The European Commission has entered into advance purchase agreements (APAs) for Covid-19 vaccines with six pharmaceutical companies and is concluding negotiations with two companies. See here. The APAs have come under scrutiny since it has become clear that one of the companies, AstraZeneca, is not able to deliver the agreed-upon quantities of Covid-19 vaccines for use in EU member states.
These APAs are confidential agreements, with the exception of the APA with German company CureVac which was partially disclosed on 19 January following demands from civil society organisations and members of the European Parliament. We had a look at the APA with CureVac.
The European Commission has entered into an advanced purchase agreement (APA) with vaccine developer CureVac for the procurement of 405 million doses of a Covid-19 vaccine for distribution in the participating EU Member States on 18 August 2020.
Curevac is developing CVnCoV, an mRNA-based vaccine against Covid-19. The clinical trials are in phase IIb/III and the CureVac vaccine has not yet received marketing approval from the European Medicines Agency (EMA) or any other regulatory agency.
The vaccine as a Global Public Good
The European Commission’s mandate to negotiate APAs derives from an agreement between the Commission and member states on procuring Covid-19 vaccines, dated on 16th June 2020. This agreement contains an annex titled ‘Initial considerations’ with the following objectives for the negotiations with pharmaceutical companies:
”In the negotiations with the pharmaceutical industry under the present Agreement, the Commission will promote a Covid-19 vaccine as a global public good. This promotion will include access for low and middle income countries to these vaccines in sufficient quantity and at low prices. The Commission will seek to promote related questions with the pharmaceutical industry regarding intellectual property sharing, especially when such IP has been developed with public support, in order to [ ] these objectives. Any vaccines available for purchase under the APAs concluded but not needed and purchased by Participating Member States can be made available to the global solidarity effort.”
The agreement between the Commission and the EU member states is annexed to APAs with vaccine producers. And one would therefore expect that the terms and conditions of the APAs reflect the stated negotiation objectives of the Commission to promote Covid-19 vaccines as global public goods and access to the vaccine in low- and middle-income countries.
The CureVac APA offers an opportunity to assess whether indeed such agreements meet such objectives. The agreement with CureVac, containing many redacted sections, is available here.
Advance Purchase Commitments
APAs are so-called ‘pull’ incentive mechanisms in which financing is made available up-front to ‘pull’ a product out of the late stage of the development phase so it becomes a marketable product. An APA, therefore, may be a procurement and a clinical development funding agreement in one, which financially de-risks the vaccine development efforts for the company.
Funding for CureVAc’s R&D
CureVAc has received the following financial support for the development and production of its Covid-19 vaccine: 300 million Euro from the German Federal government, 75 million Euro loan from the European Investment bank supported by Horizon 2020, the EC’s R&D fund, and earlier US$13.5 million from the Coalition for Epidemic Preparedness Innovations, for phase I research. In addition to these financial contributions, according to the APA, the company will benefit from additional undisclosed amounts of money in pre-purchase payments it is not obliged to refund if the product is not approved by the EMA and the money has already been spent.
While many clauses of the APA appear fairly standard to purchase contracts, the contract (in its redacted form) appears to lack a balance between the interests of the company and the public interest. The Commission undertakes solid commitments with upfront payments without guarantees that the CureVac vaccine will show sufficient efficacy to prevent a COVID-19 infection and is safe to use.
Indemnification for liability
The Commission and member states also take on the responsibility for indemnification for liability (see article I.23 of the APA), which means that the cost of any harm, damage or loss as a result of the use of the vaccine will be borne by the Commission and the member states. Normally such risk is carried by the company but considering the development speed demanded from the government as well as a low price, it is understandable that the public sector takes on this risk. However, the price of the vaccine is not disclosed in the publicly available agreement.
De-risking R&D investments
The contract mentions in several articles the need to de-risk the company’s investments in the development of the vaccine as a justification of the up-front payments the Commission and member states will make before the product is approved by the EMA. The agreement, however, does not appear to contain provisions to compensate the investment from the Commission and member states in case the product is not successful. For example, there are no provisions for sharing of intellectual property or knowledge, including access to all clinical test data, generated with EC funding.
Intellectual property rights
The company retains all rights, including intellectual property rights generated as a result of the EC funding even if the funding served to finance clinical trials or scale up production (Article 1.9.1 states that The contractor is currently concluding a dose-escalating Phase I clinical trial for the Product and is preparing recruitment and start of pivotal Phase IIb/III clinical trial studies). If this APA is used to generate clinical data, then the data ought to be owned by the EC, or at least co-owned with CureVac, or licensed to the EC. Having rights in the data would place the EC in a better position to negotiate a fair price or share the data with a wider range of actors.
The fact that such IP sharing is not part of the agreement with CureVac is particularly noteworthy because the CEO of the company has publicly stated in December that patents related to Covid-19 vaccines should be temporarily suspended and has called for much closer international collaboration in research & development of the new vaccines. This statement was welcomed by organisations campaigning for the People’s Vaccine.
The price negotiated for the product is set per dose but is not disclosed in the publicly available agreement. There is no indication in the contract whether the method used to set the price is fair and, whether the price reflects the public investments in the development of the product.
Access for developing countries
It is also unclear whether the agreement promotes access to LMICs (in accordance with the above mentioned negotiating objectives of the agreement between the Commission and member states). Both fair pricing and access to LMICs are explicitly stated negotiation objectives in the Agreement with the member states. Fair pricing is even recited in the APA (See recital F).
Member states are not allowed to resell, export, distribute or donate for free to another country outside the EU and EEA and Switzerland, including donating via NGOs or the World Health Organization, without the prior consent of Curevac (Article I.10.2). This provision de facto gives the company a veto right to such acts. This provision contradicts the Commission and member states’ negotiating objective of promoting access for LMICs.
To conclude, the agreement between the Commission and CureVac as far as it is disclosed does not provide any evidence that the EC pursues its negotiating objective of “promoting Covid-19 vaccine as a global public good”, as agreed with the member states in June 2020. The focus of the APA seems to be on de-risking investments and activities by the companies and less on the protection of public interest and public investments.