If the pricing and distribution of vaccines against COVID-19 were to be based exclusively on traditional market principles, rich countries and members of the upper class would be protected earlier than poorer ones, further intensifying global and social inequality, according to a new study published by the Head of the Institute for Business Ethics and Sustainable Strategy (IBES) at FHWien der WKW (University of Applied Sciences for Management & Communication) in Austria.
An effective vaccine against COVID-19 is a scarce health resource and entails an enormous social responsibility to producing pharmaceutical companies.
“If companies were to allow pricing and allocation solely through market mechanisms, they would share responsibility for the growing inequality in the world,” says Prof Dr Markus Scholz, Head of IBES in Vienna and the author of the article “Lessons from Corona, Impulses from Business and Corporate Ethics”.
At the same time, he points out that companies often retreat into the position that it is not their job to take responsibility for inequality issues, but rather that this is the job of states and supranational organizations, to whose laws and regulations companies would abide.
According to a calculation example, 8 billion people face a production capacity of between 1 and 2 billion vaccine doses worldwide. In order to vaccinate each person at least once, it would take 4 – 8 years in the best case – if an approved COVID-19 vaccine becomes available at all.
The shortage of vaccines would give the producing pharmaceutical companies the opportunity to demand exorbitant prices, the fulfillment of which would bring in far more than development costs and a fair profit margin, explains Prof. Scholz. A price could be determined by a bidding process in which states, foundations, corporations and even the super-rich make offers.
The consequence would be that industrialized nations would have access to a vaccine first, followed by emerging countries and finally developing countries. If market-based criteria were to subsequently control the allocation of the vaccine in these countries as well, first the rich, then the poor and finally the poorest would be protected from infection.
Global and social inequality would become entrenched because rich nations would be able to revive their economies more quickly, re-establish the population’s freedom rights faster and reopen cultural and educational institutions more quickly. Within a nation, the rich could return to work sooner than the poor and their children could be sent back to school sooner.
Three therapeutic measures
In order to overcome the inevitable challenges of pricing and allocation, Prof. Scholz proposes three concrete measures in his publication. First, the production capacities of competing pharmaceutical companies should be pooled. Only in this way it would be possible to achieve the maximum supply. For this purpose, especially in the European Union, the antitrust law, which regulates coordination and cooperation, must be adapted.
Second, non-patenting of the vaccine should be considered, as only this would give other companies the quick and cheap opportunity to produce the vaccine themselves and thus expand its availability.
Third: Already now – during the development phase – pharmaceutical companies should actively strengthen global institutions like the WHO (Gavi or COVAX). This is the only way these institutions can possibly contribute their technical expertise and political legitimacy and coordinate pricing and allocation according to balanced criteria and ethical aspects.
Prof. Scholz assumes that political decision-makers, especially in so-called developing countries, and other stakeholders would recognize and reward responsible behaviour by pharmaceutical companies. If, on the other hand, pharmaceutical companies tried to enrich themselves excessively in the context of the COVID-19 pandemic, they should be prepared for a massive loss of reputation and legitimacy, harsh restrictions and, if necessary, withdrawal of their patent rights.