Covid Road to Hell Paved with Good Intentions

Yves here. The US press has spilled some pixels on the concern that the poor and minorities will have less access to Covid vaccines. That is particularly troubling since they are most exposed to Covid, both risk of contagion (high representation in front-line worker jobs, greater odds of living in crowded housing) and adverse outcomes, due to health/access to medical care being correlated with income. The US media has been far less interested in the fact that many poor countries will be in the back of the line in being able to procure Covid vaccines, and can’t afford to build costly cold chains for the Pfizer and Moderna mRNA offerings.

The underlying problem is that the drug companies are not even making a pretense of moderating their profit goals with some price concessions to developing countries.

By Jomo Kwame Sundaram, a former economics professor, who was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Originally published at Inter Press Service

Access to COVID-19 vaccines for many developing countries and most of their people will have to wait as the powerful and better off secure earlier access regardless of need or urgency. More profits, by manufacturing scarcity, will surely cause even more loss of both lives and livelihoods.

Good Intentions Not Enough

To induce private efforts to develop and distribute vaccines, the WHO initiated COVAX to ensure more equitable access to COVID-19 vaccines. However, interest by vaccine companies has been limited, while some governments – especially from better-off upper middle-income countries – pursue other options.

COVAX has been co-led with GAVI, the Vaccine Alliance, and the Coalition for Epidemic Preparedness Innovations (CEPI). Buoyed by their earlier success with advance market commitments (AMC), they have extended the same approach in very different circumstances.

AMC was originally conceived to induce the development of vaccines for ‘neglected diseases’. Such infectious diseases remain threats in poor countries and among poor people. Hence, prospective sales revenue was believed to be too small for needed investments by profit-seeking vaccine companies.

By guaranteeing and subsidising sales, the AMC effectively promises the vaccine developer to make the research and development effort profitable, typically with early payments and subsidies to enhance the inducement.

No One Size Fits All

In the Covid-19 pandemic context, however, the COVAX AMC is not a ‘white knight’ coming to the rescue of an orphaned, typically tropical disease. Instead, it competes with other buyers, mostly of greater means.

To put it bluntly, the Covid-19 pandemic context is quite different from the ‘neglected diseases’ problem which the AMC was conceived to address, i.e., contemporary Western R&D efforts presumed to be driven primarily, if not exclusively by the prospect of profits.

The highly infectious ‘aerosol-borne’ virus quickly achieved a global reach. Apparently more likely to be lethal with advancing age, mass vulnerability to infection ensured a broad, inclusive, international market for Covid-19 vaccines from the outset.

Recognising the extent and impact of the pandemic threat, vaccine developers expect to sell their vaccines very profitably. They made advance sales to many rich-country governments, rather than, or even while committing to COVAX. Unsurprisingly in these circumstances, the COVAX AMC approach has not worked well, let alone equitably.

The companies did not require AMC advance purchases to start their efforts. Expecting the WHO to protect their interests, participating developing country governments, mainly of upper-middle income economies, have generally not worked together to push for further price moderation.

COVAX Subverted

Advance Covid-19 vaccine purchases by many rich country governments are not only greatly in excess of their population requirements, but also not made in a transparent manner conducive to improving equity.

Unsure of the efficacy and effectiveness of the often still experimental vaccines, some booked, paid for and now demand far more than needed by their populations. Thus, COVAX has been subverted by rich country government actions.

Ironically, instead of protecting and promoting the interests of the poor, the public interest and the common good, the COVAX AMC has served to set floor prices. Arguably, COVAX has ensured profits for vaccine companies without addressing the ‘only money talks’ problem and competitive ‘vaccine nationalism’.

To ensure a ‘people’s vaccine’ available to all, Acharya and Reddy have proposed public financing to develop or buy over vaccine formulas. This can ensure patentable and other relevant information is freely shared, enabling generic vaccine producers to greatly increase supply at much lower prices.

As rich country governments have already paid much to accelerate vaccine development, they can more easily secure and share the thus far undisclosed information needed to greatly and affordably scale up generic vaccine output.

As vaccine developers do not really expect much revenue from selling vaccines to the poor, such ‘generosity’ would cost them little, while earning them and the enabling governments priceless appreciation and goodwill in the process.

Way Out

The best way forward now involves approving the TRIPS waiver at the WTO, which the Trump administration, the EU and some allies, such as Brazil, have stubbornly blocked.

The TRIPS waiver – sought by developing countries led by South Africa, India and Pakistan – seeks to temporarily suspend several TRIPS provisions on patents, design and protection of undisclosed information.

The Biden administration has shown renewed commitment to multilateralism by re-joining the World Health Organization (WHO). It can demonstrate leadership by not only lifting the US embargo on exports of vaccines, vital medicines and equipment, but also advocating strongly for the TRIPS waiver proposal at the WTO.

US taxpayers have already spent many billions to accelerate private vaccine development and distribution. Vaccines for the world can be greatly increased, at little additional cost, by working with the rest of the world, as Chinese researchers did by sharing the virus’ genome sequence with the world within a fortnight of its discovery over a year ago.

