No-one knows how much the NZ government paid for our vaccines and no-one seems to be asking
How much did the New Zealand government pay for our vaccines? No-one knows, and no-one seems to be asking.
We are all firmly focused on delivery right now.
British roosters are crowing that Brexit is behind their vaccine roll-out success. Whereas across the ditch in the EU hen-house, feathers are flying over delivery failures. The wily pharmaceutical fox is firmly in charge of production.
Despite the delays, patent law stops the world engaging other manufacturers. Small countries, poor countries and now even the rich countries are hamstrung and waiting in queues.
There’s nothing like a vaccine roll-out to demonstrate the very worst of capitalism, nationalism and weak multilaterism.
We have a delivery scandal and a fair-access scandal in the news, but there’s also a much bigger mess simmering alongside it. Payments.
Why is there no pricing transparency?
What did Kiwis pay for our vaccines and what commercial clauses did we sign? The question lies at the very heart of consumer rights and the fair treatment of taxpayers around the world.
Seven billion of us, in our various hen-houses, have let a tiny number of companies take control. Much to the relief of the fox, there’s plenty of smoke to hide the feast taking place.
We plunder on, with deaths, worldwide lockdowns, reduced human contact, closed schools, no travel, mass retail closures, ballooning debt in every country and devastating economic consequences for small businesses.
And why? So a handful of the world’s big pharmaceutical companies can continue to operate using their “customary contractual terms” in the open market. Translation; secret pricing; control of production; patent protection and liability protection.
Have we gone mad? No government or collection of governments has turned the mirror on the bushy tailed hounds.
This is not a call for the nationalisation of pharmaceutical companies or the stripping out of profits. It’s about rebalancing power and transparency. We need to pressure our politicians. Why can’t they collectively change the framework?
The pandemic has created demand for a product that seven billion humans require at the same time (minus the anti-vaxxers and immunocompromised). It’s possibly the largest market segment ever offered to so few companies.
This is no ordinary transaction and should not be treated as one.
To date, governments worldwide have invested around US$12 billion (NZ$16 billion). Taxpayer money was used as cotton wool, removing large amounts of financial risk from pharmaceutical companies. In some cases all the risk was removed. Unbelievably, politicians went on to sign contracts with secret pricing and full patent rights remaining in corporate hands.
Giving up control to an oligopoly is nothing short of a calamity.
In New Zealand we read the words “the cost has not been disclosed” and alarm bells didn’t ring. We collectively accept these non-disclosure agreements. We don’t question the negotiating power of our government or their ability to stand together with other like-minded allies and demand fair terms.
So what types of information have the bushy tailed bandits demanded confidentiality over? Well, pretty much everything.
1. Price per dose: This can’t be revealed and some have confidentiality penalties where supply can be stopped if they reveal the price.
2. Delivery schedule: What level of flexibility exists? What are our exit clauses if it takes too long?
3. Over-ordering: Wealthy countries ordered multiples of their population-base to hedge their bets on the efficacy trials, but appear to have signed away control of the leftovers.
4. Liability protection clauses: Given the short time to market the US offered full protection from liability (of a vaccine having side-effects) to each pharmaceutical company. But for how long? The Europeans are rumoured to have a few exclusions.
5. The modeling behind discounts: Governments can’t disclose how their pre-orders, liability protection and funding of research translated into discounts.
Secrecy over costs makes fair pricing difficult
Companies have not faced regulations to allow for these extraordinary market conditions. Secrecy is allowed over the cost of clinical trials, the cost of research and development, production costs and the content of licensing agreements. It all hinders our ability to calculate a fair price.
Production and patents – a serious flaw
Patent rights put the control and speed of production in the hands of Big Pharma. This directly impacts the resumption of our civil liberties and the damaging debts every country is incurring. If governments jointly wield their power, vaccine factories could operate in every region of the world. We need to demand the use of all skilled manufacturers, not just a few tightly controlled out-sourcing agreements.
Leaks and legals
Already in Europe and the US many pricing terms have been leaked. Bless the woman at the EU who accidentally tweeted them all. And thanks to the dust-up with AstraZeneca we now have some insight into contracts.
Some companies like AstraZeneca operate a not-for-profit model. For a length of time rich countries will only pay the cost price of a vaccine. This remains in perpetuity for middle and poor income countries. Yet the details remain murky. How do we audit that promise and who is controlling the distribution strings? Is there an independent body deciding when a profit-taking model begins? There are murmurs AstraZeneca may have this ability from July 2021.
Governments have scored an own-goal by making vaccines free. It’s a great policy decision, but the unintended consequence is we lose interest in consumer rights and forget we are all taxpayers funding this. It is almost impossible to believe an entire planet of consumers have been granted so little transparency.
Janine Starks is the author of www.moneytips.nz and can be contacted at moneytips.nz@gmail.com. She is a financial commentator with expertise in banking, personal finance and funds management. Opinions are a personal view and general in nature. They are not a recommendation for any individual to buy or sell a financial product. Readers should always seek specific independent financial advice appropriate to their own circumstances.