SA, which was left scrambling to source Covid-19 vaccines after failing to timeously place orders with manufacturers, is set to pay a massive premium on the shots it has secured directly from the Serum Institute of India (SII), the health department confirmed on Wednesday.
After weeks of growing criticism over the slow pace of its vaccine acquisition plans, the government announced in early January that it had secured 1.5-million doses of the SII’s Covishield shot, which the institute is manufacturing under licence from AstraZeneca. It has now emerged that the government has agreed to pay the SII $5.25 (about R78) a dose, more than twice the price the EU negotiated directly with AstraZeneca in 2020.
The SII, which already exports several other vaccines to SA in partnership with Indian generic manufacturer Cipla, is one of several companies licensed by AstraZeneca to make its Covid-19 shots.
The shots the government has procured from the SII will be the first Covid-19 vaccines administered in the biggest immunisation drive in SA’s history, which aims to reach 40-million people by the end of the year.
Vaccines are widely regarded as the best hope of ending the coronavirus pandemic, which has seen more than 96.3-million recorded cases and more than 2-million deaths in the past year, disrupting economies and livelihoods around the world.
Tiered pricing
In SA, the price of vaccines is coming under increasing scrutiny as the government’s plans to secure supplies gain momentum and it finalises the 2021 budget, due to be tabled in parliament in February.
The price the health department agreed to pay for the SII’s Covishield is not only much higher than the R54 ($3.62) set out by health minister Zweli Mkhize in a presentation to parliament on January 7, but it is also a premium on the prices the SII is charging the Indian government and the AU. They are paying $3.40 and $3, respectively, according to Reuters.
SA is also paying more than the US or the EU are paying AstraZeneca in their deals with the company: the US is paying $4 a dose, while the EU is paying €1.78 (R32).
"We were advised that SII has applied a tiered pricing system, and given that SA is an upper-middle-income country, their price is $5.25. The explanation we were given for why other high-income countries have a lower price is that they have invested in the R&D, hence the discount on the price," said health department deputy director-general Anban Pillay.
The SII had not responded to Business Day’s request for comment by the time of publication.
Pillay said plans were still on track for the first 1-million Covishield shots to arrive in SA by the end of January.
Approval from the SA Health Products Regulatory Authority was expected by the end of this week, he said.
The state-backed vaccine manufacturer, Biovac, will be responsible for storing and distributing Covishield to the provinces, its CEO, Morena Makhoana, confirmed.
Biovac had been awarded the R2m contract without the usual competitive bidding process, because the timelines were so short, said Pillay.
"Given the relatively small volume, National Treasury was in agreement that we can deviate from the competitive bidding process. We will run a competitive process for future volumes," he said, referring to the vaccines secured in several other deals.
The government has secured up to 12-million doses from international vaccine financing vehicle Covax, depending on whether it provides single-shot or two-dose vaccines, the first tranche of which is due to arrive in February. There will be 12.25-million doses from the African Vaccine Acquisition Task Team, of which the first 2-million will flow between March and June; and another 9-million doses from Johnson & Johnson.
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