Liability shields, patent ownership, and leeway on delivery schedules and pricing are all included in multibillion-dollar contracts, with the assurance that much of it will remain confidential.
Members of the European Parliament realized something was lacking when they examined the first publicly published contract for procuring coronavirus vaccinations earlier this month. In fact, there’s a lot lacking.
The cost per dose has been redacted. The schedule for the rollout has been redacted. The sum being paid upfront has been redacted.
And that deal, between CureVac, a German pharmaceutical company, and the European Union, is widely regarded as one of the most transparent in the world.
Governments have spent billions to assist drug corporations in developing vaccinations, and are now spending billions more to purchase doses. However, the specifics of those agreements are mostly kept under wraps, with governments and public health organizations bowing to drug corporate demands for secrecy.
Even though the immunization campaign is only a few weeks old, the secrecy is already making accountability difficult. Pfizer and AstraZeneca, two of the world’s largest pharmaceutical corporations, recently revealed that they will miss their European delivery deadlines, raising significant anxiety as hazardous virus types spread. However, the terms of their contracts are kept secret, making it difficult to interrogate firm or government authorities about guilt or remedy.
However, documents show that pharma corporations wanted and received flexible delivery schedules, patent protection, and liability exemption in the event of a failure. In some cases, governments are forbidden from donating or reselling doses, which might stymie efforts to send vaccines to developing nations.
At least three types of vaccine deals are being cut by governments: Some people purchase pharmaceuticals straight from the manufacturers. Others purchase through regional organizations such as the European Union and the African Union. Many will turn to the Covax program, a nonprofit coalition of more than 190 countries that buys vaccines from pharmaceutical companies with the goal of making vaccines available worldwide, particularly to impoverished countries, for free or at a reduced cost. Some governments have made agreements with both manufacturers and Covax.
The United States has secured 400 million doses of the Pfizer-BioNTech and Moderna vaccines, enough for 200 million people, and is close to arranging 200 million additional doses by summer, with options to buy up to 500 million more. It also has advance purchase agreements for more than 1 billion doses from four other companies whose inoculations do not yet have U.S. regulatory approval.
The European Commission, the European Union’s executive branch negotiating on behalf of its 27 member states, has nearly 2.3 billion doses under contract and is negotiating for about 300 million more, according to data collected by UNICEF and Airfinity, a science analytics company.
Covax says it has agreements for just over 2 billion vaccine doses although it, too, is keeping its contracts secret. Only about a dozen of the 92 countries that qualify for vaccine subsidies under the alliance has managed to secure separate deals with individual companies, for a combined 500 million doses.
Despite the secrecy, government and regulatory documents, public statements, interviews, and the occasional slip-up have revealed some key details about the vaccine deals. Here is what we learned.
Governments Helped Create Vaccines
Vaccine development is a risky venture. Companies rarely invest in manufacturing until they’re sure their vaccines are effective and can win government approval. That’s part of why it typically takes so long to develop and roll them out.
To speed up that process, governments — primarily the United States and Europe — and nonprofit groups like the Coalition for Epidemic Preparedness Innovations, or CEPI, absorbed some or all of that risk.
The United States, for example, committed up to $1.6 billion to help the Maryland-based company Novavax develop its coronavirus vaccine, according to regulatory filings. CEPI kicked in up to about $400 million in grants and no-interest loans.
Other companies have received even more help. The Massachusetts biotech company Moderna not only used government-developed technology as the foundation of its vaccine, but it also received about $1 billion in government grants to develop the drug. In August, the government then placed an initial order for the vaccine for $1.5 billion. The company has said that the project was paid for entirely by the federal government.
These types of arrangements were designed to help companies jump-start manufacturing and cover costs such as clinical testing.
But Companies Keep the Patents
Despite the tremendous taxpayer investments, typically the drug companies fully own the patents. That means that companies can decide how and where the vaccines get manufactured and how much they cost. As the CureVac contract explains it, the company “shall be entitled to exclusively exploit any such” property rights.
This has been a matter of contention for months. A coalition of countries, led by India and South Africa, have petitioned the World Trade Organization to waive intellectual property rights so generic drug makers can begin producing the vaccines. The World Health Organization has endorsed the idea, but it is all but doomed by opposition from the United States and Europe, whose drug makers say patents, and the profits that flow from them, are the lifeblood of innovation.
“Governments are creating artificial scarcity,” said Zain Rizvi of the watchdog group Public Citizen. “When the public funds knowledge that is required to end a pandemic, it shouldn’t be kept a secret.”
Prices Will Vary
One of the key terms of the vaccine contracts — the price per dose — is frequently redacted in the public versions of government contracts. The companies consider this a trade secret. Some drug companies have included clauses in their supply contracts that allow them to suspend deliveries if countries reveal the price.
By insisting that their pricing remains confidential, the drug makers have the upper hand over government negotiators who do not know what other countries are paying.
While governments accepted that provision, leaks and some official reports show some of the disparities. The European Commission paid $2.19 for every dose of the vaccine developed by the University of Oxford and AstraZeneca, while South Africa paid more than twice as much, $5.25, according to media reports.
Drug companies did not respond to requests to view their unredacted contracts or explain why secrecy was necessary. A spokeswoman for Moderna pointed only to a regulatory document that said the contract “contains terms and conditions that are customary.”
That is why it caused such a stir last month when a Belgian official mistakenly revealed a price list, which showed that United States taxpayers were paying $19.50 per dose for the Pfizer vaccine, while Europeans paid $14.70.
