[Ip-health] All aboard GAVI’s COVAX express? First class tickets for fully self-financed countries: second class tickets for funded countries (supported by ODA)

Thiru Balasubramaniam thiru at keionline.org
Thu Jun 18 08:41:37 PDT 2020


All aboard GAVI’s COVAX express? First class tickets for fully
self-financed countries: second class tickets for funded countries
(supported by ODA)
Posted on June 18, 2020 <https://www.keionline.org/33370> by Thiru

On Thursday, 4 June 2020, the United Kingdom of Great Britain and Northern
Ireland hosted the Global Vaccines Summit which successfully raised $US 8.8
billion for Gavi, the Vaccine Alliance – breaking the original fundraising
target of $US 7.4 billion. Amidst great fanfare, solidarity, and good will,
Gavi launched the Gavi Advance Market Commitment for COVID-19 Vaccines
(COVAX Facility). According to Gavi’s press release
COVAX is “a new innovative financing instrument to provide access to
COVID-19 vaccines for low- and middle-income countries” with the aim of
establishing a “global mechanism to ensure equitable access to future
COVID-19 vaccine.” Fifteen donors provide initial seed funding of just over
$US500 million for COVAX; the goal is to raise $US 2 billion.

At the launch of COVAX on 4 June 2020, AstraZeneca became the first vaccine
manufacturer to sign a memorandum of understanding with the COVAX Facility.
Gavi’s press release noted,

   AstraZeneca will guarantee 300 million doses of the COVID-19 vaccine it
   is developing in collaboration with the University of Oxford. These doses
   will be supplied upon licensure or WHO prequalification.

   Gavi’s funding of procurement through a volume guarantee is being
   carried out alongside efforts by the Coalition for Epidemic Preparedness
   Innovations (CEPI), who have announced a funding award to support
   manufacturing for the AstraZeneca/Oxford vaccine candidate. Both
   AstraZeneca and Oxford have committed to operating on a not-for-profit
   basis for the duration of the coronavirus pandemic period to enable broad
   and equitable access, including for low and lower-middle income countries.”

*COVAX and the Access to COVID-19 Tools Accelerator: Whither allocation and
pricing policy?*

In an early two page pitch
1 May 2020, Gavi provided the following reassurances in relation to
transparency and cost-plus pricing.

Using clear rules and criteria including for funding, engagement with
manufacturers and allocation of vaccines, with strong governance drawing
upon the Alliance’s experience. For example, several manufacturers have
already committed to treat vaccines against COVID-19 with a cost-plus
strategy. To provide reassurance on this, manufacturers will be asked to
commit to transparency regarding their costs, and pricing could be based on
validated costs of production plus a small margin.

On 11 June 2020, GAVI released a 32 page technical design document
the COVID-19 Vaccine Global Access (COVAX) Facility which provided a
detailed overview of COVAX and its place within the vaccines pillar of the
Access to COVID-19 Tools Accelerator (ACT-A). The document has provoked
more questions than answers in relation to questions of the equitable
allocation of vaccines, pricing, and the management of intellectual
property rights.

In its technical design document, Gavi underscored the exigent need to
ensure sufficient supply of the “most suitable (safe, efficacious, quality
assured and appropriate) COVID-19 vaccines as soon as possible, and that
when available, supply is accessible globally for an effective public
health response” (COVID-19 Vaccine Global Access (COVAX) Facility
Preliminary technical design, Page 2).

Gavi touts the COVAX Facility as a collective approach to ensure that no
country is left behind.

By working together, countries can jointly manage the uncertainty of which
vaccine candidates will succeed by A collective approach allows for a much
larger portfolio of vaccine candidates than can be reached independently
and increases each country’s chance of accessing sufficient
supply.Countries can also share technical expertise and knowledge on
vaccine candidates and investments, increasing the likelihood of supporting
the most promising candidates and using manufacturing facilities most
effectively as the portfolio matures.In addition, this globally coordinated
approach, whereby demand and resources are pooled across countries,would be
a more efficient way of investing and would allow countries to leverage
benefits of economies of scale and reduced transaction costs.Given that
upfront certainty on demand and financing will be required to incentivise
manufacturing expansion, acting urgently is essential (Ibid, 2-3).

The financing of the COVAX Facility raises the most problematic questions
in relation to equitable access. COVAX envisages two classes of countries:
1) Fully self-financing countries (including high income countries and
upper middle income countries and 2) Funded countries which includes low
income countries and lower middle income countries.

Gavi proposes that the following modalities for the participation of high
income and upper middle income countries in COVAX.

Fully self-financing countries (high income countries and upper middle
income countries contribute directly to the Facility by committing to
purchase the doses to vaccinate the highest priority populations. These
countries confirm this commitment by making upfront financial contributions
to the Facility, proportional to the number of doses they will receive.
These contributions will act as down-payments against future vaccine
delivery and will enable the Facility to enter into advance purchase
commitments for future vaccine supply.As supply becomes available, a
ring-fenced proportion of that real-time vaccine production will be
directed to the fully self-financing countries to be used by these
countries according to the guidance provided by their national bodies.
COVID-19 Vaccine Global Access (COVAX) Facility Preliminary technical
design, Page 4.

For context, the World Bank classifies the following countries and
territories as upper middle income: Albania, Algeria, American Samoa,
Argentina, Armenia, Azerbaijan, Belarus, Belize, Bosnia and Herzogovina,
Botswana, Brazil, Bulgaria, Colombia, Costa Rica, Dominica, Dominican
Republic, Ecuador, Equatorial Guinea, Fiji, Gabon, Georgia, Grenada,
Guatemala, Guyana, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kosovo,
Lebanon, Libya, Malaysia, Maldives, Marshall Islands, Mauritius, Mexico,
Montenegro, Namibia, North Macedonia, Paraguay, Peru, Romania, Russian
Federation, Samoa, Serbia, South Africa, Sri Lanka, St. Lucia, St. Vincent
and the Grenadines, Suriname, Thailand, Tonga, Turkey, Turkmenistan,
Tuvalu, and Venezuela.

