As global demand for a Covid-19 vaccine dried up, the program responsible for vaccinating the world’s poor was urgently in talks to try to get out of agreements with pharmaceutical companies on vaccines they no longer need.
Drug companies have so far refused to refund $1.4 billion in upfront payments for now-cancelled doses, according to confidential documents obtained by The New York Times.
Gavi, the international vaccination organization that purchased the shots on behalf of the global Covid vaccination program, Covax, has made little public about the cost of canceling orders. But Gavi’s financial documents show the organization is trying to fix the financial damage. If a more favorable agreement cannot be reached with another company, Johnson & Johnson, it may have to pay more.
Gavi is a Geneva-based NGO that uses funds from donors including the US government and the Bill and Melinda Gates Foundation to provide immunizations to children in low-income countries low input. Early in the pandemic, it was tasked with procuring a Covid vaccine for developing countries — armed with one of the largest ever humanitarian fundraisers — and began negotiations. with vaccine manufacturers.
The negotiations went badly from the start. Initially, companies removed the organization from the market, favoring high-income countries that could afford to pay more to lock in the first doses of the drug. Gavi eventually reached an agreement with nine manufacturers.
But the vaccinations didn’t start reaching the developing world in significant numbers until mid-2022. By the time Gavi had a steady supply, demand was starting to fall: countries had health systems. Weak economies struggled to provide vaccinations, and the dominance of the milder Omicron variant has dented people’s motivation to vaccinate. Now, Covax is scroll down It is far from reaching the goal of immunizing 70% of each country’s population.
Vaccine manufacturers have raked in more than $13 billion from injections distributed through Covax. Under the contract, the companies are not obligated to return prepayments Gavi gave them to stockpile vaccines that were eventually cancelled.
But given how many doses of the vaccine Gavi had to cancel, some public health experts criticized the companies’ actions.
Thomas Frieden, executive director of global health nonprofit Resolve to Save Lives and former director of the US Centers for Disease Control and Prevention.
“It’s a large amount of money that can do a lot of good,” he said.
He added that other major global health programs have budgets close to what vaccine manufacturers are holding. “The whole polio eradication effort costs about $1 billion a year, and that’s a huge infrastructure,” he said.
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The documents show that Gavi had reached agreements with Moderna, the Serum Institute of India and several Chinese manufacturers to cancel unnecessary dosages, waiving a $700 million advance payment.
Another pharmaceutical company, Novavax, is refusing to refund another $700 million upfront payment for injections it never delivered.
Gavi and Johnson & Johnson are got into a heated dispute over payment for the footage Gavi had told the company months ago that they wouldn’t need it, but which the company still produced. Johnson & Johnson is now asking Gavi to pay an additional undisclosed amount to them.
Gavi has an indirect supply relationship with Pfizer; The Biden administration purchased a billion photos from there to donate through Covax. United States last year amend its agreement with the company, converting the 400 million dose order into future options. The company says it doesn’t charge any fees to change orders.
The terms of Gavi’s transactions are kept secret because they are done with private companies. There is no public accounting of how much money pharmaceutical companies have made from canceled vaccines.
The documents say that the manufacturers collectively made $13.8 billion in sales from vaccines distributed through Covax. Nearly 1.9 billion doses have now been shipped to 146 countries. More than half are bought directly by Gavi and the rest are funded by high-income countries.
According to the documents, Gavi’s agreements with Moderna and Serum took into account that manufacturers had to bear costs such as the cost of raw materials.
In a deal to cancel more than 200 million doses reached late last year, Gavi agreed to allow Moderna to keep an advance payment it had made. In return, Gavi was freed from having to make any additional payments for the doses, meaning they were canceled at a “significantly lower” cost than expected, according to the documents. . Moderna has also granted Gavi a credit of $58 million for future products, a credit valid through 2030.
Gavi also made concessions to withdraw from the agreement with Serum Institute of India. Gavi canceled 145 million doses by allowing the company to withhold the amount Gavi had prepaid to cover the cost of purchased materials. Serum also gave Gavi a credit note for an undisclosed amount that the organization could use to purchase a variety of routine vaccinations it purchases from Serum each year.
