SOUTH AFRICA — An analysis of South Africa’s COVID-19 vaccine contracts has shed light on pricing disparities and risk assumptions made by pharmaceutical companies.
According to the Health Justice Initiative (HJI), a South African NGO, Janssen/Johnson & Johnson (J&J) and Serum Institute of India (SII) charged South Africa more for vaccines than the European Union (EU), and South Africa assumed all the risks in one-sided contracts.
J&J charged South Africa US$10 per dose, which is 15% more than the price it offered the EU. The South African government was also required to make a non-refundable down payment of US$27.5 million.
Pfizer, too, charged South Africa US$10 per dose, a 32.5% premium compared to the reported US$6.75 “cost price” it offered the African Union. South Africa had to pay US$40 million upfront, with only half of it being refundable.
SII intended to charge South Africa US$5.35 per dose for Covishield, its generic AstraZeneca vaccine, which was 2.5 times more than what it charged the EU. However, South Africa suspended its order due to safety concerns.
The Health Justice Initiative and advocates for medicines access scrutinized the contracts after winning a court challenge to access South Africa’s COVID-19 vaccine agreements.
Jay Kruuse, director of South Africa’s Public Service Accountability Monitor (PSAM), pointed out vague delivery terms in J&J contracts, giving South Africa little control over dose arrivals. He also mentioned extensive confidentiality conditions and indemnity clauses.
The Pfizer contract shifted most risk and costs onto South Africa, with provisions described as “extreme” by Canadian professor Mathew Herder.
He highlighted the lack of guarantees for vaccine delivery and Pfizer’s “commercially reasonable efforts” standard, which allows prioritizing more profitable deliveries elsewhere.
The contracts also contained “sweeping indemnification provisions,” requiring South Africa to hold Pfizer harmless and bear costs for product recalls. Pfizer mandated the creation of a vaccine injury compensation program.
The COVAX program’s pricing was also questioned, with South Africa potentially liable for US$734 million for vaccines, including advance payments of US$94 million.
The contracts’ terms have been described as a “set of ransom negotiations” that favored multinational pharmaceutical corporations.
The lack of transparency and leverage against late or non-deliveries left governments, including South Africa, in a vulnerable position during a global emergency.
Addressing these inequities requires regional and global solutions. The Health Justice Initiative called for deliberations in pandemic accord negotiations and revisions of the International Health Regulations at the upcoming United Nations General Assembly.
The issue of intellectual property monopolies and commercial interests in vaccine production must also be addressed to ensure equitable access to vaccines in future pandemics.
While South Africa’s vaccine contracts faced criticism for their terms, the government defended its decisions, stating that it prioritized saving lives amid limited bargaining power and unequal vaccine distribution. The uncertain circumstances at the time led to difficult choices in securing vaccine doses.
South Africa also engaged with various organizations on potential frameworks for pandemic cooperation and preparedness.
The analysis of South Africa’s COVID-19 vaccine contracts highlights disparities in pricing and contract terms, raising questions about equitable access to vaccines and the need for global solutions to address these challenges.
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