What is the value of a universal COVID-19 vaccine?

Making vaccines is costly. But the benefits of doing so are often higher than the costs. Is it possible to estimate the value of a hypothetical vaccine, and if so, is it possible to spur its creation? In "Quantifying the social value of a universal COVID-19 vaccine and incentivizing its development” (National Bureau of Economic Research, Working Paper 32059, January 2024), Rachel Glennerster, Thomas Kelly, Claire T. McMahon, and Christopher M. Snyder set out to answer those questions, and more, for the case of a universal COVID-19 vaccine.

To estimate the benefit of a universal COVID-19 vaccine, one that would target all current and future variants of the virus, the authors build on a foundation of previous research. A prepandemic study found that the cost of pandemics could be over $450 billion per year globally, while a postpandemic-onset paper estimated that the cost of COVID-19 from March 2020 to the fall of 2021 in the United States alone was around $16 trillion. Meanwhile, other studies found that COVID-19 mutated quickly and new variants were able to spread and take hold in the time it took to update a vaccine, causing a surge in economic costs.

With that literature as a base, the authors use the period following the trough of the Omicron wave as the baseline for COVID-19 deaths going forward. They model the median time until the last death as within the next 3.5 years and the vaccination uptake rate as matching the booster uptake rate (51 percent vaccinated; 46 percent within 36 weeks of the new release). The authors use a narrow view of costs, giving a dollar value to each death, instead of a broader measure that considers reduced production or other economic losses. The value of a statistical life is generally estimated to be between $10 million and $15 million, and the authors use an inflation-adjusted $13.5 million estimate from the Federal Emergency Management Administration. Using these assumptions, as well as others they include in the paper (namely the efficacy and timetable of hypothetical vaccines), the authors run a Monte Carlo simulation 100,000 times. Each simulation draws from the universe of possible values for the random variables (for example, in some instances the pandemic ends early while in others it drags on), and then the possible timelines are aggregated to find the most realistic course of events. Through the simulations, the authors find that the average value of a universal COVID-19 vaccine to the United States is $1.5 trillion with no future waves of infection and $2.6 trillion if future waves continue at their current pace.

The authors then turn to how to bring a universal COVID-19 vaccine to market and how much it would cost to do so. The previous COVID-19 vaccines were all brought to market with an advance market commitment (AMC) in place. An AMC is a commitment to buy a designated amount of a product at a designated price if a product were to be created. It is a form of “pull funding,” which guarantees a payout for the production of a good. Pull funding has two main advantages to “push funding”: unlike push funding, which provides funding to a specific company or set of companies upfront, pull funding doesn’t preference any particular producer over any other; and unlike push funding, if no goods are produced then there is no amount paid out.

Using the prior AMCs as a reference point, Glennerster, Kelly, McMahon, and Snyder roughly estimate that that price to develop a universal COVID-19 vaccine would be somewhere between $4.7 and $6.4 billion, over 200 times less than the expected benefit.