Failure to improve access to Covid-19 vaccines in the developing world could cost the global economy more than US$9tn, trade experts are warning, as formal talks resume on a suspension of patent rules to ramp up production.
In a statement issued after its quadrennial conference this month, the UN Conference on Trade and Development (UNCTAD) says the pandemic “will continue to undermine global and regional supply chains… unless vaccine access is boosted in developing countries given that production systems are interconnected”.
Citing comments from John Denton, secretary-general of the International Chamber of Commerce, it says the global economy is expected to lose US$9.2tn if access to vaccines is not widened. Developed countries are expected to shoulder around half of that cost.
Elisabeth Winkelmeier-Becker, state secretary in Germany’s economic affairs and energy ministry, said at the same event that the country planned to provide 100 million doses to poorer nations.
“If the recovery is to be more equal, it will be important to substantially improve the supply of vaccines to poorer countries,” she said.
However, there remain major concerns around access to vaccines in non-producing countries.
The International Federation of Pharmaceutical Manufacturers & Associations (IPFMA), whose members include some of the world’s largest pharma companies, estimates that by January next year there would already have been sufficient numbers of vaccines produced for every adult in the world.
Yet achieving full adult vaccination by mid-2022 requires “urgent political leadership and coordinated action to remove delivery and administration bottlenecks in many environments”, IPFMA says.
One issue is that World Trade Organization’s (WTO) intellectual property rules currently prevent companies around the world from manufacturing their own versions of existing Covid-19 vaccines. As a result, supply is reliant on major producers such as Pfizer and Moderna.
The WTO’s Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) appeared to have moved closer to a temporary suspension of those rules in June this year, announcing it would begin negotiations on a waiver text.
Supporters of the proposal – tabled by the governments of India and South Africa last year – say a waiver would allow producers in developing markets to manufacture vaccines without fear of infringing patents.
But since then, investigative publication In These Times has revealed fears among US delegates to the WTO that there has been a loss of momentum on the proposals.
Formal talks on a potential waiver resume this week after a three-month hiatus, and there remains resistance from European representatives including the UK, Germany and Norway, with the EU favouring a compulsory licensing scheme instead.
Those against suspending patent rules argue doing so could hold back innovation and add unnecessary complexity to the global supply chains needed to manufacture vaccines.
Human rights group Amnesty has decried the lack of progress, however, issuing a statement in early October arguing the inaction is driven by greed. It pointed out over 3.5 million people have died from Covid-19 since the waiver was first proposed.
“It is simply shameful that a handful of wealthy governments continue to monopolise vaccine supply while consistently opposing attempts to free up intellectual property rights that would enable other states to fulfil their obligations to protect their people,” it says.
“The UK, Norway, Switzerland and the EU – including Germany – are still selfishly blocking the TRIPS waiver while other countries continue to waste time and prevaricate.”
There are additional potential concerns around scaling up vaccine production for the developing world.
Boston University’s Global Development Policy Center – a strong supporter of the TRIPS waiver proposal – argues in a recent paper that other measures will also be required to boost manufacturing.
It says potential producers in developing markets will need access to technology and know-how from vaccine originators, as well as the waiver on intellectual property rules.
Transferring that technology to regional manufacturing hubs is “the second pillar towards increasing vaccine production”, it says, citing World Health Organization research identifying 19 manufacturers across Africa, Asia and Latin America that would be interested in ramping up production if technologically possible.
The paper also calls for robust financing. Globally, financial support for vaccination has largely been funnelled into the cross-industry Covax facility, which purchases doses on behalf of countries “sometimes at a higher price than bilateral purchase agreements”.
“Vaccine monopolies are making global vaccination at least five times more expensive than it could be if products were sold at cost price,” it says.
Oxfam has estimated that Pfizer/BioNTech and Moderna have charged governments US$41bn more than the cost of production for vaccines. Colombia, for example, “has potentially overpaid by as much as US$375mn for its doses… in comparison to the estimated cost price”.
The Boston University paper, authored by Katie Gallogly-Swan and Rachel Thrasher, says hundreds of billions of dollars recently made available to International Monetary Fund members – via its special drawing rights asset programme – could be channelled into financing a scale-up of production.
It also notes proposals to levy a windfall tax on firms that have benefitted heavily from the pandemic, estimating a one-time emergency “billionaire tax” could raise more than US$5tn while still leaving those taxed US$55bn richer than before the virus struck.
The WTO has recently issued a warning over tariffs and bottlenecks in vaccine production supply chains, calling for international cooperation on reducing barriers to trade of vaccine inputs.
“Tariffs on critical products to manufacture vaccines remain high, especially in some developing countries, and might impede the flow across borders and/or increase the cost of vaccine manufacturing,” it says.
Importers in Argentina, India and Iran face average tariffs of at least 5%, it says, while 23 of the 27 largest manufacturers have at least five supply chain “choke points” that are increasing costs and limiting the expansion of production.