Grand Tamasha

Samanth Subramanian on India’s Vaccine Conundrum

Episode Summary

Samanth Subramanian joins Milan and the two discuss how the Indian government has managed the deadly second wave of the COVID pandemic, the role the Serum Institute of India and its enigmatic CEO have played in India’s vaccine production, and the patchy rollout of the government’s vaccine delivery.

Episode Notes

One of the enduring puzzles about the tragic second wave of COVID is how India, the world’s largest vaccine producer, faces an alarming shortage of vaccines. 

A new essay by the journalist Samanth Subramanian for the online news organization Quartz argues that there’s no single answer, but rather a “timeline of dysfunction” marked by what he calls “government negligence, corporate profiteering, opaque contracting, and the inequities of the global pharmaceutical market."

Samanth is a senior reporter at Quartz covering the future of capitalism. He has previously written for the Guardian Long Read, the New Yorker, the New York Times Magazine, and WIRED. He's also the author of three books, including A Dominant Character: The Radical Science and Restless Politics of JBS Haldane, one of the New York Times'  100 Notable Books of 2020

Samanth is Milan’s guest on the show this week and the two discuss how the Indian government has managed the deadly second wave of the COVID pandemic, the role the Serum Institute of India and its enigmatic CEO have played in India’s vaccine production, and the patchy rollout of the government’s vaccine delivery. Plus, the two discuss what the United States and the international community must do to help vaccinate the developing world.

Episode notes:

  1. Samanth Subramanian, “In the push for new vaccines, taxpayers keep paying and paying,” Quartz.
  2. Samanth Subramanian, “The US’ support for vaccine patent waivers still leaves plenty to be resolved,” Quartz.
  3. Samanth Subramanian, “Why is India, the world’s largest vaccine producer, running short of vaccines?Quartz.
  4. Samanth Subramanian, “India is feeling all the pain—and none of the gain—of an undeclared lockdown,” Quartz.

 

Episode Transcription

Milan  00:00

Welcome to Grand Tamasha, a co-production of the Carnegie Endowment for International Peace and the Hindustan Times. I'm your host, Milan Vaishnav. 

 

One of the most enduring puzzles about the tragic second wave of COVID is how India, the world's largest vaccine producer, faces an alarming shortage of vaccines at home. A new piece by the journalist Samanth Subramanian for the online news organization Quartz argues that there's no single answer but rather a “timeline of dysfunction” marked by what he calls government negligence, corporate profiteering, opaque contracting, and the inequities of the global pharmaceutical market. 

 

To unpack the story further, Samanth joins me on the phone today from London. He's a senior reporter at Quartz covering the future of capitalism. He has previously written for a variety of publications including the Guardian, the New Yorker, the New York Times Magazine, and Wired. He is also the author of three fabulous books, including most recently A Dominant Character: The Radical Science and Restless Politics of J.B.S. Haldane. This was awarded one of the New York Times 100 Notable Books of 2020. 

 

Samanth, good to see you. Thanks for taking the time. 

 

Samanth  00:53

Thanks for having me. 

 

Milan  00:54

This is obviously a very difficult time for anyone who has anything to do with India, so all of us at the show hope that your family and extended circle of friends are doing okay. 

 

There is a little bit of bright news on the horizon (modest bright news): many of the forecasting models suggest that India may have hit the peak of the second wave this week or is close to hitting the peak. Cases, of course, remain high, and deaths will likely increase due to the lag. I'm wondering if we could just kind of step back before we get into the question of vaccines and ask you if you could provide us a snapshot of the COVID situation in India and how the government has fared in trying to address the second wave? 

 

Samanth  01:58

Well, it's complicated, in the sense that the second wave is really unlike anything we've seen in any other country before this. 

 

I was in India in December, in January, and it was a time when I could see over the course of those two months the country gradually opening up, coming out of the effects of the first phase of the disease last year. And by the end of January, by mid-February, life was practically back to normal. People were out in restaurants. You could go to a sporting event, a cricket match, as people did – not at full capacity stadiums, but they were still there. Travel was possible again, and people were on planes and trains going across the country. Work was starting up; life was starting up. And everybody will remember Prime Minister Modi's grand pronouncement at Davos saying that India had conquered the disease or something equivalent to that. 

