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Last week, Merck and Ridgeback Biotherapeutics announced Phase 3 results of molnupiravir, an oral antiviral drug, in patients with mild-to-moderate Covid-19. In a trial that included more than 750 patients, molnupiravir reduced the risk of hospitalization or death by 50% compared with placebo. There were no deaths in the molnupiravir group compared to eight in the placebo group.

Given these findings, this oral drug appears to offer a new way to treat patients with Covid-19 and is an easier option than intravenously administered antibodies or remdesivir.

The story behind molnupiravir is intriguing and a testament to government-funded innovation. Molnupiravir, also known as EIDD-2801 or MK-4482, came out of Drug Innovation Ventures at Emory (DRIVE), a not-for-profit LLC owned by Emory University. It had previously demonstrated broad-spectrum activity against other viruses such as influenza, Ebola, and the Venezuelan equine encephalitis virus. The work goes back to 2004, when Emory researchers were studying a related compound known as EIDD-1931/NHC.

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Before it was tested for Covid-19, EIDD-2801 had accrued millions of dollars of federal funding. In 2019, the National Institute of Allergy and Infectious Diseases (NIAID) gave the Emory Institute for Drug Development a $16 million contract to test the drug for influenza. It had previously garnered funding from several other NIAID grants, as well as funding from the Defense Threat Reduction Agency (DTRA), as disclosed by Emory. When attention turned to Covid-19, Emory received pledges of more than $30 million from NIAID and the Department of Defense to cover development of the drug.

Jumping on an opportunity to develop a promising drug therapy for Covid-19, Ridgeback Biotherapeutics licensed the drug from DRIVE in March 2020. Ridgeback was founded by Wayne and Wendy Holman, both former investment managers. Within just three months, Ridgeback licensed worldwide rights for EIDD-2801 for Covid-19 to Merck, for which Ridgeback received an undisclosed upfront payment plus milestone payments and shared profits.

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But before signing on with Merck, Ridgeback had tried to negotiate a deal with the Biomedical Advanced Research and Development Authority (BARDA), one that was specifically mentioned in the explosive whistleblower complaint by Rick Bright, the former director of BARDA. In his complaint, Bright wrote that George Painter, the CEO of the Emory Institute for Drug Development, and Ridgeback cofounder Wendy Holman sought a contract first from ASPR Next and then from BARDA to develop EIDD-2801 for $100 million, and they personally lobbied the authority to get more financial aid. BARDA denied the request due to a lack of adequate documentation for the request. Even before 2020, Bright had been reluctant to give BARDA funding to EIDD-2801, saying they already had $30 million of support from NIAID and the Department of Defense.

Merck eventually backed Ridgeback and took on development of the drug. Molnupiravir then received even more federal funding: In September 2021, BARDA procured 1.7 million courses of the five-day regimen for $1.2 billion, or $700 per treatment course.

Federal support for innovation is essential for biopharma innovation and has been critical for fighting the pandemic. The rapid development of mRNA vaccines against Covid-19 demonstrate that federal agencies can enhance the role of the state in coordinating public and private sectors. The underlying technology of mRNA vaccines has a long history of public funding for research that can be traced back to NIH funding in the 1990s. Between 2002 and 2020, the NIH spent nearly $700 million on research funding for the technology underpinning these vaccines. Since then, several countries have invested billions of dollars into research on mRNA vaccines.

The U.S. government plays an essential role in backing innovation and is an essential player in biopharma innovation that has changed the lives of billions of people. Molnupiravir is the latest example of this and looks to become a tool to help people with mild-to-moderate Covid-19, filling a gap that remdesivir and antibodies currently fail to address.

That said, many companies have profited from speculation, government funding, and bad practices — especially during the pandemic. Moderna insiders have sold nearly $500 million in shares after the company received billions in government funding for its vaccine. Ridgeback Biotherapeutics is another example of a biopharma company taking advantage of a government-funded drug to make profit.

The public sector is vital to easing the Covid-19 pandemic and solving future pandemics and disease problems. But it needs to do a better job at shaping innovation responsibly and making sure that biopharma companies use federal funds appropriately for the public good, and not just for profits. Stronger government regulations should be in place to ensure that companies do not profit excessively from public funding or, at the very least, that some of the profits are plowed back into government funding for other innovative research.

Travis Whitfill is a health policy researcher at Yale School of Medicine, a graduate researcher at the UCL Institute for Innovation and Public Purpose, and a venture capitalist at Bios Partners. Bios Partners has not invested in companies developing treatments for infectious diseases.

Editor’s note: This article was updated to clarify the sequence of EIDD and Ridgeback lobbying BARDA for grant money.

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