Ep64: Big Pharma and the People’s Vaccine

Ep64: Big Pharma and the People’s Vaccine
3 November 2020

Fellows of the RACP can claim CPD credits via MyCPD for listening to this episode and reading the resources below.

This is part 2 in our series on global public health and focuses on the impact of intellectual property laws on the development and distribution of pharmaceuticals. The COVID-19 pandemic has stimulated a frenzy of vaccine development never seen before, but also examples of hoarding, price hikes and vaccine nationalism. The crisis has brought together scores of governments, manufactures and philanthropic organisations to pool research outcomes and patents, but the response from big pharma has been mixed. We’ll discuss where the IP rules have come from and where exceptions are sometimes made for public health emergencies. We also discuss how pooled procurement mechanisms and advanced market commitments can help get drugs and vaccines to populations in developing countries and whether COVID-19 can prompt a permanent change to the existing IP regime.


Dr Owain Williams (University of Leeds)
Associate Professor Peter Hill AFPHM (University of Queensland)
Dr Deborah Gleeson (La Trobe University)

Written and produced by Mic Cavazzini. Music courtesy of Free Music Archive includes ‘Let Us Overcome’ by Tayler Watts, ‘Passages’, ‘Global Warming’ and ‘Salue’ by Kai Engel, ‘Electro Cool’ by 4T Thieves, ‘Capgras’ by Ben Carey and ‘Sunstorm’ by ELFL. Image licenced from Getty Images.

Editorial feedback for this episode was kindly provided by physicians of the RACP’s Podcast Editorial Group; Sern Wei Yeok, Leah Krischock, Saion Chaterjee, Priya Garg, Victoria Langton and Joseph Lee


Submission to the inquiry into the implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade [Public Health Association of Australia]
Establishing a Global Vaccine-Development Fund [NEJM]
Compulsory licensing of pharmaceuticals and TRIPS  [WTO]
Patents, trade and medicines: past, present and future [Review of International Political Economy]
Access to medicines and hepatitis C in Africa: can tiered pricing and voluntary licencing assure universal access, health equity and fairness? [Globalization and Health]
Weekly Dose: sofosbuvir – what’s the price of a hepatitis C cure? [the Conversation]
The People's Prescription policy report [Mazzucato, UCL]
Market failure and market intervention: A tale of two regimes [Williams, Global Public Health]
Pharmaceutical Patents Review Report 2013 [IP Australia]
Patents Associated with High-Cost Drugs in Australia [PLoS ONE]
The Trans Pacific Partnership Agreement, intellectual property and medicines: Differential outcomes for developed and developing countries [Gleeson, Global Social Policy]
Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016 [WHO]
Novartis vs Colombia [ISDS Stories]
WHO includes 16 new cancer drugs on list of essential medicines [The Lancet]
Open letter asking 37 WTO Members to declare themselves eligible to import medicines manufactured under compulsory license in another country, under 31bis of TRIPS Agreement [Knowledge Economy International]
Canada’s coronavirus aid package guards against drug shortages with compulsory licensing [The Conversation]
COVAX Explained [Gavi]
Uniting behind a people’s vaccine against COVID-19 [UNAIDS]
COVID-19 drug and vaccine patents are putting profit before people
[the Conversation]


MIC CAVAZZINI:                               Welcome to Pomegranate Health and the second part of our series on the political economy of Global Public Health. I’m Mic Cavazzini for the Royal Australasian College of Physicians. In the previous episode we heard how the defining convention of the World Health Organisation had held up through in response to COVID-19. Today I want to use the pandemic as a prompt to focus on the pharmaceutical market, given some of the bizarre events we’ve seen along the way. 

Remember back in April, as the worldwide death toll from COVID had reached a 100,000? One of the first glimmers of good news to emerge was a study showing that remdesivir increased rate of recovery in severely ill patients. Almost immediately the USA alarmed the global community by buying the entire stock of the drug for three months from manufacturer Gilead Sciences. And this was already after the administration had raised the heckles of the German government for trying to lure the vaccine manufacturer CureVac to US soil.

Then in June, the findings from a British trial showed that the corticosteroid dexamethasone could reduce mortality in ventilated patients by a third. The drug was already off-patent and production was ramped up pretty easily, but it didn’t stop the price of the drug almost tripling in some parts of the world.

