You should be angry about vaccine inequity. But who should you be angry at?
One of the core assumptions behind free-market capitalism is that it is efficient at allocating resources where they will have the most utility. This does hold true in most circumstances but it has a glaring blind spot — poverty. Resources allocated to the poor do not have less utility than if allocated elsewhere, and frequently have far more, but the absence of any buying power means that potential utility is neither identified nor achieved.
A consequence of this is that the more actual poverty a society has, the less efficiently its free market is able to allocate resources. (This is why I so strongly favour Universal Basic Income; it eliminates that inefficiency, making a free market more capable of maximizing utility)
That same phenomenon has become starkly apparent in the global distribution of COVID-19 vaccines. Most people would be appalled at the idea of a vaccine dose having more value in the arm of a rich person than that of a poor person, and would certainly agree that a third dose booster shot in comparatively highly-vaccinated locations like the US or the EU will do less to combat COVID-19 than a first dose in an African country. This disparity is exacerbated by the fact that poor countries have less capacity, both to treat COVID-19 and to mitigate its economic impacts.
In other words; a COVID vaccine in a poor nation will have more effect on reducing cases than in a highly vaccinated rich country, and each COVID case is more damaging in the poor countries than in the rich ones. The total utility of a COVID vaccine, right now, is far higher here in South Africa, for instance, than it is in the US or the UK.
Hence, the outrage that doses are going there rather than here is merited, not just from a humanitarian standpoint but from a free-market efficiency one. One question, then, is where that outrage should be directed and the other, more important one, is how the situation can be fixed.
At present, there is a concerted drive from social media pundits to direct that anger toward companies that manufacture the highly-effective vaccines that we covet, along with the governments of the countries where those manufacturers are based. Our activists are very clear about who they consider to be the Bad Guys, and they are Moderna, Pfizer, Johnson and Johnson, Oxford-AstraZeneca, the United States, the UK and the EU.
This is a convenient narrative, certain to be popular because of its surface optics; these players are all and rich powerful, and they all have something that we want. Convenience and popularity, hopefully, shouldn’t be enough to accept a populist narrative at face value and we should, instead, inspect this proposition on (at least) two axes first. Firstly, is vilifying the vaccine producers morally justifiable and secondly, what will be the actual practical effects of doing so?
Both require us to first break down some of the exceptional aspects of the COVID-19 vaccine development process, and shed some light on elements of the global situation that are seldom discussed, and sometimes actively obscured.
Compared to the usual pipeline of drug/vaccine development, the emergence of COVID-19 vaccines was almost unfathomably rapid. Drug development goes through a number of stages, from initial formulation through in-vitro tests, through animal trials and then, finally, multiple phases of human study.
Vaccine candidates frequently fail, so each stage is only initiated once the previous one has proven to be successful, with delays for securing funds, hashing out contracts and setting up facilities at each stage. To initiate each stage in sequence without pauses in between would require plowing large quantities of funding into something that has more chance of failing than succeeding and thus involving considerable cost and high risk.
For COVID-19 vaccines, a bare handful of governments paid that cost and took on that risk by pre-ordering vast numbers of doses of vaccine candidates long before those candidates were proven to work. The UK pre-ordered doses from Johnson and Johnson, Oxford-AstraZeneca, Pfizer, Novavax, Valneva, GlaxoSmithKline, and Merck. As you may be aware, only the first three entries on that list are actually in production; Novavax has not succeeded at scaling up to actual manufacture and the rest simply didn’t work.
The only way to fund the winners was to also buy the failures, incurring enormous losses along the way. Had there not been governments willing to take on those losses on behalf of the rest of us, the vaccines that did turn out to work could not have been developed on the timeline that they were. Had there been no prospect of their people benefiting, those governments would, quite rightly, not have been willing to incur those losses.
In short, a handful of governments subsidized vaccine development for all of us. This subsidization was a critical component of enabling of the rapid vaccine development, but has been vilified and re-framed as “vaccine hoarding”. It has certainly resulted in unequal vaccine access but without it, I as a South African would be further from vaccination than I am now. I have trouble being angry at governments to whom I pay no tax for contributing materially to my own well-being, even if only incidentally.
One of the major criticisms of vaccine rollout has been non-uniform pricing, with countries that pre-ordered and provided development funding having negotiated lower prices per dose. On the surface, this is an ugly situation — rich countries paying less for life-saving medicine than poor ones just feels wrong. However, once the pre-orders of failed vaccines are factored in, countries like the UK have spent considerably more per dose actually received. As the host countries of major vaccine producers, countries such as the US, the UK and Germany have materially contributed to the development of the vaccines over the course of decades through spending on basic science and research, an absolutely necessary component to developing and retaining the expertise required for cutting-edge drug development.
Aside from having invested specifically in the COVID-19 vaccines, the governments we are expected to vilify have invested in the capacity to develop vaccines in general, over the course of decades. According to the World Bank, South Africa invests 0.73% of its GDP in research and development, compared to 1.7% for the UK, 2.0% for China, 2.7% for the United States and 2.87% for Germany.
