Flashback to the early stages of the Covid-19 ‘pandemic’, a word many of us were hearing for the first time. Scientists had just embarked upon their quest for vaccines. India was reporting only around a 1,000 new infections per day. Bill Gates, writing for the New England Journal of Medicine, issued an appeal: “governments and industry will need to come to an agreement: during a pandemic, vaccines and antivirals can’t simply be sold to the highest bidder. They should be available and affordable for people who are at the heart of the outbreak and in greatest need.”
Fast forward to January 2021. More than two million lives have been lost and much of the world’s economy has been shattered, with some pieces beyond repair. But there is light at the end of the tunnel. The heroic pursuit of the scientists has succeeded beyond expectations, yielding a number of safe and effective vaccines in record time. Surely, governments and industry would now pay heed to Gates’ appeal of an equitable global distribution of vaccines? Surely, they would work to ensure that “those in greatest need” are prioritised over those with the “highest bidding power”?
How fair is the vaccine marketplace?
A look at the vaccine acquisition numbers raises serious doubt about global solidarity in Covid-19 resistance. Wealthy countries have leveraged their political and economic clout to put themselves at the front of the queue. A global alliance including Oxfam and Amnesty International reported that “rich nations representing just 14 per cent of the world’s population have bought up 53 per cent of all the most promising vaccines so far”. According to Duke University’s Global Health Innovation Center, Canada has acquired enough doses to potentially vaccinate its population five times over. The US and the UK are not far behind, with potential vaccination coverage of more than 400 per cent.
To understand how this happened, we need to look into the economic mechanisms of the vaccine marketplace. Typically, fixed cost components – those that are unrelated to the quantity produced – comprise as much as 90 per cent of the total cost of producing vaccines. As the government is usually the sole buyer of vaccines, pharmaceutical companies often negotiate with public agencies to cover for indemnity in case there are harmful side-effects from vaccines.
Therefore, underdeveloped nations with low revenue potential as well as rudimentary legal structure for medical liabilities do not promise a favourable market prospect for vaccine firms. Richer nations, meanwhile, might provide additional incentives to the pharma companies by financing their capital base and offering legal protection.
How rich nations moved to the front of the queue
To see how this world order played out in the context of Covid-19 vaccines, let us look at the strategies adopted by the US and Canada, the two countries with highest per capita acquisition.
As early as March 2020, the US government launched a multi-pronged initiative called Operation Warp Speed, funded through the $2.2 trillion CARES Act. Through this initiative, several pharma companies received funding for vaccine development and/or production, against the commitment to supply large numbers of vaccine doses if they can develop safe and effective vaccines. This includes AstraZeneca, which received $1.2 billion against a commitment of 300 million doses, Novavax ($1.6 billion, 100 million doses), Pfizer ($1.95 billion, 100 million doses), GSK ($2 billion, 100 million doses), Johnson and Johnson ($1billion, 100 million doses), and Moderna ($4.1 billion, 200 million doses), to name a few.
Canada’s procurement strategy is being spearheaded by Anita Indira Anand, the minister of public services and procurement. Similar to the US, Canada also relied on hedging their bets, by securing early access to as many as seven vaccine candidates. These agreements together give Canada access to up to 414 million doses of Covid-19 vaccine candidates.
Middle-income countries: India’s vaccine acquisition strategy
While rich countries have leveraged their purchasing power, middle-income countries have employed other strategies to ensure advance market commitments. This includes countries like India and Brazil, which have leveraged their manufacturing capacity to negotiate large commitments with leading pharma companies. Other countries have leveraged their strategic advantages, such as Peru with its infrastructure to host clinical trials.
Rich countries have had strategic advantages in the development of new vaccines, by virtue of their advanced science and technology. While vaccine development is done by many small companies, often they do not have adequate large-scale manufacturing capacity, particularly in the context of today’s unprecedented demand. Therefore, pharma companies are collaborating across the globe to scale up their supply chains.
This is where India’s great strategic advantage lies. There is Serum Institute of India Private Limited (SIIPL), the world’s largest vaccine manufacturer. Leading vaccine developers like Novavax and AstraZeneca have entered into a manufacturing agreement with the SIIPL to scale up their production capacity. This gives the SIIPL significant negotiating power, which it can wield to supply part of the production batches to India. It is estimated that India potentially has access to 300 million doses, which is enough to vaccinate more than 10 per cent of the country’s population.
However, experts have noted that at this point, most of these doses are “potential”, rather than “confirmed”. So far, formal purchase orders have only been made for 11 million doses with future commitment for an additional 50 million doses by April 2021.
Beyond vaccine acquisition, the next step for India is to carry out efficient and accurate distribution of doses. This poses a substantial challenge due to the scale and complexity of the exercise. Public health officials need to maintain coordination across three tiers of the vaccine distribution network: (i) government medical store depots; (ii) state/regional/divisional vaccine storage; and (iii) district and community health centres/primary health centres. Besides ensuring a steady supply and maintaining clinical protocols for vaccine storage, an additional challenge is to promote uptake of vaccines in the initial stages when side effects of inoculation are still unknown.
Whither co-operation: Low-income countries and COVAX
In a global marketplace dominated by players with purchasing power and strategic advantages, what happens to the low-income countries that cannot strike direct deals with pharma companies?
In this context, supranational alliances like the Covid-19 Vaccine Global Access (COVAX) Facility play a critical role in ensuring equitable access. A partnership between Gavi, the World Health Organization (WHO), and the Coalition for Epidemic Preparedness Innovations (CEPI), COVAX is a global mechanism that plans to offer member countries equal access to successful vaccines as they become available. In the short term, COVAX aims to make two billion doses available by the end of 2021. In the longer term, the goal is to vaccinate up to 20 per cent of the population of member countries.
Only time will tell whether, and to what extent, these goals are accomplished. The CEPI has been negotiating with several high- and middle-income countries to ensure that, once a certain percentage of their own population has been vaccinated, they will share a fraction of the leftover doses through the COVAX facility. Several national leaders, such as Canada’s Anand, have publicly confirmed their commitment to COVAX. However, the specific details of such commitments are not clear yet.
Equitable access is possible
Vaccine hoarding by the high-income countries is likely to create scarcity in the vaccine market given the limited number of suppliers so far. At the same time, vaccine skepticism in rich countries can slow down uptake, leading to idle vaccine stock. Transferring vaccine technology to the low-income countries is unlikely to augment supply in the short to medium run.
So far, multilateral institutions like the United Nations and the WHO have not been very effective in providing global coordination towards combating the coronavirus. Rather, strengthening cooperative alliances like COVAX would go a long way towards ensuring fair and equitable vaccine access across the globe. And for this, there is light at the end of the needle.
Srijan Sengupta is an Assistant Professor at the Department of Statistics, North Carolina State University, Raleigh, US.
Prasenjit Sarkhel is an Associate Professor at the Department of Economics, University of Kalyani, West Bengal, India.
The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of their respective institutions.
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