Health and Human Services Secretary Alex Azar sparked outrage last week when he said that the federal government could not guarantee that a potential vaccine for COVID-19, the coronavirus currently sweeping across the world, would be affordable. The government “can’t control” vaccine prices “because we need the private sector to invest,” Azar told lawmakers. But Azar’s economics are wrong: the federal government can ensure that a vaccine would be cheap—or even free—while giving the private sector powerful incentives to pour resources into vaccine research.
The solution? A large cash prize for any firm that develops a successful coronavirus vaccine. The prize would be payable only on the condition that the firm makes the vaccine available to patients at low or zero cost. If designed well, such a prize will assure private-sector enterprises that they will be financially rewarded for a coronavirus vaccine while also ensuring that individuals at all income levels will be able to afford immunization.
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