And by mid-July there were promising results from Phase I vaccine trials against SARS-CoV2 as the virus is known; one conducted by the Oxford Vaccine Group with Astrazeneca, and the other by US firm Moderna. But these were soon followed by reports that Russian and Chinese hackers had tried to get access to research data, and you started to wonder if we were destined for a kind of Mad Max free for all. On a more positive note, 172 member states of the World Health Organisation came together behind the COVAX Facility in response to calls for “A People’s Vaccine” that would be “available to all, free of charge.”

Will this globalist spirit be strong enough to counter the vaccine nationalism we’ve seen so far? For a successful vaccines be produced affordably, leading pharma companies would have to give up intellectual property of their discoveries to generic manufacturers. In a minute we’ll unpack some of the laws that govern patents and commerce in this industry but here are some first impressions of the stage set by COVID-19, from RACP Fellow Peter Hill in Brisbane. He’s joined by visiting collaborator Dr Owain Williams.

PETER HILL:        I’m Peter Hill. I’m a public health physician and academic recently retired from the School of Public Health at the University of Queensland. My main research career is centred around the translation of global policies usually into low and middle income country contexts.

OWAIN WILLIAMS:         I’m Dr Owain Williams. I’m at the School of Politics and International Studies at the University of Leeds, UK. My area is the political economy of health including pharmaceuticals.

PETER HILL:        To my mind, I think the COVID story is unprecedented. Now that’s an neologism that you can use anytime. In terms of vaccines I don’t think we’ve had anything quite like this before. I think the latest count was somewhere around 230 variants and if we look analogous situations, malaria we’ve been hunting for a vaccine for absolute decades and always expecting it to come in the next ten years. HIV surprisingly hasn’t made progress in terms of a vaccine option. I think it’s the convergence of a number of things. It’s primarily affected high income countries initially which is a very different context to what we’ve seen in previous epidemics that threatened to become pandemics. And of course geopolitically we’re in a very interesting time.

OWAIN WILLIAMS:         So Mic, to get vaccines in Phase III trials within the space of six months of a novel outbreak is pretty extraordinary in terms of global effort, and I suppose to be applauded. But on the other hand we see the embedded market failures in medicines really multiplying. So the price of masks, the failure in India at present with regards to supplies of medical oxygen and the two drugs that you mentioned where you’ve seen huge price gauging and stockpiling. And it’s quite extraordinary that we’ve placed so much blind faith in markets for drugs and vaccines, and they routinely fail. And when I say “fail” I’m not using market failure in the neoclassical economic sense. I’m talking about wider failures – markets failing to provide public and welfare goods.

MIC CAVAZZINI:               Patent law goes back further than you’d think. In 1421, the architect Brunelleschi famous for the freestanding dome on the cathedral of Florence, was granted a three-year patent for a novel barge that could hoist marble blocks on and off. Not long after, the Republic of Venice also started to formally recognise the unique skills of artisan glassmakers on the Island of Murano. By the end of the 1700s laws protecting architectural and industrial designs were reasonably common in the western world.

Pharmaceutical patents, however are a very modern phenomenon. Into the 1970s they were available only in the US, Britain, France and West Germany, budensonide being an early example. Patents gave the originator exclusivity over sale in these countries, so that they could recover the costs of development and profit from their discovery.

But in any other country  you could have legally made a generic version of a drug, and sold it as cheaply as you wanted. States were concerned that granting monopolies to manufacturers would drive up drug costs for government health budgets. One by one, however, countries began to recognise that drug patents might be necessary to attract investors to the risky process of research and development.

This concept became cemented into the World Trade Organisation’s 1995 convention The Trade-Related Aspects of Intellectual Property Rights, or TRIPS. This covered everything from copyright on books and music records, to patents for industrial designs and plant varieties. Also trademarks and those geographical denominations which mean that a bubbly white wine from the Barossa valley is definitely. Not. Champagne. And for the first time, all member states of the WTO would have to give 20 year patent protections for novel pharmaceutical compounds. According to Owain Williams, this represented a real shift in the way drug therapies were thought of.

