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Nations race to buy coronavirus vaccines

August 20, 2020

Nations around the world are pledging billions to buy COVID-19 vaccines even before they have proven to be successful. DW explains how advance-purchase deals work and why they are stoking vaccine nationalism concerns.

A representational image showing the world being given a vaccine shot
Image: picture-alliance/dpa/Geisler-Fotopress

Several nations have already agreed to buy millions of doses of vaccines even before they have been approved. Most of the countries, led by the US and the UK, are striking advance-purchase agreements with several drug companies to increase the odds that they have at least one successful vaccine as early as this year. 

The vaccine being developed by British-Swedish drugmaker AstraZeneca and the University of Oxford has so far managed to score the maximum deals. 

What are advance vaccine purchase agreements? 

Advance Vaccine Purchase Agreements (APA) or Advance Market Commitments (AMC) are deals that governments, international organizations, private companies, or public insurers strike with vaccine makers to procure a substantial number of doses of vaccines — even before they are ready. The idea is to incentivize vaccine companies to produce certain vaccines that they feel may not be profitable enough or may not have a big enough market. The agreements give drugmakers security to invest in R&D and scale up the production of vaccines.

APAs are especially crucial for poorer nations, which often see pharmaceutical giants look the other way when it comes to spending on infectious disease outbreaks in low-middle income countries. Bulk vaccine purchases by governments and international organizations also help bring down their price.   

The terms of APAs vary from deal to deal. In many cases, the payments to vaccine companies are contingent on the success of their vaccine, as is the case in most of the recent government deals to procure coronavirus vaccines. There are also instances when the investments are not subject to the clinical success of the vaccine, so if a vaccine does not get regulatory approval, both the sponsor and the drugmaker lose money.  

Several countries and organizations, such as the United States and Geneva-based Gavi vaccine alliance, are investing in the so-called at-risk manufacturing of COVID-19 vaccines, which means they are funding vaccine makers to start mass-producing vaccines while they are still being evaluated in clinical trials.

"If we don't undertake 'at risk manufacturing,' then when the vaccine is successful in clinical trials, there will be a long delay (estimated to be almost a year) from the time of that clinical success to the scaling-up of production," a Gavi spokesperson told DW.

Vaccine development and manufacturing typically occur sequentially, and it can take an average of seven to 20 years for a vaccine to be developed and scaled up for widespread use. Gavi expects upfront payments to help compress the COVID-19 vaccine development time frame to 12-18 months by securing raw materials and kick-starting manufacturing scale-up and vaccine production during development. 

Which countries have struck agreements for COVID-19 vaccines? 

The US is by far the most aggressive when it comes to scoring deals for coronavirus vaccines. The country, the worst hit by the pandemic, has committed nearly $10 billion (€8.5 billion) to procure at least 700 million doses of vaccines.

That sum includes $1.2 billion earmarked for at least 300 million doses from AstraZeneca, $1.5 billion for 100 million doses of Moderna's mRNA-1273 vaccine, $1.9 billion for 100 million doses from Pfizer and German startup BioNTech, $2.1 billion for 100 million doses from Sanofi and GlaxoSmithKline (GSK), as well as $1.6 billion to be spent on 100 million doses from Maryland biotechnology company Novavax.

The United Kingdom is next in line. The country, which has the highest coronavirus death toll of any European country, has secured at least 250 million doses from various vaccine makers — nearly four times its population of 66 million and caused by uncertainty over which of the experimental vaccines may work. The UK has deals to procure vaccines from Sanofi and GSK, Pfizer and BioNTech, and AstraZeneca.

The European Union, which came late to the party, has agreed to buy at least 300 million doses of AstraZeneca's vaccine in its first such advance-purchase deal. The bloc is in talks with Johnson & Johnson, Sanofi and GSK, Pfizer, and Moderna for their vaccines under development. The European Commission said on Thursday it was in advanced talks with Curevac, partly owned by the German government, regarding the purchase of 225 million doses of its vaccine.

Some other rich countries, such as Japan and Australia, have also signed advance-purchasing deals. Tokyo has secured 120 million doses from Pfizer and BioNTech, while Canberra has agreed to procure AstraZeneca's vaccine. China, so far, seems to be betting on homegrown vaccines, at least three of which are in late-stage clinical trials.

Russia has approved its locally developed COVID-19 vaccine, Sputnik V, even before the completion of its phase-three trial that involves testing on thousands of people. But that's not deterring governments from signing up for it. Vietnam is reported to have registered to buy 50 million to 150 million doses of the vaccine. Kirill Dmitriev, head of the investment fund that financed the development of the vaccine has said that there are already preorders for 1 billion doses of the vaccine from some 20 countries.

Why are these deals stoking vaccine nationalism concerns? 

The aggressive deal-making by rich countries to secure vaccines for their people has led to concerns that the poorer nations may be left behind. The World Health Organization has warned against this "my nation first" approach.

"Vaccine nationalism is not good, it will not help us," WHO chief Tedros Adhanom Ghebreyesus said earlier this month. "For the world to recover faster, it has to recover together, because it's a globalized world: the economies are intertwined. Part of the world or a few countries cannot be a safe haven and recover."

Gavi has created the COVID-19 Vaccine Global Access (COVAX) facility to ensure fair global access to coronavirus vaccines. The facility would enter into advance-purchase agreements with pharmaceutical companies to secure vaccines. More than 150 countries — 75 of which would finance the vaccines from their own public finance budgets while the rest would be supported by donations — have signed up so far. Less than half of the OECD countries have joined the facility and they don't include the US, Germany, or France. 

The European Commission has urged EU states not to join the WHO-backed facility, Reuters reported. The Commission has however said vaccines bought from AstraZeneca, and from other vaccine makers, could be donated to poorer countries, the news agency said.

The facility has struck a deal to procure 300 million doses from AstraZeneca. It is also providing upfront capital to India's Serum Institute, the world's largest vaccine maker by volume, to accelerate the manufacture and delivery of up to 100 million doses.

"Both fully self-financing and AMC-eligible [COVAX Advance Market Commitment] countries will receive an equal dedicated proportion of vaccine supply, in tranches, as soon as doses become available to the Facility — in order to protect high priority groups within their populations," the Gavi spokesperson said. 

Ashutosh Pandey
Ashutosh Pandey Business editor with a focus on international trade, financial markets and the energy sector.@ashutoshpande85