A Public Alternative

In 1914, Connaught Labs was founded in Toronto. A publicly owned, non-commercial enterprise, Connaught manufactured diphtheria treatments and distributed it for free. It also produced insulin, which it sold at cost or near-cost.

After the Second World War, the organization branched out into polio research to fight the epidemic raging across North America. It received substantial public funding from both the Canadian and US governments. In the battle against polio, Connaught worked with Jonas Salk, who had made headway on a vaccine in the United States, but lacked the capacity to test and produce it on a large scale.

Connaught’s scientists were up to the task. They developed the “Toronto method” — a technique for mass manufacturing Salk’s vaccine — and assisted with the field studies needed for testing it effectively and safely.

However, just as the US vaccination campaign got started, it was temporarily derailed in 1955 by the “Cutter incident” — one of the few episodes of its kind in vaccine history. After being granted the license to manufacture Salk’s vaccine in the United States, Cutter Laboratories produced a hundred twenty thousand doses of a botched version that contained live polio virus. Two hundred thousand children received the Cutter formula: it caused forty thousand cases of the virus, leading to two hundred instances of paralysis and ten deaths.

Following this disaster, the United States halted its vaccination program. But Canada pushed on with its own campaign, and public confidence in Connaught’s high-quality product helped make it possible for US polio immunization to resume before long. The lab’s reputation neutralized what might otherwise have been an inflection point for anti-vaxx sentiment. The polio vaccination campaign proved to be a success because of Connaught’s production model.

Connaught Labs was initially affiliated with the University of Toronto, but later became an independent body within it — a self-sufficient research and production facility that relied on government funding and its own profits. However, despite its achievements in the first half of the century, the lab was sold off in 1972 to the Canada Development Corporation (CDC), a federally managed organization for helping Canadian private sector businesses to grow.

The CDC shifted Connaught’s mandate from public health to profitability. Following price increases on inputs — and with public funding no longer available — Connaught was forced to increase the price of its products. Operating in the private sector, the lab found itself squeezed by international competitors, particularly Eli Lilly, whose scale outpaced its own.

By the 1980s, Connaught’s leading role in insulin production was over. It was fully privatized in 1986 after Canada’s then prime minister Brian Mulroney shut down the CDC. Today, as part of Sanofi Pasteur, the former Connaught brand is still involved in vaccine production and other medical work, but along the same for-profit lines as the rest of the industry, with no public-utility orientation.

The distinctive model of Connaught Labs may have been stood down, but Cuba offers an ongoing example of the potential benefits from public ownership of pharmaceutical production. Cuba’s public biopharma sector has ensured that its medical products remain affordable. The island nation’s high public trust in vaccines — and the extensive vaccine knowledge amongst its population — also stand in stark contrast with the spread of vaccine skepticism in Canada and the United States.