COVID-19 vaccine supply low? Look at deals done in private

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David Oliver is a senior corporate and public affairs adviser, who has advised the pharmaceutical industry.

People don’t usually feel sorry for Big Pharma. At this point a year ago, your opinion might have ranged from begrudging thanks to downright hostility.

Then, after addressing the biggest challenge in medical history the “cavalry coming over the hill,” as British Prime Minister Boris Johnson characterized them, arrived just in time. The public were never more grateful for the boffins in white coats. The industry for once felt vindicated that it was a force for good.

We should remember the last time Big Pharma hit the news (before COVID-19) was because of its collective tar-brushing resulting from the actions of Purdue and the devastating opioid crisis that ensued. This was an industry case study that summed up what many had suspected were the worst evils of the industry.

I did feel sorry for Pfizer, though, on a recent Friday in January. I watched the rolling news ticker showing first Prime Minister Justin Trudeau had been on the phone, then Ontario Premier Doug Ford and last, but certainly not least, Toronto Mayor John Tory.

If you were a pharmaceutical executive on the end of calls from irate and impatient politicians, you might have been forgiven (just ever so briefly) for wishing your company hadn’t been the one that had “won” the race to produce the first vaccine.

Supply shortages at this early stage of the biggest vaccination effort in history, coupled with a resurgent and devastating public-health crisis, mean the stakes have never been higher.

One wonders that, knowing these shortages were always inevitable at this early stage of the biggest vaccination effort known to man, perhaps not enough public conditioning has been done. Perhaps it had or perhaps the industry is just deflecting blame because the crisis is severe and governments need a scapegoat for while.

We’ve often had a fraught relationship with the industry. On the one hand, we have immense gratitude for some of the truly amazing, life-changing innovations they’ve developed. On the other, we see them as profiteering pirates, making vast sums of cash out of people’s medical misery.

I’ve advised the industry and its members on many occasions and especially during the regular but difficult price negotiations that those countries with publicly funded health systems have with them.

For countries that have significant R&D operations, such as Britain, the negotiations can become even more pointed, with companies demanding they be paid what they think is fair value under an implied threat of pulling out high-value, knowledge-economy jobs.

The government, while being fully aware of this, also knows the companies are there for other critical factors, such as scientific talent availability. This, like any negotiation, is the grey ground where the deals get done.

But price, like cash, is still often king.

While the public focuses on vaccine availability, the cost debate is bubbling away just underneath. With last week’s supply shocks, it threatens to burst into the open either when people and their politicians believe they’ve been dealt an unfair hand, or later when the inevitable audit is done on who paid who for what and when and who got the “best” deal.

AstraZeneca, having used established, if updated, technology with Oxford University, and having pledged to not make a profit, appears to be reasonably safeguarded against accusations of profiteering in this debate. It also significantly helps the relatively low reported cost of each shot (around $3 to $5 each) seems a bargain, especially when compared with the expensive technology that BioNTech/Pfizer and Moderna have developed.

According to Airfinity, a leading scientific-data company, each Pfizer shot could range from around US$14 in the European Union, US$19 in the United States and as much as US$28 in Israel.

This is where it could get really complicated and messy. Different governments around the world have paid different amounts, and deals of the opaquest variety have been done by those countries that naturally want to be first in the queue for delivery.

Opaque doesn’t mean nefarious; it means some countries have done things that might appear a perfectly acceptable trade-off to get ahead in the queue, such as investing in R&D to share risk. The severe supply challenges seen in the EU may be because they backed different horses (such as GSK and Sanofi), versus Britain and the U.S., which invested heavily in the efforts of AstraZeneca and Pfizer, respectively.

Public trust in many institutions of life has never been lower. We also know we’ve never been entirely comfortable with where profit is acceptable when it comes to health care.

While companies and governments try to hide these negations behind the theatre curtain of “commercial confidentiality,” they must know that in the gravest health crisis ever, the public will demand to know more.

The EU last week decided to publish redacted agreements with AstraZeneca to demonstrate what they say is contractual fault. Big Pharma may need to be prepared for more of this and pro-actively share who was paid what, along with other aspects such as R&D investments, so an anxious public knows why some are further ahead in the queue than others.

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