Dalibor Rohac

On vaccines, the EU is getting what it paid for

On vaccines, the EU is getting what it paid for
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Remember when the EU was going to provide an antidote to the spectre of vaccine nationalism? While Italian authorities are raiding pharmaceutical plants for vaccines, the European Commission is pushing for measures to block vaccine exports to countries that do not 'reciprocate'.

Unfortunately, European authorities have it exactly backward. Instead of seeking to expand the existing supply, their ham-fisted policies risk having the opposite effect. The ongoing war on AstraZeneca is bound to make every pharmaceutical firm think twice before signing a contract with the EU. And with vaccine production chains spanning across numerous jurisdictions, including non-members of the EU, export restrictions increase legal uncertainty and can disrupt supplies further.

The inconvenient fact for the EU is that you get what one pays for. The Commission decided to pay €1.78 (£1.53) per dose of AstraZeneca, as opposed to the £3 paid by the UK government. It is also paying €12 (£10.34) per dose for a dose of the Pfizer vaccine — not £15. Much as the health commissioner Stella Kyriakides may dislike the first-come, first-served logic, pharma companies are in the business of making money for the shareholders, not serving the most pressing societal needs.

If policymakers want to align the two, they need to shape the incentives facing the pharma industry and harness, well, their 'greed', as Prime Minister Boris Johnson put it. It means doing the one thing that the EU has failed to do in response to its delayed vaccination rollout: showering the industry with money.

Normally, building and staffing new pharmaceutical factories takes months or years. Since every additional month of the pandemic costs the global economy hundreds of billions and opens the door to new virus strains, this is not the time to be cheap.

This is not a zero-sum game either. The more wealthy countries are willing to spend, the greater the industry’s production capacities and the faster the vaccine becomes available to everyone. The fact that pharmaceutical companies charge more for most common vaccines than they do for Covid-19 is not a good sign if one seeks to expand supply.

There are avenues to improve the situation. In the United States, Merck has teamed up with its ancient rival Johnson & Johnson to scale up vaccine production. It took the intervention of the federal government, under the Defense Production Act, to facilitate the joint venture, in which Merck will help with the vaccine’s production, formulation and filling of vials. The price tag to the federal government of $269 million (£196 million) for adapting Merck’s facilities is peanuts relative to the benefits of delivering millions of doses in a timely fashion.

To be sure, similar partnerships have also been struck in Europe — between Sanofi and Pfizer, Sanofi and Johnson & Johnson, Novartis and Pfizer, Novartis and CureVac, and between Bayer and CureVac. Yet, most of those involve assistance with filling vials, packing, and distribution — or, in the case of CureVac, with clinical trials and regulatory affairs. To involve outside partners in the proprietary steps of actually producing vaccines requires a more extensive sharing of intellectual property, which pharma companies are understandably reluctant to do.

Recently, 250 European parliamentarians asked the EU to waive World Trade Organization patent obligations in order to facilitate the vaccines’ production in low and middle-income countries.

However, forcing companies to give up or pool their intellectual property is the wrong way to go, especially if one wants them to produce more innovations in the future. Yet, it is perfectly legitimate to offer strong financial incentives going beyond the existing procurement contracts for them to do so — until there is no pharmaceutical manufacturing site anywhere in sight that could reasonably be repurposed toward the production of the Covid-19 vaccine.

Last year, the EU agreed on a sizeable recovery fund of €750 billion (£645 billion) to provide economic relief from the pandemic and to support the bloc’s climate and digital aims. Those are worthy causes but, as of now, the world and the EU face no problem more pressing than ending the pandemic by boosting the supply and distribution of existing vaccines.

Instead of seeking to claim a dubious moral high ground over supposedly greedy pharmaceutical companies, while most Europeans continue to go unvaccinated, the EU’s officialdom has to do the opposite. They need to get their wallets out and prepare to spend big.