 

But as we know, even as early as last November, and then again in January, and then again in February and March, there were experts warning the government that a second wave was coming. They might not have warned about the ferocity of such a wave, but looking around at other countries in the world, it was always possible to see that one wave was followed by a second, and the second was invariably worse than the first. And so I think, in dealing with this question of how the government has fared with the second wave, we first have to start with the fact that the government ignored all warning signals of a second wave to come. 

 

Then, when the tide of disease rose, it seemed to quickly swamp the country's healthcare system, even as the government was unprepared for it. Everybody has talked a lot about the merits of lockdowns, and opinions seem to be quite heavily divided on lockdowns as a way to control disease, but first and foremost, everybody has to acknowledge that lockdowns are invariably there to stem the pressure on hospitals, and India then went way too late in the second wave without ordering lockdowns. We see lockdowns now at state levels, but we still have not seen a centrally announced national lockdown, which confuses the hell out of people, and I think this kind of patchwork, piecemeal lockdown system that ultimately ended up starting way too late has also prolonged and sharpened the peak of this disease so that we eventually came upon these awful scenes of crematoriums in Delhi, and people outside hospitals, and appeals for oxygen and drugs and hospital beds on Twitter. And this is all stuff that we can see – I can only imagine what the situation is like up in the countryside where everything is automatically less visible.

 

Milan  05:06

I mean, there was a report today that the authorities in Bihar have placed a net in the Ganga river at the UP-Bihar border because there were so many bodies of COVID dead floating in the river, and they needed a way to capture them. So, really ghastly scenes coming from places where media penetration is fairly low. 

 

I just want to ask you a question about the lockdown, because you wrote about this for Quartz last month. My simple assessment of this is: you had the first lockdown, it inflicted quite a lot of pain, but India came out of it saying, “Look, we really have dodged this COVID bullet,” and Modi was able to claim the credit. And now of course, this is a ferocious second wave, and it's much harder to claim credit of any kind. So, when it was convenient, he sort of centralized credit, and when it was not convenient, he decentralized the blame. Is that a fair characterization of the political calculus, do you think?

 

Samanth  06:07

I think so. We hear a lot more in the second wave this year about how healthcare is actually a state subject, and that states should really be taking responsibility for their healthcare systems and the waves of disease in their state, forgetting all the while that a national lockdown in a country where people travel across borders can only be ordered in Delhi by the prime minister and his government – forgetting, for example, that last year the prime minister clearly centralized a lot of decisionmaking in himself, in his office. 

 

One example is this massive fund of money that people have donated to, which is called PM CARES. The fund was ostensibly set up with the fallout of the disease to help governments cope, so the money is all sitting at the Centre, and yet the states are having now not only to declare lockdowns and to deal with their own healthcare systems, but, as we will see, buy against each other to buy vaccines on the international market using their own funds once again. So, it's really a question of, as you said, not just credit, but even a certain kind of power and financial decisionmaking ability being abrogated to the Centre last year and then sort of withheld now. And the states are just being left to their own devices.

 

Milan  07:26

So, you've written a series of really interesting pieces for Quartz – and we'll link to that on the show page – on vaccines generally, but then on India's vaccine program in particular. I want to start with the latter and rewind the clock to almost a year ago today, April 2020. You had scientists in Oxford, they're working on a vaccine; they negotiate an exclusive license with the pharmaceutical giant AstraZeneca; AstraZeneca, in turn, signed an agreement with companies all around the world to manufacture the vaccine. One of those companies is based in Pune, Maharashtra: the Serum Institute of India (SI). Tell us a bit about who SI is and, if you could, its somewhat enigmatic CEO, Adar Poonawalla.

 

Samanth  08:10

So, the Serum Institute was set up about a half a century ago at a time when it was most expensive and difficult to import, biologicals and immunologicals into India, and the current CEO's father, Adar Poonawalla, Sr., as you might call him, he figured it was just cheaper and better to manufacture these agents in India itself, and he built this industry that started off quite small into this vast vaccine and drug manufacturing behemoth. Because eventually what happened, of course, as with many other industries, was that it became cheap as well as efficient for companies to outsource their manufacturing to India, and so pharma companies around the world – but also, you know, drug aid programs, vaccine programs that are run by UNICEF and WHO – all of these entities found it cheap and efficient to go to Serum and to place these vast bulk orders, and Serum became the largest vaccine manufacturer in the world. 

 

And they have grown enormously rich off this in a way that's sometimes maybe a disconnect. I mean, you look at Adar Poonawalla, his life with his resources and his fleet of Rolls Royces – I think I remember reading that he lives in the building in Bombay that used to once be the U.S. consulate or the U.S. Embassy, something of the sort – 

 

Milan  09:37

That's right – which is I think, one of the most expensive real estate transactions in India to date. 

