A patient receives a Johnson & Johnson vaccine against COVID-19 in Hammanskraal, South Africa on July 6, 2021.Alet Pretorius/AP
Secret vaccine contracts, disclosed after a court battle, show that global vaccine manufacturers charged high prices and insisted on hefty advance payments from the South African government at the height of the COVID-19 pandemic.
The contracts are believed to be the first COVID-19 vaccine contracts in any country to be legally disclosed without redactions. They provide a glimpse into the exhaustive conditions that were imposed by the vaccine suppliers at a time when thousands of people were dying and developing countries were desperate for doses.
The contracts, released on Tuesday, show that South Africa was liable for at least US$734-million in payments under four vaccine deals in 2021, including advance payments of almost US$95-million, without any guarantee that the doses would be delivered on time.
The contracts imposed a series of secrecy and indemnification clauses to shield the companies from scrutiny and legal liability, while other clauses allowed them to take control of any export of the supplied vaccines. They were also exempted from the obligation to give full refunds if their deliveries were delayed or cancelled.
Health activists fought for months in the South African courts to obtain the contracts. When a court ordered their release last month, the South African government decided not to appeal the ruling and began releasing the contracts to the activists.
An international coalition of health groups, including the Health Law Institute at Dalhousie University in Halifax, said the contracts showed a pattern of bullying, profiteering and unethical behaviour by the vaccine makers.
“The contracts reveal the phenomenal power that pharmaceutical companies wielded in negotiations,” said Fatima Hassan, a human-rights lawyer who heads the Health Justice Initiative, which led the court battle to obtain the contracts.
“In our scramble for desperately needed vaccines, South Africa was forced to hand over unimaginable sums of money for overpriced vaccine doses,” she said. “Put simply, pharmaceutical companies held us to ransom. And we must ask: Did they do it to other countries, too?”
The contracts showed that Pfizer charged South Africa a price of US$10 a dose for 30 million doses, and South Africa was required to pay US$40-million in advance, of which only half was refundable. The price per dose was 32 per cent higher than the US$6.75 “cost price” that Pfizer reportedly charged to the African Union. (The Globe and Mail has asked Pfizer to respond to this, but the company did not respond by Tuesday evening.)
Another supplier, the Serum Institute of India, charged South Africa a price of US$5.35 a dose, according to the contracts. This was more than double the price that it charged to the European Union, and it required payment in advance.
A third supplier, Johnson & Johnson, charged a price of US$10 a dose in South Africa, according to the contracts, and it required a non-refundable advance payment of US$27.5-million. The health groups said that this price was 15 per cent more than the company charged the European Union, and about 25 per cent more than the estimated not-for-profit price.
The contract also prohibited South Africa from imposing any export restrictions on Johnson & Johnson’s vaccines, even on doses that were filled and finished in South Africa. This allowed the company to export some of the South African doses to Europe without penalty at the height of the pandemic.
In response to questions from The Globe on Tuesday, Johnson & Johnson said it had ultimately charged a final price of US$7.50 to South Africa, despite the higher price cited in the contract.
It said it had also transferred its technology to a South African company, Aspen Pharmacare, to allow it to sell its own version of the vaccine, while also providing 500,000 doses to South African health care workers under a clinical study. “We remain deeply committed to helping address the health needs of people in South Africa,” it said.
The fourth contract was with Gavi, the Vaccine Alliance, for doses under the non-profit COVAX program. The contract gave South Africa no guaranteed number of doses and no delivery date, and the country was liable to pay for all doses ordered, regardless of delivery. In response to questions from The Globe, Gavi said it had provided financial incentives to manufacturers to ensure their readiness to produce, and so the payments from countries such as South Africa could not contractually be waived.
Matthew Herder, director of the Health Law Institute at Dalhousie University, said the pricing information in the contracts was “extremely” worrisome.
“It is absolutely clear from these four contracts that South Africa was bullied in terms of sweeping indemnification and confidentiality obligations, complete waiver of sovereign immunity, no guarantee of delivery, requirement of a vaccine compensation program before any doses supplied, no scope for local manufacturing, and zero flexibility to share doses,” Prof. Herder told The Globe.
The release of the vaccine contracts is a major victory for transparency, with global implications, he said.
The health activists spent four days poring over the vaccine contracts after obtaining them last week under the terms of the court order. Their conclusion was “utter disbelief that this is the power of these companies,” Ms. Hassan told an online media briefing.
The contracts forced South Africa to sign away its sovereign rights, she said.
Nick Dearden, director of British-based group Global Justice Now, said the South African court decision is “phenomenally important” and will spur his group to fight harder for access to British vaccine contracts, which have been heavily redacted.
“When secrecy is allowed to rule, big pharma gains tremendous power, and they use that power to undermine global equity and public interest,” he told the media briefing.