OWAIN WILLIAMS:         Up until the 1970s drugs were considered as public welfare goods and the reward for inventing and manufacturing them was – I don’t want to make grand claims here – but pretty much decoupled from price. And that reflects the historic funding of drug and vaccine research by states – that’s the way I’d capture it. Now that gets changed completely and then you get a slow but steady ratchet upwards of levels of protection – 20 year in the case of TRIPS – it’s a timebound monopoly. And that confers on you the rights to be a price setter

MIC CAVAZZINI:               Yes. The signing of the TRIPS Agreement in 1995 coincided with the peak incidence of deaths to HIV/AIDS. But in some of the hardest-hit countries like South Africa, the price of therapies was out of reach for most people. So in 2001, the Doha Declaration was hashed out which stated that, and I quote, “The TRIPS Agreement does not and should not prevent Members from taking measures to protect public health.” When the declaration was later accepted it introduced some ‘flexibilities’ to the TRIPS agreement. Can you explain these and particularly how compulsory licences work?

OWAIN WILLIAMS:         Doha was a product of really exceptional coalitions of gay rights activists, clinicians, human rights lawyers, really howling in the face of price gauging by pharma. You know, at the height of the HIV/AIDS epidemic a course of antiretrovirals would cost $10,000 per person per year. And of course that placed badly needed antiretroviral treatments outside of the hands of people who required them. So call it what you like but that’s a market failure. And of course underlying this was the fact that you had the potential for generic versions of these ARVs to be produced. And indeed in the run up to Doha, president of one of the big Indian manufacturers Cipla, famously offered to the European Parliament the price of a dollar a day.

So what Doha did was reconfirmed existing exceptions that are always present historically in patent law and one of the key exceptions is public health emergency. And one of the key mechanisms is the issue of a compulsory licence. Now it’s a negotiated arrangement in which the licence producer returns a set agreed sum to the originator firm – that’s what a compulsory licence is.

MIC CAVAZZINI: Let me jump in here an elaborate a bit more. Pharma companies will sometimes negotiate voluntary licences with generic manufacturers in peripheral markets. But when those negotiations fall down, a government can permit that domestic manufacturer to go ahead even without the permission of the patent owner. According to a WTO document, “countries are free to determine the grounds for granting compulsory licences, and to determine what constitutes a national emergency.” The local authorities are also free to decide what “adequate remuneration” for the patent holder should be, although there is a right of appeal. OK, back to the interview. 

MIC CAVAZZINI:               And it was recognized at the time that even with that flexibility to grant compulsory licences, most states, most countries, don’t have the manufacturing capability of their own to make use of this flexibility. So it wasn’t until January 2017, I believe, that a quorum of WTO members accepted an amendment that would allow countries in this boat to import generics from India, say.

OWAIN WILLIAMS:         That’s correct, yeah.

MIC CAVAZZINI:               And in the same year you published a case study of drug pricing in the journal Globalization and Health where you looked at parallel importing. Specifically sofosbuvir from Gilead Sciences, a direct-acting antiviral for treating Hepatitis C. It cures over 90% of cases and is much better tolerated than older interferon-based drugs. But the price of a 12 week course of treatment in the US is over $84,000 USD depending on the formulation. However in the African countries you looked Gilead was offering a tiered price – something like $1,200 USD for a full course.

OWAIN WILLIAMS:         That’s right.

MIC CAVAZZINI:               That’s a massive discount, which seems on the face of it, pretty generous. How does that arrangement or middle ground come about?

OWAIN WILLIAMS:         What that price discounting to your pricing does for pharma—it’s got a number of functions. One of the key functions – it’s good corporate PR, it’s good corporate social responsibility. They gain a lot from it. But the really important underlying function as far as I’m concerned is it legitimises the patent system more generally and it undercuts general competition.

MIC CAVAZZINI:               You talk about competing or undermining the generic market. To their credit, Gilead did also grant voluntary licences to several companies in India to make a generic version of sofosbuvir for export to these low income countries and the generic was being sold for around $700 in the countries you studied. But even at that price you concluded that it would be an astronomical burden for these countries to reach the WHO’s target of 80% of patients treated.

OWAIN WILLIAMS:         Completely, completely. I can’t remember the figures off hand –

MIC CAVAZZINI:               I think for Egypt and Nigeria it was a quarter of their total health expenditure, for Rwanda it was half, and for Cameroon it would be three quarters.

OWAIN WILLIAMS:         That’s just, you know, that’s not going to happen. There’s other disease burdens, there’s other needs in the health system. You wouldn’t be paying staff let alone other medicines and vaccines.

PETER HILL:        It also foreshadows the kind of problems we’ll have if we do have a COVID vaccine that requires two doses for example. Logistics of national coverage is going to bring with it the same kind of challenges. This is not going to be something that the average low or middle income country is going to be able to accommodate easily in its health budget.

