Welcome to Coronavirus Government Global Briefing, Mandarin Premium’s coverage of local and global COVID-19 policy news.
Lessons from the EU-AstraZeneca ‘contract failure’
Writing in theFinancial Times last Thursday, German economist and distinguished fellow at the Centre for European Policy Studies Daniel Gros argued the EU’s procurement strategy has failed because AstraZeneca and other companies have announced major delays.
For context, AstraZeneca announced in late January that it planned to cut initial deliveries in the January-March quarter from 80 million to 31 million, on the back of reduced yields in its European manufacturing plants, with the EU claiming it will receive just one quarter of the full target. AstraZeneca chief executive Pascal Soriot later alleged the company had not failed the contract because the delivery figures were simply targets, not guarantees, which had been delayed because of issues with rapidly expanding production capacity.
But Gros alleges that two mistakes have been made on the part of EU negotiators: concluding contracts later than countries such as the UK, as well as “haggling” for lower prices and refusing to cover liability for side-effects; and specifying “vague delivery targets” in quarters rather than months or weeks.
The later issue, he notes, is understandable given companies could not accept binding delivery targets for a new product but is exacerbated by a lack of contracted enforcement options — agreements only stipulate that “best reasonable efforts” be made to deliver on schedule, although the EU has threatened to put export controls on all vaccines made in its territory in the face of AstraZeneca’s shortfall — or economic incentives to deliver early.
For example, the Curevac contract contains an “estimated delivery schedule” by quarter, with the exact time line redacted and the only requirement for delays be that the company provide justification and a revised delivery schedule. Additionally, it states that “Parties agree that doses will be delivered if and when lots are released and not necessarily at the end of a quarter.” AstraZeneca’s contract has even less detail on remedial action, which Gros links to a requirement the vaccine be delivered “at cost” and the aforementioned requirement to absorb all liability risk.
Here, he adds that the lack of enforcement options or economic incentives for early delivery has an important implication: “with a constant price per dose, the companies have no incentive to step up production to the maximum because they would not be compensated for the additional costs.”
“In a standard adjustment cost model, which usually assumes that the cost of ramping up production quickly increases more than proportionally, a profit-maximising firm would opt for a gradual increase in production capacity – which then results in back-loaded deliveries. The rate of increase chosen by the firm will of course depend on the delivery schedule. The more elastic the delivery schedule, the slower the increase in production capacity. As the delivery schedule of the EU is non-binding, it is not surprising that companies find reasons to slow down the increase in production.”
Now, Gros recommends that rather than threatening to take providers to court (an empty threat given their contracts), the EU offers to pay AstraZeneca or Pfizer-BioNTtech an additional premium for any doses delivered early. “Given the extraordinary cost for society of the continent-wide lockdowns, this premium should be very high. A dose delivered three months early could well be worth hundreds of euros to society, while the cost is much lower.”
- Following a decision by the UK government to delay a second dose of the Oxford/AstraZeneca by 12 weeks in order to maximise the number of recipients (original plans were for three- to four-week gaps), preliminary results of three trials under review by The Lancet suggest a first shot confers 76% protection against symptomatic infections from three weeks until 90 days, and reduces transmission by 67%.
- Ahead of an early-stage study to be released today showing the Oxford/AstraZeneca vaccine offers “minimal protection” against mild disease from the South Africa variant, professor of vaccinology at Oxford University Sarah Gilbert has told the BBC the vaccines should still protect against severe disease and that developers were likely to have a modified jab by spring (autumn in the UK) to combat the South Africa variant.
- Last Thursday, the UK launched a trial to gauge immune responses if the Pfizer and AstraZeneca vaccines are combined in a two-shot schedule.
- Afghanistan yesterday received 500,000 doses of the Oxford/AstraZeneca vaccine from India, the first to arrive in the country, which is still waiting for emergency WHO approval.
On the home front
Victoria and NSW issue late-night alerts
Victoria’s health department has announced a hotel quarantine worker at Melbourne Airport’s Holiday Inn last night tested positive to COVID-19, after initially testing negative at the end of her shift on Thursday February 4 before returning to work yesterday morning where she later developed symptoms and was retested.
Other Holiday Inn Airport workers and close contacts are being contacted, and three new contact sites have since been announced:
- Marciano’s Cakes, Maidstone from 9:45am-10:25am, Friday February 5
- Dan Murphy’s, Sunshine from 5:50pm-6:30pm, Friday February 5; and 6:50pm-7:30pm, Saturday February 6
- Off Ya Tree Watergardens, Taylors Lakes from 1:17pm-1:52pm, Saturday February 6
The news comes just hours after NSW Health issued a precautionary alert for sites in Wollongong and south-eastern Sydney, after a returned overseas traveller tested positive two days after leaving hotel quarantine.
The person was not reportedly not showing any symptoms but had been tested on day 16 as part of an enhanced follow-up strategy for returned travellers. NSW Health calls on any visitors to the following two high-risk contact sites to get tested and self-isolate until they receive further advice:
- Headlands Hotel, Austinmer from 1pm-3pm, Tuesday February 2
- Bulli Beach Cafe, Bulli from 1.30pm-4pm, Saturday February 6
Additionally, the department calls on visitors to the following to get tested immediately and self-isolate until they receive a negative result:
- Mootch & Me, Brighton Le Sands from 10:54am-12pm, Tuesday February 2
- Optus, North Wollongong from 1pm-1:15pm, Thursday February 4
- Officeworks, Fairy Meadow from 3:45pm-4:05pm, Thursday February 4; and 3pm-3:25pm, Friday February 6
Lastly, visitors to the following are urged to monitor their symptoms:
- Woolworths, Bulli from 9:15am-10am, Wednesday February 3
- Corrimal Memorial Park, Corrimal from 12pm-1pm, Wednesday February 3
- Thirroul Beach from 3pm-4.30pm Wednesday February 3
- Sublime Point Walking Track, 661 Princes Highway in Madden Plains from 8:30am-10am, Thursday February 4
- Figtree Grove Shopping Centre, specifically Australia Post, Kmart, Blooms The Chemist, Subway from 2pm-3.30pm, Thursday February 4
- Fedora Pasta Factory, Fairy Meadow from 3.30pm-3.35pm, Friday February 5
The news comes as student return to school in Western Australia today, with masks to be mandatory for secondary students, parents and teachers in the Peel and Perth region.
‘Vaccination certificates’ to be available through MyGov, Medicare apps
Finally, Government Services minister Stuart Robert yesterday announced plans to make “vaccination certificates” available through MyGov and the Medicare phone app, with hardcopy versions of a COVID-19 vaccination to be made available through Services Australia.
Roberts said the federal government expects immunisation will be required for travel and did not rule out other services such as shops. Vaccinations will be tracked through the Australian Immunisation Register, which was strengthened last week following a decision to make it mandatory for health professionals to report all immunisations.