The Valmy

"You can’t charge what something is worth during a pandemic. So we estimated that the value of one course of COVID vaccine in January 2021 was over $5,000. They were selling for between $6 and $40. So nothing like their social value. Now, don’t get me wrong. I don’t think that they should have charged $5,000 or $6,000. That’s not ethical. It’s also not economically efficient, because they didn’t cost $5,000 at the marginal cost. So you actually want low price, getting out to lots of people.

"But it shows you that the market is not going to reward people who do the investment in preparation for a pandemic — because when a pandemic hits, they’re not going to get the reward in line with the social value. They may even have to charge less than they would in a non-pandemic time. So prepping for a pandemic is not an efficient market strategy if I’m a firm, but it’s a very efficient strategy for society, and so we’ve got to bridge that gap." —Rachel Glennerster

In today’s episode, host Luisa Rodriguez speaks to Rachel Glennerster — associate professor of economics at the University of Chicago and a pioneer in the field of development economics — about how her team’s new Market Shaping Accelerator aims to leverage market forces to drive innovations that can solve pressing world problems.

Links to learn more, highlights, and full transcript.

They cover:

• How market failures and misaligned incentives stifle critical innovations for social goods like pandemic preparedness, climate change interventions, and vaccine development.
• How “pull mechanisms” like advance market commitments (AMCs) can help overcome these challenges — including concrete examples like how one AMC led to speeding up the development of three vaccines which saved around 700,000 lives in low-income countries.
• The challenges in designing effective pull mechanisms, from design to implementation.
• Why it’s important to tie innovation incentives to real-world impact and uptake, not just the invention of a new technology.
• The massive benefits of accelerating vaccine development, in some cases, even if it’s only by a few days or weeks.
• The case for a $6 billion advance market commitment to spur work on a universal COVID-19 vaccine.
• The shortlist of ideas from the Market Shaping Accelerator’s recent Innovation Challenge that use pull mechanisms to address market failures around improving indoor air quality, repurposing generic drugs for alternative uses, and developing eco-friendly air conditioners for a warming planet.
• “Best Buys” and “Bad Buys” for improving education systems in low- and middle-income countries, based on evidence from over 400 studies.
• Lessons from Rachel’s career at the forefront of global development, and how insights from economics can drive transformative change.
• And much more.

Chapters:

• The Market Shaping Accelerator (00:03:33)
• Pull mechanisms for innovation (00:13:10)
• Accelerating the pneumococcal and COVID vaccines (00:19:05)
• Advance market commitments (00:41:46)
• Is this uncertainty hard for funders to plan around? (00:49:17)
• The story of the malaria vaccine that wasn’t (00:57:15)
• Challenges with designing and implementing AMCs and other pull mechanisms (01:01:40)
• Universal COVID vaccine (01:18:14)
• Climate-resilient crops (01:34:09)
• The Market Shaping Accelerator’s Innovation Challenge (01:45:40)
• Indoor air quality to reduce respiratory infections (01:49:09)
• Repurposing generic drugs (01:55:50)
• Clean air conditioning units (02:02:41)
• Broad-spectrum antivirals for pandemic prevention (02:09:11)
• Improving education in low- and middle-income countries (02:15:53)
• What’s still weird for Rachel about living in the US? (02:45:06)

Producer and editor: Keiran Harris
Audio Engineering Lead: Ben Cordell
Technical editing: Simon Monsour, Milo McGuire, and Dominic Armstrong
Additional content editing: Katy Moore and Luisa Rodriguez
Transcriptions: Katy Moore