Moderna and Serum declined to comment on the terms.
Gavi and Johnson & Johnson are at odds over the 150 million doses of the Covid vaccine that Gavi ordered but managed to cancel for months.
Gavi had expected a significant portion of those doses to be distributed by the end of 2021, but Johnson & Johnson has delivered under 4 million doses theretofore. (Gavi’s contract with the company does not require the company to complete deliveries by that deadline.) When the company was finally ready to ramp up deliveries last year, demand plummeted.
Gavi administrators informed the company in mid-2022 that they would not need those dosages and asked the company to stop manufacturing new injections for Covax, according to the documents.
However, Johnson & Johnson is continuing to shoot the scenes and is looking to deliver by the end of 2022, according to the documents. Now, according to the contract, the company wants Gavi to pay more and receive the vaccine.
The documents say Gavi has proposed that the dispute be brought to mediation, but the company “has so far refused to engage in meaningful negotiations.” Some controversial vaccines have expiration dates as early as mid-2023.
Jake Sargent, a spokesman for Johnson & Johnson, said the company supplied Covax with ordered dosages and informed Gavi of production details.
In negotiations with Novavax, Gavi is seeking a refund of the $700 million it spent on prepayments for the scenes.
Gavi used to expectations Novavax deliveries will begin as soon as summer 2021, but the company has already stalled its vaccine production. As a result, Gavi did not place an order for the vaccines it had originally ordered. Novavax said this was a breach of contract and cancel the agreementretain $700 million.
The dispute has not been resolved. Novavax spokesman Alison Chartan said the company is hoping to negotiate a new deal to supply its vaccine to Gavi.
Several vaccine contracts signed by Gavi have been completed. In one case, AstraZeneca refunded Gavi when the final production cost was lower than expected.
If some vaccine manufacturers are not willing to renegotiate their contracts with Gavi, the costs to the organization could be much higher. The documents show that Gavi paid $2.3 billion for the doses it wanted to cancel, but it saved $1.6 billion by getting out of those contracts.
Gavi spokeswoman Olly Cann said the organization made no new payments related to dose cancellations. He said the advance payments returned were only a fraction of what Gavi should have paid for the completed doses.
Dr Seth Berkley, chief executive officer of Gavi, declined to comment for this article. But in an interview in December about the future of the global Covid vaccination program, he said Gavi is paying less per dose than originally planned for the vaccine, and significantly less than other companies. high-income countries paid for their injections.
Donations for Covid shots have greatly inflated Gavi’s budget, and the lost upfront payments for canceled Covid vaccines do not threaten his routine childhood vaccinations. it.
The contracts Gavi is trying to scale down were negotiated during the uncertain early months of the pandemic, in some cases before a vaccine was proven to work.
“During a pandemic, I’d rather make the mistake of buying too much, than the mistake of not having enough, especially when countries feel that there aren’t enough doses in the first place.” Dr. Berkley said.
Wealthy nations, who ordered more dosages than they needed, tried to shift their surpluses to Covax, which had struggled to absorb them.
Covax starts shipping to developing countries in 2021, but the pace is slow at first. When the program finally had a vaccine, the shots give challenges that weak health systems are ill-equipped to manage.
Frustrated by erratic supply, some public health agencies have done little to create demand for vaccines, while a wave of misinformation keeps people from looking for them. Sub-Saharan Africa remains the world’s least-vaccinated region, but has reported Covid mortality in the region relatively low, this has further eroded interest in the photographs.
Dr Andrew Mulwa, who is overseeing the Covid response at Kenya’s Ministry of Health, said: “We’ve had a lot of requests for donations but we don’t accept them because we don’t want them to expire here. “We wondered, do we need to continue to spend money on administering a Covid-19 vaccine when we have another clear disparity?”
Gavi is sitting on a vaccine stockpile and expecting millions more to be donated from high-income countries looking to eliminate their own oversupply. The organization predicts a maximum demand of 450 million doses this year — half of what Covax has shipped in 2022.