Borderless COVID-19, Restricted Vaccines: Assessing the global pricing of vaccines and treatments
By Ashveena Gajeelee, Mansa Shroff and Quentin Palfrey
On April 28, 2020, Global Access in Action hosted a webinar on Borderless COVID Restricted Vaccines with Quentin Palfrey, John Stubbs, and Ashveena Gajeelee.
COVID-19 has infected more than 8.92 million people and killed at least 467K worldwide. There is a need for the international community to coordinate a global trial on the safety and efficacy of therapeutics for COVID-19. In her introductory remarks, Ashveena Gajeelee spoke about the challenges the low- and middle- income economies face in dealing with both public health and an economic crisis. The international community has called for global cooperation to ensure access to the COVID-19 vaccine by all as well as a better structure for the distribution of medicines, PPEs, and other medical supplies. OECD countries face many health challenges, including a lack of health professionals, inadequate infrastructure, and supplies of medicines, making it even worse with developed countries hoarding supplies.
While the pandemic was slow to reach Africa, the impact of the Covid-19 on many countries cannot be underestimated. Quentin Palfrey spoke about the already existing disparities in healthcare around the world. For example, a child born in Cambodia is 18 times more likely to dies under the age of 5 than in Iceland; and some 60% of people living with HIV still do not have access to quality of care. However, this situation does not undermine the progress made over the past decades in global health: the global social contract of the MDGs in 2000, the rate of death of children under five falling by half; and new HIV/AIDS infections decreased by 38% between 2000 and 2013 are all signs of how the global community can make an impact in healthcare.
The World Health Organization, European Commission, Bill and Melinda Gates Foundation, CEPI, GAVI, Wellcome Trust, Unitaid, and Red Cross are coming together to ensure equal access to medicines across the globe. Such a model has been successful in the past as in the case of HIV, with PEPFAR and Global Fund contributing to the funding and driving fierce competition with Gilead. This eventually led to innovation in the manufacturing of HIV products, which significantly drove down the cost of those products. A similar model could be used for COVID-19.
This global social contract is being challenged. As we come together as a global community, some of the major players under the Covid-19 pressure are trying to tackle the pandemic on their own. Some voices, including President Trump, has pushed a nationalist approach arguing against progressive pricing. Palfrey argues that progressive pricing of pharmaceuticals is analogous to progressive pricing in taxation, with residents being taxed on a sliding scale with the rich paying more taxes. Therefore, insisting that Mozambique pays the same price for the Covid-19 vaccine as Norway can only lead to decreased access and work against the control of the pandemic.
OECD countries have different hurdles. Access and volume of Personal Protective Equipment (PPE), diagnostics, treatments, trained health care workers are of greater concern than pricing. Some significant challenges remain as the international community addresses these issues. Firstly, creating a price that is equitable and fair to ensure net social utility rather than a flat price. Secondly, education is an enormous barrier. Many still question the safety aspect of vaccines. Thirdly, access to medicines is perhaps the most obvious, followed by financing. COVID vaccine is estimated to cost about $2 billion. As of now, CEPI has managed to raise just about under $1.4 billion. To make it equitable, global governments will need to have a reimbursement program or insurance mechanism that isolates the rational consumer model from working in the health care context.
John Stubbs spoke about the complexity of the pricing of medicines and the implications of pharmaceutical spending across the OECD countries. The United States spends far more on pharmaceuticals than any other OECD country, more than 2% of its GDP close to Japan and Canada. Stubbs argued that there should be a difference in how we price medicines in the US compared with other countries with a much lower GDP per capita. The current system in the US also allows different prices for the same medicines backed by discount programs, a system that delivers greater access to the population.
Panelists discussed many pertinent issues brought by the participants, including how many drug companies spend more money on marketing than on R&D; the need to focus on progressive drug pricing across countries rather than reducing the prices across the board and how we could reduce the patentability of drugs based on public funding.
Gajeelee brought out the challenge the international community is facing in funding the Covid-19 vaccine. The Coalition for Epidemic Preparedness Innovations (CEPI) estimated that the vaccine’s development would cost $ 2 billion. Drug development for the Covid-19 vaccine and related therapeutics in the case of the pandemic cannot be treated as a normal process, given the urgency. Panelists raised the following points that should be considered:
- Governments should tie the funding of the Covid-19 vaccine to some criteria such as advanced market commitments. Advance market commitments are another mechanism that has previously been successful in the pneumococcal space. For instance, a certain amount of purchases at a specified price for a certain period can be exchanged for a commitment; beyond that period, a fair price will be charged in the poorest countries;
- the types of funds that can be created for manufacturing and distributing the vaccines to the world. The pooling of resources to foster research and development post-Ebola epidemic is a lesson countries learned;
- Patent force often leads to anti-competitive behavior. Pharmaceuticals involved in developing a vaccine may collude, hence defeating the very purpose of making the vaccine accessible — government bodies would need to step in and monitor anticompetition or antitrust. Johnson and Johnson estimates that it can produce a billion doses annually if the vaccine is effective, and that’s a fraction of the global population, meaning billions will go without timely access.
- Intellectual Property is another challenge. There is a race to develop a vaccine creating a form of price competition. A viable option is a licensed technology that could be sold through Medicines Patent Pool, which has been used effectively in the past for HIV. Patent pools could make it easier for governments, charities, and intergovernmental organizations to negotiate with a larger pool of patent holders without as much friction, without as many transaction costs, and to come to arrangements that will allow for what will rapidly distribute medicines. Distribution and manufacturing in developing countries will be a challenge; there is certainly going to be a need to spin up many market participants there along with incentives for the research and development to happen at an extraordinarily compressed time scale of about 18 months.
- How to incentivize innovation without hindering the research and development component and still drive investments. Patent innovation is more of a one size fits all. Palfrey discussed the models that exist in other sectors. For instance, the USPTO could be given rule-making authority to adjust incentives structure to specific sectors
- How will the price and distribution of the Covid-19 vaccine be decided: the need for restoration of the social contract. While the pricing barrier is one of the critical factors to access, the other main barrier is the inefficient delivery to the populations and healthcare personnel. Three imperatives will dictate the creation of a viable vaccine: speed, manufacturing deployment, and global access — and international communities will play a huge role in this.
More: Don’t Price Poor Countries Out of the Market For COVID-19 Vaccines & Treatments, Quentin Palfrey.
The Global Access in Action (GAiA) seeks to expand access to lifesaving medicines and combat the communicable disease burden that disproportionately harms the world’s most vulnerable populations. GAiA accomplishes this by conducting action-oriented research, supporting breakthrough initiatives, facilitating stakeholder dialogue, and providing policy advice to pharmaceutical firms on best practices to increase impact. GAiA has worked on several pricing strategies, including advising African countries on how to improve their regulatory framework and policies to increase access to medicines.
