The World Health Organization’s COVAX program is the world’s premier program for vaccinating people in low and middle income countries around the world against the coronavirus. By the end of 2021, at least 2 billion vaccine doses are expected to be delivered to cover 20% of the most vulnerable people in 91 low and middle income countries, mainly in Africa, Asia and Latin America.
In internal documents reviewed by Reuters, promoters say the program is grappling with a lack of funds, supply risks and complex contractual arrangements that could make it impossible to achieve its goals.
“The risk of failing to set up a successful COVAX facility is very high,” said an internal report to the board of directors of Gavi, an alliance of governments, pharmaceutical companies, charities and international organizations that organizes global vaccination campaigns. Gavi is co-head of COVAX alongside the WHO.
The report and other documents produced by Gavi will be discussed at Gavi’s Board of Directors meetings from December 15-17.
The facility’s failure could result in people in poor countries not having access to COVID-19 vaccines by 2024, according to one of the documents.
The risk of failure is higher because the system was set up so quickly and is operating in “uncharted territory,” according to the report.
“Current risk is viewed as being beyond risk appetite until the size of the risks and the ways in which they can be mitigated are fully understood,” it said. “Intensive mitigation efforts are therefore required in order to bring the risk into the risk appetite.”
Gavi hired Citigroup last month to provide advice on mitigating financial risks.
In a November 25 memo included in documents submitted to Gavi board of directors, Citi advisers said the greatest risk to the program is from clauses in supply contracts that allow countries not to purchase vaccines booked through COVAX .
A possible mismatch between vaccine supply and demand “is not a commercial risk that the market or the MDBs mitigate efficiently,” wrote the Citi advisors, referring to multilateral development banks such as the World Bank.
“So it needs to be mitigated either through contract negotiations or through a Gavi risk absorption layer carefully managed by a management and governance structure.”
When asked about the documents, a Gavi spokesman said the body remained confident that it could achieve its goals.
“It would be irresponsible not to assess the risks associated with such a massive and complex company and to develop policies and tools to mitigate those risks,” he added.
WHO did not respond to a request for comment. In the past, Gavi has taken the lead in public commentary on the COVAX program.
Citibank said in a statement, “As financial advisors, we have a responsibility to assist Gavi in planning a number of scenarios related to the COVAX facility and to support their efforts to mitigate potential risks.”
COVAX’s plans are based on cheaper vaccines that have not yet been approved, rather than vaccines from front-runners Pfizer / BioNTech and Moderna, which use more expensive new mRNA technologies. The Pfizer vaccine has already been approved for emergency use in several countries and has been used in the UK and US. The Moderna vaccine is expected to be approved in a similar fashion soon.
COVAX has so far non-binding supply agreements with AstraZeneca, Novavax and Sanofi for a total of 400 million cans, with the option to order several hundred million additional recordings, according to one of the Gavi documents.
However, all three companies have experienced delays in their attempts that could postpone some possible regulatory approvals to the second half of 2021 or later.
This could also increase the financial needs of COVAX. The financial assumptions are based on an average cost of $ 5.20 per dose, according to one of the documents.
Pfizer’s vaccines cost around $ 18.40 to $ 19.50 per dose, while Modernas cost $ 25 to $ 37. COVAX has not concluded supply contracts with any of these companies. It is also not a priority to invest in ultra-cold distribution chains in poor countries that are required for the Pfizer vaccine, as it is still expected to use mostly shots that require more conventional cold storage, according to one of the Gavi documents .
On Tuesday, a senior WHO official said the agency was in talks with Pfizer and Moderna to launch their COVID-19 vaccines as part of an early global rollout at a price for poor countries that may be below current market prices.
Further recordings are being developed worldwide and COVAX would like to expand its portfolio to include vaccines from other companies.
The rich countries, which have booked most of the stocks of COVID-19 vaccines currently available, are also planning to donate some overdoses to poor countries, although it is not clear whether this would be done through COVAX.
To achieve its goal of vaccinating at least 20% of people in poor countries by the next year, COVAX needs $ 4.9 billion on top of the $ 2.1 billion already raised.
If vaccine prices are higher than projected, delivery is delayed, or additional funds are not fully recovered, the facility is at risk of failure, the records state.
So far, the UK and the countries of the European Union are the main donors of COVAX, while the US and China have not made any financial commitments. The World Bank and other multilateral financial institutions are offering cheap loans to poor countries to help them buy and use vaccines through COVAX.
The facility is issuing vaccine bonds that could raise up to $ 1.5 billion next year if donors agreed to cover the costs, one of the Gavi documents reads. COVAX also receives funding from private donors, primarily the Bill and Melinda Gates Foundation.
But even in the best financial conditions, COVAX could still fail due to the disproportionate financial risks caused by its complex business process.
COVAX signs upfront sales contracts with companies for vaccine supplies to be paid for by donors or receiving countries who have the means to afford them.
However, under the clauses in COVAX contracts, countries could still refuse to buy pre-ordered quantities if they prefer other vaccines or if they can get them through other systems either faster or at better prices.
The facility could also suffer losses if countries couldn’t pay for their orders or if herd immunity developed too quickly so that vaccines would no longer be required, the Citigroup report said. A strategy to mitigate these risks was proposed, including through changes to supply contracts.