Pfizer reached a record revenue of $100 bn in 2021-22 with soaring sales of its COVID-19 vaccine by charging up to 24 times the potential cost of production. Pfizer isn’t alone – with numerous companies, including UK-headquartered AstraZeneca, also boasting large annual profits from saving millions of lives around the world.

With the UK’s ongoing Covid inquiry, in which an independent organisation is examining the British government’s response to the pandemic, it is worth asking – should this essential drug have ever been for-profit?

The ‘recipes’ for these vaccines were patented by their respective firms, and Pfizer refused calls by the World Health Organisation (WHO) to share vaccine technology with capable producers in low/middle-income countries – a step that would have driven down global prices and increased worldwide distribution.

This did not occur until 2022, 2 years after the height of a deadly, global pandemic.

Albert Bourla, Pfizer’s CEO at the time, described the idea of sharing vaccine technology as “dangerous nonsense,” while Oxfam’s Health Policy Manager called this move a “false excuse that vaccine companies are hiding behind to protect their astronomical profits.”

Adam Smith, considered the father of modern economics, argued in his book The Wealth of Nations, that firms’ decisions are driven by the profit incentive. Smith writes how it is not from ‘benevolence’ (goodness) but rather ‘from their regard for their own interest’ (increased profits).

Advocating for the ‘free-market economy’, Smith theorised that the self-interest of profit and making money incentivises firms to optimise their costs, lower their prices, and increase quality to grasp customers from competitors.

This efficiency in costs means output is produced at a lower opportunity cost, which in turn aids the basic economic problem of scarce resources fulfilling unlimited wants, resulting in a win-win situation.

Costs for developing the vaccine in the US were at least as high as $31.9 bn, the elusive sight of profit must have been needed for any firm to wade into these costly waters.

Even so, the patented ‘recipes’ have meant that most vaccine companies have been able to exploit this high barrier to entry and exert oligopolistic control over the market (i.e. a small number of firms dominating the industry).

By prioritising contracts from the richest countries willing to pay excessive prices, firms were able to make the most profit whilst excluding poorer countries.

On top of this, prices for the vaccine varied to a great degree as firms engaged in price discrimination across the world to maximise profits, with developing countries such as Uganda paying over double for AstraZeneca’s vaccine compared to Europe in 2021 at $7 per dose due to lower bargaining power.

With around a third of Uganda’s population living in extreme poverty, this price hike is clearly unaffordable.

Even if the vaccines were priced exactly the same in all countries, the price would still be regressive (where expenditure makes up a greater proportion of lower incomes), and contribute to worsening income inequality.

This price variation itself was a result of the stronger bargaining power richer countries possess using economies of scale to their advantage to negotiate lower production costs. This also coincided with many richer countries placing larger quantity orders, excessively so, which meant that the vaccine firms still profited to a high degree.

Although AstraZeneca has nobly tried to implement a tiered pricing system as part of its ‘not-for-profit’ approach, the experiences of Uganda and other African countries may prove otherwise. But, if successful, this system would have reduced the regression-based inequalities.

AstraZeneca stood strong in its pledge to provide the vaccine on a not-for-profit basis whilst the disease was a pandemic, with its goal to “protect global health.” Chief executive Pascal Soriot stated he had “absolutely no regrets” about not profiting when competitors such as Pfizer were.

AstraZeneca had its priorities straight in ‘protecting global health’, and the other companies should have followed suit. The company’s attitude stands as evidence that a profit incentive was not needed to produce the vaccine, as analysts argued.

With the disease now being classified as endemic, AstraZeneca has made the move to now openly profit from the vaccine – private firms continue to profit on taxpayer-funded science.

Perhaps, this is fair now when considering the typical profit margin for other vaccines in the drug industry sits at around 20%.

It is worth remembering that these companies did create vaccines that ultimately saved countless lives. But, profiting at extremely high levels when people across the world were struggling to make ends meet, and lives were being lost by the minute is somewhat immoral, especially when other companies proved that the profit was unnecessary.

At the end of the day, Pfizer may have won a battle with their tremendous profits – but it is AstraZeneca who, as of February 2024, are winning the war with their stock price following a 140% increase over the last 5 years.

AstraZeneca’s approach to “protect global health” seems to have paid off better in the long run, valuing the company higher, regardless of the comparatively minimal profit they made.