 

Samanth  09:42

... and his wife is a socialite who is embedded in these Bollywood circles. So, there seems to be quite a disconnect between the flashiness of his life and the fact that it's built on revenue made from the measles vaccines, for example. But that's fine. We're not here to judge lifestyles. 

 

But he's an odd character, and he's clearly, perhaps rightly, seen this pandemic as a moment for Serum to shine. I think very often, before 2020, if you talked to people about the Serum Institute, they wouldn't have known what you were talking about. This was not a household name. And I think he's seen in this both a way to enhance the profile of the company – obviously, to make some money; how much money is still sort of open to question – but also to kind of set Serum up for the long haul, both in terms of gaining these high-profile customers and participating in this massive drive to vaccinate the world.

 

Milan  09:43

So, Serum is manufacturing AstraZeneca in India, but a few months later, it decides to manufacture vaccines for something known as COVAX, which is – I guess the best way to describe it is as a kind of global initiative that takes money from rich countries to provide vaccines for poor countries. What does SI pledge to COVAX, and how is it getting paid to create all these vaccines?

 

Samanth  11:10

So, COVAX was set up by GAVI, the Global Vaccine Alliance. The Gates Foundation, WHO, UNESCO – all of these guys organized it, and money was pumped into it to create a fund to buy these vaccines at $3 or less. The rich countries kick money in; GAVI arranges the vaccine purchases at $3 or less and distributes them for free in ninety-odd developing countries. So, this is the final objective: at least 20% of the populations in those countries can be vaccinated for free through this big global pool of vaccines. 

 

And so obviously, when something like this is set up, you need a cheap and easy and efficient way to manufacture these vaccines, and so it's not surprising at all – I think we could have predicted this even back in April or May – that all of these entities turn to the Serum Institute of India to buy vaccines. It's really one of the only manufacturers in the world that has that kind of scale going for it. What the agreement is exactly between the COVAX facility and Serum, we don't know. GAVI told me – and this is one of the few things I've been able to get out of them – GAVI told me that they always understood that Serum would have to balance its obligations to the COVAX facility with the obligations to supply India itself, given that Serum is an Indian company, and it's right there. So, I think GAVI and the rest of the COVAX cohort would assume that these are the two main priorities for Serum, which is low-cost vaccines for COVAX and then vaccines for India through whatever separate arrangement they need.

 

Milan  12:57

One question on this – Serum is manufacturing vaccines for AstraZeneca, it's manufacturing vaccines for COVAX, and it also has an obligation to the country in which its based, India, to provide vaccines for a massive population. Does it have the capacity to deliver on each of these three objectives?

 

Samanth  13:18

Well, as we're seeing right now, no. And I think the key question here – and the one to which we don't really have an answer – is, has there been a huge missed window, a missed opportunity last year in which Serum and India together should have been trying to build that capacity out, adding more manufacturing lines to make sure that Serum is well stocked with all the vaccine raw material supplies that it needs? You know, just simple things like that. 

 

Well, it's simple in retrospect, but we have to remember that the U.S. government actually did anticipate some stuff. So, a lot of what was happening around Operation Warp Speed was essentially the government kicking money to the pharmaceutical companies, saying, “We think there will be a vaccine approved, in which case, we have to be ready to go at scale. So, here's the money for you guys to start setting that up.” It's the same thing the UK government did with AstraZeneca over here. It's the same thing that Germany did with Pfizer-BioNTech for that vaccine. So, there's been a lot of government thinking in advance about the things that will have to happen once the vaccine is approved, and I think in terms of capacity, both Serum and India have somehow just completely missed the boat in terms of building capacity up through 2020.

 

Milan  14:42

Okay, so here's the part I don't get: if you jump ahead to October 2020, India finally places its first order for vaccines, and it's pretty small. It buys 11 million doses of Covishield, which is what the AstraZeneca-Oxford vaccine is marketed as in India. It buys another five and a half million doses of Covaxin, which is a homegrown vaccine being produced by another company, by BioNTech. Now, India has a population of 1.4 billion. Let's say you have about a billion adults. Each adult needs not one dose but two doses. Why is India's order so small?

 

Samanth  15:18

Not only so small, but also so late. Because it's not October – it's actually January 2021. that the first orders are placed. 

 

Milan  15:26

So, India doesn't place its first vaccine orders until January of this year? 

