Wise to refuse vaccine deal on Pfizer’s terms

The Narendra Modi government was unwilling to accept the terms, which Pfizer insisted, the main sticking point being the company’s demand for a sovereign compensation against any problems that may arise from future use of its vaccine. can. The full details of the compensation were not made public by any of the governments that signed the contract, but these things do not remain hidden for long. Pfizer’s contracts with various governments have leaked over the past few months. The picture is not beautiful.

The contract that Brazil accepted appears to be the most unilateral among those signed by Albania, Peru, Chile, the European Commission (EC) and the US.

Brazil completely waived its sovereign immunity and took 100% of the risk. So, if Pfizer’s vaccine doesn’t work or even proves to be the cause of deaths, it’s a headache for the Brazilian government, not the vaccine maker. If Brazil defaults on payments, Pfizer has the power to seize state assets – for example, Brazil’s parliament building or its defense system – and then monetize them to recover its dues. In fact, it may even confiscate property as a “precautionary measure.”

If that is not sufficient, Pfizer has “the sole discretion to set additional terms and guarantees for (the Company) to meet indemnification obligations.” Basically, Pfizer can demand whatever Brazil wants.

There is no penalty if Pfizer does not provide vaccines on time. The company is free to adjust its distribution schedule and Brazil “will be deemed to have agreed to any amendments”. And if there are any shortages, 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 “incurable material breach” of the agreement. Pfizer could terminate the agreement immediately, and Brazil would have to pay full price for any remaining contracted doses.

While Pfizer’s intellectual property (IP) rights are impenetrable, if Pfizer itself is sued for infringing someone else’s IP rights, it is Brazil that has to bear the legal defense and all costs of damages. And Pfizer does not guarantee in any way that its product does not infringe third party IP or require additional licenses.

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

If, notwithstanding all these undisputed conditions, any dispute arises, it shall be resolved not in a public court, but by a panel of three private arbitrators. Brazil must also keep secret the existence of this Tribunal and of course all proceedings, decisions and awards. It seems that Pfizer is above the laws of Brazil.

Brazil is prohibited from making any public announcement relating to the “existence, subject matter or (the) terms of the Agreement” or commenting on its relationship with Pfizer without the written permission of 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 requires the consent of Pfizer to speak, and Pfizer’s government to speak.

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

This time the government has been very smart. Pfizer seems to have launched a massive campaign that millions of Indians will be affected if vaccines are not imported on Pfizer’s terms. As a very senior corporate executive who is a friend puts it: “This is the story… there is a shortage of vaccines. Pfizer is the best. Therefore, India must immediately accept Pfizer’s terms and prices. By not accepting it, the administration is proving that it is merciless.” But the government remained adamant.

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 discussion with Pfizer. Because he knew that by early August domestic vaccine supplies should increase dramatically and states’ distribution mechanisms should also be accelerated.

That is exactly what happened. Production and procurement accelerated. Vaccination numbers consistently beat the targets the government had set for itself. Data from countries administering the Pfizer vaccine also showed that it was no magic bullet, described as being much better than Covishield or Covaxin. The experts who batted for Pfizer today do not even name names. They have moved to complain that the billion-mark of vaccines is too fast to be achieved.

India took its stand against the greed of Big Pharma and refused to take the ransom. Its stand has proved to be completely correct.

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