To my mind it makes considerably more sense to criticize the governments that HAVEN’T funded vaccine development than the ones that have.
Another point of major contention is the profit margins applied to vaccine doses. There is a considerable amount of simplistic accounting being presented in various locations to support the notion that vaccine manufacturers are profiting unduly from these precious products. Holding a PhD in Chemical Engineering and having been involved in startup projects for both new chemical products and, more recently, new medical products, this is an area of particular expertise for me, and the quality of discourse has been frustratingly poor. Those estimates that do go as far as factoring in recovery of capital outlays still omit some major factors. The first of these is the opportunity cost for existing facilities reallocated to vaccine production; this applies to all pre-existing elements of the supply, production and distribution chain that are utilized. The other omission from every estimate I’ve seen in popular media is the factoring in of risk. When a project has a probability of failing at various points in its lifespan, you have to account those potential losses into the eventual price point in order to still come out ahead on an averaged return on investment which includes the scenarios where the project does not reach production. In the case of vaccines, this risk is an enormous factor, particularly for the accelerated development cycle that front-loads funding prior to the success of a development stage.
If the returns on investment did not justify the financial risk, then the projects would not have gone ahead. In other words, projects with a high likelihood of failure and high upfront costs must necessarily have commensurately high price points on the finished product.
One argument that has been raised against this pricing element is that a large portion of that funding came from state spending. I find it a bizarre proposal that I should be entitled to the results of state spending by foreign governments to whom I pay no tax, when my own government did not make the same kind of investments on my behalf. To add to that, South Africa’s private medical health insurance schemes are subsidizing the public sector doses at a one-to-one rate, and so the government is carrying only a portion of the eventual cost of our vaccines. The United States recently donated 5.7 million doses of Pfizer vaccines to South Africa. With roughly ten million South Africans vaccinated at the time of writing, using a mix of Pfizer and the more inexpensive Johnson and Johnson vaccine, the US government has spent an amount of money on vaccinating South Africans that is comparable to what our OWN government has spent.
US-based Johnson and Johnson also came to our aid in a desperate moment when our vaccine rollout was halted, by delivering 500 000 doses to be administered under the Sisonke trial.
To sum up; the US government has contributed more, materially, to my getting vaccinated than my own government has, only to be accused of vaccine apartheid. Morally, this is comparable to being rescued from drowning and then accusing your rescuer of oxygen apartheid. This narrative also serves to shield our own government from criticism for their abject failures in vaccine provision and in long-term funding of research and development; we can only speculate, but perhaps that is its objective.
In terms of practical effects, both harms and benefits are likely to arise. The benefits are fairly transparent even though the activism has not, so far as I have seen, actually proposed any workable improvements to the vaccine development pipeline that managed to so rapidly yield results. The TRIPS waiver demand is little more than a publicity stunt. Moderna waived its IP in October 2020 already, and no generic copies have arisen. A general IP waiver is unlikely to result in rapid vaccination scale-up. However, a general awareness of our plight in richer countries could sway public opinion toward sending doses our way sooner. That is a clear gain, but one that would perhaps be better pursued in a more honest (and less petulant) way.
The other benefit that may arise is transparent publication of the contracts signed between our government and vaccine producers. I believe that any contract a democratic government signs on our behalf should be open to our inspection, so I support this strongly. The guilt for the current lack of transparency certainly lies with our own elected government, not with the privately-owned foreign company. I don’t feel like I have a right to see every contract entered into by every company on Earth. Just our government.
The potential harms are that this kind of accusation adds to the anti-vax narrative that pharmaceutical companies are ruthlessly profiteering, adding to the climate of distrust that allows anti-vax sentiment to thrive. The rather spurious use of the word apartheid to describe predictable market behaviour, when we have in fact been the beneficiaries of considerable assistance, undermines the meaningfulness of the term, and minimizes apartheid itself. If everything is apartheid, then nothing is.
I have also seen a sensible person say that they would support expropriation of the Johnson and Johnson doses that are produced in the US, bottled here, and then shipped to the EU. That course of action would be entirely catastrophic; it is unlikely that any further doses would land on our shores if we looted doses passing through our ports. The mentality that we are entitled to hold onto something simply because it has passed through our hands is transparently awful. When financiers think in that way, it’s called embezzlement. When government officials do it, it’s called corruption. When a courier does it, it’s called theft.
End (but some footnotes follow)
- 40% of the world’s vaccine doses have been administered in China, which has a higher rate of vaccination per capita than the United States, slightly higher than the UK at present.
- EU-manufactured Oxford-AstraZeneca doses are sold at cost price in low-income countries. When South Africans complained about being charged higher prices than Britain was charged for the vaccine developed there, we were actually buying those doses from the Serum Institute of India.
- The vials that we put the Johnson and Johnson doses into aren’t manufactured here; they are imported.
- I was told on Twitter that, in spite of my PhD in Chemical Engineering and leadership position for Wits in a medical innovation consortium, that I am not qualified to discuss the manufacture of chemicals or medicines, on the basis of my gender.
