Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

How the U.S. locked up vaccine materials other nations urgently need

Stock MarketsMay 07, 2021 12:01PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Stickers that are given to people who have been vaccinated against the coronavirus disease (COVID-19) are pictured in Los Angeles, California, U.S., April 12, 2021. REUTERS/Lucy Nicholson

By Allison Martell and Euan Rocha

(Reuters) - To fight the pandemic at home, the United States gave its own vaccine manufacturers priority access to American-made materials needed to make the shots.

As a result, the U.S. government laid claim not only to vast quantities of finished COVID-19 vaccines but also to vaccine components and equipment all along the supply chain, according to a Reuters review of more than a dozen contracts involving some major suppliers.

That has left some countries desperately in need of those supplies to scramble for substitutes, exacerbating international disparities in vaccine access, according to interviews with suppliers, foreign manufacturers and vaccine market experts.

On Wednesday, President Joe Biden threw his support behind waiving patents for COVID-19 vaccines, thrilling those who have been pressuring his administration to help speed production of doses worldwide. If adopted by the World Trade Organization, the move would let other countries make their own copies of the much-coveted shots.

But the waiver would not address a less conspicuous but equally pressing problem: the growing worldwide shortage of vaccine ingredients and manufacturing equipment. The United States has a tight grip on a significant amount of those materials, such as filters, tubing and specialized disposable bags essential to making vaccines.

Countries ravaged by the virus - including India, where a catastrophic explosion of cases has filled hospitals and morgues - cannot make vaccines without such supplies, even with access to manufacturers' cookbooks.

The problem stems from the U.S. reliance on a law dating to the Korean War in the 1950s, called the Defense Production Act (DPA), which gives federal agencies the power to prioritize procurement orders related to national defense. For decades, the law was used to supply the military as well as respond to everything from natural disasters to roadblocks in the decennial U.S. census.

The administration of former President Donald Trump invoked the act to put the U.S. government first in line to buy American-made vaccines as well as other products needed to fight the COVID-19 pandemic. In turn, vaccine makers have priority access to any supplies needed to fill U.S. orders.

Gavi - a vaccine alliance comprising international organizations, governments, drug companies and others - lauded the Biden administration’s moves to increase global access to vaccines. Among other things, it cited the country's $4 billion commitment to COVAX, a global vaccine buying consortium Gavi co-leads with the World Health Organization.

But in response to questions about the DPA, Gavi said: “The greatest challenge to COVAX’s goal of equitable access to vaccines is constrained global supply. Export controls on raw materials is a considerable contributor to this and ultimately only serve to prolong the pandemic.”

A senior Biden administration official, speaking on condition of anonymity, said there is no export ban, and all U.S.-based suppliers continue to ship products abroad after giving priority to U.S. manufacturers. The official said the DPA has not caused the global shortages of vaccine materials, and the problems stem instead from overwhelming demand.

"There's just not enough to go around," the official said, noting that the administration is investing in increased raw material production.

On Wednesday, Katherine Tai, the U.S. trade representative, briefly mentioned in her statement about Biden’s patent decision that the administration would “work to increase the raw materials needed” to make vaccines. She did not elaborate.

A PLEA FROM INDIA

Vaccine components are produced all over the globe - in countries including the United Kingdom and China. But some leading suppliers, including Thermo Fisher Scientific Inc (NYSE:TMO), and the Danaher Corp (NYSE:DHR) units Cytiva and Pall, are based in the United States. Reuters could not determine precisely what share of vaccine materials and equipment are made in America.

The DPA has helped the United States build a huge vaccine production system, ensuring reliable access to finished doses for Americans, and driving up revenue for U.S. pharmaceutical companies.

About 45% of the U.S. population has received at least one dose of a COVID-19 vaccine. Dozens of other countries, from South Africa, to Guatemala, to Thailand, have vaccinated about 1% or less of their populations, according to data collected at the University of Oxford in the United Kingdom.

