100 percent focused on U.S.” acknowledged one of the people, an official on the Trump administration’s Operation Warp Speed.

In those terms alone, the deal paid off. The Moderna vaccine became one of two shots critical to the Covid-19 response, inoculating more than 70 million Americans in a campaign that’s offered the U.S. a clear path out of the pandemic. At least 7 million booster shots have gone out on top of that, with Moderna planning to eventually win authorization to give its vaccine to children.

Yet when it comes to combating Covid-19 abroad, the deal cut by the Trump administration has proven a significant obstacle.

Global health experts prize Moderna and the similar mRNA vaccine produced by Pfizer and BioNTech because they appear to offer protection for longer than other shots and have become easier to transport — boosting their appeal to vaccination efforts within many low- and middle-income countries. Moderna has also consistently churned out doses, with plans to deliver as many as 800 million this year and hit 3 billion in 2022.

Pfizer pledged to give away more than 1 billion doses of its vaccine to the developing world through next September. Johnson & Johnson and AstraZeneca have also become significant direct suppliers to the world, with the U.S. still weighing whether to donate more of its own stockpile of those vaccines abroad.

But despite pressure from Biden officials to devote more of its production toward making doses for poorer countries, Moderna pursued a different strategy.

The company has so far capitalized on its control of a premium Covid-19 vaccine, brokering sales worth billions of dollars primarily with affluent nations. Of the 26 individual countries that Moderna has agreed to supply with its vaccine, according to a database maintained by the Duke Global Health Innovation Center, just four are considered low-income.

Those poorer countries are in line to receive less than 10 percent of the total supply that the company has committed through the end of next year — representing only a fraction of what’s needed to meet global demand. On Thursday, Moderna predicted it would rack up as much as $18 billion in sales this year for its only product — with half of that coming from outside the U.S.

“Nine out of 10 Moderna doses have gone to rich countries,” said Robbie Silverman, the senior manager of private-sector advocacy at global justice organization Oxfam America. “Even among a set of bad actors in terms of vaccinating the world, Moderna stands out.”

A world awaiting doses

In response to a series of questions, a Moderna spokesperson defended the company’s decision-making and said the company is investing in ramping up its manufacturing so it can make more doses for low-income countries next year.

A large percentage of Moderna’s limited initial supply was committed to the U.S., the spokesperson said, stressing that the company has since worked with the administration and other governments to free up its ability to donate leftover doses to countries in need. So far, roughly 52 million Moderna doses owned by the U.S. have been diverted to COVAX, the world’s chief vaccine equity initiative.

“It was never Moderna’s intent that the [U.S. government] would be limited in its ability to donate doses to those low-income countries that needed doses,” the spokesperson said of the language, which people with knowledge of the provision said was granted to certain manufacturers, including Moderna, to shield them from legal liability concerns.

Moderna also dismissed criticism of its pursuit of profits, calling the prospect of selling its vaccine at non-profit prices “not sustainable for the first product for a 10-year-old company.” The company instead highlighted commitments to devote at least one-third of its production next year — 1 billion doses — to low-income countries.

It also decided earlier this year not to enforce its Covid-19 patents during the pandemic — though it’s kept secret the other proprietary elements still needed to successfully replicate the vaccine.

Asked whether the company had a greater responsibility to aid the global vaccination campaign as an outsize recipient of public funding, the spokesperson noted that “other companies also received funding from the U.S. government to develop Covid-19 vaccines” — and some of those companies have yet to bring their shots to market.

Yet those inside and outside the administration working on the global Covid-19 response say Moderna stands apart both in its heavy reliance on the federal government and subsequent resistance to ramping up aid for a pandemic fight that the Biden administration has vowed to lead.

Instead, current and former administration officials said that in private conversations, they felt Moderna representatives were openly disdainful of the idea that the company should serve as a global supplier.

"Moderna made it very clear from the beginning that they were not in the business of selling doses at cost to help the rest of the world," said another former Operation Warp Speed official.

Moderna did promise to supply COVAX with up to 500 million doses through 2022 that could be distributed to low- and middle-income countries. But it must wait in line; the company has yet to deliver any of the initial 34 million doses it pledged by the end of the year because it must first fulfill other supply commitments made elsewhere.

When officials representing COVAX approached Moderna this summer to try to lock in additional doses, the company sought to hike its prices, according to two people with knowledge of the discussions. The negotiations grew so difficult that Biden administration officials eventually stepped in to help broker an agreement.

In October, Moderna announced plans to supply more of its vaccine to COVAX next year at its “lowest tiered price,” though it did not specify a dollar amount. A Moderna spokesperson insisted that COVAX has "always been offered and receives" that lower price, but did not elaborate on the negotiations.

Moderna, COVAX and the U.S. are still involved in discussions about pledging more doses to the vaccine equity initiative.

Moderna’s posture toward the global vaccination campaign has nevertheless soured its relationship with government officials who argue the company has a greater responsibility to support its Covid-19 priorities because of what it owes to U.S. taxpayers. To date, the federal government has invested nearly $10 billion in Moderna's vaccine — including almost $3 billion combined between research and development funding and the pre-purchase deal that created an instant market for the vaccine before it had proven safe and effective.

"The bottom line is that the U.S. government has invested heavily," said Kate Elder, senior vaccines policy adviser for Médecins Sans Frontières' Access Campaign. "And they did a poor job building access conditions into that tremendous public funding that was handed over to Moderna."