MIC CAVAZZINI:               Interestingly you can get generic sofosbuvir in India for around $530 a course, and in Pakistan where Gilead hadn’t lodged a primary patent at all, it costs as little as $150.

OWAIN WILLIAMS:         Really?

MIC CAVAZZINI:               Yes. I just found that on a market website in Pakistan. So what’s going on here in this particular example? Has Gilead controlled specifically who is licensed to send generics to Africa and still set the price at a floor that they can tolerate rather than –?

OWAIN WILLIAMS:          I’ll be somewhat glib about this – frankly I think if they can guarantee sales in their core markets and core middle income markets, at a good price, they don’t really care about the peripheral markets. You have to recognise that pharma’s markets something like 40% of the global market for drugs is in the United States. You add then to that 38% being in Europe, and then you add on to that the outliers like Japan, Canada, Australia, New Zealand – takes you up to about 86% of the market. I mean Africa represents about 1 or 2% of the global market, so it’s a peripheral market. You can see that they’re not really – it’s gauging in the extreme to deny these regions cheaper generic drugs.

MIC CAVAZZINI:               I think Gilead are still doing OK – sofosbuvir formulations generated over $50billion USD in sales up to the end of 2017.

OWAIN WILLIAMS:         They’ve done alright out of that one and they will continue to do alright out of it. 2012 they got the patent, so they’ve got a healthy ten years patent monopoly on that. And yet you’ve got hardly anywhere in terms of eliminating the disease. We’re not even half-way there. It’s just absurd in welfare terms, in human rights terms.

I remember talking to the guy who wrote the industry proposal for the United States which kind of formed the basis of what we ended up with in the TRIPS Agreement – a very interesting man called Jacques Gorlin and he took me out for lunch once. He’s a very charming, entertaining man, but it’s like having dinner with the devil, for me. And he said, “We couldn’t believe we got away with it. We just thought everybody would push back and it was for us what in negotiation we call an ambit claim. We’d ask for this absurdly high level of protection, 20 years, process and product patents, biotech patents, gene patents – we’d ask for all of this, and we’d get half of what we set out to get. And we ended up with the lot.”

MIC CAVAZZINI:               We’ll talk about research and development costs in the next episode, but let’s agree that pharmaceutical companies do pretty well out of the 20-year patents under TRIPS. That hasn’t stopped them for lobbying for even further protections in many other free trade agreements since 1995. You probably heard the Trans Pacific Partnership discussed heatedly in the press a few years ago. The TPP was hashed out over 5 years of secretive negotiations between 12 countries; rich ones like the US, Canada and Japan; and lower income countries like Peru, Vietnam and Brunei. Australia and New Zealand were at the table too.

Before the TPP was even signed, however, a newly-elected Donald Trump immediately bailed out of the agreement calling it a ‘bad deal’ agreed on by guess you? But it was actually a very good deal for US pharmaceutical companies, by virtue of provisions such as patent extension and secondary patents.

Why patent extensions? Well after a drug patent is filed, there are often delays before it’s accepted by a registration body like the TGA, Medsafe or the FDA. This will eat away at the 20 year market monopoly, so the pharma companies argued that they deserved to be compensated with a few extra years of exclusivity. Even though this provision was dropped from the final version of the TPP as it stands now, Australia actually has an Extension of Term clause in its Patent Act already.

In a federal government review from 2013 the authors found patent extensions has delayed the entry of generics into the Australian market and added a cost of around $240 million dollars to the PBS the previous financial year. The authors also concluded that it hadn’t attracted more pharmaceutical research to Australia as intended, since even firms that had conducted most of the research overseas had benefited from this “wind fall.”

Another common allowance in trade agreements is for secondary patents. This is where a company modifies a formulation so that it’s now in a gel cap rather than a pill say. Maybe they add another active ingredient or find some new indication. Any of these tweaks might be enough to get another few years of exclusivity on the molecule. In a 2013 study in PLoS medicine, researchers found that the 15 costliest drugs in Australia had an average of 49 patents associated with each of them. AstraZeneca’s Omeprazole alone 121 patents on its own, again thanks to rules that predate the Trans-Pacific Partnership.

These layers of IP protection are described as patent thickets and are a daunting obstacle to any manufacturer of generics according to Deborah Gleeson from the School of Public Health at La Trobe University. On behalf of the Public Health Association of Australia, she advocated against increased patent protections in the TPP.

