Ananish Chaudhuri: Is big pharma profiteering from the pandemic?

The distribution of the Covid-19 coronavirus vaccines was organised by Gavi, the Vaccine Alliance, a philanthropic enterprise through its Covax facility. Photo / Sam Mednick, AP, File

OPINION

Several pharmaceutical companies worked hard and fast to develop Covid-19 vaccines and, although the speed at which these vaccines were manufactured was applauded by many, some vaccine makers are now being criticised for keeping profits from cancelled shots.

A recent investigative report in the New York Times states that the vaccine makers have kept US $1.4 billion in prepayments for now-cancelled doses meant for the world’s poor as demand for vaccines declined.

The worldwide distribution of vaccines was handled by the Gavi, a public–private global health partnership with the goal of increasing access to immunisation in poor countries.

In September 2020, Gavi was announced as one of the organisations leading the Covax vaccine allocation plan, created to ensure that any new Covid vaccines would be shared equally between the world’s richest and poorest countries

According to the New York Times, many developing countries struggled to deliver Covid-19 vaccines, and the dominance of the milder Omicron variant diminished some people’s motivation to be vaccinated.

Now, Covax is winding down, while the World Health Organisation’s (WHO) goal of vaccinating 70 per cent of the population of each country is yet to be reached.

Meanwhile, the vaccine makers have still brought in more than $13 billion from shots distributed through Covax.

Under the contracts, the companies are not obliged to return the prepayments Gavi gave them to reserve vaccines that were ultimately cancelled.

According to the New York Times article, Gavi has reached settlements with Moderna, the Serum Institute of India, and several Chinese manufacturers to cancel unneeded doses, surrendering $700 million in prepayments.

Another company, Novavax, is refusing to refund $700 million in advance payments for shots it never delivered.

An earlier feature in the New York Times from 2021 suggests that the vaccine brought in US$3.5 billion in revenue for Pfizer in the first three months of that year, nearly a quarter of its total revenue. While the company did not disclose its profits from the vaccine, profit margins are estimated to be in the 20 per cent range.

This second write-up notes that Pfizer frequently claims it has not received funding from the US federal Government but its partner BioNTech received substantial support from the German government in developing their joint vaccine. Taxpayer-funded research aided both companies.

The National Institutes of Health (NIH) patented the technology that helped make Pfizer’s and Moderna’s RNA vaccines possible.

BioNTech has a licensing agreement with the NIH, and Pfizer is piggybacking on that licence.

It is also the case that the vaccines have been distributed primarily to rich countries, and poor countries have lagged far behind.

None of this information should come as a surprise.

In 2020, a press release from Doctors Without Borders pointed out that Gavi does not have experience negotiating with pharmaceutical companies on behalf of lower-income nations. The release went on to comment that “…the Who Pandemic Influenza Preparedness (PIP) Framework is an example of Who’s global normative and operational role in developing public health instruments that help to prepare for and respond to global pandemics. The PIP Framework includes requirements for manufacturers to set aside specific quantities of medicines or vaccines in the case of a global influenza pandemic, with Who determining the equitable allocation of those medical tools.”

Pharmaceutical companies are profit-driven and will use litigation and other measures to keep the money rolling in, despite negatively impacting the health of populations.

Ananish Chaudhuri. Photo / Supplied

As I point out in my book Nudged into lockdown? Behavioural Economics, Uncertainty and Covid-19, South Africa reported approximately 49,000 deaths from Covid-19 over the course of 2020. In 2019, about 72,000 people died from HIV/Aids.

According to the World Bank, one in every five South Africans between the ages of 15 and 49 suffers from HIV/Aids. The HIV prevalence rate for adults aged 15 to 49 was 37 per cent in Swaziland, 25 per cent in Lesotho and 25 per cent in Botswana.

In 2001, more than 40 pharmaceutical companies, many of them the world’s largest and most powerful companies, including Merck, GlaxoSmithKline and Roche, sued the South African government to try and stop it from enacting legislation aimed at reducing the price of medicines for South Africans via adopting generic substitutes.

A similar attempt to allow for generic production of Covid-19 vaccines was defeated by many rich countries of the world who banded together under the World Trade Organisation’s TRIPS protocol (for governing intellectual property rights).

Meanwhile, many countries around the world have refused to reveal the nature of the contracts they signed with Pfizer, and in October 2021, a report from the Australian Broadcasting Corporation quoted a study by Public Citizen, a non-profit group based in Washington DC, accusing Pfizer of hiding behind a veil of secrecy to profiteer during the pandemic.

Hopefully, the Royal Commission into our Government’s response to the Covid-19 pandemic will shed some light on the details of our relationship with Pfizer, including how many vaccines we received directly from them, how many through Covax, what price we paid for those vaccines and whether this was justified.

- Ananish Chaudhuri is Professor of Experimental Economics at the University of Auckland Business School. This article reflects the opinion of the author and not necessarily the views of Waipapa Taumata Rau University of Auckland.