For the fully funded countries (low income and lower middle income), Gavi
proposes the following arrangements:

Funded countries (LICs and LMICs) are those whose financial commitments for
participating in the Facility are covered by official development
assistance (ODA). They also get access to volumes as soon as it becomes
available to meet requirements to vaccinate the highest priority
populations. The volumes specifically directed to these funded countries
would be allocated across them using guidance from the global allocation
frame work under development by WHO, which builds on WHO’s policy
recommendations on priority target population (Ibid).

The COVAX Facility’s allocation mechanism best illustrates the stark
difference in treatment between the fully self-financing countries and the
funded countries. The fully self-financing countries (“investors”) receive
the following benefits package.

   Fully self-financing countries:The Facility will work to secure enough
   vaccine doses to enable all countries in this group to vaccinate e.g. 20%
   of their populations, to ensure that every country can immunise their
   highest priority populations .Ring-fenced doses for this group will be
   distributed evenly amongst all countries in the group until each country
   has received enough doses to vaccinate this proportion of their population.
   Whilst the Facility will determine the number of doses that a country
   receives, it will not interfere with a country’s sovereign right to follow
   guidance from their own national bodies about how they use any fully
   self-financed allocated doses once they receive them.

   In line with the principle of solidarity, if a country in this group
   successfully concludes a bilateral deal and receives enough doses to cover
   e.g. 20% of their population, the Facility requests that these countries
   delay receipt of any additional doses from the Facility until all other
   Facility country participants have received enough supply to also cover
   their highest priority populations.The Facility requests that countries be
   open and transparent about their supply agreements. This requirement
   matches the condition placed on manufacturers to also be open and
   transparent about their bilateral deals with countries (Ibid, 11).

   Once all countries in this group have received sufficient supply from
   the Facility to cover e.g. 20% of their population, any additional supply
   of vaccines would be offered to countries in line with a needs-based
   allocation framework.

For low income and lower middle income countries dependent on donor
financing, the following treatment is proposed.

The Facility will work to secure enough doses to enable all countries in
this group to vaccinate at least their highest priority populations.
Ring-fenced doses for this group of countries will be allocated to, and
distributed across,countries according the WHO Allocation Framework,which
is based on transparent ethical and public health criteria. This will
require a clear picture of applicable demand from countries.In addition,
WHO will provide policy recommendations to countries on use of vaccines,
which will be particularly important for developing countries which may
have limited capacity to conduct a robust epidemiological assessment (Ibd).

Under the COVAX Facility’s allocation framework, Gavi commits to ensure
that funded countries can “vaccinate at least their highest priority
populations”; as this group of countries are not investors in COVAX, they
are not guaranteed the requisite amount of doses to cover 20% of their

To cover access for low income countries, low middle income countries,
including IDA-eligible Small Island Economies, Gavi’s COVAX AMC, housed
within the COVAX Facility, Gavi proposes the following pull mechanisms:

The COVAX Facility will utilise pull mechanisms, which are instruments to
incentivise manufacturer product development and installment of capacity
through the assurance of future procurement at a pre-determined volume and
price of a successful candidate.Two types of pull mechanisms will be used.
Gavi will enter into manufacturer-specific contingent volume guarantees to
procure vaccines that meet the agreed WHO Target Product Profile, so as to
de-risk and incentivise timely investment in expansion of manufacturing
capacity. The Facility will also rely on a market-wide demand
guarantee,which could provide continued incentives and assurances to
manufacturers to expand production capacity and to bring products to market
meeting e.g. preferred characteristics of the WHO target product profile
(TPP)or with enhanced characteristics based on country needs.

For more background on Gavi’s earlier forays with advanced market
commitments, please see Médecins Sans Frontières’s (MSF) perspicacious
briefing: COVID-19 Vaccine Global Access (COVAX) Facility: Key
considerations for Gavi’s new global financing mechanism

In terms of pricing, the technical design paper acknowledges that beyond
the near term, COVID-19 vaccines pricing would evolve towards a tiered
pricing approach.

   - Short-term period to reach priority populations and control the
   pandemic: A flat pricing strategy (with firms able to set their own price,
   which then applies across countries participating in the Facility) will be
   encouraged, given existing bilateral agreements between a number of
   countries and manufacturers and broad expectations to price the vaccine as
   a global good during the short-term period. Such a pricing structure should
   incentivize broad country participation in the Facility. However, some
   manufacturers may prefer tiered pricing;the Facility will accommodate that
   request if the price levels offered for each tier are considered suitable.
   If a flat pricing strategy is proposed by manufacturers, a
   cross-subsidization mechanism may be applied to establish differential
   pricing charged to countries to account for varying ability to pay.
   - Beyond this initial short-term period, the market is expected to
   evolve towards a traditional, market-led, tiered pricing approach(noting
   that the Facility, itself,will be time-limited) (Ibid, 20).

The COVAX Facility’s technical design paper is silent on deep technology
transfer including language on know-how, patents, and other intellectual
property rights.

In terms of governance, the paper provides this rather nebulous description:

A representative governance structure is under development.The tailored
governance body will include representatives from Facility investors and
recipients, including a combination of self-financing and funded countries,
and will shape how the Facility may evolve as conditions change (Ibid, 22).

As the COVAX Facility presses forward, many questions still remain

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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