Are nations being bullied by vaccine producers?

Reports indicate that some governments may have been 'abused' by unreasonable demands in vaccine-related negotiations.

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Published in Free Malaysia Today & Astro Awani, image by Free Malaysia Today.

The Bureau of Investigative Journalism (BIJ) recently revealed that Pfizer has been accused of “bullying” the governments of Argentina and Brazil in vaccine-related negotiations, involving claims of vaccine supply terms going beyond questionable indemnity conditions to unreasonable demands such as putting up state-owned assets as collateral for foreseeable legal cases.

Although governments are driving vaccine demand, no vaccine producer has mentioned that it has been “forced” to produce vaccines. Furthermore, it’s likely that vaccines are still being purchased as per commercial terms in bilateral deals, with profit margins possibly included. As reported by Reuters, Pfizer’s expected revenue from vaccine sales in 2021 is US$15 billion.

Not only profits may have already been accounted for, but part of its costs may have been subsidised by governments. As reported in BIJ, BioNTech (Pfizer’s partner) was provided a sum of US$445 million by the German government for vaccine development and the US government agreed to a deal worth almost US$2 billion to pre-order 100 million doses even before clinical trials entered phase three.

It makes sense to demand exemption from liabilities if governments insist on procuring vaccines associated with poorer clinical trial results, done testing by cutting corners, or if vaccines are provided at minimal or no profit. So far, we have been made to understand that this may not be the case.

We have heard how the vaccines have high levels of safety, efficacy and with generally low incidence or rare cases of serious adverse events. Furthermore, CNBC reported that Pfizer’s CEO, Dr Albert Boula, mentioned that “this is a vaccine that was developed without cutting corners”.

Surely these widely touted statistics and testaments of confidence in vaccine safety and efficacy can be translated to some coverage of liabilities associated with the vaccines. Nothing goes further in cementing public confidence in a product than what is implied in the betting phrase “put your money where your mouth is”, which refers to a very reliable yardstick to measure someone’s true place (and magnitude) of confidence.

Of course, it is understood that the real-world scenario is different than clinical trials. Although clinical trial results indicate that the benefits to the many outweigh the known risks to the few, clinical trials cannot cover all groups of people, all medical conditions and elucidate all potential contraindications and all potential long-term effects, if any. Trying to do so may take a much longer time and could increase costs (and prices), which many countries are not likely to accept. Hence, some level of indemnity might still be reasonable, but not total immunity.

Perhaps level of liabilities can reflect (or designed in relation to) percentages of adverse events found in clinical trials. With the understanding that the real-world scenario might reveal more unfavourable outcomes than clinical trials, a discount or a leeway in the frequency and/or type of adverse events extrapolated in a real-world scenario could have been reasonably considered and negotiated to widen the protection to vaccine producers.

Not to mention that real-world events are devoid of sufficient test controls and some
adverse events may only manifest after a longer duration – which makes “proving direct linkage to vaccines” to be reasonable, but also inherently difficult.

Notwithstanding how these terms could be skewed in favour of compensators, these kinds of conditions (combining with the reported rarity of serious adverse events) are already in itself built-in “safeguards” that should be more than sufficient for profiting vaccine producers.

According to BIJ, Pfizer’s demands appear to go above and beyond this where it has been accused of demanding protection against its own “acts of negligence, fraud or malice”, asking state-owned assets to be put up as collateral for any foreseeable legal cases and requesting the setting up of a “guarantee fund” with money transferred to a foreign bank account.

Reuters reported on March 4 that Brazil’s minister of health Eduardo Pazuello alluded that the agreement with Pfizer was nearing completion, which Reuters mentioned as “effectively overcoming a dispute over liability clauses”.

It is unclear what that means contractually and we can only hope that it refers to a mutual two-sided deal and not Brazil being pushed to agree to these supposed demands due to its desperate circumstances.

Though the matter is still an accusation, it does raise concerns on countries that have made deals with vaccine producers. As reported by Reuters, Pfizer has said that “many other nations had agreed to identical deals”.

It has been reported that Malaysia’s science, technology and innovation ministry and the health ministry have “briefed” the Public Accounts Committee on vaccine procurement processes but perhaps a serious look is needed on the specific clauses by independent legal experts, assuming this has not been done.

It is understood that the Malaysian government has signed a non-disclosure agreement (NDA) with Pfizer, and legal experts in Malaysia have reportedly reiterated that the NDA is meant to protect trade secrets, prices and other contents that could impact a company’s commercial competition in the market. Breaching this information to third parties could void the agreement, trigger legal repercussions and break the supply deal altogether.

We have to be mindful that these accusations, if true, carry serious ethical, national
and humanitarian implications. Although the NDA is between the government and the vaccine producer, principally speaking, “the government” is also a representative and servant of the public, purchasing vaccines using public funds.

If full transparency is not doable, the “third parties” in question can also be limited to an independent oversight body that represents national and public interest. Arguably, this should not be considered a third party in the first place and provisions for such technical, legal and financial due diligence sessions (not just briefings) should be included in vaccine purchase agreements.

Also, the reference to “competitions” or “markets” should be made with more sensitivity to the bigger picture of an unprecedented global health and economic crisis, which calls for  a more altruistic and empathetic version of capitalism – not commercial arrangements that are unprecedented even in normal circumstances.

If competitive concerns (prices, trade secrets) are too commercially sensitive, there must be a way for a redacted review of the contract where everything else can be scrutinised, especially wherever it has implications on national interest and sovereignty such as clauses related to indemnities and liabilities.

Relatedly, the Malaysian government is planning to set up a compensation scheme for those who experience serious side effects after receiving the Covid-19 vaccines, on top of giving vaccines for free. This is a considerate move by the government and although the issue of “proving direct linkage” mentioned above is also present in the said scheme, it is better than nothing.

More pertinent questions include scheme financing mechanisms, involvement of vaccine producers in having “skin in the game” and the cost of additional protection provided to vaccine producers, if any.

It is reasonable to assume that the probing and pushing for such negotiations can significantly delay or break a supply deal. Or it may simply result in prices of vaccines to be increased to accommodate for potential future legal liabilities. Either cases can significantly decrease equitable access to vaccines, especially to low- and middle-income countries.

Based on supply and demand, vaccine producers are on the “A-side” in deal-making. Governments, being on the “B-side”, have been negotiating from a disadvantaged position to begin with.

If the experience in Brazil and Argentina were true, the cost-benefit of pursuing fairer deals make any strategic concessions by governments to be more understandable, if not the only way. Unfortunately, the price of dispute, even a legitimate one, may ultimately be paid by the people who are not able to receive vaccines, threatening public health and the economy.

Thus, it is likely countries may have chosen to agree to such deals based on the same reasoning, opting to create and finance their own vaccine injury compensation scheme instead of having a spat with vaccine producers, which may not be worth it.

The pandemic (and the price of not having a choice) has exposed vulnerabilities in key areas of national security and in the future, we cannot leave it to external hands. We should aspire to collaborate regionally, with inter-dependent economic blocs, and build internal capabilities to respond to these threats better in the future.

Ameen Kamal is the head of Science & Technology at EMIR Research, an
independent think tank focused on strategic policy recommendations based on
rigorous research.

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