Faced with the severe health and economic damage caused by Covid-19, governments may wish to protect their citizens by securing vaccines first. But such ‘vaccine nationalism’ has consequences and may not be the wise choice in the longer term.
The UK’s rollout of vaccines is proceeding at a fast pace. Over 46 million doses have been administered and, at its peak, the rate briefly surpassed 800,000 injections into arms in one day. The vaccination effort has become a key focus of government policy, as it is the tool through which we hope to exit regulated social distancing policies and return to normal economic and social life.
The rapid pace of the rollout and the high numbers of vaccines in the UK stand in stark contrast with other parts of the world. The World Health Organization reported that as of 24 April 2021, just 18 million vaccine doses had been administered in Africa; and through the COVID-19 Vaccines Global Access (COVAX) initiative, more than 38 million vaccine doses have been shipped to over 100 countries. But these are still a fraction per person compared with what has been delivered in the UK, as well as in other vaccine leaders like the United States, Chile, Israel and even European Union (EU) countries.
Vaccine policy cuts across many issues that have occupied economists during the pandemic, not least the question of whether policies should treat UK citizens and companies differently from those abroad. Making this distinction is often referred to in the media as ‘vaccine nationalism’.
A vaccine utopia
One way to see how vaccine nationalism impinges on policy design is to contrast it with an imagined, ideal opposite – let’s call it vaccine utopianism.
The process from initial research to the delivery of the vaccine to patients is a complex one, relying on the participation of a number of different stakeholders including scientists, government health services, regulators and pharmaceutical companies. In addition, the supply chain from production to where the doses are administered is long and highly specialised, often spanning many countries and involving many different companies.
The decisions that have to be made are plenty, but let us for simplicity consider just a few key ones:
- Which and how many vaccine candidates, or options, should be backed and funded?
- Which pharmaceutical companies should develop and produce them?
- Where in the world should the vaccines be produced?
- Where in the world should they be distributed and deployed first?
For each of these questions, there is a balance to be struck – or in economic terms, there are trade-offs.
Investing in a broad range of candidates is clearly sensible overall as it increases the chances that one or more successful vaccines can be developed. Whereas any one country cannot be expected to back a large number of candidates, a coordinated plan should have different countries back different candidates with a view to sharing the benefits once it is known which investments pay off – for example, the UK supporting the Oxford-AstraZeneca option, and the United States funding Moderna.
As to which companies should make the vaccines, it would be preferable to entrust production with those companies that have the most experience and thus can make best use of existing patents. Production should be chosen with a view to doing it most efficiently and at the lowest possible cost.
This suggests locating production where capacity and know-how are already available and using existing international supply chains whenever possible to ensure that each step of the process is carried out as efficiently and with as few frictions as possible.
Finally, vaccines should be distributed to where they can avoid the most suffering: to populous countries, adjusted for demographic factors that affect the impact of Covid-19; to countries without the capacity to fund or administer lockdowns; and to countries where prevalence is highest.
Why go it alone?
As outlined above, there are clear advantages to coordinating and planning the vaccine development process internationally. Reducing inefficiencies and distributing vaccines rationally according to need has evident positive effects on global health and economic wellbeing.
Why then would a country or a group of countries consider going it alone and instead rely on their own efforts and vaccine development process?
The key insight here is that what is best for the world overall is not necessarily what is optimal for an individual country that only considers its own wellbeing. In other words, it is perfectly possible that any given country would be better off on its own than it would be as a member of an international coalition of countries working in concert.
This is almost certainly the case for most rich countries that are currently vaccinating their own populations while only sending symbolic numbers of vaccines to poorer countries through the COVAX facility, which aims to ensure equitable access.
So what are the factors that can influence a country’s incentives to pursue the uncoordinated route? There are several possible explanations.
First, a country may believe that it can secure a better deal for itself as a single buyer than what it would get as part of a cooperative effort. This may be because it has more clout (financial or political strength) or because it has a historic knowledge base in pharmaceutical development on which it can draw.
Second, some governments may find political advantage in being seen to ‘beat others’ in the race to secure vaccines and thus use the vaccine rollout as part of a broader narrative of self-sufficiency to build national pride. Similarly, after a year where government decisions have closed businesses and limited people’s social interaction, governments may seek to rebuild popularity through positive vaccine news.
Consequences of going it alone
Once a country decides not to participate in a collaborative vaccine development and procurement process, each and every decision described above is influenced. In particular, additional constraints now present themselves, which means that an outcome that is globally beneficial is harder to achieve. For example, a single country cannot realistically back more than a small number of vaccine candidates and may now steer this choice towards those that are domestically developed.
In addition, the choice of who should produce the vaccines is no longer necessarily made with an eye on previous experience, but rather on whether this company is a domestic one and can be relied on to be sensitive to the country’s needs and priorities.
Last, to the extent possible, the country may need to ensure that as much of the supply chain as possible is either on home soil or directly under the control of the country in question. This would mean that a third-party country could not interrupt supply and thus the distribution of doses.
