Las Vegas Review-Journal (Sunday)
Governments sign secret vaccine deals: Here’s what they’re hiding
BRUSSELS — When members of the European Parliament sat down this month to read the first publicly available contract for purchasing coronavirus vaccines, they noticed something missing. Actually, a lot missing.
The price per dose? Redacted. The rollout schedule? Redacted. The amount of money being paid up front? Redacted.
And that contract, between German pharmaceutical company CureVac and the European Union, is considered one of the world’s most transparent.
Governments have poured billions of dollars into helping drug companies develop vaccines and are spending billions more to buy doses. But the details of those deals largely remain secret, with governments and public health organizations acquiescing to drug company demands for secrecy.
Just weeks into the vaccination campaign, that secrecy is already making accountability difficult. Drug companies Pfizer and AstraZeneca recently announced that they would miss their European delivery targets, causing widespread concern as dangerous virus variants spread. But the terms of their
contracts remain closely guarded secrets, making it difficult to question company or government officials about either blame or recourse.
Available documents, however, suggest that drug companies demanded and received flexible delivery schedules, patent protection and immunity from liability if anything goes wrong. In some instances, countries are prohibited from donating or reselling doses, a ban that could hamper efforts to get vaccines to poor countries.
Governments are cutting at least three types of vaccine deals: Some are buying directly from pharmaceutical companies. Others are buying through regional bodies like the European Union or the African Union. Many will turn to the nonprofit COVAX program, an alliance of more than 190 countries, which is buying from the drugmakers with an eye toward making vaccines available worldwide, especially to poor countries, free or at reduced cost. Some governments have signed deals with manufacturers and COVAX alike.
The United States has secured 400 million doses of the Pfizer-BioNTech and Moderna vaccines, enough for 200 million people, and is close to arranging 200 million additional doses by summer, with options to buy up to 500 million more. It also has advance purchase agreements for more than 1 billion doses from four other companies whose inoculations do not yet have U.S. regulatory approval.
Despite the secrecy, government and regulatory documents, public statements, interviews and the occasional slip-up have revealed some key details about the vaccine deals. Here is what we learned.
Governments helped create vaccines
Vaccine development is a risky venture. Companies rarely invest in manufacturing until they are sure their vaccines are effective and can win government approval. That is part of why it typically takes so long to develop and roll them out.
To speed that process, governments — primarily the United States and Europe — and nonprofit groups like the Coalition for Epidemic Preparedness Innovations, or CEPI, absorbed some or all of that risk.
The United States, for example, committed up to $1.6 billion to help Maryland-based company Novavax develop its coronavirus vaccine, according to regulatory filings. CEPI kicked in up to about $400 million in grants and no-interest loans.
Other companies have received even more help. Massachusetts biotech company Moderna not only used government-developed technology as the foundation of its vaccine; it also received about $1 billion in government grants to develop the drug. In August, the government then placed an initial order for the vaccine for $1.5 billion. The company has said that the project was paid for entirely by the federal government.
These types of arrangements were designed to help companies jump-start manufacturing and cover costs such as clinical testing.
But companies keep the patents
Despite the tremendous taxpayer investments, typically the drug companies fully own the patents. That means that companies can decide how and where the vaccines get manufactured and how much they cost. As the CureVac contract explains it, the company “shall be entitled to exclusively exploit any such” property rights.
This has been a matter of contention for months. A coalition of countries, led by India and South Africa, has petitioned the World Trade Organization to waive intellectual property rights so generic drugmakers can begin producing the vaccines. The World Health Organization has endorsed the idea, but it is all but doomed by opposition from the United States and Europe, whose drugmakers say patents — and the profits that flow from them — are the lifeblood of innovation.
“Governments are creating artificial scarcity,” said Zain Rizvi of the watchdog group Public Citizen. “When the public funds knowledge that is required to end a pandemic, it shouldn’t be kept a secret.”
