Sunday

24th Oct 2021

Investigation

EU negotiators defend high Covid vaccine prices paid to pharma

  • Did the EU overpay by €31bn in the rush to purchase Covid-19 vaccines? (Photo: Arne Müseler)
Listen to article

In September 2020, the EU Commission's top vaccine negotiator made a pledge. Doses would cost between €5 and €15, Sandra Gallina assured MEPs. "We cannot go beyond certain limits because it wouldn't be affordable," she told the health committee.

Little did she know that her fixed cap would crumble under pressure from jabmakers.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • A study by Imperial College London showing that mRNA jabs could be mass-produced for as little as $1.18 [€1.01] (Photo: Flickr)

One year after Gallina's promise, two of the four manufacturers supplying the EU have vastly inflated their prices.

Documents seen by the Financial Times revealed Pfizer's vaccine now fetches €19.50, against €15.50 previously. Similarly, a dose of Moderna costs $25.50 [€21.60)], up from $22.50 in the first deal, although down from $28.50 in the second.

Overall, the EU could have overpaid €31bn for doses, according to the People's Vaccine Alliance, a coalition of more than 70 humanitarian organisations. This assessment rests on a study by Imperial College London showing that mRNA jabs could be mass-produced for as little as $1.18.

"We are getting a good deal"

But how come that pharmaceutical companies were allowed to impose higher jab prices?

Richard Bergström, vaccine coordinator for the Swedish government, told the cross-border journalism team Investigate Europe that medicines are always priced based on value, rather than manufacturing costs.

Under this rule, "the Moderna and Pfizer vaccines should cost more than $100 per dose, that was the view [of] the markets and the analysts," justifies Bergström, who has been negotiating doses on behalf of the EU. "We're not paying those prices."

The agreements were struck in May and June for a total of up to 2.1 billion shots until 2023. The new terms include vaccines for children as well as updates to tackle future variants.

"It's an all-inclusive price for the next two years and we think that was a very good deal," confirms Bergström.

Such details are precious to understand proceedings that have been shrouded in opacity.

When the European Commission was tasked with vaccine procurement on behalf of the bloc, a joint negotiation team of seven delegates was appointed by member states. But most remained anonymous, bar Bergström for Sweden, and César Hernandez for Spain.

"My problem is that I can't scrutinise negotiators," regrets Mohammed Chahim, a Dutch MEP on the health committee. "Parliament should be involved in talks. This lack of transparency feeds resentment against vaccines."

Redacted documents provided 'no meaningful transparency'

What's more, deals have long remained secret, despite €3bn of so-called Advanced Purchase Agreements to secure orders and de-risk production for drugmakers. "Contracts were only released after months of pressure from civil society, MEPs and the European Ombudsman," says Olivier Hoedeman of Corporate Europe Observatory.

This EU watchdog NGO submitted two freedom of information requests to the commission in September 2020 to access records. In addition to contracts, 365 internal documents were identified, but only 80 were shared.

"Unfortunately they were so heavily-redacted that their disclosure provided virtually no meaningful transparency at all," says Hoedeman, who adds that the EU failed to use its negotiating power to prevent Pfizer, BioNTech and Moderna from gaining a monopoly on mRNA vaccines.

"Taxpayers have paid three times"

Only four vaccines have been authorised by the European regulator so far. Astra Zeneca and Johnson & Johnson, which vowed to provide doses on a not-for-profit basis, are using conventional techniques, by growing weakened forms of the virus.

But their products have been increasingly shunned due to delays and reports of rare blood clots. Contrarily, Moderna, Pfizer and its German partner BioNTech, are using the newer mRNA technology, which teaches human cells how to trigger an immune response and is expected to be cheaper to produce. Still, their price tags are higher and their profits are rocketing.

Between the three of them, these companies have reaped over $60bn in jab sales in 2021 and 2022. BioNTech alone could boost Germany's economy by 0.5 percent this year.

"Vaccine corporations have been greedy," says Anna Marriott, policy lead for the People's Vaccine Alliance.

Taxpayers have paid three times, she claims. "First with billions for research, then with bloated prices draining public funds, and finally because they're paying little in taxes."

Negotiators' hands were tied

While Pfizer/BioNTech and Moderna demanded juicy cheques from the EU, they withheld information on their costs and profit shares, according to sources. Investigate Europe spoke to two key negotiators involved in the first round of procurement.

On condition of anonymity, they said that their hands were tied by the lucrative contracts already signed by the United States. "Trump set up a market based on secrecy and high prices," says one, adding that the pivotal variable was speed rather than rates, amid costly lockdowns.

"Big Pharma are very good at pressuring," says another, claiming some companies initially wanted four times the price agreed. "If you don't sign their contracts, others will do." More transparency would have put Europeans in a tight spot against international competitors, both argue.

"The whole system operates on the fact that you get more price competition through secrecy," adds Bergström. "Both the industry and the public side believe it's bette because everybody will get better deals."

