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The Canadian Vaccine Fiasco

Excerpted from “Neoliberal State Failure is Slowing Down Vaccine Distribution,” Jacobin #41, April 4, 2021

By Leigh Phillips

Canada was one of the first countries in the world to sign contracts with Pfizer and Moderna, in summer 2020. By the fall Ottawa had locked down sufficient advance supply agreements and other deals with other companies to deliver some 414 million doses of vaccine. For a population of roughly 37 million, this would have been sufficient to deliver two doses to everyone in the country almost six times over—more vaccines per capita than any other nation in the world (later tallies would put the figure at “merely” four times over). The shopping spree was trumpeted with pride by the government, even as some such as Amnesty International thought it a Canada-first overkill that could limit access to poorer countries.

But in late November Prime Minister Justin Trudeau had to dampen expectations, warning the nation that other countries would in fact be first in line. “One of the things to remember is Canada no longer has any domestic production capacity for vaccines,” he said during one of his regular COVID-19 press conferences. “We used to have it decades ago, but we no longer have it.”

A publicly owned medical research and therapeutic manufacturing facility, Connaught Labs, was established in 1914 in Toronto. It would go on to be recognized as a world-class vaccine research and development (R&D) and production outfit that passed along much of its output, including insulin, for free, at cost, or near cost. Indeed, when the US lacked the ability to test and mass-produce Jonas Salk’s polio vaccine, this Canadian outfit initially filled that gap. But in the 1970s, as the neoliberal revolution took hold in Canada as much as anywhere else in the Western world, Connaught Labs’ mandate was shifted from public health to profit-making, and in 1986 the company was privatized by the Conservative government of Brian Mulroney.

Unable to compete against larger multinational pharmaceutical giants, it was eventually swallowed up by French firm Merieux (now itself part of Sanofi). A private, Quebec-based vaccine manufacturer, IAF BioChem, was no less squeezed, and it was purchased by GlaxoSmithKline (GSK) in the 2000s. Sanofi and GSK still make vaccines in Canada, but decision-making about such production rests with their corporate headquarters outside the country.

Indeed, there has been tremendous consolidation in the industry far beyond Canada, and a wholesale retreat from private-sector interest in vaccine manufacture and R&D (due to insufficient profitability compared to drugs servicing chronic diseases) over the past four decades. In the 1970s some 25 major firms worldwide were producing vaccines, but by the mid-2000s this number had declined to just five, according to the US Institute of Medicine.

The federal government was warned that domestic vaccine supply in the face of future pandemics was fragile.

The threat that the decline in domestic manufacturing capacity posed to vaccine supply in Canada did not go unnoticed in the clinical community. On at least five separate occasions, the federal government was warned by high-level bodies that domestic vaccine supply in the face of future pandemics was fragile.

The HIV/AIDS pandemic prompted the first such worries. In 1993 a Health Canada working group of some 40 infectious-disease experts meeting at Lac Tremblant in Québec produced a long list of recommendations, including the need for a national strategy for emerging infectious diseases, new public health infrastructure for pandemic monitoring and rapid testing, and a national vaccine strategy. But it was the era of a second wave of swingeing austerity in the country under prime minister Jean Chrétien, whose Liberal government cut social program funding by 40 per cent compared to the 25 per cent cut that had been perpetrated by the Tories.

In 1999 a conference of provincial and federal deputy health ministers warned of concerns over security of vaccine supply and worked to craft a new vaccine strategy but was unable to convince Ottawa to fund it. Then, in 2002, the social-democratic premier of Saskatchewan, Roy Romanow, headed a major federal commission on the future of healthcare in the country. In his report he too recommended a national immunization strategy.

After the 2003 SARS outbreak, caused by the virus SARS-CoV1, the annual conference of federal and provincial health ministers asked the dean of medicine at the University of Toronto, David Naylor, to produce an assessment of what could be learned from this fresh pandemic. The report, which itself name-checked each of these previous dire warnings, dryly noted with respect to the threat to security of vaccine supply: “A decade later, very similar recommendations are repeated in our report.”

Finally, in 2010, the Canadian biotechnology industry association issued its own series of documents in the wake of the 2001 H1N1 swine flu pandemic on the state of the country’s vaccine environment. They similarly warned of the “unique,” “vulnerable” and “fragile” vaccine supply situation in Canada, recommending that the federal government step in, to ensure continued supply and prevent manufacturers from exiting the vaccine market, with sufficient subsidies in what is a high-risk, low return on investment commodity.

Crucially, they recommended that the government simply pay for vaccine manufacturing capacity to sit idle, much like a fire department, in order to be able to ramp up in an emergency. (Of course, being private biotech firms, they would like the government to pay them to do the idle sitting around, although it would be more rational and cheaper for Ottawa to just establish a publicly owned vaccine R&D and manufacturing agency directly, a Connaught II.)

The Conservative opposition has decried Trudeau for his “gross incompetence” due to the loss of “vaccine sovereignty.” And it is true that when his Liberals returned to power in 2015, they were content to allow this growing pile of reports to gather dust. But Trudeau was the sixth successive prime minister to ignore expert warnings over domestic vaccine supply, including three Tories.

Why are private vaccine manufacturing facilities easier to establish in the US, UK or Europe than in Canada?

We already know that both R&D and manufacture of vaccines, similarly to antibiotics, is not substantively profitable compared to therapeutics for chronic diseases. Research into vaccines does happen, but primarily at universities or government labs, from which private startup vaccine developers are sometimes spun out.