The DPA has drawn criticism from vaccine makers around the world, including the Serum Institute of India, the largest manufacturer globally.

On Twitter in late April, chief executive Adar Poonawalla requested “on behalf of the vaccine industry outside the United States” that America lift its hold on raw materials “if we are to truly unite in beating this virus.”

Starting this month, the company had planned to produce a billion doses annually of a vaccine developed by U.S.-based Novavax (NASDAQ:NVAX) Inc. But that output will be more than halved without American raw materials, according to a source familiar with the company’s plans, speaking on condition of anonymity.

Serum is also manufacturing COVISHIELD, a licensed version of the AstraZeneca (NASDAQ:AZN) Plc vaccine.

After weeks of public appeals from the Serum, the United States last month offered India filters needed to produce COVISHIELD. But India’s need for vaccines and supplies remains vast. Serum is also meant to be a top supplier to other low- and middle-income countries. COVISHIELD and the Novavax shot form the backbone of the COVAX program.

Serum, which declined to discuss the raw materials issue with Reuters, is not the only vaccine maker in need.

The South African vaccine maker Biovac Institute also relies on a U.S. company for bioreactor bags, needed for cell cultures. Biovac has been warned by its U.S. supplier that the usual lead time for bags may more than double to 14 months because of the U.S. DPA, chief executive Morena Makhoana told Reuters.

Manufacturers in some other countries say they are in better shape. Brazil’s Butantan Institute has been able to buy supplies from both the United States and Europe, an executive told Reuters.

For instance, an order for supplies to make AstraZeneca’s vaccine in the United States would be prioritized, even though the shot is not yet approved for use in the country. That could delay materials being sent to Serum, which is making the same vaccine for use in India and many other countries.

For now, three manufacturers’ COVID-19 vaccines - Pfizer Inc (NYSE:PFE), Moderna (NASDAQ:MRNA) Inc and Johnson & Johnson (NYSE:JNJ) - are approved for emergency use in the United States.

Asked about the global consequences of getting priority on U.S. supplies, AstraZeneca did not comment and Moderna and J&J declined to comment. Pfizer did not directly address the U.S. DPA but said “we have gone to enormous efforts … as we seek to serve populations all over the world.”

‘UNPRECEDENTED DEMAND’

Some suppliers say the industry would do a better job than governments at managing limited resources to maximize access globally.

“If the end goal is, let's produce vaccines, then we're big believers that you need to let the industry connect the relevant parts so that we can deliver the end product,” Thermo Fisher executive vice president Michel Lagarde told Reuters.

The Biden administration official said experts from various federal agencies discuss the use of the priority system during daily operations calls. Sometimes officials can change U.S. delivery dates to avoid disrupting other vaccine projects abroad.

But suppliers are planning to get ahead of demand. Leading purveyors Cytiva, Pall and Thermo Fisher are expanding manufacturing space in the United States and abroad. Thermo Fisher has nudged customers to clarify which needs are urgent and which can wait days or weeks, and the company tries to find time to fill orders even if they are not rated as priorities, Lagarde said.

Cytiva said in a statement that it is expanding production, but is itself limited by some raw materials shortages.

“The world is experiencing an unprecedented demand for biopharmaceutical products, technologies, and solutions,” Cytiva said.

(Allison Martell reported from Toronto and Euan Rocha from Mumbai, India. Additional reporting by Krishna N. Das in New Delhi, Wendell Roelf in Cape Town, Ludwig Berger in Frankfurt, Eduardo Simões in Sao Paulo, Michael Erman and Carl O'Donnell in New York. Editing by Michele Gershberg and Julie Marquis)

How the U.S. locked up vaccine materials other nations urgently need
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Simon Liu
Simon Liu May 07, 2021 12:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
America First!
Catholic Man
CatholicMan May 07, 2021 11:34AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If it hurts Americans, biden will do it.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email