BEIJING, June 30, 2021

Multilateral Cooperation in the Time of Vaccine Shortage

Before the COVID-19 pandemic, we believed that we were living in the world of well-functioning multilateralism. Eighteen months since the outbreak of the pandemic, we are not quite sure if multilateralism has worked efficiently to meet the expectation of the global community. To the contrary, many would wonder if the world has passed the test to form a united front based on multilateral cooperation to win the battle against a truly global health crisis when the battle can only be won by multilateral cooperation.

In June 2021, the prevailing global view is that the world will end the pandemic in the next 12 months or by the middle of 2022. This optimism is based on the successful production of vaccines for mass use, especially in developed countries. The real challenge in the next 6 to 12 months is for the global community to achieve an equitable deployment of vaccines to developing countries. As of June 15, about 10 percent of the world’s population has been vaccinated with two doses. A hypothetical goal to end the pandemic in 12 months would require global vaccination of at least 30 percent of the population by the end of 2021, and then 60 percent by the middle of 2022. But this is not an easy task unless accompanied by a national-level implementation timetable for each developing country confirmed by international commitment for financing and deployment of vaccines.

Indeed, most countries have set targets and have a National Deployment and Vaccine Plan (NDVP), supported by UNICEF and the World Health Organization (WHO), based on which multilateral development banks (MDBs) decide to finance the gaps. An NDVP is meant to be a living document that adapts to changes in the demand and supply scenario. But the reality is different. For their part, MDBs are conducting market analysis and prepare a strategic procurement plan as part of their vaccine financing operations. However, in a situation of acute shortage of supply, governments and suppliers insist on full confidentiality on all direct procurement and NDVPs are no longer a living document.

As a matter of fact, MDBs have set aside tens of billions of dollars of loan funds for vaccine procurement and delivery. For instance, the USD13 billion COVID-19 Crisis Recovery Facility of the Asian Infrastructure Investment Bank (AIIB) includes financing for vaccine procurement and distribution. As of June 18, the World Bank’s USD12 billion facility has approved USD3.6 billion for vaccine procurement. In the case of the Asian Development Bank (ADB), about USD1 billion out of USD9 billion has been approved. AIIB has been partnering with other MDBs on vaccine deployment in Asia, having recently approved vaccine access projects in the Philippines and Mongolia. However, given the demand and deployment challenges, the commitment for vaccine delivery is just getting started.

Other than MDBs, high-income countries have also made pledges to provide grants and donate vaccines for low-income countries based on the agreed timetable. With the rapid addition of supply capacity, more and faster disbursement is expected over the next 12 months but other than the vaccines procured under the COVAX platform, developing countries are currently left alone to negotiate and procure vaccines directly through bilateral deals with a handful of manufacturers. COVAX is indeed an example of multilateralism in action, but the progress in delivery is slow and the allocation is not sufficient to make an immediate impact when the virus mutates into different types.

Against the immediate challenge of the timely delivery of vaccines to developing countries, MDBs are well positioned to provide additional financing for direct procurement of eligible vaccines suited to the domestic logistics supply chain and distributions facilities. For instance, AIIB just approved the Mongolia Vaccine Delivery Project, co-financed with ADB, which supports the urgent procurement of vaccines directly from manufactures since the available vaccines from donations and COVAX are far from adequate to implement the NDVP. However, amid the currently constrained market for vaccines, there is no efficient multilateral data-sharing mechanism to help developing countries achieve value for money in vaccine procurements by engaging with manufacturers that have advantageous vaccine availability and delivery timeline on terms and conditions that are reasonable to developing countries.

In fact, the supply and demand situations of vaccines globally continues to remain confusing and uncertain. In the current suppliers’ market, manufacturers of vaccines are not concerned with the possibility of unsold vaccines. Yet it is still difficult for manufacturers to plan their production, especially in the medium term, without understanding demand scenarios backed by a predictable procurement plan. On the other hand, over the next six months, developing countries will continue to be desperate to obtain any type of vaccines from multiple sources. If vaccines are indeed a global public good, to compensate for a flawed market mechanism, some kind of multilateral platform would be needed to help balance supply and demand through information sharing of vaccine procurement plans, actual procurement confirmed through orders and signed supply agreements, supplies of and manufacturing capacity for input materials and finished products, delivery schedules, etc. In addition, the data for prices charged and paid vary widely and are kept mostly confidential. Much of this information is available but widely dispersed across individual governments and organizations. Perhaps one of the multilateral institutions or collectives such as WHO, UNICEF, GAVI or the International Monetary Fund (IMF) can lead the multilateral effort across agencies to serve as a repository of information regarding vaccine supply and demand and provide updated data in a standardized format for better planning and execution of a global vaccine delivery plan.

In the medium to long term, two other challenges deserve specific mention: First, the existing multilateral mechanism cannot ensure the equitable deployment of vaccines globally at the cost of national priorities of vaccine-producing countries. This is to a certain extent unavoidable, but there must be a rethinking of global governance to balance global equity and national policies at the time of crisis. One of the reforms recommended by the Independent Panel for Pandemic Preparedness and Response, appointed by the Director-General of WHO, is the establishment of a new high-level global body led at Head of State and Government level which will ensure leadership, financing and accountability in the post-pandemic era based on a new Pandemic Framework Convention. The key is the enforceability of any decision by a new framework or convention.

Second, going forward, an imminent issue to debate is whether developing countries will have to start building vaccine manufacturing capacity by themselves. One lesson from the ongoing pandemic is that uninterrupted supply of life-saving vaccines cannot be left only to market forces, or worse, domestic political decisions of vaccine-producing countries. Having experienced acute shortage of vaccines, some countries are motivated to build vaccine producing capacity domestically. However, if left uncoordinated, such efforts could result in wasted investments with the risk of additional facilities lying idle during non-pandemic periods.

Financing of vaccine manufacturing in developing countries, subject to financial and economic viability, could take place in areas supported by MDBs. Some countries like Bangladesh, Indonesia, and Egypt, are interested and have capacity to manufacture vaccines with adequate external support. A challenge here is how to select and acquire the optimal technology. This can be mostly done through licensing and technology transfer deals directly with big multinational companies. As developing countries are on a weaker side of such negotiations with multinational companies, MDBs can support the evaluation and long-term vaccine supply and demand scenario on behalf of developing countries and help them with the decision on a national or regional basis. A regional public good model for vaccines production can be explored and reviewed by MDBs. In parallel, WHO can continue to explore multilateral cooperation in technology transfer through the COVID-19 Technology Access Pool (C-TAP) and mRNA technology transfer hub.

The challenges are many but there is no shortage of insights as witnessed in the recent Global Vaccine Summit, hosted by the UK. The world has technology and financial resources to win the battle over the next 12 months. However, the effectiveness of global efforts depends on the efficient multilateral cooperation, without which the 12-month goal is unlikely to be achieved. And in the longer term, multilateral cooperation without enforcement may repeat the same mistake.

AUTHOR

Hun Kim

Director General, Social Infrastructure Department, AIIB

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