Explainer: Federal-State Tussles Over Covid-19 Vaccines

By Boo Su-Lyn |

With a finite number of vaccines produced by a few manufacturers (Sinovac in China and Pharmaniaga in Malaysia), increasing distributors may not improve access because they’re all accessing the same source.

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KUALA LUMPUR, May 21 — Tensions over the procurement of Covid-19 vaccines have erupted into an ugly fight between Putrajaya and state governments, notably Penang, amid Malaysia’s surging epidemic that has yet to reach its peak.

The federal government — represented by Khairy Jamaluddin, the Coordinating Minister of the National Covid-19 Immunisation Programme (PICK) — described Wednesday an offer by an individual to donate two million doses of Sinovac’s Covid-19 vaccine to the Penang state government as a “scam”.

Khairy had said the Hong Kong-based company named Xintai Development Enterprise Ltd — which the individual, a Mr Yong Chee Kong, claimed to represent — was not registered, according to company search records. Khairy also said the vaccine developer, China-based Sinovac Biotech Ltd, informed him it did not receive any applications on the purported donation.

A company with a close-sounding name — Xintai Enterprise Development Ltd — is indeed registered in Hong Kong, but Yong’s letter to Penang Chief Minister Chow Kon Yeow spelled the company’s name as Xintai Development Enterprise Ltd.

Yong seemed to give differing accounts of his intended donation, telling Malay Mail that he was acting in his personal capacity to donate the vaccines, but telling Free Malaysia Today that it was his employer, Xintai Enterprise Development, that wanted to contribute the Sinovac vaccines to Penang.

The cost of two million Sinovac vaccine doses is immense. Sinovac’s coronavirus vaccine is reportedly priced from as little as US$5 (RM20.73) per dose in Thailand, US$14 (RM58.04) in India, US$17 (RM70.48) in Indonesia, and possibly US$38 (RM157.55) in the Philippines. These reported prices are for government orders; prices for smaller orders by private parties are likely to be higher.

The price of the Sinovac shot for Malaysia is unknown, due to the federal government’s confidentiality agreements with the vaccine developer. Similar confidentiality agreements are used by other Covid-19 vaccine producers in other countries.

This means that the worth of two million doses of Sinovac’s vaccine can range from (a not insignificant) RM41.5 million to a whopping RM315.1 million.

Then there are the Selangor and Sarawak state governments. Sarawak seems to have bypassed the vaccine minister and gone directly to Prime Minister Muhyiddin Yassin to gain approval to procure 500,000 doses of Sinovac’s vaccine.

The Sarawak state government did not not reveal if it is getting the domestically manufactured product from local pharmaceutical company Pharmaniaga Bhd or the finished vaccine imported by Pharmaniaga from China, or from another distributor importing the finished vaccine from China.

Selangor’s state government said that it has booked 2.5 million doses of Covid-19 vaccines and that it plans to roll out its own coronavirus vaccination programme next month under SELGATE Corporation, a state-owned company. State executive councillor Dr Siti Mariah Mahmud declined to name the brand of the approved vaccine ordered by the state.

Malaysian law does not prohibit companies without a health care or medical background from distributing pharmaceutical products, including Covid-19 vaccines, as long as such products have been approved by the National Pharmaceutical Regulatory Agency (NPRA). Although one local company may be appointed by a foreign manufacturer as the local product registration holder to register their products in Malaysia, this does not prevent the manufacturer from appointing multiple distributors to distribute their products.

Companies without a track record in the pharmaceutical industry like a bamboo product manufacturer, a digital government services provider, and a wire and cable manufacturer, which only diversified into the health care business during the Covid-19 pandemic last year, have previously announced intentions to distribute coronavirus vaccines in Malaysia.

How Can Putrajaya, State Governments, Private Sector Get Sinovac Vaccines?

In light of limited global supplies of Covid-19 vaccines by Pfizer-BioNTech and AstraZeneca-Oxford, this article will focus on Sinovac, the third coronavirus vaccine approved by the NPRA for use in Malaysia.

The federal government has appointed Pharmaniaga as the sole manufacturer — to undertake the fill-and-finish processing, the last stage of manufacturing, of Sinovac’s Covid-19 vaccine — and sole distributor of the shot. Besides manufacturing the vaccine locally, Pharmaniaga can and has procured the finished product from Beijing.

