Pfizer exposed for unreasonable contract terms for COVID-19 vaccine in low income countries

April 21, 2021: The US pharmaceutical giant Pfizer has succeeded in imposing indemnity clauses in its vaccine contract with South Africa, but on exposure was forced to drop demands for sovereign assets to be sold to pay for any claims for compensation for adverse effects.

South Africa has a variant of the novel coronavirus which is resistant to the Oxford-Astrazeneca vaccine but still vulnerable to the Pfizer-BioNTech vaccine.

On April 14, 2021, the South African Health Minister Zweli Mkhize told his parliament’s health committee that the demand for sovereign asset collateral was too risky. “As the government, we found ourselves in a precarious position of having to choose between saving our citizens’ lives and risking putting the country’s assets into private companies’ hands,” the Minister said.

This dispute delayed the provision of the urgently needed vaccines. South Africa will now pay US$10 per dose for thirty million doses of Pfizer vaccine, starting with the arrival of two million doses in May. The government had to make non-refundable down payments in its deals with Pfizer and Johnson & Johnson. “This is another onerous term that we had to concede as manufacturers were not prepared for it to be removed,” Health Minister Mkhize wrote.

Unredacted draft contracts between Pfizer and the Dominican Republic, Albania and Peru show that the company sought to be indemnified against problems at any step of the supply chain — including packaging, manufacturing and storage. Experts told the South African Mail & Guardian’s Bureau of Investigative Journalism that it was “unreasonable” to require governments to pick up the bill for any negligence by Pfizer.

Yousuf Vawda, a professor at the University of KwaZulu-Natal’s law school, said: “While Pfizer appears to have dropped its demand on sovereign assets, it has still insisted on the indemnity and no-fault compensation commitments … Such conduct must be condemned in the strongest terms, as they are holding governments to ransom and delaying the rollout of vaccination”.

Pfizer responded by saying that they have indemnity in the US legal system and they want that everywhere.

These examples show the urgent need to waive WTO rules during the pandemic so access to vaccines is not controlled by pharmaceutical companies.