Does the world need another health policy blog? Probably not. But I promise I’ll keep it short…
Last week, Albert Bourla, CEO of Pfizer, cautioned that patients may need to receive a third COVID-19 booster shot within months, and potentially an annual booster thereafter. Many factors may be at work, chiefly the rapid development of new SARS-CoV-2 variants, and our limited knowledge on the strength and duration of protection current vaccines will provide. He may or may not be right – and if he is, the same will almost certainly be true for other vaccines too – and I am not remotely equipped to assess whether he is. But let’s step back and think briefly about two economic aspects of this which I find rather worrying.
Governments everywhere are understandably desperate to start realising the benefits of vaccination – even those (like Australia’s federal Government) who have thus far failed to vaccinate significant portions of their populations. Plans for “vaccine passports” are rife, even if they vary in complexity from old-school pieces of paper through to the usual frothy tech solutions. Aside from their profoundly complicated human rights implications (I’m just not going there, don’t worry…), any kind of vaccine passport that serves as a permit (to work, or to travel, or to attend mass gatherings etc.) effectively creates a captive market, whether it is individuals who pay for their vaccinations or their governments. In the extreme, this is as big a captive market as you could conceive of – every one of the world’s 7.9 billion people. So anyone who is able to decree that we must all have three rather than two shots, and/or keep on getting them every year, has the power to increase manufacturers’ revenues and profits massively at a stroke. This creates the opportunity for extraction of economic rents on an almost unbelievable scale. To borrow the broader argument of Brett Christophers (2020, p287), citizens of every nation will effectively be held captive by the need to be vaccinated, and they or their governments will be obliged to continue to pay. The economic rents this new area of fiat monopoly will create for vaccine producers – already rentiers par excellence through their intellectual property rights – will be vast.
At the same time, any need for boosters (for variants or as annual top-ups) will create massive additional demand, and further strain production capacity. Many rich nations successfully put themselves at the front of the queue for vaccine output. Instead of manufacturing capacity continuing to churn out vaccines for the rest of the world once the more privileged nations had achieved adequate coverage (which was as close to a real plan as the world had), there is now a grave risk that much of that capacity will remain tied up in an endless cycle of re-tooling for new variant boosters and updates – so that the poor world may never effectively catch up. Only a major expansion of physical manufacturing capacity, distributed throughout the nations of the world, can get us out of that trap.
So that leaves us with a few firms who possess extraordinary rentier power over a product essential to any “new normal”; firms whose lobbyists and protectors – from high income country governments to global philanthropic foundations – have successfully rebuffed every attempt to challenge their intellectual property and patent rights throughout the pandemic. What is to be done?
First, we all need to go back to that TRIPS Waiver proposal from South Africa and India and stop bed-wetting about its alleged impacts on “innovation”. Manufacturing infrastructure needs to built across the world, to start cranking out reliable, world-class product cheaply and quickly. A compulsory licensing approach which gave the proprietary vaccine manufacturers only pennies on the dollar would still see them reap unfathomably huge profits over coming years; seeking monopoly profits is, in this case, seeking to extract maximum rent in its purest form. That is simple greed; and a grossly inefficient allocation of resources.
Second, vaccine manufacturers and their representatives need to be removed entirely from the governance structures (national and global) that make the call on requirements for boosters, variants, updates etc. COVID-19 has already seen an explosion of problematic procurement and governance decisions in many countries. Effective governance must be reinstated now. The vaccine designers and manufacturers have achieved extraordinary things over the last year; but they cannot expect to get a seat at the table to vote themselves open-ended profits for years to come.
Third, citizens in any jurisdiction that is bringing in vaccine passports or permits need to be absolutely clear with their governments – we will only accept your vaccine passport as long as you, the government, can deliver free-of-charge, timely access to vaccination for everyone who wants it. Governments must bear the full cost of vaccine passport regimes, and not shift the burden onto citizens. Perhaps that might provide some small incentive for governments to think more clearly about keeping the costs of vaccines down, and how to avoid being held hostage by manufacturers for years to come.
And for the record, I eagerly await my turn in the queue to receive a first shot (of whatever flavour) here in Australia.
Frontier Futures 
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