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25 January 2021updated 28 Jul 2021 1:47pm

How austerity economics is hindering Covid-19 vaccine programmes

Underinvestment in vaccine production and distribution by wealthy countries is preventing a swifter recovery.

By Ido Vock

The World Health Organisation could approve the Oxford/AstraZeneca coronavirus vaccine in the coming days or weeks, according to a document leaked to Reuters. This means doses manufactured by the Serum Institute of India will begin to be distributed to poorer countries under the WHO’s Covax initiative, which aims for a more equitable distribution of vaccines worldwide. 

Even with Covax, though, some low- and medium-income countries are likely to be waiting well into 2022 to have populations fully vaccinated. The primary reason for the wait is straightforward: there is not sufficient production capacity to manufacture enough doses of the most in-demand medical product on Earth. Rich countries are hoarding initial production, says the WHO’s director general, putting in orders for diversified portfolios of different vaccine candidates. Poor countries are, by and large, at the back of the queue ­– you can see by how much for yourself on the New Statesman’s new global vaccine tracker

Canada has ordered enough doses to, theoretically, vaccinate its entire population nearly five times over, while the UK could do so nearly three times over, according to figures compiled by Airfinity, a science information company. Yet 92 of the poorest countries covered by Covax ­­will receive enough doses to immunise only a quarter of their populations by the end of 2021 under the scheme, according to Gavi, a global health organisation aiming to boost immunisation in the developing world. 

But even rich countries are currently struggling to secure enough doses, blaming supply issues. Given the urgency, both in public health and economic terms, why are bottlenecks still happening? 

Underinvestment in production facilities by rich countries is partly to blame. Although vaccine production cannot be mechanically ramped up with more investment, more funding couldn’t hurt. Problems such as recent delays in production from Pfizer and AstraZeneca could have been alleviated with earlier investment. Indeed, a paper published this month suggests that investment in additional capacity last summer would have allowed the US to produce enough doses for its population by March this year rather than the summer, and for the entire world by October – some eight months earlier than is likely to happen in reality.

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This additional backing would have benefitted rich and poor countries alike, but a failure to properly anticipate the costs and benefits of a coronavirus vaccine prevented further investment last year. Coronavirus transmission appeared under control in many countries in the summer of 2020, leading them to underestimate the risk of second and third waves.

Spending billions building factories to manufacture several vaccine candidates, with no guarantee that any would work, seemed profligate at the time – until you consider that such a sum is a drop in the ocean compared to the price of lockdowns, which cost advanced economies billions every day, both in lost economic output and additional government spending to support businesses and individuals. 

Bill Gates warned last spring that only governments could afford to take the kind of financial risks needed to build the necessary facilities, some of which might not end up being needed, and prevent a future vaccine shortage. Few heeded his warning, in part because of an austerity mindset dating from the 2008 financial crisis. Both rich and poor countries are now paying the price. 

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The good news is that it isn’t too late to change course. Investment in supply chains can still help to accelerate delivery of vaccine doses, for instance by adding facilities to existing factories, helping increase output. States must realise that investment in vaccine production and delivery is close to the most effective multiplier of government spending conceivable and get out the chequebooks.