Moderna to Uncle Sam: My vaccine, not yours

Moderna Inc. has been a marvel of the pandemic, a startup powered by science, private and public funding and smart people who produced a COVID-19 vaccine in record time. It helped save lives and shortened the course of an epic public health crisis.

Along the way, the company and its investors also have reaped vast financial rewards. Its share price has soared 116% over the past year and more than 650% since March 2, 2020, just before pandemic lockdowns began in earnest. Its market valuation over that latter stretch has grown from $9.8 billion to about $91.7 billion. It posted earnings of $3.3 billion on revenue of $5 billion in the third quarter, compared with a loss of $234 million against revenue of $158 million in the same period a year ago. The company recently said it has signed vaccine orders for 2022 worth $17 billion — which would make it one of the best-selling drugs in the world.

So why is Moderna, with its reputation burnished and its coffers full, being so greedy? The COVID-19 slayer is locked in a patent battle with the U.S. government — its indispensable partner in the vaccine quest — that makes it look like just another pharmaceutical bully: grasping, tone deaf, financially insatiable and conveniently forgetful about some of the reasons behind its success.

Moderna collaborated with the National Institutes of Health and its scientists for four years to develop its vaccine, and the U.S. government gave the company $10 billion in research and development money to pave the way. The government also agreed to purchase 500 million doses of Moderna’s vaccine, guaranteeing a buyer from the get-go — and eliminating some of the market risk that can challenge drug companies.

Some of Moderna’s funding was channeled through Operation Warp Speed, the government’s all-hands-ondeck push that expedited deliveries of vaccines from several drug companies. But taxpayers had been subsidizing Moderna’s vaccine research since long before Operation Warp Speed emerged — leading analysts to speculate about whether the government was entitled to an ownership stake in the vaccine’s intellectual property rights.

Although Moderna’s vaccine most likely wouldn’t have existed without government support, the company filed a claim during the summer with the

U.S. Patent and Trademark Office, asserting that its scientists alone designed a key genetic sequence that makes the vaccine so effective. The government strongly disagrees, saying three of its own scientists were central to that effort. Both parties tried to settle their disagreement behind the scenes, but this week the dispute spilled onto the pages of The New York Times. A court battle may be coming.

Moderna says it’s willing to acknowledge the NIH and a trio of its researchers as “collaborators” but not as “co-inventors.” The NIH says that such an omission “deprives NIH of a co-ownership interest in that application and the patent that will eventually issue from it.”

To be sure, Moderna is in a tough industry, contending with unusually challenging headwinds. Its stock got dinged last week after it disclosed that sales for the year would be billions of dollars lower than expected. It also missed earnings expectations. The company attributed the shortfalls to the difficulties associated with selling into an international market and supply chain headaches. It appears to be falling behind such competitors as Pfizer Inc. and Biontech.

Yet Moderna remains financially flush, and the federal government helped get it here.

Why is the company being so greedy? Maybe simply because it can. The government shouldn’t let it get away with

this.

Timothy L. O’brien is a senior columnist for Bloomberg Opinion.