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HomeTalking PointsBalancing cheaper, cost-saving imports with support for local vaccine makers

Balancing cheaper, cost-saving imports with support for local vaccine makers

SA's snubbing of a local vaccine producer in favour of cheap imports last week has brought into the spotlight the challenge of governments in poorer countries of developing their own production capabilities versus massive savings earned from importing cheaper medicines, writes MedicalBrief.

At a high-level international meeting on the local production of mRNA vaccines in South Africa this week, Health Minister Joe Phaahla was mortified that his government’s decision to procure pneumococcal vaccines from an Indian company (Cipla) rather than local state-backed company Biovac became the focus of discussion at the event.

For the next tender, which begins in 2024, Cipla will supply 12.6m doses of the 10-valent pneumococcal vaccine at R97.06 per dose. Biovac currently supplies the government with a 13-valent pneumococcal vaccine (Prevnar), at R288.32 a dose, reports BusinessLIVE.

The Health Department has defended its decision to switch suppliers, saying the decision was a financial one. Biovac’s bid price was “at least double” that put forward by Cipla, it said.

The controversial decision coincided with the meeting in Cape Town of more than 200 international delegates working with the mRNA technology transfer programme launched in June 2021 by the World Health Organisation (WHO) and the Medicines Patent Pool (MPP).

The mRNA hub is based at South African company Afrigen, which has developed a Covid-19 vaccine based on Moderna’s recipe – albeit without Moderna’s help. Afrigen is passing this know-how on to people from 15 other low- and middle-income countries (LMICs), and representatives of 14 of these countries participated in the five-day event.

Phaahla told delegates that the government was fully committed to building local vaccine development but that Ministers were not involved in procurement decisions, which were governed by an Act of Parliament that civil servants were obliged to follow – or face prosecution.

Biovac, which is partly owned by the South African Government, is Afrigen’s vaccine production partner, and has been making Pfizer’s pneumococcal vaccine, Prevnar-13, since 2021.

The government holds 47.5% of the shares in Biovac, with the remainder held by a consortium led by Immunotek. The state and multinational drug manufacturers have invested heavily in the facility over the past 20 years in an effort to revive SA’s human vaccine manufacturing capacity.

For many years Biovac was the sole supplier of vaccines used in SA's childhood immunisation programme, importing those it did not make. The tender was opened up to other companies in 2020, but Biovac retained the lions’ share of the contracts, including the one for pneumococcal jabs.

Biovac entered into a partnership with Pfizer in 2015 to help produce its 13-valent pneumococcal vaccine, in the expectation that the jabs would be purchased by the state.

But last week the Health Department announced it had dropped Biovac in favour of Cipla for the next three-year contract to supply pneumococcal vaccines.

Cipla, which has a pharmaceutical manufacturing plan manufacturing site in Durban, does not produce any shots in SA, and will import them from the Serum Institute of India.

“The Health Department could not ignore the benefits of savings from a company that was offering quality vaccine products at half price, which make it possible to increase services in the expanded programme on immunisation, and which also (allows us) to tackle more vaccine preventable diseases,” it said.

“The department will always strive to look at practical ways to support local investment and production of medical products like vaccines. It is … important to balance this with available financial resources within the prevailing legal framework,” it said.

Responding to Biovac’s complaint earlier this week that its officials had not sought to negotiate on price, the department said it could not do so because Biovac had not complied with some of the requirements and conditions of the contract, without elaborating.

“It is the standard practice of the department to negotiate prices with all local manufacturers who submit responsive bids,” it said.

Biovac CEO Morena Makhoana said it had submitted the same documents as it did for the previous tender, and when officials sought clarification, it provided everything they asked for.

And in another BusinessLIVE report, Biovac has taken issue with Cipla SA’s claim that its pneumonia vaccine will save the Health Department R2.4bn over the next three years, saying its calculation is based on inflated demand forecasts and outdated prices.

The direct savings are likely to be R280m a year, or R840m over the period, said Biovac.

Makhoana said on Tuesday said that the demand forecasts were inflated, as there were only about 1m live births in SA each year, and the government had historically purchased up to 3.3m doses of Prevnar 13 per year. Infants are given three doses of the vaccine.

The figures provided by Biovac for the estimated savings made by the Health Department, and the number of doses purchased a year, suggest its tender price was of the order of R181.90, or 87% more than Cipla SA’s price of R97.06 a dose, set out in the health department’s announcement of the vaccine contracts awarded for 2024.