 

Samanth  15:31

January of this year. And the explanation is – not from the government, obviously, but from people who are trying to understand the government's perspective – is that none of these vaccines have been approved yet. The final approvals for Covishield only came in around December 2020, late in the year – in India, I mean, in the Indian trials – and so the Indian government couldn't, in any conscience, sort of take a bet with a huge amount of money on a vaccine that hadn't been approved. 

 

Now, I find that completely specious for a number of reasons. One is that countries all around the world were taking those bets time and time again because they knew the upside to getting a vaccine approved is far greater than the downside of laying out a little money in advance and placing an order. By November, certainly, it looked as if Covishield, the Astra Zeneca candidate, would find approval – it was just a question of, would something go disastrously wrong in the last month of trials? It didn't. So, even by November, they could have taken that bet. 

 

And then, finally, yes, this key question of what happened in the decisionmaking process that [made] India order sixteen, seventeen million doses of vaccines in January. Even in February, the second order from Serum for Covishield vaccines – there was an order of ten million as late as February 2021. 

 

And so the only thing I can figure out, the only thing I can speculate about, is that India somehow genuinely thought – or the decisionmakers genuinely believed – in the face of all countervailing evidence that there was no second wave coming, or that even if it came, it would be a sort of light second wave of the kind that we'd seen from the first. Many people were speculating – there was all sorts of rife rumor about the fact that Indians have higher immunity, or that maybe so many people had been exposed to COVID already that some kind of herd immunity had been built up. People were genuinely puzzled about the lightness of the first wave, and I think a lot of Kool-Aid was drunk at some of these decisionmaking meetings, which resulted in these really paltry first orders for vaccines. It wasn't until March 2021 that India placed an order of 100 million doses of Covishield.

 

Milan  17:56

So, March 2021, they start to make these big bulk purchases, but India also does something else, which is it starts to move to curb exports of vaccines that it is providing to other countries. So, I think one of the questions a lot of Indians are asking is, why was the country exporting vaccines in the first place when it clearly didn't have enough for its own population? And if this was a kind of soft power diplomatic move, to what extent can the government of India take credit for these exports if this was just Serum Institute providing doses under commercial or COVAX obligations that it already had?

 

Samanth  18:34

There are three different kinds of exports that we can break this down into. One is the Indian government engaging in what we call vaccine diplomacy, sending vaccines out as a gesture of goodwill to countries that obviously are too poor or small to manufacture them themselves. The second is Serums' doses, its obligations that it has to send out under COVAX, which, as far as my last memory of the statistic goes, GAVI told me about twenty-nine million doses have gone out under that. 

 

The third is doses that Serum is sending out under its own commercial contracts with other governments or companies or entities. So, to give you one example, we don't know what the original AstraZeneca-Serum contract says about whether Serum is going to supply the countries of Europe and the UK and the U.S. AstraZeneca has manufacturing plants in all of these territories; it would be reasonable to assume that those plants would supply the West. And yet in March 2021, when the UK temporarily ran short of doses over here of the AstraZeneca vaccine, we know that five million doses left India and went to the UK. We don't know whether Serum was always supposed to supply those as a stopgap. We don't know if AstraZeneca leaned on Serum. We don't know if it was in the original contract that Serum would have to fill gaps in AstraZeneca's production schedule for the West. We don't know any of these things. 

 

And, of course, Serum by itself is completely free to cut deals with other countries and to supply them vaccines. This is something that, again, I think India didn't think through, and I'm not quite sure yet how to process that. Because obviously, we've seen in the West countries such as the U.S. imposing export restrictions quite early, making sure that vital supplies or even vaccines would not leave the country until the populations' needs are taken care of. We see that as a restrictive practice, particularly in [a moment] of emergency – we see it as an example of the U.S. government hoarding these essentials. So, I don't know whether to praise the Indian government's restraint in not doing that initially or whether to sort of criticize them for the fact that they didn't think this through the way other quite pragmatic governments clearly seem to have done. So, I'm a little bit torn about that. But, yes, there's sixty-six million-odd doses of Serum-made vaccines out there in the world – it's a one-month supply. Serum today makes seventy million doses a month. So, it's a whole month's worth of supplies that India is already exporting.

