Penny wise, pound foolish

Dr Eric Crampton
Insights Newsletter
22 July, 2021

The government allocated $50 billion in Budget 2020 to deal with the pandemic - on top of the $12.1 billion already allocated. We were going to spend what was needed for a strong public health response.

And, somehow, we managed to fail to order vaccines in time. The first orders for the Pfizer vaccine were not made until late January 2021.

It is difficult to understand how this happened.

Ordering vaccines while they are still in development may not be simple, but it seems far simpler than most other parts of the pandemic response.

The strategy in July 2020 should have been obvious. Buy a giant portfolio of vaccines for everyone while they are still in development, knowing some will fail to pan out at all. Pay for early delivery up front or guarantee payment for early delivery. Ask MedSafe to begin investigating each of the ordered vaccines. Administer the vaccine that best suits our needs, on its being approved, while passing other effective vaccines on for others to use.

It would be hard to claim that this kind of rush delivery order would be unkind to other countries. We would be giving other countries multiple vaccines for each course administered here at home. Early guaranteed orders from richer countries help build the capacity that gets the whole world vaccinated.

If the government had spent $30 per course of vaccines for each of eight different vaccine candidates in July 2020, it still would have cost less than 10 percent of what the government had spent on wage subsidies at that point. It would be a bargain at twice the price.

As of 17 December 2020, the government had secured pre-purchase agreements for four vaccines, including ample doses of Janssen, Novavax, and AstraZeneca. We do not know what delivery timetables were negotiated.

But they only secured pre-purchase agreement for 750,000 courses of the Pfizer vaccine they ultimately decided to use.

And they waited until MedSafe approval was imminent before making the first small order for the Pfizer vaccine, rather than getting orders in ahead of time. By the time we made that order, Israel had already delivered Pfizer doses to about 30 percent of its population.

It is a failure that we hope is not repeated.

Pfizer is developing a new Delta-variant vaccine. If we are not getting orders in right now, we risk being at the back of the next queue.

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