In recent weeks, there have been some notable developments in relation to the procurement of potential vaccines against COVID19. On June 3, France, Germany, the Netherlands and Italy announced the formation of the Inclusive Vaccine Alliance (IVA) in order to negotiate with pharmaceutical companies for the procurement of a possible vaccine. Just ten days later, these four countries were quick to announce that a deal was sealed with AstraZeneca (AZ), an Anglo-Swedish pharmaceutical company for the gradual supply of 300-400 million doses to the EU at “cost price”. Others are encouraged to join “under the same conditions as the alliance members” should they wish so. Moreover, the IVA made it clear that due to all the virus-related worries, the deal with AZ would not be exclusive and that the alliance would be in talks with other manufacturers as well.
The contract with AZ was announced on the eve of the launch of the European Commission’s vaccines strategy. One of the main tools foreseen in the strategy is the use of funds to be used as a deposit in the context of Advance Purchase Agreements (APAs) for promising products against the coronavirus.
Be it through the IVA or the Commission-driven pooled procurement initiative, by paying up front, governments are committing today to de-risking the vaccine development and manufacturing process. This means, put simply, public money will be used to cover most of the losses pharmaceutical companies may sustain in case of failed products. What governments get in return is some sort of a priority voucher which offers them privileged access and the right to buy “promising” products in the future when/if they are authorized. They get to “jump the queue,” which seems to be the top political priority right now for Brussels and many EU capitals in the global race and competition for COVID19 therapeutics.
Joint, pooled procurement is undeniably the right way forward given the specificities of a pandemic and the intricacies of the vaccines market. Hence, the EU brings clear added value and a convergence of the two initiatives is inevitable, especially as the European market is not big enough for two competing procurement initiatives. Nonetheless, there is a real danger of considerable amounts of public investment being squandered.
The public as a wise investor, not a passive donor
Taking into account the massive mobilization of public investment and resources in sharing the risk with pharma developers, while decreasing the liability of producing vaccines against the coronavirus, the EU as a whole needs to act as a wise investor, not a passive donor. It needs to take steps to guarantee a fair return on this substantial and multifaceted public support by attaching public-interest conditionalities.
Insurance policy or a blank cheque?
The European Commission needs to be applauded for designing an EU response to the conundrum of COVID19 vaccines. Member States should better stick together as pharma companies will once again try to play one off against the other by offering what they claim to be better deals. That said, this “insurance policy” as it is described by the Commission in the strategy should not become a blank cheque for the pharmaceutical companies.
To this end, the European Commission and Member States need to:
