All aboard Gavi’s COVAX express? First class tickets for fully self-financed countries: second class tickets for funded countries (supported by ODA)

On Thursday, 4 June 2020, the United Kingdom of Great Britain and Northern Ireland hosted the Global Vaccines Summit which successfully raised $US 8.8 billion for Gavi, the Vaccine Alliance – breaking the original fundraising target of $US 7.4 billion. Amidst great fanfare, solidarity, and good will, Gavi launched the Gavi Advance Market Commitment for COVID-19 Vaccines (COVAX Facility). According to Gavi’s press release, COVAX is “a new innovative financing instrument to provide access to COVID-19 vaccines for low- and middle-income countries” with the aim of establishing a “global mechanism to ensure equitable access to future COVID-19 vaccine.” Fifteen donors provide initial seed funding of just over $US500 million for COVAX; the goal is to raise $US 2 billion.

At the launch of COVAX on 4 June 2020, AstraZeneca became the first vaccine manufacturer to sign a memorandum of understanding with the COVAX Facility. Gavi’s press release noted,

    AstraZeneca will guarantee 300 million doses of the COVID-19 vaccine it is developing in collaboration with the University of Oxford. These doses will be supplied upon licensure or WHO prequalification.

    Gavi’s funding of procurement through a volume guarantee is being carried out alongside efforts by the Coalition for Epidemic Preparedness Innovations (CEPI), who have announced a funding award to support manufacturing for the AstraZeneca/Oxford vaccine candidate. Both AstraZeneca and Oxford have committed to operating on a not-for-profit basis for the duration of the coronavirus pandemic period to enable broad and equitable access, including for low and lower-middle income countries.”

COVAX and the Access to COVID-19 Tools Accelerator: Whither allocation and pricing policy?

In an early two page pitch dated 1 May 2020, Gavi provided the following reassurances in relation to transparency and cost-plus pricing.

Using clear rules and criteria including for funding, engagement with manufacturers and allocation of vaccines, with strong governance drawing upon the Alliance’s experience. For example, several manufacturers have already committed to treat vaccines against COVID-19 with a cost-plus strategy. To provide reassurance on this, manufacturers will be asked to commit to transparency regarding their costs, and pricing could be based on validated costs of production plus a small margin.

On 11 June 2020, GAVI released a 32 page technical design document on the COVID-19 Vaccine Global Access (COVAX) Facility which provided a detailed overview of COVAX and its place within the vaccines pillar of the Access to COVID-19 Tools Accelerator (ACT-A). The document has provoked more questions than answers in relation to questions of the equitable allocation of vaccines, pricing, and the management of intellectual property rights.

In its technical design document, Gavi underscored the exigent need to ensure sufficient supply of the “most suitable (safe, efficacious, quality assured and appropriate) COVID-19 vaccines as soon as possible, and that when available, supply is accessible globally for an effective public health response” (COVID-19 Vaccine Global Access (COVAX) Facility Preliminary technical design, Page 2).

Gavi touts the COVAX Facility as a collective approach to ensure that no country is left behind.

By working together, countries can jointly manage the uncertainty of which vaccine candidates will succeed by A collective approach allows for a much larger portfolio of vaccine candidates than can be reached independently and increases each country’s chance of accessing sufficient supply.Countries can also share technical expertise and knowledge on vaccine candidates and investments, increasing the likelihood of supporting the most promising candidates and using manufacturing facilities most effectively as the portfolio matures.In addition, this globally coordinated approach, whereby demand and resources are pooled across countries,would be a more efficient way of investing and would allow countries to leverage benefits of economies of scale and reduced transaction costs.Given that upfront certainty on demand and financing will be required to incentivise manufacturing expansion, acting urgently is essential (Ibid, 2-3).

The financing of the COVAX Facility raises the most problematic questions in relation to equitable access. COVAX envisages two classes of countries: 1) Fully self-financing countries (including high income countries and upper middle income countries and 2) Funded countries which includes low income countries and lower middle income countries.

Gavi proposes that the following modalities for the participation of high income and upper middle income countries in COVAX.

Fully self-financing countries (high income countries and upper middle income countries contribute directly to the Facility by committing to purchase the doses to vaccinate the highest priority populations. These countries confirm this commitment by making upfront financial contributions to the Facility, proportional to the number of doses they will receive. These contributions will act as down-payments against future vaccine delivery and will enable the Facility to enter into advance purchase commitments for future vaccine supply.As supply becomes available, a ring-fenced proportion of that real-time vaccine production will be directed to the fully self-financing countries to be used by these countries according to the guidance provided by their national bodies. COVID-19 Vaccine Global Access (COVAX) Facility Preliminary technical design, Page 4.

For context, the World Bank classifies the following countries and territories as upper middle income: Albania, Algeria, American Samoa, Argentina, Armenia, Azerbaijan, Belarus, Belize, Bosnia and Herzogovina, Botswana, Brazil, Bulgaria, China, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, Equatorial Guinea, Fiji, Gabon, Georgia, Grenada, Guatemala, Guyana, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kosovo, Lebanon, Libya, Malaysia, Maldives, Marshall Islands, Mauritius, Mexico, Montenegro, Namibia, Nauru, North Macedonia, Paraguay, Peru, Romania, Russian Federation, Samoa, Serbia, South Africa, Sri Lanka, St. Lucia, St. Vincent and the Grenadines, Suriname, Thailand, Tonga, Turkey, Turkmenistan, Tuvalu, and Venezuela.

