Covid Hit These Countries Hard. Now They Face Big Vaccine Bills

LAGOS (Capital Markets in Africa) — Colombia has already paid a steep price in the pandemic with more than 61,000 deaths from Covid-19. Now the South American nation faces another cost: about $850 million to immunize its population.

South Africa, Colombia and other middle-income countries hit hard by Covid have lined up behind richer ones to buy vaccines in hopes of averting more suffering. They’ve pursued cheaper doses from AstraZeneca Plc, as well as far more expensive shots from Moderna Inc.

With an annual health budget of just $10 billion for about 50 million residents, Colombia is one of many countries struggling to afford those immunizations. Health-care advocates have said that drugmakers have the upper hand in negotiations with governments that have limited cash and aren’t eligible for free doses. Emerging details show the extent of the squeeze.

Lacking the means and production capacity of wealthy nations such as the U.S. and Britain, middle-income countries urgently need vaccines to revive their economies and escape the pandemic but must do so with health spending that’s been stretched tight for years.

Countries like Colombia “are against the wall,” said Carolina Gomez, co-founder of an advocacy group at Universidad Nacional de Colombia that works to ensure access to medicines and health technology. “They have no choice but to submit to what the drugmakers say.”

‘Biggest Mismatch’
A health worker carries Pfizer-BioNTech vaccine in Bogota, Colombia.

Covax, a program that aims to deploy shots equitably to every corner of the globe, is helping many poor countries access immunizations by providing doses funded by donors. But it can’t cover the costs for countries like Colombia or supply enough to protect most of a country’s population.

So Colombia has done direct deals with Pfizer Inc., Moderna, AstraZeneca, Johnson & Johnson and Sinovac Biotech Ltd. for doses needed to supplement its purchases via Covax. The country agreed to buy 10 million doses from partners Pfizer and BioNTech SE at $12 each, regulatory filings show.

The government meanwhile is paying about $295 million for 10 million Moderna doses, according to Finance Ministry documents pointed out by researchers from Universidad Javeriana in Bogota. That’s equivalent to almost $30 a dose, although it may include logistics expenses. The cost of 20 million doses through Covax comes to roughly $225 million. The figures take into account some transport costs. Officials declined to provide more details.

High- and middle-income countries will pay more than low-income nations for Pfizer’s shot, but at a significant discount from “normal benchmarks” during the pandemic, the company said. Pfizer said it won’t profit off supplies to poorer countries. Moderna didn’t respond to requests for comment.

Colombia has reported 2.3 million Covid cases, or about two out of every 100 worldwide. Tougher restrictions in major cities, fueled by rising infections at the start of the year, hampered recovery from its deepest economic contraction in history, and the government is planning tax increases and spending cuts.

Carolina Gomez
Middle-income nations face “a particular dilemma,” said Anna Bezruki, a researcher at the Global Health Centre at the Graduate Institute of International and Development Studies in Geneva. With vaccine spending, “you’re taking a big slice of the pie” that could have been devoted to other health-care priorities, she said.

A number of those governments, including Latin American countries like Argentina and Peru, are especially vulnerable, said Thomas Bollyky, director of the global health program at the Council on Foreign Relations. Middle-income nations, excluding China, represented almost half of the global burden of coronavirus cases last month, but only 17% of vaccine doses given, according to a report by the CFR’s Think Global Health initiative.

“It’s middle-income countries where you see the biggest mismatch between an expanding pandemic and a scarcity of vaccines,” Bollyky said. “Distributing different amounts of vaccines to different locations isn’t necessarily unfair, provided that they’re going where they can do the best and where the crisis is the greatest, but that isn’t what seems to be happening.”

South Africa
AstraZeneca and its partner, the University of Oxford, have emerged as key suppliers to lower-income countries, pledging not to profit from them. Yet the vaccine has faced safety and efficacy questions, most recently when a number of European Union countries suspended their use because of concerns about dangerous blood clots. AstraZeneca said that analysis of millions of records has shown no evidence of increased risk, and the World Health Organization has also backed the shot.

South Africa, which budgeted as much as 19.3 billion rand ($1.3 billion) to vaccinate two-thirds of its population, confronted a similar dilemma. After a small study indicated AstraZeneca’s shot offered minimal protection against mild to moderate illness caused by a new variant, it had to change course.

The government agreed to buy doses of both Johnson & Johnson’s single-shot vaccine as well as the Pfizer-BioNTech product at $10 each, according to its health department. It committed $5.25 a dose for AstraZeneca’s vaccine made by the Serum Institute of India Ltd. Moderna offered vaccines at between $30 and $42 per dose, but South Africa hasn’t announced any orders.

‘Extortionate Prices’
The expenses for a country like South Africa or Colombia may not seem like a huge price to pay compared with the size of their economies and the overall cost of the pandemic, but they’re adding to the pain for those governments.

Such payments are spread out across the globe. In another example, Malaysia has estimated its vaccine costs at about 3 billion ringgit ($730 million). The healthy ministry’s 2021 budget is less than $8 billion for its population of about 33 million.

Those agreements are contributing to big sales for Moderna and Pfizer. Moderna said it has signed more than $18 billion in advance purchase agreements for supplies set to be delivered this year, while Pfizer projected about $15 billion in revenue this year from its shot with BioNTech.

The rates some lower-income countries are paying for shots are “unconscionable,” said Lawrence Gostin, a global health law professor at Georgetown University, calling them “extortionate prices — for a commodity that they need desperately for the recovery of their own economies.”

Covax, the vaccine effort led by groups including the WHO, only solves part of the problem. The initiative aims to protect at least a fifth of each participating population by the end of 2021, and dozens of countries, Colombia and South Africa included, must pay for vaccines they receive through the program.

Countries making purchases through Covax committed to an estimated average price of $10.55 per dose, documents show. Contract talks are ongoing, and Covax aims to achieve similar or lower prices than individual countries get in direct deals with companies, according to Gavi, the Vaccine Alliance, another one of its backers.

While Covax is a “significant achievement,” it has grappled with insufficient funds and constraints in the number of doses available, said Bollyky of the Council on Foreign Relations.

Dose Crunch
“In an environment where there’s incredible demand and limited supply, it’s hard to see how one is going to shift the pricing dynamics,” he said.

The vaccine crunch has led to calls to suspend intellectual property protections on vaccines to expand production. But last year, the U.S., the EU, Switzerland and others rebuffed a proposal from India and South Africa that sought to waive sections of trade rules.

Colombia began receiving doses through its direct deals with manufacturers in mid-February. In Covax’s first shipment to Latin America, 117,000 doses of Pfizer vaccine arrived in Colombia in early March. South Africa and others have begun rollouts too.

But the gaps remain wide. The U.S., Britain and the EU snapped up shots well in advance of knowing which would prove effective. The U.K. has already administered more than 26 million doses and plans to offer all adults a vaccine by the end of July. By contrast, Colombia has given about 840,000 doses.

Amid growing urgency, China and Russia have ramped up supply deals. Russia’s Sputnik V vaccine has attracted interest from a string of countries, including some in Central and Eastern Europe that haven’t experienced the declines in infections others have reported.

Wealthy countries were able to push to the front of the line, in part because they could afford to bet on vaccines that hadn’t yet been approved, according to Safura Abdool Karim, a public health lawyer and researcher at the Wits School of Public Health in Johannesburg.

“The lower- and middle-income countries couldn’t afford to take that gamble,” she said. “Up until now, the landscape has been defined by availability. It will increasingly be defined by affordability.”

Source: Bloomberg Business News