Cipla SA CEO Paul Miller declined to comment.

The price of Prevnar 13 in SA is determined by Pfizer, which told Business Day last week that its 13-valent vaccine was superior to the 10-valent vaccine provided by Cipla SA, because it offered protection against more strains of pneumococcal disease. Cipla SA and the health department separately disputed that the 10-valent shots were inferior.

Wits vaccinologist Shabir Madhi said there had been no direct studies comparing the efficacy of the two vaccines, and the strains that are not included in the 10-valent shot constitute a low percentage of the pneumococcal disease in SA.

He said Pfizer had recouped the cost of developing Prevnar more than 15 years ago, and while it sold the shot to the international vaccine purchasing organisation Gavi for $3.50 (R64.27), it had yet to lower its pricing for middle-income countries.

Even if Pfizer offered the jab to SA at double the Gavi price it would have been competitive, as there was scope to reduce the number of Prevnar shots given to babies from three to two, said Madhi.

The UK had made this transition in 2019 and research conducted in SA had shown two doses of the vaccine was not inferior to three, he said.

Madhi warned that Biovac is likely to face future competition for the six-in-one shot it bottles for Sanofi, called Hexaxim. Biovac’s Hexaxim is the only six-in-one vaccine registered in SA, and Biovac holds the sole supply contract with the health department. A tender process for the 2024 supply of this vaccine is under way, and has yet to be finalised.

Meanwhile, the department took issue with Pfizer’s assertion earlier this week that the government’s decision to switch from a 13-valent vaccine to a 10-valent jab was regressive. A 13-valent shot offers protection against 13 different strains of pneumococcal disease, while a 10-valent jab offers protection against 10 strains.

“At present, there are three pneumococcal-containing vaccines currently registered with the SA Health Products Regulatory Authority, containing the most prevalent serotypes that would be effective for use in SA. Any suggestion that PCV 10, as procured by the department, is not effective, is unfounded,” said the department.

While Biovac is dismayed by the state’s decision to go with Cipla, it is precisely this tension between price constraints and the drive to support more local production that countries, global vaccine procurement agencies and donors must resolve if local vaccine and medicine manufacturing are to become a reality in regions like sub-Saharan Africa, which are so lacking in this capacity.

Unless governments and donor agencies are actually going to procure vaccines from regional manufacturers, the mRNA technology transfer will simply become lessons in science rather than a solution to structural manufacturing inequity, reports Health Policy Watch.

But vaccines and medicines produced by new start-ups are also likely be more expensive than those produced by giant Indian or Chinese pharma firms that have been in the business for year and are already supplying large global markets.

As Dr Blade Nzimande, Minister of Higher Education, Science & Technology, told the mRNA meeting, while technology transfer is necessary, “this is not sufficient”.

“We need government support, and this includes the willingness to invest in research and development, building of human capacity, and willingness to pay a premium for vaccines, at least until we achieve economies of scale,” he added.

But is it realistic to expect that countries economically battered by Covid-19 would be willing and able to pay this premium – when generic companies like Indian generic giant Cipla can deliver vaccines at a significantly cheaper rate?

Local health officials told Health Policy Watch that the decision to give the three-year contract to Cipla instead of buying Biovac’s vaccines would save the department so much money that it could introduce two new childhood vaccines.

Cipla said that its contract with South Africa would save the government about R2.4bn over its three-year lifespan.

WHO Director-General Dr Tedros Adhanom Ghebreyesus described the tension between the government and Biovac as a “heads up” that the same problem could arise for mRNA vaccines.

Nzimande said that the Finance Ministry was busy amending its “preferential procurement” legislation in South Africa, including how to balance price and local production.

“This is a complex issue. Sometimes an international company is cheaper than a local company because it is actually being subsidised by the government in its own country, and we are not doing the same thing. We might have to pay more sometimes because we want to build local capacity.”

While Tedros expressed support for preferential procurement to support local vaccine start-ups in their infancy, he said this should be established at a “regional and continental level”, starting with Africa’s free trade zone.

At a global level, Tedros said that WHO, Gavi, UNICEF and other international organisations would also need to support Africa’s production.

Indeed, after decades of chasing vaccines and medicines at the lowest price possible – no matter where they were produced – Gavi late last year committed to diversifying its procurement and purchasing more African health products.