There are three ways the federal government, state governments, and the private sector can obtain Sinovac vaccines: the filled-and-finished vaccine manufactured by Pharmaniaga, the imported finished product from Sinovac’s manufacturing site in Beijing, China, that is distributed by Pharmaniaga, or from another distributor importing and distributing the finished vaccine from Sinovac’s Beijing plant.

Khairy told Pharmaniaga in no uncertain terms at his Wednesday press conference to prioritise and fulfill the federal government’s order of 12 million doses of Sinovac’s vaccine — whether via fill-and-finish or by importing the finished product.

Pharmaniaga asserted in a statement on May 11 that it is able to produce two million doses per month in its Puchong facility and that as of May 10, it has manufactured 1,284,147 doses of Sinovac’s vaccine, of which 290,480 doses have been rolled out, while 400,000 doses of the finished product have already been distributed for PICK. This leaves some 11.3 million doses left of Putrajaya’s order to fill.

The government-linked company (GLC) said last February that aside from the 12 million Sinovac vaccine doses it is supplying Putrajaya, it has also procured another two million doses that will be manufactured locally for the private market. Nonetheless, Khairy has instructed Pharmaniaga to prioritise the federal government’s order for PICK.

CodeBlue spoke to Galen Centre for Health and Social Policy chief executive Azrul Mohd Khalib for the rest of this article:

How Does A Manufacturer Determine The Priority Of Filling Covid-19 Vaccine Orders?

Usually, it is determined by what is agreed upon in the agreement between the manufacturer and the client who is procuring these vaccines. There could be clauses within the agreement that say that their order should take precedence over orders of lesser value or that they are bound to prioritise the government’s orders due to a public health emergency.

We saw some controversy in Europe erupt due to such clauses being invoked by the European Commission in its order with AstraZeneca. In reality, the priority of orders could very well be decided by the manufacturer, depending on the volume, value, timeline of the order, as well as influenced by geopolitical priorities.

Can Pharmaniaga Fill Multiple Covid-19 Vaccine Orders By Putrajaya And Other Parties (State Governments Or Private Sector) Simultaneously?

Sure, it could do that. As a private company, it should be able to take in and fill these orders simultaneously in a staggered or phased manner, in which all orders are able to be met.

But as a GLC, Pharmaniaga may be bound by its status to fulfill and complete the federal government’s order before beginning work on those of others, especially since its delivery of vaccines are part of the national immunisation programme.

Even though there might be no legal imperative to do that, Pharmaniaga will likely be compelled or directed by the board to take that position, due to its relationship with the federal government.

Does Appointing Multiple Distributors Enable Quicker Access To Covid-19 Vaccines?

When there is a finite number of vaccines that are being produced by a small number of known manufacturers (i.e. Sinovac in China, and Pharmaniaga in Malaysia), increasing the number of distributors does not really mean that the level of access improves or the quantity of vaccine increases.

That is because they are all accessing the same source for the vaccines. There is no diversity of manufacturers. Instead, what this could result in is a competition among those who ordered the vaccines: the federal and state governments.

What Is The Distributor’s Role? Is The Distributor Liable For Any Severe Side Effects From Covid-19 Vaccines?

A distributor is usually the contact point for which the procurement of goods is conducted through, especially when the manufacturing company has no local presence in the country. It usually deals with most of the commercial interactions involved in the procurement, taking on the responsibility of ensuring timely and complete delivery of orders that are made.

The distributor is usually not responsible for any adverse effects caused by the product that it delivers, which in this case are vaccines. These issues concerning adverse drug reactions, or adverse drug events, are usually dealt with and held accountable to the manufacturer of the vaccine.

However, in the case of the Covid-19 public health emergency, it is possible that the vaccine manufacturers have secured full indemnity from any adverse events. This was seen in the case of Pfizer with the UK and Singapore, as a guarantee for the supply of their vaccine.

If Malaysia also entered into the same agreement, this would mean that the Malaysian government would be primarily and independently liable should there be any adverse effect from the use of that particular vaccine. If there are any damages to be awarded, it will be borne by the Malaysian government.

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