For the fully funded countries (low income and lower middle income), Gavi proposes the following arrangements:

Funded countries (LICs and LMICs) are those whose financial commitments for participating in the Facility are covered by official development assistance (ODA). They also get access to volumes as soon as it becomes available to meet requirements to vaccinate the highest priority populations. The volumes specifically directed to these funded countries would be allocated across them using guidance from the global allocation frame work under development by WHO, which builds on WHO’s policy recommendations on priority target population (Ibid).

The COVAX Facility’s allocation mechanism best illustrates the stark difference in treatment between the fully self-financing countries and the funded countries. The fully self-financing countries (“investors”) receive the following benefits package.

    Fully self-financing countries:The Facility will work to secure enough vaccine doses to enable all countries in this group to vaccinate e.g. 20% of their populations, to ensure that every country can immunise their highest priority populations .Ring-fenced doses for this group will be distributed evenly amongst all countries in the group until each country has received enough doses to vaccinate this proportion of their population. Whilst the Facility will determine the number of doses that a country receives, it will not interfere with a country’s sovereign right to follow guidance from their own national bodies about how they use any fully self-financed allocated doses once they receive them.
    In line with the principle of solidarity, if a country in this group successfully concludes a bilateral deal and receives enough doses to cover e.g. 20% of their population, the Facility requests that these countries delay receipt of any additional doses from the Facility until all other Facility country participants have received enough supply to also cover their highest priority populations.The Facility requests that countries be open and transparent about their supply agreements. This requirement matches the condition placed on manufacturers to also be open and transparent about their bilateral deals with countries (Ibid, 11).
    Once all countries in this group have received sufficient supply from the Facility to cover e.g. 20% of their population, any additional supply of vaccines would be offered to countries in line with a needs-based allocation framework.

For low income and lower middle income countries dependent on donor financing, the following treatment is proposed.

The Facility will work to secure enough doses to enable all countries in this group to vaccinate at least their highest priority populations. Ring-fenced doses for this group of countries will be allocated to, and distributed across,countries according the WHO Allocation Framework,which is based on transparent ethical and public health criteria. This will require a clear picture of applicable demand from countries.In addition, WHO will provide policy recommendations to countries on use of vaccines, which will be particularly important for developing countries which may have limited capacity to conduct a robust epidemiological assessment (Ibd).

Under the COVAX Facility’s allocation framework, Gavi commits to ensure that funded countries can “vaccinate at least their highest priority populations”; as this group of countries are not investors in COVAX, they are not guaranteed the requisite amount of doses to cover 20% of their population.

To cover access for low income countries, low middle income countries, including IDA-eligible Small Island Economies, Gavi’s COVAX AMC, housed within the COVAX Facility, Gavi proposes the following pull mechanisms:

The COVAX Facility will utilise pull mechanisms, which are instruments to incentivise manufacturer product development and installment of capacity through the assurance of future procurement at a pre-determined volume and price of a successful candidate.Two types of pull mechanisms will be used. Gavi will enter into manufacturer-specific contingent volume guarantees to procure vaccines that meet the agreed WHO Target Product Profile, so as to de-risk and incentivise timely investment in expansion of manufacturing capacity. The Facility will also rely on a market-wide demand guarantee,which could provide continued incentives and assurances to manufacturers to expand production capacity and to bring products to market meeting e.g. preferred characteristics of the WHO target product profile (TPP)or with enhanced characteristics based on country needs.

For more background on Gavi’s earlier forays with advanced market commitments, please see Médecins Sans Frontières’s (MSF) perspicacious briefing: COVID-19 Vaccine Global Access (COVAX) Facility: Key considerations for Gavi’s new global financing mechanism.

In terms of pricing, the technical design paper acknowledges that beyond the near term, COVID-19 vaccines pricing would evolve towards a tiered pricing approach.

  • Short-term period to reach priority populations and control the pandemic: A flat pricing strategy (with firms able to set their own price, which then applies across countries participating in the Facility) will be encouraged, given existing bilateral agreements between a number of countries and manufacturers and broad expectations to price the vaccine as a global good during the short-term period. Such a pricing structure should incentivize broad country participation in the Facility. However, some manufacturers may prefer tiered pricing;the Facility will accommodate that request if the price levels offered for each tier are considered suitable. If a flat pricing strategy is proposed by manufacturers, a cross-subsidization mechanism may be applied to establish differential pricing charged to countries to account for varying ability to pay.
  • Beyond this initial short-term period, the market is expected to evolve towards a traditional, market-led, tiered pricing approach(noting that the Facility, itself,will be time-limited) (Ibid, 20).

The COVAX Facility’s technical design paper is silent on deep technology transfer including language on know-how, patents, and other intellectual property rights.

In terms of governance, the paper provides this rather nebulous description:

A representative governance structure is under development.The tailored governance body will include representatives from Facility investors and recipients, including a combination of self-financing and funded countries, and will shape how the Facility may evolve as conditions change (Ibid, 22).

As the COVAX Facility presses forward, many questions still remain unanswered.