Dag Inge Ulstein, Norway’s minister of international development, said countries and international organizations must do more to make contracts public. He also called on countries to share vaccine technology and said rich governments should donate vaccines to poor countries early — even while still vaccinating their own citizens, as Norway plans to do.
“There must be transparency related to the agreements on procurements,” he said in an interview. To that end, he shared with The New York Times his country’s purchase agreement with Covax. That organization has refused to make public its deals — either with the drug makers or with the countries it is selling to.
Covax contracts with countries assume a cost of $10.55 per dose but warn that the final cost could be higher after including an “access/speed premium,” which Covax said is used to help companies rush their vaccines to market.
Donations and Resales Are Restricted
Public health advocates have called on wealthy countries — which have all but cornered the market on the early doses — to donate or sell vaccines to poor countries. But contracts may restrict buyers’ ability to export doses, which could depress drug company sales.
The CureVac contract, for example, prohibits European countries from reselling, exporting or donating doses — including to Covax — without permission from the company. Some contracts in the United States have similar restrictions.
Understand the State of Vaccine Mandates in the U.S.
- College and universities. More than 400 colleges and universities are requiring students to be vaccinated for Covid-19. Almost all are in states that voted for President Biden.
- Hospitals and medical centers. Many hospitals and major health systems are requiring employees to get the Covid-19 vaccine, citing rising caseloads fueled by the Delta variant and stubbornly low vaccination rates in their communities, even within their work force. In N.Y.C., workers in city-run hospitals and health clinics will be required to get vaccinated or else get tested on a weekly basis.
- Federal employees. President Biden announced that all civilian federal employees must be vaccinated against the coronavirus or be forced to submit to regular testing, social distancing, mask requirements and restrictions on most travel. State workers in New York will face similar restrictions.
- Can your employer require a vaccine? Companies can require workers entering the workplace to be vaccinated against the coronavirus, according to recent U.S. government guidance.
A spokesman for the European Commission has said the companies included that provision to guarantee that, wherever their drugs were used, they were covered by the same legal protections.
And governments are trying to find other ways to restrict exports.
On Tuesday, Germany lobbied the European Commission to allow its member states to block exports of vaccines to countries outside of the bloc after the stuttering start of vaccine distribution in Europe.
Vaccines Arrive When They Arrive
Delivery times are considered proprietary information, so there are no public benchmarks to measure a company against.
Nowhere is that clearer than in the European Union’s fight with AstraZeneca over the company’s announcement that it would not deliver the expected number of doses in the first quarter of this year. European officials say they received specific, contractual assurances for such deliveries. The company says it promised only to make its best efforts to hit those targets.
European officials, who initially agreed to keep the contract secret, have now asked the company to make it public. Unless that happens, there’s no way to assess who is responsible.
But there is no question that the drug makers have built themselves plenty of wiggle room for such an ambitious, complicated rollout. The CureVac contract says that the delivery dates (which are all redacted) should be considered estimates. “No product or only reduced volumes of the product may be available at the estimated delivery dates,” the contract reads. Similar provisions exist in other contracts.
Nearly every vaccine maker has similarly told investors that they might not hit their targets. “We may not be able to create or scale up manufacturing capacity on a timely basis,” Pfizer warned in a corporate filing last August.
That uncertainty has frustrated health officials. When Pfizer recently told Italy that it was temporarily cutting deliveries by 29 percent, the government said it was considering taking the company to court. That lawsuit, if it materializes, could make public some details of the European Union’s contract with Pfizer, which remains entirely secret.
“At one point they promised more vaccines or faster vaccines,” said Steven Van Gucht, the Belgian government’s top virologist. “And in the end, they couldn’t deliver.”
Some Governments Are Profiting
Early in the pandemic, the European Investment Bank, the lending arm of the European Union, provided a $100 million loan to the German company BioNTech, which partnered with Pfizer in producing a vaccine.
In addition to the interest on the loan, the European bank will receive up to $25 million in vaccine profits, according to a redacted version of the contract that BioNTech filed with securities regulators.
The bank said profit-sharing arrangements reflect the risk involved in early financing. Mr. Rizvi, of Public Citizen, argued that it puts governments on the same side as the drug makers and reduces any incentive to make drugs cheap and widely available.
Companies Get Liability Protection
In the United States, drug companies are shielded from nearly all liability if their vaccines don’t work or cause serious side effects. The government covered Covid-19 drug makers under the PREP Act, a 2005 law intended to speed up access to the medicine during health emergencies.
That means that people cannot sue the companies, even in cases of negligence or recklessness. The only exceptions are cases of proven, “willful misconduct.”
Drug companies are seeking similar liability waivers in negotiations with other countries. European negotiators have balked at such requests. Covax also insists that countries accept all liability as part of their contracts.
The CureVac-E.U. a contract does shield the company from significant liability, but with exceptions. Those exceptions are redacted.
Monika Pronczuk contributed reporting. The Fight to Beat a PandemicCoronavirus Vaccine TrackerWaste, Negligence and Cronyism: Inside Britain’s Pandemic Spending
Matt Apuzzo is a two-time Pulitzer Prize-winning reporter based in Brussels. He has covered law enforcement and security matters for more than a decade and is the co-author of the book “Enemies Within.” @mattapuzzo
Selam Gebrekidan is an investigative reporter for The New York Times based in London. She previously was a data and enterprise reporter for Reuters where she wrote about migration to Europe and the war in Yemen, among other stories. She has also covered U.S. oil markets. A version of this article appears in print on Jan. 29, 2021, Section A, Page 10 of the New York edition with the headline: Secret Details Seep Out In Deals Governments Have With Drug Makers.