“Under Commission President von der Leyen, the tendency of EU institutions (and officials) to evade their due accountability by collectively hiding behind a democracy-defying bulwark of opacity has reached alarming proportions.”
If you blinked, you probably missed it: The European Commission has renegotiated its highly controversial COVID-19 vaccine contract with Pfizer-BioNTech, against a backdrop of almost zero press coverage. When parts of an interim report on the contract renegotiation recently leaked out, it was not to MEPs or the EU public but to journalists from the Financial Times and the Reuters news agency. And then the story quickly disappeared. Which is probably no surprise given how little difference the renegotiation will make, as Martin Sonneborn, a German MEP and former editor-in-chief of the Satirical magazine Titanic, documents in a withering account:
If their reports are correct, then the Commission is proposing to replace Pfizer’s existing €10 BILLION payment obligation with a €10 BILLION payment obligation to Pfizer.
An interesting shell game.
The EU may even end up paying more for less (more on that later).
The renegotiation had become necessary because many EU member governments had grown weary of amassing (and paying for) ever-larger mountains of COVID-19 vaccine vials that hardly anyone wants and will never be used. Yet new supplies kept arriving. As I reported in January, Germany’s government had accumulated more than 150 million unused vials in its central warehouse and was even talking of cancelling or reducing the additional orders it had made through the EU Commission for 2023 and 2024. Many states in Eastern Europe were saying much the same.
This was enough to get the Commission, kicking and screaming, back to the negotiating table. But if past is prologue, the most important details of the renegotiation will never be made public.
“Disappearing Ink”
On May 26, the Commission announced it had reached a deal with Pfizer to revise the terms of the May 2021 contract. The new deal cuts down the 450 million doses that were still due to be delivered in 2023, and spreads them out over the next four years. As Politico noted in its piece Pfizer, the EU, and Disappearing Ink, “that’s all the information you get. The Commission isn’t revealing the new number of doses that member countries must buy, nor any of the financial terms of the amended contract.”
Sonneborn has tried to make some sense of the bare bones on offer (machine translated):
It is about “adjusting” the gigantic (third) von der Leyen-Pfizer contract, with which the Commission had made a binding commitment to purchase 900 million doses by the end of 2023. Around 400 million of these units have already been delivered, and the remaining 500 million still have to be accepted by the EU members this year.
The starting point for the renegotiations are the 500 million doses still to be purchased. At the list price of 20 euros/dose, this results in a liability (from the legal contract concluded in 2021) of €10 billion.
According to the Financial Times, the renegotiated contract now envisages reducing the total number of vaccine doses to be purchased from 500 million to 280 million. In the future, 70 million vials are to be purchased per year, with the delivery period being extended to 2026. Pfizer is willing to cancel the units that were originally ordered but have not been purchased in return for a “cancellation fee” of €10/dose, but only if the EU accepts a higher price for the vials to be delivered by 2026. In dark corners of the schoolyard (and the pharmaceutical industry) this is called a “flexibility fee”…
[T]hese [new vaccines] are no longer to be priced like the previous one (20 euros per shot), but according to a new, as yet unknown pricing system, which provides for an equally “adjusted” higher price for every future “adjusted” vaccine.
If we haven’t miscalculated, then at least another €5.6 BILLION euros from binding EU contracts will go to Pfizer’s balance sheets books and offshore accounts, if they haven’t burst by then. And in view of Pfizer’s current sales price of 110 to 130 dollars per dose in the USA, we are so dizzy that we can no longer reliably calculate the result here. That would correspond to 280 million 100 euro notes.
To summarise: The Commission is proposing to give up 220 million originally ordered Pfizer doses for a cancellation fee of 2.2 billion euros and in return is giving up a new order disguised as a renegotiation of 280 million units, for a sum of between €5.6 and €28 billion.
One seeming result of the renegotiation is that Pfizer-BioNtech have secured a quasi-monopoly in the EU for their hugely lucrative vaccine business. According to an unnamed source cited by the FT, if Pfizer-BioNTech were to ship around 70 million doses a year over the next few years, it would more or less cover the entire market. This would surely contravene the EU’s antitrust laws, and is a serendipitous outcome for a medical product that has proven to be not nearly as effective or as safe as initially marketed. In fact, BioNtech is facing a rash of lawsuits in its native Germany for suspected injuries and adverse events caused by its COVID-19 vaccine.
Given the original vaccine contract is the single largest procurement deal the Commission has ever signed and that EU taxpayers will essentially be footing the bill for vaccines that most of them do not want and will not take, one might expect that its renegotiation would be a matter of broad public interest. Yet the story has met a wall of deafening silence from the continent’s mainstream media (with Politico proving an honourable exception).
More worrisome still, VdL’s Commission is seeking to carve out a much larger role for itself in securing joint procurement deals for the EU’s 27 Member States, not only in healthcare but also in energy and arms…
Read the full article on Naked Capitalism
Nick Corbishley 