A confluence of consequences is staring at the world. On Friday, the UK reported over 58,000 COVID-19 cases, the largest number of single day cases since January. In the US, the New York Governor imposed a statewide mask mandate. Banks in New York and London are asking employees to work from home. In Germany, the outgoing chancellor Angela Merkel and her successor Olaf Scholz announced a ban on unvaccinated people from accessing all but the most essential businesses. Austria is moving for compulsory vaccination.
The phraseology of lockdowns is back in circulation. The discovery of the Omicron variant last month triggered a flow of pious words. Predictably, leaders from the rich world chanted the need to improve access to vaccines. Words, though, are not enough. Honoré de Balzac, the French novelist known for his unfettered views on society, observed ‘Qui parle trop veut tromper’ or ‘whoever talks too much wants to deceive’. The chasm between the talk and walk reeks of hypocrisy.
As early as in October 2020, India and South Africa moved the WTO seeking a temporary waiver from certain provisions of the TRIPS Agreement (patents, trade secrets, copyright and industrial designs) for the containment, prevention and treatment of COVID-19. WTO rules call for unanimous decisions and the proposal backed by more than 100 countries has barely moved. The virus, meanwhile, has moved freely via variants infecting over 270 million, causing over 5.2 million deaths.
The case for vaccine equity has been eloquently articulated by WTO Director General Ngozi Okonjo-Iweala. “The issue of equitable access to vaccines, diagnostics, and therapeutics is both the moral and economic issue of our time.” The causal relationship between vaccine access, the spread of the virus and loss of lives and livelihoods is established beyond doubt. The circumstance and the spectre though have yet to persuade the opponents.
The strongest opposition to vaccine waivers is from the European Union, Switzerland and the United Kingdom, home to the largest pharma companies in the world. The EU stance is not deterred by appeals by 388 Members of European Parliament and national parliaments or by 375 trade unions. The US supported a temporary waiver but failed to show up with detailing. The stance of the rich nations is in stark contrast to that of countries such as India and Russia — both have offered waivers on their vaccines.
The UK, for instance, has argued that while the waiver proposal presents “the international IP system is a barrier when we still do not think that we have seen evidence of that being the case.” Effectively, the burden of proof — for and against — has been parked in the class wars of WTO.
While that is debated, denial has worsened access. Money and facts speak for themselves. The magnitude of inequity is illustrated by data from the Duke Global Health Innovation Center. The UK can vaccinate 323 per cent of its population, the EU 339 per cent of its population, and the US 279 per cent of its population. The African Union, in contrast, has barely enough vaccines to cover a fifth of its population.
The crux of the EU opposition is about returns. At the WTO, the EU has argued that intellectual property rights represent value and are “the legal guarantee for potential returns on investment in innovation”. It bears mention here that Pfizer is forecast to earn over $36 billion from vaccine sales in 2021 and Moderna around $18 billion.
Be that as it may, the debate is not about the merits of what qualifies adequate returns nor is it about denying rewards for innovation. It is about making available the means to tackle the pandemic. The challenge before the rich countries is to design public policy to absorb the cost of these rewards — through means such as subvention, tax credits or acceptable mechanisms. Lessons learnt from enabling access to HIV vaccines may be useful.
The consequence of rising infections and the cost of managing the economic destruction is manifest in data. In Europe, interest rates are at negative, at -0.5 per cent and inflation is above 5 per cent. Effectively, people are paying to park money even as its value is eroding. In the UK, inflation touched a 39 year high of 6.8 per cent and its economy slowed to a no-growth crawl. Across the Atlantic, on Friday, the United States reported consumer inflation not seen since 1980. The G7 central bankers must now worry about high cost low growth scenarios.
The reality streaming out of developed economies holds instructive lessons. Clearly, the strategy of printing out of a demand slump is governed by the statute of limitations. Costs do catch up — and will rise as the US Federal Reserve pivots from its easy money stance. Secondly, services account for two-thirds of the developed world GDP and stimulus is not enough to revive the face-to-face economy locked down by fear. Crucially, dole cheques may revive demand at home but cannot address supply chain issues in a globalised interdependent world unless infection growth is contained.
The context demands a review of the stance on vaccine waivers. It is useful to remember that the price paid in terms of erosion of economic output will be far greater than the cost of enabling vaccine access. Effectively, no one is safe until everyone is safe.
Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
shankkar.aiyar@gmail.com