To procure Covid-19 vaccines for South Africans, government was bullied and forced to pay exorbitant amounts – in some cases double the price – to various pharmaceutical companies, under terms and conditions that were overwhelmingly one-sided and favoured the multinational corporations.
This was revealed by the Health Justice Initiative (HJI) after it reviewed and studied the previously secret documents making up the four contracts/agreements handed to it last week, following a Gauteng High Court (Pretoria) ruling compelling the National Department of Health to provide access to the information.
The documents can now be viewed on the HJI website.
TimesLIVE reports that scrutiny of the contracts, which were not under South African legal jurisdiction, showed SA was liable for payments of at least $734m, including advance payments of almost $95m, with absolutely no guarantees of timely delivery.
HJI director Fatima Hassan described the contracts as “unethical, immoral and imperial minded”, saying they made no provision for transparency and government, because the purchaser had little leverage.
South Africa paid 33% more than the AU price for the Pfizer-BioNTech vaccine and paid the Serum Institute of India (SII) 2.5 times more than the UK for a generic version of the Oxford-AstraZeneca vaccine.
Johnson & Johnson charged South Africa $10 a dose, which is 15% more than the company charged the EU and about 25% more than the estimated not-for-profit price.
However, reports Business Day, J&J SA spokesperson Kafi Mojapelo disputed the pricing attributed, saying it supplied vaccines to SA at its “final global price” of $7.50 a dose.
The records reveal Pfizer charged South Africa $10 a dose, which is 32.5% more than the $6.75 “cost price” it reportedly charged the AU.
The analysis also showed the agreements placed people and governments in the Global South in the unenviable position of having to secure scarce supplies in a global emergency (2020-2022) with unusually hefty demands and conditions, including secrecy, a lack of transparency, and very little leverage against late or no delivery of supplies or inflated prices, resulting in gross profiteering.
The exact price of GAVI-Covax doses was unclear.
But the organisation’s “all-inclusive weighted average estimated cost per dose” was $10.55 a dose, with a maximum cost of $21.10.
The Health Department said it entered into the agreements to protect South Africans from Covid-19, which had claimed at least 100 000 lives.
“There is no argument that low- and middle-income countries around the world, including SA, had limited bargaining power to secure vaccine doses and negotiate the price of vaccines for various reasons, including the limited number of manufacturers and vaccine hoarding and nationalism by high- and upper-middle-income countries,” said its spokesperson, Foster Mohale.
The contracts show the $27.5m advance payment required by J&J was non-refundable. Only half the $40m advance payment required by Pfizer was repayable.
Hassan said the deference to and fear of powerful pharmaceutical companies in the middle of a crisis and in a constitutional democracy was incredibly concerning.
“It (is a) story of pernicious bullying and heavy-handedness. The terms and conditions are so one-sided they beggar belief,” she added. “There was no transparency, little leverage against late or non-delivery of supplies, and we paid inflated prices in almost all of these contracts, resulting in gross profiteering by the vaccine manufacturers.
“It shows how much power was put into the hands of private sector actors and how few options governments had, when acting alone, in the middle of a pandemic.”
She said in its scramble for desperately needed vaccines, South Africa was forced to hand over unimaginable sums of money for overpriced doses.
“We were bullied into unfair and undemocratic terms in contracts that were totally one-sided. Put simply, pharmaceutical companies held us to ransom. And we must ask: did they do it to other countries too?”
The documents also cited a requirement that SA seeks permission from J&J to divert, sell or donate doses for which it had already paid.
The government agreed not to impose an export ban, enabling J&J to ship vaccines bottled at Aspen Pharmacare’s plant in Gqeberha to EU customers when shots were in short supply in SA.
Pfizer also barred SA from exporting its jabs without its consent.
Additionally, the Health Department agreed not to take any action to override the intellectual property rights of the SII or Gavi for their shots, even as SA was working with India to try to get the WHO to waive intellectual property rules on vaccines.
Jay Kruuse, director of NPO Public Service Accountability Monitor SA, told Health-e News there was a strong bias in favour of the pharmaceutical industry in the J&J contracts.
“Delivery terms for doses were vague. The contracts allowed for J&J to not deliver on a fixed time frame, putting South Africa in a difficult position. There was a very extensive confidentiality clause.”
He said the indemnity clause provided extensive cover to the pharmaceutical industry and put the government in an unfavourable position.
“South Africa paid $10 per dose more than some countries, including countries that are considered high-income countries,” he added.
Regarding the Covax contracts, these were initially set up for the benefit of low-middle income countries but the global north got the doses they needed, leaving many without vaccines.
Professor Brook Baker, a senior policy analyst for the Global Access Project at the Northeastern University’s School of Law in the USA, said: “Covax failed in South Africa in every respect. Gavi projected to supply 20m doses by the end of 2021 and they fell short.”
Gavi is the global vaccine alliance, and the co-lead of Covax.
“The contract guaranteed no number of doses or actual price. South Africa only got 1m doses from the Covax contract even though Gavi raised $10bn to procure vaccines,” Baker pointed out, adding there were massive indemnifications absolving Gavi of any loss.
The HJI report underscores the need for a regional and global solution to address the power imbalance between governments and pharmaceutical companies, and the group emphasised that this issue should be a focal point in the upcoming United Nations General Assembly and in revisions of the International Health Regulations, reports IOL.
Nick Dearden, director of Global Justice Now in the UK, said what the HJI had done was important.
“When secrecy is allowed to rule, pharmaceuticals gain power undermining public interest. Countries like South Africa were charged two and a half times more than countries like the UK and this is not right,” he said, adding that there were many lessons to be learned and it’s vital that people know what happened.
Supporting the importance of transparency, Tahir Amin, director of the Initiative for Medicines, Access and Knowledge, a US based non-profit, said these kinds of agreements often get redacted.
“We’re all operating in the dark which is why the HJI court case was so important. It’s imperative for all governments to try to protect the public first,” he said.
Health Justice Initiative (Open access)
Business Day article – Covid vaccine contracts hold SA to ransom (Restricted access)
See more from MedicalBrief archives:
Judge orders Health Department to disclose vaccine contract data
HJI goes to court to access vaccine supply records
Health activists seek access to SA’s confidential vaccine supply agreements
Health campaigners want a ccess to SA’s vaccine contract with J&J
Deadline for state to submit Covid vaccine documents