The lessons of Operation Warp Speed

Emergency powers should be used sparingly, but advance market commitments and a new regulatory approach to risk could boost the supply of vital technologies.

This post summarizes “Operation Warp Speed: Negative and Positive Lessons for New Industrial Policy,” by Alex Tabarrok, forthcoming in Innovations: Technology, Governance, Globalization. It was written for the Law of Abundance project at the Johns Hopkins University Center for Economy and Society.

Operation Warp Speed (OWS) stands as one of the most successful government initiatives in recent history, delivering Covid-19 vaccines in record time through an unprecedented public-private partnership. OWS combined financial support for vaccine development with regulatory streamlining and logistical “all-of-government” coordination. As a model of industrial policy, OWS offers critical lessons, both positive and negative, for future initiatives. The role of advance market commitments (AMCs) and the potential for recalibrating FDA risk-reward tradeoffs are notable positive lessons, but there are also cautions about overriding democratic guardrails outside of emergencies.

Many "Operation Warp Speed for X" proposals misunderstand OWS and fail for reasons of both feasibility and desirability. On feasibility, OWS succeeded primarily by accelerating and scaling the application of existing scientific knowledge to manufacturing rather than generating new discoveries. An “Operation Warp Speed for Cancer”, for example, is misapplied because the bottleneck in scientific advances is typically not funding or the speed of regulatory systems but progress in underlying ideas and general-purpose technologies. Cancer research, for example, has been advanced by artificial intelligence but spending more money on cancer research won't advance artificial intelligence.

The rapid design of the SARS-CoV-2 vaccine within days of the virus' genetic sequence being published was made possible by prior research on similar viruses like SARS, MERS, and HIV. This underscores the importance of consistent investment in basic research, as its payoffs often have long and unpredictable lags. But we have little to learn about accelerating science from Operation Warp Speed.

On desirability, OWS's extraordinary measures – bypassing democratic debate and standard procurement procedures, utilizing military resources, and centralizing executive authority – are not a suitable model for normal governance.

It’s notable, for example, that there was no Operation Warp Speed law and thus little to no congressional debate or oversight. OWS was a public-private partnership run from the executive branch. To see the potential for abuse, consider that the Department of Defense's vast resources – including military personnel, cargo planes, and helicopters – were effectively commandeered to accelerate the production of vaccines by private, for-profit corporations. During the emergency, the lines between national welfare and corporate welfare were blurred. A permanent blur could lead to reduced transparency, accountability, and democratic oversight, increasing the risks of waste, corruption, and abuse.

The blurring of corporate and national welfare and the bypassing of standard democratic procedures and guardrails was justified given a national emergency with three critical characteristics:

1. True emergency conditions with clear, immediate threats to life and economic stability.

2. Extraordinarily large externalities, with social benefits exceeding private returns by orders of magnitude - mRNA vaccines sold for around $40 per course but provided social value estimated at $5,800 per course.¹

3. A clear national consensus on goals, eliminating the need for extended democratic deliberation.

Outside of these conditions, a program to spend large amounts of money and government resources with little oversight or debate to subsidize for-profit corporations would not be justified and would be positively dangerous. Nevertheless, despite its emergency-specific nature, OWS does offer some valuable lessons for future industrial policy initiatives.

1. Advance Market Commitments

OWS demonstrated the effectiveness of AMCs as an innovation incentive mechanism. AMCs guarantee a market for products that meet predefined criteria, thereby reducing risk for innovators and encouraging investment. OWS utilized AMCs to guarantee the purchase of millions of vaccine doses at a set price, mitigating the financial risks for manufacturers and ensuring widespread accessibility.

AMCs effectively combine the advantages of traditional innovation incentives like patents and prizes. Patents offer a period of market exclusivity as an incentive, but this can lead to high prices and limited access. Prizes incentivize specific outcomes but lack the market feedback mechanisms of patents. AMCs, particularly when tied to market demand, address these limitations by ensuring that innovations both meet real-world needs and are accessible at affordable prices. AMCs hold promise for other areas where market incentives alone are insufficient to drive innovation, such as antibiotic development and climate-resilient agriculture.²

2. FDA risk-reward tradeoffs

OWS' utilization of the Emergency Use Authorization (EUA) process highlights the potential for recalibrating FDA risk-reward tradeoffs, particularly for life-threatening conditions. The EUA allowed for faster approval of treatments based on a "reasonable belief" of effectiveness, rather than requiring definitive proof, as long as the potential benefits outweigh the risks in the context of a public health emergency. Applying a similar risk-adjusted approach to drug approvals for life-threatening conditions could accelerate patient access to potentially life-saving treatments. For example, a Bayesian decision analysis framework, which explicitly considers the severity of a disease and the potential costs of both approving ineffective treatments and delaying beneficial ones, could be used to better calibrate approval thresholds based on the specific risks and benefits associated with different conditions.³

Patients with life-threatening diseases are in an “emergency” situation even outside of a national emergency. Extending the EUA’s “reasonable belief” framework to these contexts is promising but would require careful consideration to ensure patient safety and scientific rigor.

Conclusion

The success of OWS shows that bypassing standard procedures can enable governments to scale innovations effectively during true emergencies. However, making such measures permanent risks eroding democratic accountability and program effectiveness. Striking the right balance – knowing when to invoke emergency powers and when to adhere to standard procedures – is essential for effective governance. While OWS’s structure and methods were tailored to emergency contexts, its lessons, particularly on AMCs and regulatory flexibility, offer valuable insights for accelerating innovation and addressing broader societal challenges.

1. Castillo, Juan Camilo, Amrita Ahuja, Susan Athey, Arthur Baker, Eric Budish, Tasneem Chipty, Rachel Glennerster, et al. 2021. “Market Design to Accelerate COVID-19 Vaccine Supply.” Science 371 (6534): 1107–9. https://doi.org/10.1126/science.abg0889.

2. Glennerster, Rachel, Kyle Emerick, Anne Krahn, Sarrin Chethik, and Siddhartha Haria. 2023. “The Return to Investing in Climate-Resilient Crops.” University of Chicago: Market Shaping Accelerator. https://marketshaping.uchicago.edu/wp-content/uploads/2024/05/The-Return-to-Investing-in-Climate-Resilient-Crops.pdf.

3. Isakov, Leah, Andrew W. Lo, and Vahid Montazerhodjat. 2019. “Is the FDA Too Conservative or Too Aggressive?: A Bayesian Decision Analysis of Clinical Trial Design.” Journal of Econometrics, Annals Issue in Honor of Jerry A. Hausman, 211 (1): 117–36. https://doi.org/10.1016/j.jeconom.2018.12.009.