Pfizer and BioNTech also refused government funding for initial R&D, testing, and production support out of fear that it would politicize or delay their work. Instead, they leveraged Pfizer’s resources, multinational research teams, global capital markets and supply chains, and a logistics-and-transportation infrastructure developed over decades. BioNTech received funds from the German government for domestic testing and manufacturing, but only in September — long after the vaccine was finalized and being produced in the United States at Pfizer’s considerable expense
What’s more, the money that OWS did provide to the two companies, through an advance-purchase contract with Pfizer, was not the result of “industrial policy” in any traditional sense. The contract was a procurement deal to buy finished, FDA-approved doses only, regardless of their country of origin. Pfizer fully bore the risk of failure, and its contract expressly excluded from government reach almost all aspects of vaccine development and production. Since Pfizer was already making its vaccine when its OWS contract was signed and global demand for a COVID-19 shot was already astronomical, it’s questionable that the agreement even incentivized production all that much.
The BioNTech/Pfizer shot thus provides the real-world market counterfactual so often missing from industrial-policy debates — Here, we do know what would’ve happened without OWS: the first and most prolific vaccine of them all.
In fact, OWS actually hindered Pfizer’s early manufacturing efforts. In particular, OWS’s use of the Defense Production Act to prioritize participant companies — some of which still have not produced an approved vaccine — in the allocation of key vaccine materials impeded Pfizer’s ability to meet its initial production targets and expand production once its vaccine was approved. As OWS chief Moncef Slaoui said, “Other manufacturers were able to access ingredients and equipment at the expense of Pfizer. We were using the DPA to get lipids for Moderna and sterile bags for X, Y, Z, and Pfizer would find themselves at the bottom of the queue.” Only after Pfizer agreed to sell the United States more doses in December was this DPA-created logjam cleared.
Second, initial funding for both BioNTech and rival mRNA-vaccine manufacturer Moderna came from private capital markets, not OWS or other government sources, which undermines a core industrial-policy claim that private markets won’t fund unproven technologies. According to BioNTech’s 2019 SEC filing, the company was founded in 2008 “with a seed investment of €150 million from the Strüngmann family, through its investment vehicle AT Impf, and MIG Fonds” — both of which fund start-ups in the biotech industry. Moderna was a concept-stage company for Boston-area biotech-venture-capital firm Flagship Pioneering, which incorporated the company in 2009 and combined with other private investors to officially launch it in 2012 with a $40 million jump-start.
Third and finally, that U.S. factories are today churning out millions of vaccine doses is an argument against industrial policy, not for it. Though the first Pfizer doses came from Puurs, Belgium, the bulk of their supply comes from three American facilities — in St. Louis; Andover, Mass.; and Kalamazoo, Mich. — that the company already owned and had rapidly upgraded on its own dime. Moderna, meanwhile, initially relied on its own plant in Norwood, Mass., the 17-year-old manufacturing facilities of Swiss-owned contract producer Lonza in Portsmouth, N.H., and “fill-finish” facilities in Bloomington, Ind., owned by New Jersey-based Catalent. Advanced purchase orders surely helped these facilities upgrade in 2020 and 2021 to meet astronomical demand, but initial manufacturing capacity and the technical-knowledge base necessary for production were already in place — and not because of OWS or any earlier U.S. industrial policy.
The successes of BioNTech/Pfizer and Moderna stand in stark contrast to the failures of the U.S. vaccine manufacturer with the deepest and most longstanding ties to the federal government — Maryland-based Emergent BioSolutions. According to a months-long investigation by the New York Times, Emergent, a “longtime government contractor that has spent much of the last two decades cornering a lucrative market in federal spending on biodefense,” invested heavily in lobbying while ignoring various safety and manufacturing best practices. The company had effectively captured the U.S. Biomedical Advanced Research and Development Authority that handles pandemic-related contracts, and, despite repeated contracting failures, was rewarded with a $628 million contract to manufacture COVID-19 vaccines. It has thus far failed to produce a single finished vaccine dose.
While OWS may have helped some pharmaceutical producers overcome discrete supply-chain obstacles and mitigate the risk of production during a one-off crisis, the case of Emergent argues strongly against deeper government involvement in the domestic manufacturing of critical technologies and essential goods. Indeed, perhaps the best thing that OWS did was to get the government out of the private sector’s way, by streamlining the typically years-long regulatory-approval process for COVID-19 vaccines.
The core contention of industrial-policy advocates is that private parties and open markets cannot achieve critical public goals without strategic, long-term government intervention. But the success of the BioNTech/Pfizer vaccine, the failures of Emergent BioSolutions, and the successes of OWS’s deregulatory work show that markets function best without significant government micromanagement, and that, far from fixing past market failures, further U.S. industrial policy could create new ones.
And only in Washington could that be considered a “triumph.”
