Covid-19 contracts reveal that Big Pharma ‘bullied’ SA while securing vaccines worth $734m – NGO
After winning a legal challenge forcing the government to hand over its Covid-19 vaccine contracts with large pharmaceutical organisations, the Health Justice Initiative says they show ‘SA’s sovereignty was bartered for scarce supplies’.
The Health Justice Initiative (HJI) has made damning findings on the Covid-19 vaccine contracts between the Department of Health and pharmaceutical giants Johnson & Johnson (J&J), Pfizer and the Serum Institute of India, and the Global Alliance for Vaccines and Immunisations (Gavi), an international alliance established to improve equitable access to vaccines.
The NGO said the conditions of the contract negotiations were found to have been unequal and at worst amounted to bullying towards South Africa, with the vaccines being found to have been overpriced.
J&J was found to be the worst offender and is reported to have charged South Africa more than countries in the global north. HJI said the company “charged SA US$10 per vaccine dose, while the EU reportedly paid US$8.50, and there are also claims that the non-profit price could have been in the region of US$7.50”.
In August, HJI won a legal challenge to force the Department of Health to make available its contracts with the vaccine providers. The department initially argued against disclosing details of the deals, saying it would be in breach of confidentiality clauses. Government officials maintained they had negotiated in the best interests of the country.
However, the Pretoria High Court ordered that they make available the contracts as well as copies of all Covid-19 vaccine negotiation meeting outcomes and/or minutes and correspondence with any of the parties.
On Tuesday, 5 September, the HJI said that while the government made some of the documents available, it had until the end of September to submit the outstanding ones so a fuller analysis could be carried out.
“We found that in all four contracts/agreements, the pernicious nature of pharmaceutical bullying and Gavi’s heavy-handedness is evident: the terms and conditions are overwhelmingly one-sided and favour multinational corporations,” the HJI said.
“This placed governments in the Global South, and in turn, the people living in these countries, 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.”
South Africa paid $734-million for the 67 million vaccine doses it received from the four pharmaceutical organisations central to the contracts, $94-million of which was not fully refundable.
“This deference to and fear of pharmaceutical power, in the middle of a crisis, in a constitutional democracy, should be of deep concern to the global public health community. 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,” the HJI continued.
It stressed that this was not something that could be solved by a single government and that it was calling for not only regional, but also global backing to ensure that the “bullying” never happens again.
The HJI’s initial findings after receiving the contracts include:
- As previously reported by The New York Times, J&J’s agreement barred South Africa from imposing any export restrictions, even for doses filled and finished in South Africa. The contracts state that J&J cannot be “held responsible” for late delivery of vaccines and contains no non-delivery penalty. This allowed J&J, at the height of South Africa’s third wave of Covid infections, to export South African doses to Europe without penalty.
- Both J&J and Pfizer barred South Africa from donating or exporting doses without the companies’ consent.
- The Pfizer contract contains none of the public-interest measures that are contained in some UK and EU vaccine agreements, such as access to test data, march-in rights in the event of abandonment, localised manufacturing or dose redistribution.
- Gavi provided no guarantee of the actual number of doses or delivery date for Covid-19 vaccines. South Africa remained liable to pay for all doses ordered, even after the country was forced to order doses directly from pharmaceutical companies when Gavi failed to deliver.
A victory for transparency
HJI founder Fatima Hassan told a media briefing: “This case has shown that when an NGO wants to use the Constitution to create the precedent for great transparency in our country, that is possible.”
Hassan said that Health Minister Joe Phaahla took a “prudent and wise decision not to oppose” the Pretoria High Court order.
“Unfortunately all of these contracts proved what we thought was happening … and that is that they are one-sided. All the power has remained with the pharmaceutical companies.
“We believe that our country, that is us as South Africans who put up billions of rands, that our sovereignty was taken away at the behest of very powerful pharmaceutical companies who are unelected and hold no public office in our country,” Hassan said.
She went on to say that at a minimum, there should be an investigation into J&J for extracting a restriction on export bans to benefit its agreement with local company Aspen Pharmaceutical.
Companies in control
Also in attendance at HJI’s briefing were members of the multidisciplinary team examining the vaccine contracts, including Jay Kruuse, Matthew Herder, Brook Baker and Tahir Amin.
Kruuse, a director at the Public Service Accountability Monitor, was specifically assigned to look into the deal with J&J. He said he found that the delivery terms were very vague and allowed J&J not to deliver to timeframes, putting the government in a difficult position as it had no control over vaccine arrivals.
According to Kruuse: “A clause that remains of specific concern is the confidentiality clause, containing extensive confidentiality agreements. In addition to that the indemnity clause, section 17 provides extensive cover to the pharmaceutical company. Had these contracts been released earlier to the public, they would have supported more [action] around the pricing … and that requires more investigation.”
Herder, a professor of law and medicine and director of the Health Law Institute, dealt with the Pfizer contract and highlighted that the language of the contract was quite stringent.
“For instance, the South African government was restricted from sharing doses with neighbouring countries who might be in need. They cannot do so without Pfizer’s prior and written consent and unlike other contracts, Pfizer can withhold its consent and for however long and whatever reason it chooses.”
Herder said Pfizer was in complete control of where vaccines were to be made and supplied for South Africa, with no commitment made to local manufacturing.
The contract didn’t even guarantee that Pfizer would actually deliver the vaccines. If the company didn’t, the government would only be able to recoup 50% of what it would have spent, which Herder said was not standard in such contracts. This put South Africa in a position to assume all risks and costs.
Baker, who is a senior policy analyst at Health Gap, told the briefing: “Gavi had projected to supply 20 million doses by the end 2021 and fell far, far short of that. The contract is elusory: no guaranteed or disclosed price, no set number of doses and it only delivered on a 10th of [the] agreement.”
Baker was concerned that this would set a precedent for similar deals, but also questioned why the big pharma organisations were responsible for the contract terms and why the government accepted such unreasonable terms.
Baker also emphasised it was important for countries to impose transparency requirements so as to overcome the issue of big pharma using secrecy to make big profits.
Amin, CEO of the Initiative for Medicines, Access & Knowledge, told the press briefing: “These kinds of documents often get redacted … How can governments or anybody set any public policy when we don’t know what the commercial transactions are? So really we’re all operating pretty much in the dark.”
He said it is why “fights for justice”, such as the HJI’s case, often happen after the event.
Hassan said: “What this whole saga has shown us over the last few days and in utter disbelief is that the government, with the Constitution and a robust democracy, has told itself that it is powerless to actually resist this kind of power.”
J&J, named specifically by Hassan as needing further investigation, sent a statement to Daily Maverick after the media briefing, stating:
“Johnson & Johnson supported and worked closely with South Africa in every phase of our response to the pandemic. We supplied our vaccine to South Africa at our final global price of $7.50 per dose, transferred our technology to Aspen Pharmacare in Gqeberha to enable the local fill and finish of the Johnson & Johnson Covid-19 vaccine and later enabled Aspen to manufacture, market and sell its own Covid-19 vaccine, Aspenovax.
“In addition, we advocated for and supported the donation of hundreds of millions of vaccine doses by the US government, EU member states, the United Kingdom, Canada and New Zealand to Covax to under-resourced countries. To date, more than 85% of our doses have been delivered to low- and middle-income countries.
“We also ensured South Africa played a pivotal role in our clinical programme and helped make our vaccine available to approximately 500,000 South African frontline healthcare workers via the Phase 3b Sisonke (‘Together’) implementation study in early 2021.” DM