But these relatively small outfits do not have the ability to pay for trials or establish the extremely complex manufacturing facilities to actually make them. Production of a single lot of vaccines can take between one and two years, with up to 70 per cent of that period devoted to quality control. Building a new facility typically has a lead time of three to five years, costing from $100-million to $600-million.

All this makes vaccine production not especially enticing to investors, even in a large market such as the United States (331 million people) or the EU (446 million). Canada, with its 36 million people, is just too small a market. It makes more sense to establish facilities in the US and supply Canada from there.

Calls for a re-establishment of a public vaccine manufacturer initially met with snark from liberal commentators, suggesting this was an exercise in nationalist nostalgia. They note that the COVID vaccine bets of three of the biggest pharmaceutical giants, GSK, Merck and Sanofi, did not pay off. Pharmaceutical development is always something of a gamble, and so even if Canada had maintained Connaught Labs there is no guarantee it would have performed any better.

But this conflates the three separate risk-laden challenges of vaccine profitability: R&D, clinical trials and manufacture. Even if a particular bet does not pay off, the maintenance of idle manufacturing facilities in readiness for emergencies would enable (licensed) production of those vaccines whose bets did pay off. It is true that one size of factory does not fit all, so a variety of options would need to be maintained. Even if some amount of retooling were necessary, at least manufacture would not begin from a standing start.

To be fair to the Trudeau government, Ottawa did attempt last May to partner with a Chinese firm, CanSino Biologics, to have Canada’s National Research Council (NRC) run initial clinical trials on their candidate vaccine, Ad5-nCoV, that had been codeveloped with the Chinese military. Then, with $44-million from Ottawa to ensure their Montreal facilities met appropriate manufacturing standards, the NRC would also actually produce the vaccine. That is, Trudeau’s administration recognized—albeit once the horse had bolted—the need for domestic production.

But for some reason, three months later, the Chinese State Council, the chief administrative body (headed by Premier Li Keqiang and roughly equivalent to a cabinet), blocked approval of transport of the vaccine candidate to Canada. This occurred at the same time as Chinese vaccine candidates were shipped to other countries, and the rationale remains murky to this day, but it is widely assumed that the decision is linked to diplomatic tensions between the two countries over the arrest of Huawei executive Meng Wanzhou.

Under pressure from Canadians unused to being at the bottom of the global league tables in anything health-related, Trudeau has since committed to “repatriating” vaccine production. A deal has since been inked with Maryland-based Novavax to manufacture its COVID vaccine domestically at the NRC, which has also received $126-million to upgrade its biomanufacturing capacity. It will start production in July [2021], with the first jabs going into arms in 2022. The government is also throwing cash at the University of Saskatchewan for additional facilities expected to be online at the end of this year, and private firms in Vancouver (to be ready by spring 2023), Montreal (late 2023), Winnipeg and Calgary.

In the meantime, Canada still has to source the bulk of its vaccine doses from Europe, which has stopped short of a US-style export ban but has instituted export controls. A US-first vaccine policy established by Donald Trump has been continued under the Biden administration, meaning American facilities just across the border cannot supply Canada. Trudeau has said he has received verbal assurances from the European Commission president that vaccines contracted to be supplied to Canada will continue.

Research, development, clinical trials and production in a single, publicly owned enterprise is superior to what the Liberals have opted for.

And Trudeau’s discourse regarding “vaccine sovereignty,” rather than an understanding that it is the market that is the more fundamental cause of the problem, will still lead to issues down the road. Many public health experts regard the re-establishment of the Connaught model of a seamless chain of research, development, clinical trials and production in a single, generously funded, publicly owned enterprise that concentrates best practice in one site as superior to what the Liberal Party has opted for: a dispersed network of companies across the country, each performing different, uncoordinated roles. Some will be engaged in discovery, some in trials, some in product formulation, some in raw material production, some in “fill and finish,” some in packaging, and potentially with manufacturers responsible for their own monitoring of standards.

In addition, by giving small chunks of cash to lots of private firms instead of spending the allotted $1-billion on a single public service endeavour, funds are inefficiently distributed as each link in the chain extracts their own profit margin. And, most dangerously, each private link in this chain remains at risk of exit from production or from the country should greater profits result from such a move, leaving the same loss of domestic capacity to arise in the future.

When challenged by reporters as to whether Trudeau regrets not having adequately prepared the country by building Canadian facilities earlier in the pandemic (or even before the pandemic, as so many experts had warned), he parried that there “is always more” that can be done, as if, sure, there will always be things our leaders get wrong. They’re only human.

The country has had more than four decades of neoliberal hollowing out of state capacitythe ability of the government to do things.

But Canada’s vaccine debacle is not a one-off mistake that anyone could have made. Instead, the country’s experience is in line with more than four decades of neoliberal hollowing out of state capacity—the ability of governments to do things. It was not just vaccine manufacturing that stalled in Canada: The country had its own personal-protective-equipment crisis, common across the advanced Western states, and its test and trace system has to this day never really gotten off the ground. Vaunted policies were regularly delayed, severely crippled or ultimately abandoned.

In BC, the provincial government has this past week given up on attempts at sequencing variants of concern. Governments that lose their ability to enact policy are called fragile states or, in extreme examples, failed states. We may be unused to using such terms when talking about the developed world. Canada is not Somalia; Europe is not Syria. Nevertheless, state failure is the most appropriate term to describe our response to this pandemic.

Leigh Phillips is a science writer and the author of Austerity Ecology and the Collapse-Porn Addicts.

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