DEBORAH GLEESON:      Companies tend to use secondary patents as a way of kind of protecting their investment past the end of the 20- or 25-year patent term and making it much more difficult for generic companies to negotiate their way through all of those patents. Litigation is very expensive and time consuming and so patent law in Australia and in many other countries have a low standard for inventiveness. So you don’t have to demonstrate that something is very new, very novel. It just has to be an incremental change to the status quo essentially.

MIC CAVAZZINI:               And again, there was a provision within the Trans-Pacific Partnership that guaranteed originators that any clinical trial data they submitted to a registration body could remain undisclosed. Normally the TGA would use these same data to rule on the quality and safety of a generic versions of the drug. But with this exclusivity rule other firms would need to replicate the data. And you say that this hurdle to reinvent the wheel could remain in place even after the patent itself has expired?

DEBORAH GLEESON:      So essentially even if a vaccine say is not under patent it can still get five years of monopoly based on the clinical trial data. So this is a potential obstacle to compulsory licensing. So even if a compulsory licence is issued data exclusivity may still protect that product. The US tried to extend that five-year period for biologic products in the TPP. We could’ve had more difficulty getting access to biosimilar medicines which include vaccines. But there was a lot of resistance from the other countries and a very big global movement by health and humanitarian organisations against that type of extension of monopoly periods for biologics.

MIC CAVAZZINI:               There’s a study you refer to in that 2018 article for Global Social Policy; After Jordan signed an agreement with the US in 2001, data exclusivity delayed the availability of generic versions of 79% of medicines launched thereafter, and it caused a 17% increase in medicine expenditure. There are similar findings in Central America after the signing of the CAFTA agreement. So it’s not just Australian consumers who’d have to pay a bit more for their drugs – the real losers from the new provisions of the TPP would be the low income partners to the Trans-Pacific Partnership – so Chile, Vietnam, Brunei. In one statement, Medécins Sans Frontiéres said, “The TPP will go down in history as the worst trade agreement for access to medicines in developing countries.” Can you explain that a bit?

DEBORAH GLEESON:      So in developing countries that don’t have schemes like the pharmaceutical benefits scheme, you know, people on low incomes can face catastrophic costs for medicines if they have to buy the patented version. But there’s also the issue of the administrative and human resource costs of actually implementing a whole lot of rules around intellectual property rights, and this for small countries with very limited health budgets and very limited government budgets overall – this can be a really significant impost and can really reduce the amount of funding there is to go around.

MIC CAVAZZINI:               It’s not just the US that has written these so-called “TRIPS-Plus” provisions into its trade agreements, but the EU and Japan too which have their own pharma industries to protect. As Deborah Gleeson has written, this represents “the failure of wealthy countries to successfully prosecute their agenda through multilateral forums.” That’s to say that the World Trade Organisation is like a classroom where everyone gets to speak in turn. But after class, the new kid in school gets cornered in the corridor and bullied into giving up his lunch money for the prospect of making friends—or in this case, the promise of new export markets.

Public health is inextricable from diplomacy and WHO researchers have shown that even those developing countries that would be eligible to make use of compulsory licensing often encounter many obstacles and threats. A sting that’s common to many trade agreements are Investor-State Dispute Settlements. ISDS provisions enable foreign corporations to sue a government for compensation at an international tribunal if they think their investment has been harmed by that country’s domestic laws. It was through these that cigarette manufacture Phillip Morris challenged Australia’s plain packaging law.”

Another infamous case was that of Novartis vs the Colombian government around the production of the chaemotherapy imatinib, marketed as Glivec by the Swiss firm since 2001. Imatinib can reverse the death sentence of chronic myeloid leukemia for many patients- that’s if they can afford lifelong therapy.

A Colombian firm had been making a generic version until Novartis obtained a patent in that country in 2012. It now would cost $20,000USD for a year of treatment, 4 times the previous price, and twice the average annual income in Colombia. Since negotiations weren’t going anywhere, the government issued a compulsory licence for the generic. Novartis in turn, threatened an ISDS tribunal, arguing that Colombia had violated “legitimate expectations” from an existing trade deal.

Eventually the two parties agreed to meet half-way, so adamant was Novartis not to concede a compulsory licence. In 2015, the World Health Organisation added imatinib to its list of essential medicines. This are the drugs deemed to be necessary for a functioning health system at all times, and which should be available at prices affordable to individuals and the community. This has done nothing for CML patients in the US, where imatinib costs an eye-watering $92 000 every year. As a result, fewer that a quarter of patients in that country end up receiving treatment. Nevertheless, Glivec brought in $4.7 billion to Novartis in the year 2012 and accounted for 10% of the firm’s revenue.

