On COVID-19 vaccines, contracts and innovation in public procurement

I have been considering writing or not about the current situation with the COVID-19 vaccines in the EU. First, the AstraZeneca row with the Commission and Member States and second, the difficulties in scaling up production.

As for the first, now is not the moment to discuss the topic and frankly posts like this are speculative and uninformed without the presence of the actual contract. Neither the Commission nor AstraZeneca have made it available and the closest analogue we have is the CureVac contract which may or may not be identical to the AZ one. Without the contract there's no point in dwelling on this.

The fact we do not have a contract, however, is worth discussing. The current COVID-19 crisis has showed  the importance of making contracts publicly available for accountability purposes. My view on these is since we are talking about emergency procurement which sidesteps the usual rules and objectives of procurement and therefore done without competition should be made public immediately and in full. If there was no competition, then effectively there is no competition to protect. Since the economic operator is being rewarded with a higher price and zero competitive pressure for the economic operator, making the contract available seems a reasonable flipside to exchange.

Without transparency there is no accountability.

I know the usual mantra "BUT BUT BUT CONFIDENTIAL STUFF". Well, other than trade secrets (narrowly defined) all the rest is already protected in one way or another via other legal mechanisms such as copyright, design rights, trademarks or patents. These are state sponsored monopolies given to an economic operator that it can afford to defend on his own penny via private enforcement actions. Plus, a contract offered without competition is in effect a state (or EU) sponsored monopoly for that particular supply that is being purchased.

And if I had to guess the really confidential stuff does not usually show up in a contract. Does anyone really think AZ's 'secret sauce' (so to speak) will be explained in detail in the contract? Or that of a PPE supplier for example? Of course not.

Secrecy is being used to reduce accountability and protect the parties from any PR fallout from whatever is included in it.

Finally, let's look at innovation in public procurement and how intellectual property is still its Achilles heel.

Innovation and intellectual property

Both the UK and the EU have poured money into the vaccine manufacturers to help them develop their vaccines. It is true AZ is selling the Oxford-developed one at cost...for now. The problem here is since the IP has moved from Oxford to AZ despite its original intention of open sourcing the vaccine, the consequence is that only AZ can produce it at the moment, either directly or via licensing agreements. This is the gordian knot of the problem at this moment in time. It is an issue of scaling up production of an innovative product. It is fair to say as well that AZ probably optimised the formula and materials to speed up production quickly as they have a vested interested in selling it even if at cost...for now.

I cannot claim to know the best solution for this problem, but the fact of the matter is that these decisions have significant consequences. Had Oxford open sourced the vaccine IP then perhaps it would have taken longer to finish the trials without the backing of AZ further delaying any ramp up on production. But had it been treated like a generic drug, it is likely then that soon(ish) we would have more manufacturing capacity being brought to bear including in the global south, bringing us all closer to put a lid on the disease.

With the PR fallout from the EU deal my guess is that AZ could consider open sourcing the vaccine itself sooner rather than later once their costs are recouped. What that would do for their propensity to step up in a future pandemic, I have no clue.