Covid: What happened to the $1.4 billion pharmaceutical companies have charged for vaccines that haven’t been delivered?

As global demand for Covid-19 vaccines wanes, the program responsible for vaccinating the world’s poor is urgently negotiating to try to break deals with pharmaceutical companies for vaccines it no longer needs.

Until now, drug companies refused to pay back $1.4 billion in advances for now canceled doses, according to confidential documents obtained from The New York Times.

Gavi, the international immunization organization that bought the vaccines on behalf of the global Covid vaccination program COVAX, has said little publicly about the costs of canceling orders.

But Gavi’s financial records show the organization has been trying to contain the financial damage. If you can’t reach a more favorable deal with another company, Johnson & Johnson, you may have to pay even more.

Gavi is a Geneva-based non-governmental organization that uses donor funds, including the US government and the Bill & Melinda Gates Foundation, to provide childhood vaccines to low-income countries.

Early in the pandemic, he took it upon himself to buy Covid vaccines for the developing world thanks to one of the largest humanitarian fundraisers in history and entered into negotiations with vaccine manufacturers.

Those negotiations went badly at first.. Initially, the companies shut the organization off the market, prioritizing high-income countries that could pay more to secure the first doses. Eventually Gavi reached agreements with nine producers.

delayed vaccinations

But vaccines didn’t start reaching developing countries in significant numbers until mid-2022.

As Gavi had a steady flow of supply, demand began to decline: countries with weak health systems found it difficult to deliver vaccines, and the dominance of the mildest variant of omicron weakened people’s motivation to get vaccinate.

Now, Covax falls well short of its target vaccinate 70% of the population of each country.

vaccine manufacturers they have raised more than 13,000 million dollars with vaccines which were distributed through COVAX. Under the contracts, the companies are not required to repay the advances that Gavi gave them to book the vaccines that were ultimately canceled.

But in light of the number of vaccine doses Gavi has had to cancel, some public health experts are criticizing the companies’ actions.

Manufacturers of Covid vaccines “have a special responsibility” because their products are a social good and most of them were developed with public funds, said Thomas Frieden, executive director of the global health nonprofit Resolve to Save.Lives and former director of the US Centers for Disease Control and Prevention.

“That’s a lot of money that could do a lot of good,” he said.

He added that other major global health programs have budgets roughly equal to the amount of money vaccine makers are grabbing onto.

“The entire polio eradication effort costs about $1 billion a year and involves a lot of infrastructure,” he said.

Dose not delivered

Gavi has reached deals with Moderna, the Serum Institute of India and several Chinese manufacturers to cancel unnecessary doses, recouping $700 million in advances, the documents show.

Another pharmaceutical company, Novavax, refuses to repay another 700 million advances for vaccines he never delivered.

Gavi and Johnson & Johnson face off in one tough dispute over the payment of vaccines which Gavi told the company months ago that he wouldn’t need, but that the company still produced. Johnson & Johnson is now asking Gavi to pay an undisclosed additional amount.

Gavi had an indirect supply relationship with Pfizer; the Biden administration bought him one billion vaccines to donate through COVAX. The United States last year revised its deal with the company, converting an order for 400 million doses into future options. The company said it did not charge any fees for changing the order.

Secret

The terms of Gavi’s agreements were kept secret because he had signed them with private companies. It has not been made public how much the drug companies have earned with canceled vaccinations.

The documents said manufacturers collectively earned $13.8 billion in revenue from vaccines distributed through COVAX. Almost 1.9 billion doses have already been shipped to 146 countries. More than half was purchased directly from Gavi and the rest was donated by high-income countries.

Gavi’s deals with Moderna and Serum took into account that the producers had already incurred expenses such as raw materials, according to the documents.

In an agreement for cancel more than 200 million doses signed late last year, Gavi agreed to let Moderna keep an advance it had paid.

In return, Gavi was freed from having to make additional payments for the doses, meaning they were paid off at a “substantially lower” cost than expected, according to the documents. Moderna also provided Gavi with a $58 million credit towards future products through 2030.

Gavi has also made concessions to terminate his contract with the Serum Institute of India. Gavi canceled 145 million doses allowing the company to keep money Gavi had paid up front to cover the cost of materials that had already been purchased.