But the US couldn’t start importing generic imatinib even if it wanted to. It’s just one of 37 higher income countries that volunteered to forego access to the TRIPS flexibilities when the Doha Declaration was put into practice. They promised never to override primary patents by manufacturing or importing generics.

But desperate times call for desperate measures
.  In April this year, Dr Gleeson was one of 45 academics, along with Joseph Stiglitz of World Bank fame, who wrote an open letter  to ask that those WTO members walk back this commitment in response to the sheer scale of the COVID-19 pandemic.

DEBORAH GLEESON:      We called for the governments who waived their rights to import medicines under compulsory licence from other countries to revoke that voluntary waiver that they made many years ago when the conditions that we face now in a global pandemic were probably not front of mind. So an example might be the drug remdesivir which is a treatment for COVID-19 and Gilead Sciences has priced remdesivir at over $3,000 Australian dollars for a five-day course of treatment for developed countries. Now although Gilead has issued voluntary licences to a number of companies in India, Pakistan and Egypt, those companies are only permitted to supply low and some middle income countries.

Now Gilead Sciences has only limited manufacturing capacity, so it would make sense for Australia, in a situation where we can’t actually get access to the product from Gilead Sciences to be able to issue a compulsory licence to import generic copies of remdesivir from India for example. So Cipla has agreed to manufacture remdesivir for $66 for a course of treatment. We already have provisions in our Patents Act to enable patents to be overridden. So the government can issue a compulsory licence or use the Crown use provisions in situations where there’s a public health emergency. Earlier in the COVID-19 pandemic Canada decided to introduce emergency legislation to waive the requirement to negotiate with the patent owner before issuing a compulsory licence, and that’s something that Australia could consider doing in order to speed up that process. I mean basically we have that mechanism – it’s about whether there’s the political will to use it.

MIC CAVAZZINI:               This isn’t intended to be a beatup on Gilead Sciences. Corporate interests will always take advantage of the regulatory loopholes left open to them, and Gilead just happens to provide some current examples of this. Take the Orphan Drug Act in the US, which is supposed to stimulate attention to rare diseases when there is little expectation that costs would be recouped. Among the incentives offered are large tax credits on clinical trial costs, 7 years of exclusivity on a given indication and additional research funding from the Federal Drug Administration.

Remdesivir already had a similar designation in Europe for treatment of Ebola patients. In March Gilead Sciences secured orphan drug status for the use of remdesivir against COVID-19, because at that time, it met the criterion of a rare disease that affected fewer than 200,000 people in the country. However briefly. After a backlash from civil society groups, Gilead walked back its additional monopoly claims on the drug.

As Deborah Gleeson said before, Gilead Sciences has permitted parallel distribution of generic remdesivir to 127 mainly low-income countries and this is to be applauded. But Owain Williams writes that middle income countries with great inequity are the ones hardest hit, because they’re ineligible for tiered pricing.  

South Africa and Brazil, for example, rank 1st and 8th on the World Bank’s estimates of income inequality and a quarter of South Africa’s population lives below the poverty line. While that proportion is lower in Brazil, 11 million people have had to sacrifice other essential household purchases to cover the costs of healthcare. Both these countries do have respectable public healthcare systems, but the inflation of drug prices strains national budgets too.

Remdesivir is just one of many existing therapies that aren’t readily accessible to most people who need them. The WHO estimates that 80% of the world’s population lives in places with little or no access to pain medications. And more than two million children die each year from vaccine-preventable diseases.

Letting the market solve these problems hasn’t worked, because the demand and the supply side of the equation are so mismatched. One way to redress this balance on behalf of lower income countries has been through pooled procurement mechanisms. These are large collaborations between governments and philanthropic organisations that represent millions of potential patients across the developing world.

One success story is Gavi, The Vaccine Alliance, which went to tender for 2 billion doses of pneumococcal vaccine spread over ten years- and set a price cap of 3 dollars 50 US per dose. Pharma companies flocked in for a piece of the 1.5 billion dollar contract contract that was underwritten by the World Bank. Here’s Owain Williams again.