 

Milan  21:30

So, all of this is playing out in real time. The second wave is gathering strength; Serum, as you document, is making repeated pleas with the Government of India for more funds to expand its production. Your reporting shows that Serum had already been receiving hundreds of millions of dollars from the Government of India – as well as other governments and other development agencies, as many of these contracts are secret, so we don't actually know. What do we know about Serum's motivations during this period? How much more money did they need if they were already getting this influx of funds elsewhere and turning a profit, as their CEO had claimed?

 

Samanth  22:12

It's difficult to tell. I mean, Adar Poonawalla has said time and time again, through 2020 and then even this year, that over the course of last year, he invested $800 million in scaling up to meet COVID vaccine. Now, of that, we know $300 million has come from the COVAX facility, the Gates Foundation, and GAVI. He said he invested between $200 and $250 million – I can't remember the details, but something on that order. So, that still leaves another $250 million unaccounted for. Maybe it was advanced payments from some governments or companies or something – we're not sure. 

 

But one of the things that I kept wondering is, well, everybody's starting from zero in terms of capacity to manufacture COVID vaccines – nobody's ever done this before, nobody has a line ready to go. So, he started building this out, I assume, around May or June last year. By April this year, he said he was at 70 million doses a month, which is significant. It's a lot. But I always wondered: how much does it cost to build one of these lines? I mean, how much does it cost to add X number of doses per month to your capacity? 

 

So, I went around asking people in the vaccine industry and the drug industry what this costs, and all of the figures I got were far, far, far less than that $800 million figure. One guy told me that a recent line that had been set up in Norway to manufacture 45 million doses a month cost about $45 million. And obviously, that was going to be cheaper in India, where land and labor and so on are quite inexpensive. I think the highest estimate I've heard to set up a line manufacturing 100 million doses a month was in the region of $200 million dollars, something like that. So, Adar, by his own admission, has four times that. 

 

Now, it is possible that he had the money, but he couldn't set up a much larger capacity of production because supplies on the market were so limited. You look at things like bioreactors and bioreactor packs; you look at filters; you look at culture mediums; all of these things – there's limited supplies out there. Obviously, the U.S. companies have a head start, so it's eminently possible the market for all of this was cornered back then in 2020. 

 

And yet, even as late as March 2021, Poonawalla is claiming that one of the real problems is not his ability to expand but just the fact that he doesn't have money, and he goes back once again to the Indian government demanding a much bigger payment, and India eventually kicks in $400 million or so as an advanced payment on a huge order of vaccines. So, it really does beg the question – I mean, if he had $800 million last year, clearly, he hasn't spent all of that to ramp up to a capacity of 70 million doses a month. He's still asking for hundreds of millions of dollars in March. Where's this money going? Why don't we know more?

 

And we should, I think, in this particular case. I realize Serum is a privately held company, but there are public crises and emergencies where I think the public has a right to know what is happening in a slightly more transparent way as compared to normal times. And yet, we don't know that with Adar. And so he is potentially right now sitting on at least $1.2 billion dollars of money, some of which has been invested already. The rest of it, we don't know what he plans to do with.

 

Milan  26:01

I forgot to mention one part of the story which was somewhat surprising: just a couple of weeks ago, he flies to the United Kingdom and seeks refuge there for a little bit. He's getting a lot of attention, a lot of harassment, he claims, from people who want to see their vaccines, and there's a shortage. But he also announces new investments in the United Kingdom. What do we know about what he's doing elsewhere?

 

Samanth  26:31

Very little. I mean, I think the investment in the UK is not for a manufacturing plant – I did manage to find that out. So, it was about 200 million pounds' worth, and there's going to be a sales office and some R&D, but I don't think it's a kind of center where he can start manufacturing vaccines for the Western world.

 

So, it seems to be a combination of things. One is that he really seemed at that time to be on some kind of huge press campaign. He was talking to the Financial Times and the Times of London and the New York Times. He gave these interviews – not long, not extensive, but he clearly wanted to get his view of the situation out there and get ahead of the bad press that has been coming to him, which is that he just hasn't managed to scale up. 

 

Now, the second thing, he said in the Times interview, which was interesting – that he was getting a lot of semi-threatening phone calls from industrialists and chief ministers of states. I can completely understand that – I'm sure that's happening. We know what India is like. And, look, I can understand this is a very difficult situation for him, and it's sort of unfair on the part of India, on the part of AstraZeneca, on the part of COVAX and GAVI, that all of these responsibilities have devolved onto this one company to supply essentially a third of the world or a quarter of the world. But having said that, even in the midst of that unfairness, it looks like he's managed to make some not very good or confusing decisions.