Needless to say, all these decisions that are made in order to reduce dependence on other countries or foreign firms and suppliers, inject additional inefficiencies and risk into the process.In particular, they do not make optimal use of all available resources and know-how to develop the vaccines in the most efficient way.
They also inject unnecessary additional risk into the process by focusing on only a small subset of vaccine candidates (which may turn out to fail) and by relying too much on production facilities in limited geographical locations. This in turn increases the risk that vaccine production falls victim to delays and production failures due to local production difficulties. Last but not least, such decisions also hamper or disrupt the concurrent vaccine development processes of other countries.
The mechanics of vaccine nationalism
How then, can a country secure the best possible access to vaccines for itself? Broadly speaking, there are two main strategic decisions. The first is to move fast to pre-empt rivals. The second is to ensure that the advantage of being first is locked in and ensured going forward. Let us consider these in turn.
Moving faster than rival countries can be achieved in a number of different ways. This can involve forming partnerships with pharmaceutical companies and providing early funding for research and the build-up of capacity. It also can take the form of emergency market authorisation and regulatory approval of vaccines.
In the UK, for example, the regulatory procedure was sped up by enacting a ‘rolling review’ process whereby the Medicines and Healthcare products Regulatory Agency analysed data as they became available.
But being first is not enough. The country must also ensure that the advantage of being first is maintained and not eroded by other countries signing on.
There are a number of techniques that a country can adopt to achieve this. They range from outright export bans (which have reportedly been imposed by the United States) to more subtle methods, such as the use of exclusionary contracts. These contracts work by ensuring that an order must be serviced in a preferential way or by buying options on additional production.
It should be noted here that in terms of outcomes if not in terms of law, these approaches may be equivalent. For example, while the UK government has not imposed outright export restrictions on vaccines, the contracts that it has written with pharmaceutical producers such as AstraZeneca are achieving much the same outcome.
Where do we go from here?
In order to avoid the negative outcomes associated with vaccine nationalism, it is vital that incentives to cooperate are strengthened. We know that when countries have repeated interactions, cooperation is easier to sustain.
We may be able to explain the strategic standoff over vaccines between the UK and the EU in this light. The common EU procurement agreement – through which EU countries award contracts as a whole rather than individually – is itself an attempt to ensure cooperation between the 27 member countries, the EU-27. These countries had previously not delegated vaccine procurement to the EU.
It was recognised early on (and the point is explicitly made in EU policy papers) that without cooperation, there could be a very damaging and costly rush by member countries to compete for vaccines, leading to winners and losers. To avoid this, a cooperative solution was sought. The UK was invited to participate but opted to go it alone instead.
This raises two points. First, why was the EU-27 able to agree and why did the UK government decide not to join (setting aside any issues around Brexit and nationalist sentiment)?
All the 27 national governments that signed up to the common purchasing agreement may have realised that they would have to interact repeatedly over time in all manner of other contexts. It may therefore have been easier to sustain a cooperative stance on vaccine purchases even if many of the larger countries may have had strong short-term incentives to go it alone and secure vaccines for themselves.
In contrast, the UK, now being outside of the EU, may have projected only limited need for future cooperation – at least relative to countries inside the EU. Consequently, concerns about collaboration down the road may have had a weaker effect on the UK government’s decision to cooperate on vaccine purchases.
Second, once the UK and the EU could not agree to act in concert, it was inevitable that some confrontation would happen. This is arguably an inextricable consequence of not cooperating.
So how can we ensure more cooperation? First, we should recognise and raise awareness of the fact that interaction continues even if the UK is no longer tied in a close political union. Even the most vaccine nationalist country relies on international supply chains and so no one can wholly go it alone. For example, an export ban on final products can become irrelevant if the importing country can cut off supplies of intermediate products.
Second, even countries that are outside the supply chain may have leverage in other dimensions. A country that does not produce vaccines may manufacture personal protective equipment (PPE) and choose to withhold supplies of this or other necessary products. Alternatively, countries may choose not to cooperate in other spheres such as migration or security.
Last, taking a broader view, governments should understand that when faced with a worldwide pandemic, controlling the disease globally is a necessity and in each country’s national interest. As new strains emerge, we may only be as protected as our ‘weakest link’ – in other words, even if a country is fully vaccinated, we are only entirely protected when the rest of the world is too.
Where can I find out more?
- Preparing for a Pandemic: Accelerating Vaccine Availability: Economic analysis of the problem faced by governments in determining the scale and structure of procurement for vaccines.
- Vaccine development and distribution: Surveys of economists in Europe and the United States on issues of intellectual property rights in vaccines, distribution to developing countries and global cooperation to facilitate exports of vaccines and key production inputs.
- Economic costs of inequitable vaccine distribution across the world: VoxEU analysis.
Who are experts on this question?
- Flavio Toxvaerd, University of Cambridge
- Tony Yates, Independent Economist
- Canice Prendergast, The University of Chicago Booth School of Business
- Fred Chen, Wake Forest University