Shut out of Moderna's vaccine secrets

Former Trump officials acknowledge that they prioritized domestic inoculations over those for other countries. In 2020, Operation Warp Speed bet on a handful of candidates with hopes of making good on then-President Donald Trump’s vow to begin vaccinations by the end of the year. The administration poured billions of dollars into the vaccines’ development, betting that the ultimate return — stamping out the virus — would far outweigh the up-front investment.

With 1,000 Americans dying from Covid-19 each day and the government rushing to secure doses, Trump administration officials said there was little immediate priority given to plotting out the international implications. Discussions about the global distribution part of the response would not begin in earnest until winter of that year.

By then, the government had already struck supply deals with Moderna and others that included limits on the United States' ability to donate doses abroad.

Hamstrung by the language in those contracts, the Biden administration struggled to quickly donate excess vaccines throughout the first half of this year, prompting sharp criticism from global health advocates even as the administration scrambled to find a way around the clause.

Health officials were finally able to modify the Moderna contract in June to create a new path for sending doses abroad, two people with knowledge of the process said, and the company confirmed. Yet the global vaccination effort had already fallen well behind. Moderna, meanwhile, had separately secured the sale of nearly 200 million doses to largely wealthy nations in the first six months of the year.

In the months since, the Biden administration has been unable to find a workaround to an even more consequential contractual restriction: its inability to access and share the technology needed to make Moderna’s vaccine.

Under pressure from lawmakers and activists to jump-start vaccine production around the world, the White House ordered a review of its agreement with Moderna to find justification for compelling the company to share the proprietary recipe needed to make its vaccine.

The search came up empty. The contract not only shut the administration off from accessing any of Moderna’s own patents, it barred it from seizing any of the trade secrets or technical information needed to replicate the vaccine.

“We have had dozens of lawyers across the federal government review the Moderna contract,” a White House official said. “They have made clear to us that the [U.S. government’s] contracts with Moderna do not provide the USG sufficient information, technology and human resources required for the USG to produce the vaccine itself or have it manufactured by an alternative source.”

Moderna has rejected pleas from Biden officials and international organizations to give up its formula voluntarily, going to great lengths to guard the lucrative mRNA technology at the core of the vaccine.

The company spokesperson noted that Moderna has licensed its technology to a handful of manufacturers it considered "highly capable and experienced." Those plants are located in affluent countries, such as France and Switzerland.

But when the WHO established a vaccine hub in South Africa earlier this year, its attempts to partner with Moderna were rebuffed, the WHO said at the time. Instead, the company announced it would create its own manufacturing plant in Africa — though its construction could take years, and it has yet to settle on a site.

The WHO is now trying to puzzle out the Moderna vaccine’s formula on its own. The additional step will delay by years its ability to begin manufacturing doses for a continent that has vaccinated less than 9 percent of its population — by far the lowest rate in the world.

‘I just feel like we're stuck'

Moderna’s lack of cooperation, combined with its soaring profits, has turned what began as a government success story into a prime target of lawmakers and global health advocates. Sens. Elizabeth Warren and Jeff Merkley led a dozen Democrats last month in blasting Moderna’s refusal to share technology despite the “disproportionate” benefits it received from U.S. taxpayers.

Activists have staged protests outside Moderna’s headquarters and the home of Bancel, the company’s CEO, and sought to organize public pressure campaigns. On Thursday, Oxfam America went directly to Moderna’s shareholders, asking them to support a resolution calling for the company to reconsider transferring technology for fear that refusing “could tarnish its reputation” and undermine its relationship with the government.

“I just feel like we’re stuck, and I think we’re stuck because Moderna wants to exercise an enormous amount of control, is really acting in a very greedy way and wants to make a lot of profit,” said Fatima Hassan, a South African human rights lawyer and founder of the Health Justice Initiative, during a panel last month hosted by Yale Law School’s Law and Political Economy Project.

During that same event, the Biden administration issued its strongest rebuke of Moderna’s strategy to date, with Chief Science Officer for Covid-19 Response David Kessler warning that the company should “not underestimate the resolve of the United States government in addressing this issue.”

The scrutiny put Moderna on the defensive. In October, Bancel published an open letter titled “Our Global Commitment to Vaccine Access” that reiterated the company’s pledge to ramp up production for low-income countries next year and touted its plans to build a manufacturing facility in Africa.

Within the Biden administration, officials said the close relationship that Moderna once enjoyed with the federal government remains far from repaired. But constrained by the company’s Trump-era deal, they have little choice but to redouble efforts to privately coax greater global commitments out of the company.

The administration last week made minor progress: Moderna agreed to sell up to 110 million shots to the African Union, which represents countries on the continent with a collective population of 1.3 billion. But to get the organization to the front of the line, the U.S. had to give up its place — deferring its own anticipated deliveries into next year.

And for many, the deal served only to reinforce the growing global disparity fueled by the vaccine race — one that has guaranteed Covid-19 boosters and child vaccines for all Americans and those nations that can afford it, while keeping first shots out of the reach of much of the rest of the world.

“There’s a real clear roadmap to ending this pandemic and preventing the next one, and it’s very achievable,” said Gostin, the global health law professor. “We’re just not doing it, and it has a lot to do with the intransigence of companies like Moderna.”

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