The Covid-19 Vaccine Economy

March 26, 2021

Despite some recent case spikes in parts of the world and the emergence of new strains, the Covid-19 pandemic is on the wane and life is slowly reverting to normalcy. This is largely due to the development of vaccines that are currently being manufactured in various countries, including the US, UK, India, and China. It is expected that the ongoing vaccination drive will help achieve herd immunity and effectively end the pandemic by late 2021. However, the distribution of these vaccines that are intended to help countries recover from a pandemic that has affected almost everyone, is far from uniform. This article explores how the market for coronavirus vaccines and their distribution across the world is extremely heterogeneous due to a host of economic factors including income disparity, level of development, barriers to entry and the global political dynamic.

A Major Hurdle in Income and Infrastructure

Vaccines manufactured in different countries vary not only in composition but also in terms of their price. For instance, the Moderna vaccine produced in the US has an MRP of over ₹2000 immediately putting it out of reach of the poorer populations. On the flip side, the vaccines produced in India - Covaxin and Covishield - are expected to be sold at ₹206 and ₹200 (for each of the first 100 million doses) respectively. Although Covishield is being sold at ₹200 to the government, it will be sold at ₹1000 per dose to private buyers later. The accessibility to most vaccines also depends on the governments’ abilities to subsidize and distribute them at an affordable price.

Simultaneously, the availability of necessary infrastructure is also a key factor. The Pfizer-BioNTech vaccine, for instance, needs to be stored at -70°C, whereas the Moderna vaccine needs to be stored at -20°C. This requires sophisticated cold storage chains that developing nations do not have, thus making them unsuitable alternatives. Meanwhile, most other vaccines are stored using regular refrigerators, which developing countries can arrange at a relatively lower cost. Although these differences should not matter much, there have been slightly different efficacies reported for each of the vaccines, with the more effective vaccines being the ones that are selling at a higher price and require more expensive infrastructure in general.

Income disparity is not only a hurdle in the availing of vaccines but also in their development. For instance, India’s Covaxin faced serious allegations of conducting flawed phase 3 trials on the basis of a lack of informed consent being taken from the participants in the clinical trial. Some hospitals in Madhya Pradesh allegedly offered the ‘vaccine’ to people for money and then included them in the randomized trial where they received either the placebo or the vaccine. It is important to note that neither was the vaccine approved at this time nor were the people notified before or after their inclusion, that they were a part of a clinical trial. Unsurprisingly, the victims of such malpractice are largely the poor, who are not well-informed about research protocols, and do not have much awareness of the specifics of the vaccine. Such instances of exploitation are never witnessed among the wealthier sections of society.

The Patent Capitalisation

The pandemic has touched the farthest corners of the world, with only a handful of countries having remained unaffected throughout. As it spread from person to person, Covid-19 has been blind to income, race, religion and caste, but it has left behind differing impacts on everyone. As in every other major global disaster, the world’s poor have been the worst hit due to their economic instability and limited access to healthcare facilities. Clearly, they are the most in need of the vaccine to return to some form of a sustainable livelihood. Unfortunately, with capitalistic tendencies seeping into the distribution of a typical welfare good, the behaviour of the vaccine market is far from desirable.

Possibly the worst of these tendencies is the attempt to patent the vaccine by large companies in high-income countries (HICs). Pharmaceutical firms like Pfizer and Moderna seek to maximize their profit margins by making production more exclusive, which will make the vaccines inaccessible to poorer countries. The World Health Organization has urged these companies to let go of benefits that will threaten the world’s supply of vaccines through the COVAX programme. India and South Africa have proposed to the World Trade Organization to ban the patenting of Covid-19 vaccines, at least temporarily. However, HICs stonewalled this proposal, citing the need for the incentivization of ‘innovation’ and investment into developing the vaccines. It is difficult to buy this line of argumentation though, considering how the same countries are also hoarding vaccines in a bid to drive their prices up. Fuelling the already prevalent inequality in the vaccine market any further will merely make it harder for the world to exit the pandemic and the bid to seek the patent waiver continues.

The Political Firepower of the Vaccine

In addition to the other cogs in this vaccine market, global politics and foreign relations determine, to a great extent, how vaccines are sourced distributed around the world. For instance, India has distributed vaccines to many countries, especially developing nations, which some have interpreted as a diplomatic tool employed by the government. Of course, to produce enough doses to be able to distribute millions for free is reflective of India’s strong pharmaceutical sector, but it is also a testament to the political sway that the Covid-19 vaccine holds. This political power is concentrated in countries like India and China, which are making vaccines more suitable for developing nations. Its effects are especially evident especially in the shift in the stance of the Canadian government on the issue of the farmers’ protest in India. After initially commenting in support of the protesting farmers, the Canadian PM “commended” the handling of the protests by the Indian government. Notably, this change was seen around the same time that India agreed to ship 5 lakh doses of the Covid-19 vaccine to Canada. Irrespective of whether one is critical of it, the Indian government has put the vaccines to good political use.

In conclusion, the Covid-19 vaccines comprise a very volatile and influential market that has significant political ramifications. As the world rises from the ashes of the pandemic, the suppliers of the vaccines wield unlimited power over those that are in desperate need of them. The vaccine possesses all the characteristics that regular goods do but remains much more than that. Ensuring the availability of the Covid-19 vaccine to the world’s most vulnerable populations will require a combination of political will and global cooperation at an unprecedented level, in the absence of which, the pandemic will continue to trample on the poor as it has in the past.

(Written by Siddarth Venkatesh and Edited by Sagara Ann Johny)