EU unable to cap COVID-19 vaccine prices in secret deals

  • Deals for doses happen behind closed doors between the EU and pharmaceutical companies. 
  • New variants, international competition and darkness around manufacturing costs have allowed Pfizer/Biontech and Moderna to increase the bill for European taxpayers.
  • Promoting vaccines as a public global good was shelved during the first procurement round.

In September 2020, the EU Commission’s top vaccine negotiator made a pledge. Doses would cost between €5 and €15, Sandra Gallina assured members of the European Parliament. “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.

One year after Gallina’s promise, two of the four manufacturers supplying the EU have inflated their prices. Documents seen by the Financial Times revealed that 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 may have overpaid €31 billion 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 to $2.85. The markup for each shot would thus be over 794% for Moderna and over 1,838% for Pfizer.

“We are getting a good deal”

But Richard Bergström, vaccine coordinator for the Swedish Government, told 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 vaccines 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 jabs 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,” says Bergström.

Richard Bergström | Photo courtesy of EHFG

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 vaccination.”

Redacted documents provided “no meaningful transparency”

What’s more, deals have long remained secret, despite €3 billion 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. AstraZeneca 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 $60 billion in jab sales in 2021 and 2022. Biontech alone could boost Germany’s economy by 0.5% 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,” confirms Richard Bergström. “Both the industry and the public side believe it’s better 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% of adults have now been inoculated, according to EU commission president Ursula von der Leyen. “We did it the right way, because we did it the European way,” she trumpeted in her state of the union address last week.

von der Leyen at the State of the European Union Address, 2021 | Photo: EU

Yet, von der Leyen also admitted that less than 1% 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 €3 billion 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.

Winnie Byanyima | Photo: UNAID

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.

This article has been published by the following media partners: EUObserver, Klassekampen, il Fatto Quotidiano and Público