Why Are Vaccine Prices Secret, And What Can We Do? — Dr Khor Swee Kheng

The government can release more non-price details today, for example the terms for logistics, indemnity, insurance and freight.

On 22 December, Minister Khairy Jamaluddin announced that the government will spend RM2.05 billion to purchase vaccines for 26.5 million Malaysians. If every person receives two doses, that works out to approximately RM39/dose on average, which is a very reasonable price and appears globally competitive.

These vaccines are an important tool in our ability to fight the pandemic. Malaysia has done well to sign procurement agreements with several companies to deliver enough vaccines for 83% of our population. However, this important milestone is being overshadowed by questions regarding the transparency of prices for each individual company.

These demands for price transparency are reasonable, for public trust, vaccine confidence and anti-corruption reasons. As a health policies and global health expert, I am supportive of transparency and fair contract terms between low-and-middle-income countries (LMICs) and large and powerful multinational pharmaceuticals. That will improve health outcomes, reduce corruption and strengthen public trust.

However, price transparency for the vaccine is a highly complex situation with two sides. We must consider both sides to understand why the Malaysian government can’t disclose the vaccine prices. Understanding both sides will show us how to improve the outcome, which is value-for-money procurement, no corruption and high public trust.

As a brief disclosure, I’m currently an independent consultant for health systems and policies. I do not own stocks in any company anywhere in the world, and I spent eight years working for a large pharmaceutical company (two years in medical affairs in Singapore and six years as Ethics and Compliance Director based in Dubai, Shanghai and Paris covering Eastern Europe, Middle East & Africa and China).

Firstly, we must consider the forces outside government control. Pharma companies have three major customers: governments (health ministries, hospitals or government insurers), private entities (private hospitals, distributors or agents) and global organisations (e.g., UNICEF buys 2 billion vaccine doses/year).

Pharmas often ask their customers to sign non-disclosure agreements (NDAs), even if it’s a large customer. The NDAs can cover areas like intellectual property, prices or commercial terms. It’s probable that these NDAs cover ex-factory prices (i.e. wholesale, but not retail prices) and other commercial terms such as Custom/Insurance/Freight (CIF) terms or mark-ups along the distribution chain.

Pharmas want the NDAs to preserve or enhance their advantage. One, keeping intellectual property and patents secret provides an advantage over their competitors. Two, keeping ex-factory prices secret enhances their negotiating strength with other buyers. This is especially true because multinational pharmas sell to countries with different levels of wealth. Three, keeping commercial terms (such as freight prices, insurance terms and mark-ups) secret provides another advantage over their competitors.

You may ask then, why would a customer sign NDAs? Firstly, there’s no clear disadvantage for a customer to sign an NDA. There’s only a clear advantage if all other customers stop signing all NDAs with every company. So far, there is no single actor in the world willing and able to convene this collective action. Two, the customer needs or wants the products made by pharma and is willing to sign an NDA.

NDAs could help pharma make more money. At this point, maybe you’re angry at pharma. But we can’t blame pharma because it’s only responding to global capitalism. Wall Street, pension funds and asset managers want higher profits to benefit shareholders, pensioners & investors. The average Malaysian can benefit too, if institutions like EPF, Khazanah, PNB and private asset managers invest in pharma.

Now you might say “pharma shouldn’t profit from disease” and this is a very reasonable statement. But the solution is not to solely blame pharma, but also to change the structural forces that compel pharma to act in certain ways. In other words, we must change the way global capitalism functions and how global health goods (like vaccines, medicines and oxygen) are managed, priced and governed. Then, we can have equitable outcomes for the poorest and most vulnerable people in the world.

But that’s a very big and complex conversation, and it should be done separately. This letter only speaks about Covid-19 vaccine prices and NDAs. At this point, we understand that the NDAs are outside our government’s control.

Malaysia must comply with them, because we have no choice. Revealing the vaccine prices means that we break the NDA, and we could potentially lose our vaccines. It’s not just Malaysia under the NDA; even the European Commission (with 27 countries and 450 million people) signed an NDA with Pfizer.

But, although the government is under NDAs, the government cannot “hide” behind them. Transparency will increase vaccine confidence and public trust, which strengthens public health. There are several ways we can build trust and fight corruption, despite the NDAs.

Firstly, publicly announcing the overall vaccine cost is an excellent move. Kudos to Minister Khairy for this transparency. Secondly, Minister Khairy has the right instinct to offer to disclose more to relevant Parliamentary Select Committees and the Public Accounts Committee. In theory, individual MPs can sign NDAs to preserve the confidentiality of the disclosure, but they are responsible if leaks happen and we lose vaccines.

Thirdly, the government can commit to release the details of each contract at a pre-agreed date, for example “two years after signing the contract”. This is an easy clause to insert into a contract with any pharma. Fourthly, the government can release more non-price details today, for example the terms for logistics, indemnity, insurance and freight. These value-added services are not price-related and can be public information.

Fifthly, Malaysia needs long-term work to strengthen our own external reference pricing system (to benchmark prices against peer countries) and build our own domestic manufacturing capacity to reduce over-reliance on foreign entities. Finally, Malaysia must actively lead reforms of global health. Two specific examples are the governance and pricing of global public goods such as vaccines and medicines.

In summary, I personally do not support NDAs. However, I understand and accept the current realities of global health and the global capitalist system. Malaysia is a middle power with limited leverage in a global health and capitalist landscape that is tilted against low-and-middle-income countries.

That understanding will give us a firm foundation to mitigate the disadvantages of NDAs, while working hard to increase our own self-reliance and change the deep infrastructure of global health. In the case for NDAs and Covid-19 vaccine prices, although the government is bound by NDAs, it can still do a lot. It’s up to citizens to understand both sides of the landscape, and hold the government accountable where possible.

  • This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.

You may also like