But that commitment remains only on paper, critics say. Actual implementation of plans to buy locally produced vaccines in Africa is being confined to a separate budget designated for funding pharma start-ups, and requiring more donor funds.

Phaala said “innovative funding mechanisms will be required… to assure sustainability”, and proposed that “appropriate trade incentives” could be used to build “more secure demand so that this industry can grow beyond our borders”.

But South Africa was also looking to the WHO, Gavi and the Covax facilities for support, he added.

Meanwhile, Nzimande said that approaching international partners to subsidise prices of products produced locally in South Africa was a good idea. This has been done on a time-bound basis of 10 years for the pneumococcal vaccine.

International donors have invested heavily in building the capacity of the African mRNA hub, mainly in reaction to the pandemic.

There was global recognition that building Africa’s vaccine manufacturing capacity is essential to prepare for the next pandemic, and idea of a hub to manufacture and train others germinated in the WHO and the MPP.

The idea has been attractive to wealthier countries. The European Council alone has invested €40m in the hub, and recently signed an additional €15.5m grant with the European Investment Bank to facilitate the expansion of Biovac’s vaccines manufacturing capacity, said Martin Seycell, deputy director-general of the European Council.

Canada has so far invested $45m in the hub, and Caroline Delany, GlobalAffairs Canada’s director-general for Southern and Eastern Africa, announced a further commitment of $15m last Thursday.

Norway and South Africa developed a special relationship during the pandemic as co-chairs of the Access to Covid Tools (ACT) Accelerator, and Norway’s Minister of International Relations, Anne Tvinnereim, stressed that the mRNA hub was part of a bigger ecosystem aimed at preparing for the next pandemic.

“Different parts of this system must be strengthened to facilitate increased local and regional production of vaccines, and the key will be to ensure that production capabilities will be commercially sustainable. This includes the production of other types of vaccines in non-pandemic times,” said Tvinnereim.

“South Africa and Norway follow the discussions on pandemic preparedness and a platform for medical countermeasures very closely,” she added, stressing that lessons learnt during the pandemic needed to be taken forward to the United Nations High Level Meeting on pandemic preparedness and response in September.

After the briefing of the mRNA hub meeting, Tedros and the international team formally opened the Afrigen facility.

Health-e News reports that the WHO chief applauded the achievements made in less than two years. “I am delighted to be here with our partners to support a sustainable model for mRNA technology transfer to give low- and middle-income countries equitable access to vaccines and other lifesaving health products,” he said.

“In less than two years we have shown that when we work collaboratively, we succeed collectively.”

He also emphasised the need for sustainable mRNA tech transfer for equitable access to vaccines and health products in LMICs. “The pandemic highlighted that one of the most important strategies for addressing global health emergencies is to increase the capacity to produce medical countermeasures such as vaccines and therapeutics,” he added.

Executive director Professor Petro Terblanche said that the hub’s Covid-19 vaccine candidate, AfriVac 2121, “is currently in the scale-up phase”.

“Over the past 18 months, Afrigen has undergone an incredible transformation with the support of a network of partners and mentors enabled by this programme,” she added.

Afrigen is currently manufacturing vaccine batches to be used in phase I/II clinical trials to good manufacturing practice standards, while also continuing with training and technology transfer to network partners.

The vision for the hub goes beyond Covid-19 vaccines. “It has set its sights on diseases that are prevalent in our environments, like malaria, tuberculosis and HIV/Aids,” said Nzimande.

 

Health Policy Watch article – Despite Hosting mRNA Hub, South Africa Buys Vaccines From India – Highlighting Tension Between Price Pressures and Local Production (Open access)

 

Health-e News article – MRNA vaccine tech hub to improve healthcare in lmics (Open access)

BusinessLIVE article – Health department defends move to drop Biovac in favour of Cipla (Restricted access)

BusinessLIVEBiovac-disputes-ciplas-claim-it-saved-government-r24bn

 

See more from MedicalBrief archives:

 

€15m pledge to increase Biovac vaccine production

 

Afrigen’s Cape Town bid to reverse engineer Moderna’s vaccine

 

Pfizer invests R255m to strengthen South Africa’s health system through Biovac partnership

 

As COVAX disappoints, developing countries turn to home-grown jabs

 

 

 

 

 

 

 

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