Serum also gave Gavi a credit note for an undisclosed amount that the organization can use to purchase the many routine vaccines it purchases from Serum each year.

Moderna and Serum declined to comment on the terms.

Gavi and Johnson & Johnson are at odds over 150 million doses of COVID vaccines that Gavi has ordered but has been trying to cancel for months.

Gavi expected a significant portion of those doses to be distributed by the end of 2021, but by then Johnson & Johnson had delivered fewer than 4 million doses. Gavi’s contract with the company did not stipulate that the latter would complete the deliveries before this deadline. When the company was finally able to ramp up deliveries last year, the question collapsed.

Gavi’s administrators notified the company in mid-2022 that they would not need those doses and asked to stop making new vaccines for COVAX, according to the documents.

However, according to the documents, Johnson & Johnson has continued to produce the vaccines and has sought to deliver them by the end of 2022. Now, as per the contract, the company wants Gavi to make an additional payment and accept the vaccines.

Gavi has proposed that the dispute go to mediation, but the company has “so far refused to enter into meaningful negotiations,” the documents said. Some of the disputed vaccines have expiring mid 2023.

Jake Sargent, a spokesman for Johnson & Johnson, said the company made available the requested doses to COVAX and kept Gavi briefed on the details of its production.

In negotiations with Novavax, Gavi is seeking a refund of $700 million in vaccine upfront payments.

Gavi Expected Novavax Deliveries To Start In Summer 2021, But The Company Has Made It production errors of vaccines. Consequently, Gavi did not forward the orders for the doses that he had originally reserved.

Novavax claimed it was a breach of contract and canceled the deal, keeping the $700 million.

The dispute is unresolved. In a statement, the company said it hoped to negotiate a new deal to supply Gavi with his vaccine.

Agreements respected

Some of the vaccine contracts signed by Gavi have been fully respected. In one case, AstraZeneca reimbursed Gavi when final production costs were lower than expected.

If some vaccine makers were unwilling to renegotiate their contracts with Gavi, the costs to the organization could have been much higher. Gavi would have had to pay $2.3 billion for the doses he wanted to cancel, the documents show, but he saved $1.6 billion by canceling those contracts.

A Gavi spokesman, Olly Cann, said the organization has not made any new payments related to the canceled doses. He added that the advances delivered represented a fraction of what Gavi would have paid for the finished doses.

Dr. Seth Berkley, CEO of Gavi, declined to comment on this article. But in a December interview on the future of the global COVID vaccination program, he said Gavi was paying less per dose than originally planned for vaccine purchases and considerably less than what high-income countries were paying per dose for vaccines. your vaccinations.

Donations for COVID vaccines have significantly increased Gavi’s budget, and missed upfront payments for canceled COVID vaccines do not jeopardize their regular work of vaccinating children.

The contracts that Gavi is trying to scale back were negotiated in the uncertain first months of the pandemic, in some cases before the vaccines proved to work.

“In a pandemic, I would err by buying too many doses, rather than not getting enough, particularly as countries initially thought there were not enough doses,” Berkley said.

Rich countries, which were asking for many more doses than necessary, tried to dispose of the surpluses by handing them over to COVAX, which had difficulty absorbing them.

COVAX started deliveries to developing countries in 2021, but the initial pace was extremely slow. When the program finally got the vaccines, it presented challenges that weak health systems weren’t well equipped to handle.

Frustrated by erratic supplies, some public health agencies have done little to create demand for vaccines, while a wave of misinformation has discouraged people from getting them.

Sub-Saharan Africa remains the least vaccinated region in the world, but reported COVID death rates in the region have been relatively low, further weakening interest in vaccines.

“We have many offers for donations, but we don’t accept them because we don’t want them to expire here,” said Dr. Andrew Mulwa, COVID response manager at the Kenyan Ministry of Health.

“We ask ourselves, should we continue to spend money on administering COVID-19 vaccines when we have other glaring disparities?”

Gavi maintains a stockpile of vaccines and expects millions more in donations from high-income countries seeking to eliminate excess supplies. The organization expects peak demand of 450 million doses this year, half of what COVAX shipped in 2022.

Translation: Elisa Carnelli

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