OWAIN WILLIAMS:         I mean look, the vaccine market is a fairly exceptional market. The model is volume – high volume, low price. And the upshot of that is a lot of the big pharma companies have retreated from the vaccine market. And yet you can still make money. I mean whether you’re a generic firm, that is the generic model, or a big pharma operator, one of the big four left in the vaccine market, you’ll still make money out of it. Advance market commitments are the magic bullet because they – you’ve got guaranteed sales so you can produce according to what those commitments are. So it’s perfect for producers. You know you can gear your production line, you know that you’re going to need – in 2021 you know that you will be receiving x billion dollars for your MMR or pneumococcal vaccine, and you just crank it out. That’s money in the bank. There’s no innovation involved in this incidentally – there’s no innovation.

MIC CAVAZZINI:               Well there’s two sides of it. I mean you wrote in the Journal of Global Public Health that yes UNICEF is responsible for 40% of the world vaccine purchasing. So that is volume you talk about of vaccines that have already been developed. But these kind of public-private partnerships have also contributed to new product development. For example in 2018 the Medicines for Malaria Venture and Glaxo Smith Kline came out with tafenoquine, which is the first single dose medication against plasmodium vivax. And the TB Alliance now has a combination therapy for the treatment extensively drug-resistant or multidrug-resistant tuberculosis. So those development pipelines exist but are they financially sustainable or do they constantly need topping up from big donors like the World Bank?

OWAIN WILLIAMS:         Yes they do. They require bankrolling. That’s fine – I mean that’s a good thing, but these product development partnerships have increasingly also had to coordinate. And one of the key areas of coordination is not just in terms of data but it’s in terms of patent thickets. And these patent thickets are dense – different companies owning key platforms or processes or components so there’s multiple interests and intellectual property rights that are variously required in developing new treatments. And a lot of these product development partnerships, one of the key things that they do is negotiating that mess.

MIC CAVAZZINI:               While drug molecules can be easily cooked up in industrial labs in many parts of the world, vaccines are much too complex. They’re often carefully folded proteins that have to be cultivated in chicken eggs or in cell cultures. But many of the biotechnology steps in the pathway, the reagents or even the cell lines involved, might have IP protections of their own.

For example, Australia’s CSL, formerly the Commonwealth Serum Laboratories, will need to acquire the adenovirus vector technology from AstraZeneca if it’s to produce their COVID vaccine locally. And the Moderna candidate is an mRNA-based vaccine, which is an even more niche technology that hasn’t been approved in humans before.

I just want to highlight another important distinction around funding models. As Owain Williams has said, there have been some impressive examples of procurement mechanisms for churning out existing vaccines on a massive scale. But it’s a lot harder to get funding together to bank on research for new drugs and vaccines, if they’re for diseases that predominantly affect the developing world. Fewer than 5% of new medications approved over the first decade of this millenium were for neglected diseases.

Translational and clinical research are both costly, and vaccine trials especially so because you need big numbers to demonstrate prevention of infrequent outcomes. On average, only 7% of vaccines in the preclinical stage make it to market, and even by the time you get to clinical trials the rate of success is still barely 20%.

Given these odds, pharma companies prefer to focus on the markets that can pay. They research high cost chaemotherapies, or drugs for common lifestyle diseases like cardiovascular diseases and diabetes, even though these represent only 10% of the global disease burden.

It’s remarkable, therefore, how many have gotten behind the call for “ A People’s Vaccine” to the SARS-Cov2 virus. COVAX has already got 15 vaccine candidates in its portfolio, including the AstraZeneca and Moderna candidates now in Phase III. In earlier stages of clinical testing are others from the University of Queensland, from Curevac in Germany, from Clover Biopharmaceuticals in China and from Inovio and Novavax in the USA.

COVAX represents 172 countries and is supported by various philanthropic organisations and global health bodies like Gavi and the Coalition for Epidemic Preparedness Innovations. Participation in COVAX is essentially like a lotto pool—rather than put your money all one ticket, you share the risk on several different contenders. While rich countries pay for entry, those that can’t will still be looked after. The initial target is for 2 billion doses by the end of 2021- enough to vaccinate 3% of the population of every participating country in the first round. Successive rounds would bring vaccine coverage up to 20%, and some originator firms have already agreed for their vaccine to be produced at scale through the Serum Institute of India.

The question is whether COVAX is a beacon of goodwill that will diffuse the vaccine nationalism and ruthless IP protection that has come before it. Here’s Peter Hill describing just how peculiar this partnership is.