Besides, the bill would have been much higher if member states had not teamed up, he says. As a former advisor to the World Health Organization and director-general of the European Federation of Pharmaceutical Industries and Associations, he knows the ins-and-outs of the trade from both sides.

'We did it the right way, because we did it the European way'

Bergström, as well as the two former negotiators, want to be judged on the results of the immunisation campaign. And despite a sluggish start hampered by delays and rare blood clots, over 70 percent of Europeans have now been inoculated.

"We did it the right way, because we did it the European way," trumpeted EU commission president Ursula von der Leyen in her state of the union address last week.

Yet, von der Leyen also admitted that less than one percent of global doses were administered in low-income countries. This is a betrayal of the EU's mandate to "promote vaccines as global public goods," alleges Ellen 't Hoen, director of research group Medicines, Law and Policy.

The EU committed to donating 200 million jabs this year and contributed €3bn to COVAX, the aid-like programme to share vaccines with poorer countries. However, the bloc remains one of the main opponents of a patent waiver proposed by South Africa and India at the World Trade Organization (WTO).

Such an initiative would temporarily lift restrictions on intellectual property and compel pharmaceutical companies to share know-how on their products, allowing others to ramp up supply worldwide.

"The EU has been lacking a true sense of solidarity," says Ellen 't Hoen. "What happened to no-one is safe before everybody is safe?".

'There was strong nationalism on the European level'

Access for all was never a priority in the initial talks, concede the two former negotiators who spoke to Investigate Europe. "The words 'global public goods' are an empty shell," says one, suggesting that the commission had neither the time nor the capacity to push for a patent waiver. "There was strong nationalism on the European level," adds the other. "We couldn't have this debate without the US and China, it would have been a losing strategy."

Vaccine-hoarding has been described as apartheid by Cyril Ramaphosa, the president of South Africa. UN under-secretary Winnie Byanyima told Investigate Europe that COVAX has so far only supplied 42 million doses to Africa, well below its target of 700 million doses by the end of the year.

"Today, rich countries in the EU are approving vaccines for booster jabs while doctors are dying in low- and middle-income countries because they cannot get even a first dose," condemns Byanyima.

The European Commission declined to comment on contract prices but reiterated its commitment to global cooperation. In a statement, it said: "around 236 million doses have been delivered by COVAX to 139 countries. This is a great collective achievement."

A spokesperson for Pfizer said governments are charged depending on their income, at a value significantly discounted during the pandemic.

BioNTech and Moderna were not available for comment.

Investigate Europe reached out to dozens of EU officials and governments, most did not respond.

To date, the European Commission has secured up to 4.6 billion doses, for a population of just 448 million people.

Author bio

Maxence Peigné is an investigative journalist with Investigate Europe.

EU commission keeps vaccine price secret

The European Commission is about to sign a fourth contract for hundreds of millions of vaccine doses against Covid-19. The contracts include non-disclosure clauses, meaning things like price or even where they will be produced remains confidential.

Pressure builds on EU to back WTO vaccine-patent waiver

MEPs have backed a motion demanding the temporality lifting of intellectual properties rights of Covid-19 vaccines - a symbolic move that puts pressure on the European Commission to change its position on the issue of global access to vaccines.

MEPs 'disappointed' at observer-status at new EU health body

MEPs have slammed the European Commission for sidelining the European Parliament in the new Health Emergency preparedness and Response Authority (HERA), giving MEPs a role of mere observers. Its budget will be €6bn over the next six years.

Baltic states lead Covid surge across east Europe

The surge of Covid-19 infections in eastern EU member countries, particularly the Baltic states, is putting health systems under increasing pressure, prompting governments to reimpose restrictive measures.

News in Brief

  1. Russia's anti-vax campaign backfired, EU says
  2. China angered as MEPs call for Taiwan talks
  3. Emissions from La Palma volcano reach Brussels
  4. Body of eighth victim of Belarus border-crisis found in river
  5. Report: Syrian bank fiddling currency to evade EU sanctions
  6. Nato adopts plan to counter new Russian threats
  7. Alleged killer of British MP 'felt affiliated' to IS
  8. Coronavirus: Belgium returns to 'red' zone

EU Commission tightlipped on Hungary recovery-plan decision

Among the criteria needed for EU pandemic recovery funds is for member states to propose arrangements "expected to prevent, detect and correct corruption, fraud, and conflicts of interests when using the funds provided."

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. EU states want more Belarus sanctions
  2. Gas price spike exposes rift at EU summit
  3. Poland vows not to give into EU 'blackmail' at summit
  4. EU vows to uphold Paris climate ambition amid scientists' fears
  5. Commissions's new migration pact still seeking 'landing zone'
  6. Europe can't ignore Chinese encroachment in Ukraine
  7. Lithuania - where 'biodiversity funding' is cutting down trees
  8. Dutch lawyers take Frontex to EU court over pushbacks

Join EUobserver

Support quality EU news

Join us