Prices will vary
One of the key terms of the vaccine contracts — the price per dose — is frequently redacted in the public versions of government contracts. The companies consider this a trade secret. Some drug companies have included clauses in their supply contracts that allow them to suspend deliveries if countries reveal the price.
By insisting that their pricing remains confidential, the drugmakers have the upper hand over government negotiators who do not know what others countries are paying.
While governments accepted that provision, leaks and some official reports show some of the disparities. The European Commission paid $2.19 for every dose of the vaccine developed by the University of Oxford and AstraZeneca, while South Africa paid more than twice as much, $5.25, according to media reports.
Drug companies did not respond to requests to view their unredacted contracts or explain why secrecy was necessary. A spokesperson for Moderna pointed only to a regulatory document that said the contract “contains terms and conditions that are customary.”
That is why it caused such a stir last month when a Belgian official mistakenly revealed a price list, which showed that United States taxpayers were paying $19.50 per dose for the Pfizer vaccine, while Europeans paid $14.70. Donations and resales are restricted Public health advocates have called on wealthy countries — which have all but cornered the market on the early doses — to donate or sell vaccines to poor countries. But contracts may restrict buyers’ ability to export doses, which could depress drug company sales.
The CureVac contract, for example, prohibits European countries from reselling, exporting or donating doses — including to COVAX — without permission from the company. Some contracts in the United States have similar restrictions.
Vaccines arrive when they do
Delivery times are considered proprietary information, so there are no public benchmarks against which to measure a company.
Nowhere is that clearer than in the European Union’s fight with AstraZeneca over the company’s announcement that it would not deliver the expected number of doses in the first quarter of this year. European officials say they received specific contractual assurances for such deliveries. The company says it promised only to make its best efforts to hit those targets.
European officials, who initially agreed to keep the contract secret, have now asked the company to make it public. Unless that happens, there’s no way to assess who is responsible.
But there is no question that the drugmakers have built themselves plenty of wiggle room for such an ambitious, complicated rollout. The CureVac contract says the delivery dates (which are all redacted) should be considered estimates. “No product or only reduced volumes of the product may be available at the estimated delivery dates,” the contract reads. Similar provisions exist in other contracts.
Nearly every vaccine-maker has similarly told investors that they might not hit their targets. “We may not be able to create or scale up manufacturing capacity on a timely basis,” Pfizer warned in a corporate filing last August.
That uncertainty has frustrated health officials. When Pfizer recently told Italy that it was temporarily cutting deliveries by 29%, the government said it was considering taking the company to court. That lawsuit, if it materializes, could make public some details of the European Union’s contract with Pfizer, which remains entirely secret.
“At one point they promised more vaccines or faster vaccines,” said Steven Van Gucht, the Belgian government’s top virus expert. “And in the end they couldn’t deliver.”
Some governments profiting
Early in the pandemic, the European Investment Bank, the lending arm of the European Union, provided a $100 million loan to German company BioNTech, which partnered with Pfizer in producing a vaccine.
In addition to the interest on the loan, the European bank will receive up to $25 million in vaccine profits, according to a redacted version of the contract that BioNTech filed with securities regulators.
The bank said profit-sharing arrangements reflect the risk involved in early financing. Rizvi, of Public Citizen, argued that it put governments on the same side as the drugmakers and reduced any incentive to make drugs cheap and widely available.
Companies get liability protection
In the United States, drug companies are shielded from nearly all liability if their vaccines don’t work or cause serious side effects. The government covered COVID19 drugmakers under the PREP Act, a 2005 law intended to speed up access to medicine during health emergencies.
That means that people cannot sue the companies, even in cases of negligence or recklessness. The only exceptions are cases of proven, “willful misconduct.”
Drug companies are seeking similar liability waivers in negotiations with other countries. European negotiators have balked at such requests. COVAX also insists that countries accept all liability as part of its contracts.
The CureVac-EU contract does shield the company from significant liability, but with exceptions. Those exceptions are redacted.