 

Milan  28:08

Diplomatically put, Samanth. Coming back to the present moment, I want to ask you about where India's vaccine rollout stands today. We know that the central government has provided vaccines for frontline workers, for healthcare workers, for people over the age of 45. What happens to those between the ages of 18 and 45? What are the Centre's obligations, and what are the states supposed to be doing?

 

Samanth  28:34

Well, that's it right now. There's sort of a tripartite competition for vaccines that are produced. Serum and Bharat-BioNTech will both supply doses to the central government; they will supply doses to state governments a slightly higher price; and they will supply doses to private hospitals at a price that is even above that. And so these three entities essentially find themselves competing against each other for the limited supply of vaccines. Not an ideal situation. 

 

To compound that, there is an incentive system set up over here for these companies to sell preferentially to private hospitals because they pay top dollar – they're getting the highest price. And then, for private hospitals themselves, the sky's the limit. I mean, I've already started hearing stories about private hospitals administering doses of Covishield for $20 a pop – 1200 rupees or 1400 rupees. That makes it one of the most expensive vaccines in the world for COVID. And this is only likely to exacerbate as supply shortages continue. 

 

The other thing that happened today that we should talk about is, there's a government panel – we don't know what panel – that has put out an advisory that says the ideal time to take between two jabs of Covishield is now twelve to sixteen weeks, and also that if you've had COVID at all, you should wait six months before you get vaccinated. We don't know the data or the tests or the studies that these conclusions are based on at all. The six-month metric, in particular, I haven't heard about in any other country in the world. In the UK, AstraZeneca has been administered with a twelve-week margin, but they've extended this now in India to sixteen weeks. This is clearly a way to manage these problems of supply and to make sure that demand is low. So, that's the other problem.

 

And then the final problem comes in terms of delivery – how to deliver the vaccine to the people who need it. There is an app – as with everything in the Modi administration, there is an app. The app crashes a lot; it's buggy; it has to be hacked in strange ways. And then when you get on it, there are never any slots on there, so you can't book a vaccine appointment. And for all his Digital India drive, we have to remember that there are hundreds of millions of people in India who will not be able to download an app or know what to do with it. 

 

And so rather than going out into the population to ensure that every single person is vaccinated, the government is setting up a situation where it's trusting that the population will pour across its doorstep, in an orderly fashion, to get their shots. And India is not that kind of country. Even in the cities, I think vaccine hesitancy is somewhat high. Certainly, knowledge about vaccines and why it's important to get immunized is not high at all. I mean, a lot of people think that it's an option, or that it's something that only has to do with your health. This question of the vaccine as a public benefit – you get vaccinated so you don't infect anybody else – that fact, that concept is quite frail, I think. And, as I said, once you move out of cities and into the villages, that only becomes more extreme. 

 

So, the communication has been shoddy; the messaging has been insufficient. This app sits at the center of it. And, given the fact that India at one point conducted this extremely painstaking, thorough polio campaign to immunize children against polio – literally door-to-door, working with village self-help groups, making sure that nobody was missed, because if anybody was missed, that means there would be an outbreak or the virus could spread – given that India has that kind of experience, it's sort of shocking to see them roll back or abandon all of that expertise and pin their hopes on an app.

 

Milan  32:49

So, there's one piece of this that you didn't talk about, and I want to ask you about this, which is the importation of foreign vaccines. So, India has really focused on “domestic vaccines” from Serum and from Bharat-BioNTech, but we now know they've given approval for the Sputnik vaccine. There are talks underway, we understand, with both Pfizer and J&J – presumably, others as well. 

 

But the Centre, in what I think is a somewhat unusual move, has basically said, if the states want to import vaccines, they can do so, which sets up potentially a kind of a very competitive, high-stakes game where individual states are competing against one another to try to get those vaccines, which reminds me of what U.S. states were doing a year or so ago when New York was trying to get masks and Connecticut would swoop in and the federal government would come in and take from both of them. So, what's going on on the foreign vaccine front?

 

Samanth  33:51

In one way, some – not all, but some – of this discussion is moot in the sense that there's not that many foreign vaccines out there to buy yet. Between America's own vaccine nationalism, not wanting to release doses until its population's fully vaccinated – I mean, we're really at a stage now where Pfizer's vaccine was approved for twelve- to fifteen-year-olds in the U.S., while at the same time, there are vulnerable and healthcare workers in other countries around the world who have not been vaccinated, so there's a distinct inequity over here that the U.S. government has to address in some way. So, there's not that many vaccines out there to buy. 