PETER HILL:        What strikes me as being interesting was that the most significant investment in this area that we had seen prior to COVID was Gavi using this as a way to stimulate development of vaccines that otherwise would not have had a real commercial attraction to the major pharmaceuticals. And whilst the mechanism may be the same the motivation and the economic impulse underneath them was really quite different.

MIC CAVAZZINI:               The Oxford/AstraZeneca vaccine is now in Phase III testing and even before the data were out a billion unconditional pre-orders have been placed by the UK, Europe, the US – Australia is trying to get a piece of the pie as well. You’re both at the University of Queensland where Australian researchers have also working on a candidate with federal funding. If this one works out is it right that Australians get first dibs on this vaccine?

OWAIN WILLIAMS:         Quite, quite. I mean immediate priorities for Australians aside is still a successful candidate will have to be produced and licensed in other areas and other countries.

MIC CAVAZZINI:               And if supply was limited you could argue that the limited supply needs to be targeted in specific hotspots before it gets distributed universally perhaps.

OWAIN WILLIAMS:         That’s right. Well there’s all sorts of equations. Clearly in terms of the epidemiology of this there’s a clear case for prioritising certain groups. You arguably should be giving it to frontline workforce and you want to be giving it to people who are vulnerable either in terms of what they do so that social reproduction can continue, so
so cleaners, bus drivers, and people in aged care.

DEBORAH GLEESON:      At the moment vaccine nationalism is really undermining equitable access to vaccines at the global level. You know, the problem won’t be solved until it’s solved for everyone. It won’t – the world won’t return to normal, the global economy won’t recover, people won’t be able to travel, until the pandemic has resolved in all countries, not just a handful of wealthy countries.

COVAX and the Technology Access Pool are really important mechanisms for the COVID-19 pandemic. They have flaws but they’re the most promising mechanisms that we have if COVAX is actually funded sufficiently. At the moment there are still billions more dollars that are needed. So wealthy countries simply haven’t committed enough funds to ensure access for the countries that can’t fund their own vaccines, and we see these wealthy countries negotiating directly with vaccine manufacturers advance purchase agreements in order to secure access separately from the COVAX mechanism, which means they may buy up so much of the vaccine that there isn’t enough left for low income countries.

MIC CAVAZZINI:               Yeah, I found that interesting that Australia had already been in negotiations with AstraZeneca before it joined the COVAX fund and paid $124 million to the COVAX fund. Do you think COVAX and the Technology Access Pool have the potential to short circuit the whole IP regime for the future or is it a blip?

DEBORAH GLEESON:      I think the global regime that we have at the moment where research is funded by providing patents, monopolies on clinical trial data and so on is a fundamentally broken regime. It really works against what we need in a pandemic which is timely, affordable access to new products. And we really need to look at new ways of funding research and development, you know, we need to rethink the entire intellectual property regime – we need to rethink the way trade and investment agreements are negotiated and the types of rules that are put into them- mechanisms like the investor state dispute settlement process. During a pandemic we need rapid access to new products on a large scale and so we really need a different system.

MIC CAVAZZINI:               You can hear all about a different system in the next episode. We challenge the basic premises of intellectual property, that these laws and the free market are essential for stimulating innovation.

In terms of Australia’s commitment to a People’s Vaccine, it was only late September that Australia joined the COVAX facility. A few days later, the Prime Minister, Scott Morrison, used his speech to UN General Assembly to make this statement. “In terms of a vaccine, Australia’s view is very clear. Whoever finds the vaccine must share it. This is a global responsibility, and it's a moral responsibility, for a vaccine to be shared far and wide. Some might see short-term advantage, or even profit. I assure you to anyone who may think along those lines, humanity will have a very long memory and be a very, very severe judge."

It will be interesting to see whether the diplomatic pen is mightier than the sword of the market. For now, I want to thank my guests Peter Hill, Owain Williams and Deborah Gleeson for their contribution. The views expressed are their own, and may not represent those of the Royal Australasian College of Physicians. 

To find all the references mentioned in this podcast please go to our website racp.edu.au/podcast. Pomegranate Health
is just one of many educational resources you can find at the RACP’s Online Learning Resources portal along with recorded lectures and eLearning course and the Online Congress series of webinars. There’s something for every specialty, and even a page to submit your favourite tools.

If you found this podcast interesting, don’t be afraid to share it with your colleagues. Many thanks, I’m Mic Cavazzini.


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28 Nov 2020
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