You’ll have a quieter 2021, they said. Trade won’t be such a big issue, they said. The Brexit deal will be done and Donald Trump will be out of the White House, they said. In fact, we’re not even a month into the year and already the snafu over Covid-19 vaccinations in the EU is starting to echo last year’s trade disputes about personal and protective equipment (PPE), only this time with mind-bendingly sophisticated technology and intellectual property rights involved. All we need now is Emmanuel Macron expropriating a consignment of AstraZeneca vaccines destined for the UK from the runway at Lyon airport and we’ll be partying like it’s 2020.
In this context, today’s main piece looks at whether the critics are right that the public-private partnership model of governments working with pharma companies isn’t the way to vaccinate the world. Meanwhile, Tall Tales explores how the vaccines saga adds another layer of antagonistic myth to a dysfunctional relationship between the EU and UK.
The nasty dispute between the EU and AstraZeneca over vaccines, with the UK trapped in the blast radius, is so complex and fast-moving that we’re more inclined to curl up into a protective ball and watch proceedings through our fingers than comment as it goes along.
One thing strikes us, though. The episode underlines the problem revealed by last year’s episode where the EU imposed bloc-wide restrictions on PPE exports to keep essential goods at home. Weaknesses in the EU’s internal market spill over into dysfunction in external trade. Brussels is usually very good at running a trading bloc, where it has half a century’s practice. But it struggles with centralised procurement in a medical emergency where it doesn’t have practised mechanisms of buying and monitoring in place.
Hence the export restrictions — either actual, as last year, or threatened, as with vaccines now — because of the EU’s inability to manage internal supply and demand in a crisis. Export controls probably won’t happen, but for member states even to be discussing them makes the EU look daft given its solemn vows last year to eschew trade restrictions on essential medical supplies.
Either way, the current global inoculation effort, with huge inequities between countries, doesn’t look very impressive. Could we do better? Rich-world governments have approached the development of a coronavirus vaccine with a public-private model. The idea is to guarantee demand via public purchase commitments, funded by rich countries’ aid budgets for poor nations if necessary, and get pharma companies to do research and development in return for intellectual property rights. Ngozi Okonjo-Iweala, director-general presumptive of the World Trade Organization, is steeped in this approach as chair of Gavi, the global vaccines alliance, though she declined to comment for this piece.
The model has a lot of institutional momentum. Oxford university was initially going to give the IP for its vaccine away but was persuaded, not least by the highly influential Gates Foundation, to partner with a pharma company instead.
This approach has certainly led to an entire bunch of Covid-19 vaccines being invented very quickly. But that doesn’t necessarily translate to rapid production scale-up or efficient distribution, especially in the developing world, where many people will be waiting for years for jabs. Covax, the aid-funded collective purchasing mechanism for developing countries, has been slow to get going, but even if budgets were bigger, the vaccines are just not there to be bought at the moment.
As we’ve described before, a group of developing countries have argued for IP waivers for Covid-19 vaccines and other medicines under WTO rules to ease supply. If only it were that simple. The knowhow to manufacture biologic vaccines isn’t mainly contained in a patent: it involves immensely complex manufacturing processes and learning-by-doing.
The public-private model works best when a private company invents a treatment which is easily replicable and scalable. That is not the case here.
Jamie Love, head of the IP advocacy group Knowledge Ecology International, said: “The decision not to require the transfer of knowhow right from the beginning of vaccine development was a massive global policy failure.” It’s not just Covax that has disappointed, Love says: the Covid-19 Technology Access Pool (C-TAP), a sharing mechanism for coronavirus-related medical data and research housed at the World Health Organization, has also achieved little.
Ironically, given its tussles with Brussels, AstraZeneca was more alert to the scaling-up problem than most companies. It partnered from the start with the Serum Institute of India, the world’s largest vaccine manufacturer. But although Serum is doing some impressive work — it is shipping a million vaccines to South Africa next week — it’s not enough to supply the world. Rumours of Indian export bans have arisen (though have so far come to nothing) to add uncertainty to the situation. As the EU is now discovering, concentrating production in a small number of places raises political risk.
Love reckons Oxford should have opened up its technology from the beginning for anyone who wanted to learn. Governments could then have supported production with huge spending through mechanisms such as the US’s Defense Production Act, which enables the federal government to use extraordinary powers to compel companies to manufacture products according to presidential direction.
Making that work on a global scale would probably mean the world’s leading countries at least loosely having to co-operate on a huge subsidy and procurement drive. Politically implausible? Maybe. And there’s no guarantee that a more state-driven approach would have created the same technologies, let alone improved production and distribution. China and Russia have created their own vaccines with huge state support, but their cost, efficacy and manufacturing capacity are all at present unclear.
But as we said last year when all this kicked off, the more that the public-private model looks like it is struggling, the more an alternative looks attractive. The debate about the right model to vaccinate the world is very far from over.
There was, during the early stages of the pandemic, a lot of talk about a V-shaped recovery. Along with a U-shaped one, a Nike-tick one and even a K-shaped one, which we never quite understood. The V-shaped recovery has not materialised for economies in general, but it has for trade, where a rebound in manufacturing and high demand for consumer durables has led to a sharp recovery.
Trade volumes are now, as the chart above shows, back at their pre-pandemic levels. A spectacular turn of events given the depth of the trough in the second quarter.
The scriptwriters have certainly come up with a new twist to take the Brexit story into the next series: a British-Swedish company led by a Frenchman forced to export vaccines developed at Oxford university and made in the UK to continental Europe rather than inoculate its own elderly from a deadly disease.
Contributing to the cross-Channel tension is a lurking tall tale some EU types and British politicians like to tell themselves — that the other side is useless and hence any sign of superior performance is perforce a sign of skulduggery.
Some Brexiters thought the EU would be a pushover in the withdrawal talks because they’d seen it flailing around hopelessly in the eurozone debt and migration crises. They failed to spot the difference between squabbling member states trying to invent policy during an emergency and the European Commission’s finest ruthlessly exercising long-practised skills and stratagems in an area of established competency. Result: the EU took the UK apart in the negotiations and those Brexiters are left whingeing and mewling about unfairness.
Looking the other way, some EU types seem to think that because it made such a hash of Brexit and is something called “Anglo-Saxon” — though what two Germanic tribes from the Dark Ages have to do with this we can’t imagine — the UK can’t get anything done. This fails to distinguish between the reality-challenged politicians running the Brexit talks and the competent (and centralised) government, civil service and public health operation doing the vaccination programme. Result: what looks like a weird sense of indignation from some on the EU side that the Brits’ superior inoculation record must somehow involve cheating.
Obviously if the two sides were prepared to learn from each other, everyone would be better off. I guess we’ll have to watch the rest of the episodes to see if that happens. No spoilers please.
The best trade stories from Nikkei Asia