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  1. Larry

    I’m heartened by the news that the Sputnik vaccine has proven to be so effective. Russia seems far more likely to share this with nations in need and it will be easier to deliver ship and make.

    The elite in the west know that if the facade of profit motive driving innovation is ever removed, it will be extremely hard to replace. The scientists who drive this innovation are not principally motivated by profit, and won’t be the principal beneficiaries of the massive profit seeking.

    1. rosemerry

      Now that the EU is even deigning to try the Sputnik vaccine after the delays in the expensive Pfizer and Moderna orders, we may hear a little more about the vaccines from China, Russia and Cuba which are in great measure being provided to poorer countries in great need. The arrogance of the rich countries assuming their vaccines are of course superior may soon be tested.

  2. VietnamVet

    The human mind really does not like unpleasantness and trauma, it is so much easier believe in good intentions. But if others violate this, it causes fear and rage. This is the cause of the obvious divisions in the US Capitol since January 6th. There is no way to address sedition peacefully while the nation is failing to control the pandemic and the economic depression.

    A catastrophe has struck Manaus Brazil. Patients are dying due to the lack of oxygen. This is North and South America’s future with the coronavirus endemic and mutating. The city had been thought to be near herd immunity before the latest wave, likely a new variant, hit and proved it false:

    Vaccines alone are no guarantee that coronavirus will be eradicated. They do insure huge profits for Big Pharma. Corporate Media is shilling for more shots while nursing home workers are reluctant to get vaccinated. Yet, Australia and New Zealand have reopened the air travel bubble between the two nations thanks to strict public health measures. The virus can be controlled. But it takes a united country, war-footing, and a national public health campaign that makes the Biden Plan seem worse than half-assed.

    What is preventing victory and a return to normal is incompetence, corruption, denial, and greed. If variants get established in the USA, a million Americans could die.

    “Profit over lives” means the end of the Union.

    1. Irrational

      Everywhere has their variant of incompetence in this pandemic.
      In the EU, it was talking for so long that vaccine deals were signed 3 months after other advanced economies on ridiculous terms and right now we have extremely limited supply thanks to that.
      We are very fortunate: both of us can work from home, so our main gripes are when can we see something other than our 4 walls and will we ever see our relatively parents (in another EU country and in the US) again?
      The in-laws in the US had their first shot last week.
      I am not sure who is doing worse between the EU and the US on this issue!

  3. LowellHighlander

    As an economist, I wish to point to something fundamental about this whole situation: the academic discipline’s systematic inculcating of ideology from the first course in economics at universities and colleges. Specifically, the vast majority of economists (trained in the U.S., at least) drum out the concept, and indeed the word, “need”. This still happens, I’m sure, even though 3 economists have defined needs: Professor Mark Lutz (Professor Emeritus at the University of Maine), the late Robert E. Prasch (former Professor at Middlebury), and of course Professor John Kenneth Galbraith. [Wishing to keep this post short and to the point, I’ll refrain from citing their publishing on this concept, unless someone writes back to ask for them.]

    Perhaps needless to say, we might be having a whole different conversation here if the concept of needs had been systematically inculcated into economics students’ thinking. For example, why should private entities be in charge of any aspect in this fight against the virus when economists can plainly see that the elasticity of demand for a vaccine will be off the charts [because people need this vaccine, or else their personal welfare curve would be in great jeopardy of falling – to an untimely death]? The chance for making a killing in the market (pun intended) under the current market structure, world-wide, of pharmaceuticals is obvious to anyone, at least anyone who hasn’t been well trained not to see that, apart from “wants”, people have legitimate and compelling needs, which cannot be left to a market alone.

    1. Susan the other

      AOC made this exact point during House hearings over a year ago. She is very eloquent. Everyone got the message about inelastic demand, etc. Good old American extortion at this point. I’m thinking that since we have given private Big Pharma every consideration and allowed them to impoverish us all without demanding anything from them in return, we should now wash our hands of them completely, create Pharma for the People as a government run enterprise, and ask the privateer pharmaceutical companies – if they complain – to design a vaccine for the killer-disease known generally as Greed. Let them drink hemlock.

    2. Darthbobber

      The 2 economics courses that were the college norm for non-economics majors (1 micro, 1 macro) were the worst for inculcating the ideology. “Need” where it arises is treated purely subjectively, as in no way distinct from a want or a whim. (all in line with that certain version of freedom. “Nobody else can tell you what you need”, etc etc)

    3. John Anthony La Pietra

      The phrase “a killing in the market” puts me in mind of this song — which, apparently, really is connected to the book. . . .

    4. John Anthony La Pietra

      Pardon me — i should have added the rather related lyrics of the first verse:

      With his fool’s gold stacked up all around him
      From a killing in the market on the war,
      Children left King Midas there — as they found him,
      In his countinghouse where nothing counts but more. . . .

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