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Home / Opinion / Columns /  The wisdom of refusing a vaccine deal on Pfizer’s terms

It is amply clear now that one of the best decisions that the Indian government took for its covid vaccination programme was something it did not do. It did not sign a contract with American pharma giant Pfizer for vaccine supply. At the time, many commentators had been highly critical of this, some even predicting that our streets would be piled up with bodies. While some of them surely acted based on their own reading of the situation, others may have been influenced by Pfizer’s forceful spin doctors.

The Narendra Modi government was not ready to accept the terms that Pfizer insisted on, the main sticking point being a sovereign indemnity demanded by the company against any problems that might arise in the future from the use of its vaccine. The full details of the indemnity were not made public by any government that signed the contract, but these things don’t stay hidden for long. Over the last few months, Pfizer’s contracts with various governments have been leaked. The picture is not pretty.

The contract that Brazil accepted seems to be the most one-sided among those that have been uncovered, like the ones signed by Albania, Peru, Chile, the European Commission (EC) and the US.

Brazil completely waived its sovereign immunity and took on 100% of the risk. So, if the Pfizer vaccine does not work or is even proven to be the cause of deaths, it is the Brazilian government’s headache and not the vaccine maker’s. If Brazil defaults on payments, Pfizer has the power to seize state assets—for instance, Brazil’s parliament building or its defence systems—and then monetize them to recover its dues. In fact, it can even seize assets as a “precautionary measure".

If that is not enough, Pfizer has “sole discretion to determine additional terms and guarantees for (the company) to fulfil the indemnity obligations." In effect, Pfizer can demand whatever it pleases of Brazil.

There are no penalties if Pfizer does not deliver vaccines on time. The company is free to adjust its delivery schedule and Brazil “shall be deemed to agree to any revision". And if there is a shortfall, Brazil can neither accept donations of Pfizer vaccines nor buy them from other countries without the company’s permission. If it does, it will be considered an “uncurable material breach" of the agreement. Pfizer can immediately terminate the agreement, and Brazil will have to pay the full price for any remaining contracted doses.

While Pfizer’s intellectual property (IP) rights are impregnable, if Pfizer itself is sued for infringement of someone else’s IP rights, it is Brazil which has to bear all costs of legal defence and damages. And Pfizer in no way guarantees that its product does not violate third-party IP or that it needs additional licences.

It is significant that these terms are not part of Pfizer’s contracts with the EC and the US. In fact, the US flatly rejected many of the indemnity clauses.

If, in spite of all these watertight conditions, a dispute arises, it will be resolved not in a public court, but by a panel of three private arbitrators. Brazil has to keep even the existence of this tribunal—and of course all proceedings, decisions and awards—secret. Pfizer, it would seem, is above the laws of Brazil.

Brazil is prohibited from making “any public announcement concerning the existence, subject matter or terms of (the) agreement" or commenting on its relationship with Pfizer without written permission from the company. Thus, Pfizer has silenced a national government. But, for the EC and the US, this non-disclosure provision applies to both parties—the government needs Pfizer’s consent to speak, and Pfizer the government’s.

India has been down this road before, in the 1990s, when it signed a contract with Enron to build a power plant at Dabhol, Maharashtra. It was because of a vigilant media and citizen activism—and finally Enron’s spectacular meltdown in 2001—that we escaped relatively unhurt. But it remains a dark chapter in India’s foreign investment story.

This time round, the government has been remarkably astute. Pfizer seems to have carried out a big campaign that millions of Indians would be affected if the vaccines were not imported on Pfizer’s terms. As a very senior corporate executive, who is a friend, put it: “This is the narrative…There is a shortage of vaccines. Pfizer’s is the best. So India must at once accept Pfizer’s conditions and pricing. By not agreeing, the administration is proving that it is heartless." But the government held firm.

And, cleverly, it never said a clear ‘no’ to the company. It did not leave the negotiating table and the official stance was that it was in discussions with Pfizer. Because it knew that by the beginning of August, domestic vaccine supply should increase dramatically and the delivery mechanisms of the states should also be ramped up.

That is exactly what happened. Production and procurement shot up. Vaccination numbers consistently beat targets that the government had set for itself. Data from countries administering the Pfizer vaccine also showed that it was not the magic bullet it was hyped to be, much superior to Covishield or Covaxin. Today, the experts who had batted for Pfizer do not even mention the name. They have shifted to petulantly complaining that the billion-vaccines mark could have been achieved faster.

India stood its ground against the greed of Big Pharma and refused to be held ransom. Its stand has been fully vindicated.

Sandipan Deb is a former editor of ‘Financial Express’, and founder-editor of ‘Open’ and ‘Swarajya’ magazines

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