 

The ones that will be there, you're right – this perfectly sets up the ground for a sort of bidding war where states with deep pockets will go out and try to get as many doses as possible for themselves ahead of states with not that much money. So, it's easy to imagine a situation where a Maharashtra or Tamil Nadu has that kind of buying power. 

 

And where the revenues will come from – I mean, debates around the distribution of tax revenue in India and on how the Finance Commissions distribute money have been quite energetic for a while now, to say the least, and I think this is something that's only going to add to that debate. I mean, if states are expected to go out into the international market to buy their vaccines to protect their populations, there's going to be real thinking about why that much money should be sent away to the central government in the first place if it's not being used to do the kind of international buying that the Centre is supposed to do. It's a very unusual situation, and I don't know what precedent there is for it. But I do know, for example, the new finance minister of Tamil Nadu is somebody who thinks heavily about this kind of stuff, about how state should distribute revenue among themselves and what states should do to safeguard more of their tax revenues for themselves.

 

Milan  36:09

So, you talked about the fact that, look, even if these contracts are signed with a Pfizer or a Moderna or whoever, it's not like there's a lot of excess supply at the moment. There's a lot of demand; not a lot of supply. One of the things the Biden administration has done in recent days, in a pretty stunning reversal, was to indicate support for a measure at the World Trade Organization to suspend intellectual property rights on COVID-19 vaccines in order to make sure that poor countries could vaccinate their citizens. You had a piece in Quartz where you write that, while this might be a welcome move, it's really just the first step in a pretty long process. Could you describe for us what needs to happen for this waiver to actually improve vaccine availability on the ground in a country like India? 

 

Samanth  37:00

So, the Biden administration's move, while bold and unprecedented, is sort of, as of now, largely symbolic. What has to happen is for the rest of the WTO – and this has to be unanimous decision, which is difficult enough to obtain under normal circumstances – the rest of the WTO, all the members have to agree to the precise nature of this waiver on intellectual property. And that includes, what kinds of patents will be waived? Will underlying technologies have their patents waived as well, or is it just the IP of the vaccine itself? What kind of payments will be set up? Who ensures that people get paid? All of this comes into play.

 

Milan  37:04

And I should just mention on that – Europe has made its stance pretty clear, which is that they continue to oppose a waiver. So, already out of the gate, you have a big problem, right?

 

Samanth  37:57

And the WTO was not, as far as I could see – I mean, there were people in the [inaudible] who are familiar with the process talking about the fact that even negotiating all of this stuff could take as late as November or December, and once that happens, there's a separate issue, which is – the IP waiver, you can think of it as a recipe. It's like a recipe card for the vaccine. But the recipe is quite complicated, and so a head chef has to go down to the kitchens in these various countries and train the sous chefs in making this dish on their own. So, there has to be what is called in the industry a tech transfer and a knowledge transfer, and companies are not obligated to do that. Pfizer has to sit back and allow these IP waivers to happen if the WTO works on it, but Pfizer is not obligated to go out there and train these people to do the kind of science that needs to be done. And so there has to be a further process where the U.S. government leans on these companies to cooperate with that stage of the process as well. 

 

So, that happens, and Pfizer and all these other companies send people out to countries like India, where there's already some kind of manufacturing capacity, and there is some transfer of knowledge and technology. There will need to be new equipment, new supplies brought in, because these lines are not manufactured the same way as the commercial lines. And so you will need more stuff, you'll need more money. So, there has to be some fundraising for that. 

 

And then, I don't know how long this is going to take – people who are ardent champions of IP insist that it will take months and years for these knowledge transfers to actually have an effect. People in India tell me something completely different: they say they could do it in a matter of three months, we could have something up and running. I don't know. It's difficult to say. But regardless of anything, it doesn't seem possible – I think even if we start from today and run through the timeline of events, it doesn't seem possible for a factory in India to be manufacturing a version of a Pfizer or Moderna vaccine by mid '22 – at the earliest. I'd say it might be later. 

