It seems like many governments are in the Covid vaccine purchase business. Hardly a week goes by without purchase announcements ranging from 100M+ to several billion $.
Taking for example, Japan-to-pool-20bn-with-Europe-Canada-for-vaccine-buying-fund, this is what they state:
The purchasing program would negotiate with vaccine developers to secure supplies with upfront payments. Proponents of the proposal said it would support vaccine development by giving drugmakers assurance of demand for their product.
Assurance of demand??? With covid?
At this time no one has a proven Covid vaccine, so how are these deals structured?
Are they options to buy? Firm commitments? Contingent on success? Obviously, whoever first makes a fully functional vaccine will have a huge customer base, so the usual seller-side incentive of scoring a lead customer does not apply overmuch.
I can see many reasons to buy ahead of time, but not all of them obviously require these vast sums of money to be given to a corporate entity in advance. I assume only some of those sums are getting disbursed right away, but it seems like only the overall total agreement envelope makes the headlines.
support R&D. Are the funds required for R&D that high?
support testing. That's probably a better one, I could see large scale testing taking lots of resources.
prep the manufacturing pipeline. Another good one, since the vaccine numbers required are going to be so high. You want to be able to ramp that up, without needing the cash flow from selling the product. Or risking bankruptcy from a failed candidate. But would it not be better to structure that as funding a joint pooled manufacturing capability, at least by broad families of vaccine technology and then slotting in whatever vaccine works and is compatible?
secure priority treatment in advance. When company X has a working vaccine, everyone is going to want it right away. But what happens if you secure rights to a dud (90% of vaccine candidates fail)?
Not to mention that there have been concerns for a while that, if and when a vaccine shows up, rich nations will get first grab at it, leaving poorer nations behind.
DW has a round up article. Now, this actually touches a bit on what I am asking about, but doesn't really go into specifics.
"If we don't undertake 'at risk manufacturing,' then when the vaccine is successful in clinical trials, there will be a long delay (estimated to be almost a year) from the time of that clinical success to the scaling-up of production," a Gavi spokesperson told DW.
Now, I don't know how much Gavi is spending on that but sums like $1B on manufacturing seem high for pharmaceuticals. If this was semiconductor manufacturing, then yes, their fabs can cost that much.
How do taxpayers know that their money is being used in the most efficient fashion, rather than as either corporate welfare or as political gestures to show that "the government is doing something".
Note: I am NOT claiming this is corporate welfare, or that the funding is unjustified. At the level of economic pain, let alone deaths, that Covid is causing, multiple billions can be worthwhile spending.
But I am rather curious about what safeguards are being put in place when large $$$ contracts are being signed for unproven products.