National Council of Applied Economic Research
It is expected for COVID-19 vaccines to be classified as ‘global public goods’ given their development is being substantially funded by people’s taxes
Opinion: Palash Baruah and D L Wankhar
Unrelenting efforts to find a vaccine or vaccines to combat the novel coronavirus disease (COVID-19) are currently underway across the world. There has earlier never been a race against time to produce a vaccine within record time.
Institutions companies and developers across the world have begun to use cutting-edge technologies combined with scientific know-how to find a vaccine.
In this rush regulators sped up administrative processes fast-tracked procedures and reduced paperwork to allow shortcuts and hasten research and clinical studies. Professionals — including data analysts and physicians — have begun working on clinical trials and are giving this their top priority.
Thirty-four vaccine candidates have reached clinical evaluation with another 142 candidates in pre-clinical evaluations according to the draft landscape of COVID-19 vaccine candidates published by the World Health Organization (WHO) as of September 3 2020.
These events occurred amid pessimistic and somewhat cautious warnings from a few sections of experts and scientists. They said potential COVID-19 vaccines now in the pipeline in various stages may be more likely to fail because of the rush through research and clinical testing phases.
Allocation of potential vaccine(s)
Global health think-tank Policy Cures Research estimated that more than $5.39 billion was already committed to finding vaccines for COVID-19. This was possible because of large-scale efforts through various partnerships.
The levels of upfront public investment being allocated for the development of COVID-19 vaccines were higher than any other vaccines. We can see this influencing price determination and country-dose allocations.
The WHO broadly developed a strategic advisory for the appropriate and fair use to allocate vaccines. In the first phase of allocation doses will be allocated proportionally to all participating countries simultaneously to reduce overall risk while in the second phase consideration will be given to countries in relation to threat and vulnerability.
It is obvious that frontline workers / responders in the health sector who were in close contact with high-mortality risk groups — including the elderly the poor and under-nourished with low immunity and those with certain comorbidities — will be the first beneficiaries of potential vaccines.
It was also reported that due to the absence of international laws that prevent pre-purchase agreements several rich countries have already entered into such agreements with vaccine manufacturers. This development has come to be known as ‘vaccine nationalism’ or the ‘my nation first’ approach.
Global alliances
Countering this move about 172 economies — as of August 24 — were engaged in discussions to potentially participate in COVAX a global initiative co-led by the Coalition for Epidemic Preparedness Innovations (CEPI) Global Alliance for Vaccines and Immunization (GAVI the Vaccine Alliance) and the WHO. COVAX is working with vaccine manufacturers to provide countries equitable access to safe and effective vaccines.
We can also expect COVID-19 vaccines being classified as ‘global public goods’ and ‘the people’s vaccine’ given their development is being substantially funded by people’s taxes.
But it will be closely watched as to how these initiatives get converted into something concrete and then implemented in ensuring affordable adequate procurement and equity in distribution of COVID-19 vaccines. Passing through trials and getting regulatory approvals are just the first few steps. The last leg will be determined by the vaccines’ accessibility and most importantly by efficacy and affordability.
It was observed in the past that many vaccines were supplied by one or two suppliers in view of the fact that vaccine development has high costs (investments) and carried the risks of high failure rates.
Vaccines were also often viewed as less profitable for pharmaceutical companies leading to some pulling out of production altogether resulting in smaller investments being allocated.
Patents and procurement mechanisms
In addition new vaccines tend to be more expensive when they are under patent protection. At present there have been no specific announcements that COVID-19 vaccines being developed will forgo patent protection an indication of why stock prices of such developers have seen an upward trend. Successful COVID-19 vaccine(s) will invariably face production bottlenecks driving prices higher.
The fact that only some manufacturers will have the necessary equipment and capacity to produce large quantities of the vaccine(s) loomed large. This can adversely impact availability and have the resultant effect on pricing.
Along with this implementing universal immunisation programmes in view of resource and capacity constraints would be a herculean — if not an impossible — task. A staggered approach in which the most exposed and / or vulnerable population groups are prioritised will perhaps be the norm. The WHO also rightly pointed out that different procurement mechanisms can also affect the prices and timely access.
According to some experts vaccine technology and approach would be yet another consideration in determining pricing. Live-attenuated vaccines for example take a longer time to develop and are more expensive to produce compared to other approaches.
There are also doubts about the duration of protection that COVID-19 vaccine(s) will have having a logistical impact on both the implementation of vaccination programmes and the prices of vaccine(s).
It is hoped that one or more vaccine candidates will see the light of day keeping in mind the number of candidates and the evolving pandemic situation. Mutually beneficial procurement mechanisms and pricing trends will emerge. Some experts pointed out multiple vaccines can also address large-scale production challenges and prevent monopolies.
None of the potential developers however have completed all the required clinical tests at this stage with necessary approvals to follow. Some clues or indications about pricing have started emerging.
This was despite GAVI publicly saying that as of now they have no specific target prices and will also seek to negotiate tiered pricing for richer and poorer countries.
Adoption of pricing models
It is obvious that pricing will not only depend on the type of vaccines being developed and capacity constraints but also on the number of doses and the kind of negotiations or agreements with respective national governments.
Speculations are rife that manufacturers of potential vaccine candidates are likely to adopt some kind of ‘differentiated pricing model’. Manufacturers may pursue their launches on a ‘not-for-profit’ basis or adopt ‘ethical margins’ on price.
Public procurement by governments is another option but contracts through procurements invariably include elements such as assured volumes or quantities upfront payment (partial or full) multi-year contracts bundling of products discounts and rebates etc.
Will governments override any patents or other intellectual property barriers on production import and export of these vaccines?
In emergencies governments can issue ‘compulsory licenses’ to allow companies that do not own intellectual property of a medicine or vaccine to manufacture and sell versions for domestic distribution at lower prices
If such steps are adopted then private or non-government developers will have to be compensated. There is also a need on clarity over licensing agreements and transfers of technology from the developer to manufacturer.
Another angle that needed to be looked into at the time of launch is the so called ‘in-pandemic’ pricing and ‘out-of-pandemic’ pricing where manufacturers may face a situation where infection rates plummet to negligible levels prior to the vaccine launch. This situation can reinforce the production and commercial risk taken by developers or manufacturers.
We are being confronted with an unprecedented situation warranting unprecedented solutions. Researchers have made the COVID-19 genome freely available resulting in speeding up of the hunt for vaccine(s).
It is only to be expected that we should not allow intellectual property patent rights or any form of exclusive licenses or restrictions to threaten countries’ access to safe effective and affordable COVID-19 vaccines. Scientific challenges to find effective and safe vaccine(s) will be followed by an equally tough moral test to make it adequately available at affordable pricing
Views expressed are the authors’ own and don’t necessarily reflect those of Down To Earth.