 

Now, it's useful in the medium term or the long term because clearly, this disease is not going to go away – there are still going to be variants floating around. We may need boosters or shots on a regular basis. The EU is already planning and has, I think, placed an order for millions of doses to be delivered in 2023. So, that's two years out, so everybody's thinking about this in the long term. And undoubtedly, if the IP waiver goes through, it will help avoid the kind of crisis that India has now – it will help avoid that kind of crisis in 2022 or 2023. But I don't think the IP waivers will do anything to help the situation in 2021. And what really needs to happen from the point of view of the Biden administration is for the government to not just follow through with that in parallel, but also, first of all, lift its curbs on exports, which kick in under the Defense Production Act, so that supplies can be purchased on the open market, but also release, for example, its surplus doses of the AstraZeneca vaccine, which I believe has not yet been approved in the U.S. yet.

 

Milan  41:36

It hasn't approved yet for domestic use, right.

 

Samanth  41:39

So, release those into the international market; allow Pfizer and Moderna to divert some of their surplus U.S. supply, again, to countries like India. And finally, also, recognize that the U.S. itself has to now start thinking about doing some kind of triage on the international landscape where twelve- to fifteen-year-olds in the U.S. are not as vulnerable as healthcare workers in Africa or in Asia, and so maybe it is for the global good that these doses go there first rather than come to teenagers and in America. 

 

So, I think that's sort of the other aspect of it, and I think until now, the Biden administration, and even the Trump administration last year, has done the relatively easy thing, which is to kick up money for COVAX, for example. But I think the hard decisions haven't been made.

 

Milan  42:38

So, Samanth, I want to bring this conversation to an end by asking you to step back. You took up a new position at Quartz to monitor the future of capitalism, which is a very, very big subject. I'm curious what this entire episode and this reporting you've done has taught you about the business of vaccines. You had a piece published yesterday where you argue that taxpayers of many countries are paying not once but twice for their own vaccines. How so?

 

Samanth  43:12

When I first started reporting on vaccines last March or April, even back then, I was struck by the fact that all of these vaccine candidates that seemed promising back then, so much of the basic research on that – basic science stretching back decades in Europe and in the UK and in America – so much of this research had been funded by taxpayers, by government grants, sometimes by philanthropies, sometimes by coalitions like CEPI, which includes government money in its grants. So, all of this had been funded patiently at points where they were high risk ventures. Nobody knew they would pay off, and all of them came to fruition at about the right time for this COVID vaccine to be developed on the basis of them. 

 

So, that takes us up till March 2020. And then after that, governments started kicking in further money to companies to enhance their manufacturing capacity, placing advanced orders – essentially, de-risking the COVID vaccine enterprise so that companies would be encouraged to take on the responsibility of manufacturing one should a vaccine ever be approved. So, more money. 

 

And then, in the case of Moderna – it's actually sort of an interesting case. Moderna is based on three separate and crucial technological breakthroughs. All three have been funded in large part by the U.S. government or by the German government, and in one of these three cases, the National Institutes of Health actually owns the patent on the technology, on this little protein that helps evoke an immune response. So, Moderna and other companies that are using mRNA technology, they are supposed to be licensing this patent from the U.S. government, from the NIH, but Moderna doesn't pay the NIH license, for reasons unknown. Pfizer apparently does; Moderna doesn't. 

 

And then finally, after all of this is done, the U.S. government goes back to these companies and buys the vaccines at between $15 and $20 a pop in the understanding that once this crucial phase of the pandemic is passed, companies will be free to raise their prices and be commercial again in their pricing, as one of the executives of these companies put it. And so all of this seems to me that the taxpayer has paid over the years for the research, has paid these companies to enhance their capacity, [and then] is sort of refraining from taking license fees that should be accruing to the government and is then exempting the company to buy these vaccines and enhance their bottom lines. 

 

And so it struck me as a perfect example of something that people in the drug industry have been talking about for a long time, which is this conversion of public subsidy to private profit. And it's been difficult to quantify in the past just because drug development is complicated and long, but in this particular case, there's been so much that's been done on a public stage quite transparently in terms of grant announcements and so forth that a couple of academics have actually worked out some of the funding portions for one vaccine, the AstraZeneca vaccine, and they found that up to 99 percent of all research funds that led to the development of the AstraZeneca vaccine came from public funds, from public money. 

 

And so it seems to me that it's a great time to get into the future of capitalism beat because it seems like this is really what the future of capitalism ought to be trying to fix: the conversion of public subsidy to private profit.

 

Milan  47:09

My guest on the program this week is Samanth Subramanian. He is a senior reporter at Quartz covering the future of capitalism. His reporting on the Indian vaccine rollout has been a central reading. Samanth, we know you have a lot of reporting to do. Thanks so much for taking the time.

 

Samanth  47:21

Thanks, Milan. I'm so glad.