Across developing Southeast Asia, governments have turned to privatized vaccination schemes to supplement free vaccines given directly to citizens. COVAX, the global vaccine sharing scheme funded by the World Health Organization (WHO) that aims to secure free vaccines for developing countries, has struggled with supply and distribution efforts. In early September, COVAX slashed its goal for 2021 by nearly 30 percent, or over half a billion doses, and that gap is expected to widen in the coming months.
Meanwhile, the highly contagious Delta variant of COVID-19 has swept across the region as the rate of fully vaccinated people in seven out of 10 Association of Southeast Asian Nations (ASEAN) member states lags behind the world average of 30 percent. Governments in Southeast Asia struggling with under-capacity have therefore turned to the private sector for assistance in distributing vaccines. However, this strategy has exacerbated other problems, including inequitable access, inaccurate counts, and corruption.
On February 25, Indonesia became the first Southeast Asian country to authorize a private vaccination scheme. The program, known as Gotong Royong, allows private companies to purchase government-imported vaccines for their employees and their families. Under the Ministry of Health’s supervision, state-owned pharmaceutical company Bio Farma orders and distributes the vaccines to private health centers at no cost to employees, while the Indonesian Chamber of Industry and Commerce registers interest from companies. Vaccines must differ from those currently used in the national public vaccination campaign, limiting companies to the Sinopharm vaccine. By the time of Gotong Royong’s launch on May 18, over 22,000 companies had registered more than 10 million of their employees, a reflection of widespread frustration with Indonesia’s public vaccination program.
Subsequently, other Southeast Asian countries announced their own guidelines for private purchase of vaccines. In response to pressure from companies eager to vaccinate their own employees, President Rodrigo Duterte of the Philippines issued an order on March 29 requiring the Ministry of Health to fast-track approval of private vaccine contracts. Firms must enter tripartite deals with the national government and vaccine manufacturers. Under these joint deals, Manila encourages but does not require companies to contribute half of privately purchased vaccines to the national supply. Bangkok has also authorized state-private vaccine programs, such as one led by state-owned enterprise Industrial Estate Authority of Thailand and the Federation of Thai Industries. Through the partnership, Princess Chulabhorn’s scientific research institute, Chulabhorn Royal Academy, is importing 300,000 doses of Sinopharm vaccines to inoculate Thai factory workers in five industrial estates and a deep-sea port.
If the impetus for governments allowing private-sector vaccines was to help bolster government vaccination efforts, these programs may instead reinforce inequity of vaccine access. Well-intentioned private campaigns by companies in the Philippines and Indonesia largely focus on people with formal jobs on-site and their immediate families. By relying on private companies to get vaccines to their own workforce quicker, governments may unintentionally be pushing the 78 percent of Southeast Asians working in the informal sector – many of whom live below the poverty line and are disproportionately female – toward the back of the line.
Additionally, the establishment of a private market for vaccines in the Philippines may have unintentionally created a backlog. In the Philippines, both private and public vaccine shipments have encountered delays, prompting Philippine Senate Majority Leader Juan Miguel Zubiri to urge the senate on August 17 to investigate why the National Task Force Against COVID-19 had not approved 42 private vaccine contracts. Zubiri remarked that government inaction prevented the companies from receiving at least 10 million vaccine doses. The Philippines’ vaccine czar Carlito Galvez Jr. later explained that Moderna, Johnson & Johnson, and AstraZeneca are not accepting private vaccine orders, while Sinovac, Sputnik V, and Pfizer will prioritize orders from national governments. Nonetheless, nearly a month later, he announced that the national government will no longer require the private sector to enter tripartite deals to secure vaccines for their employees. Meanwhile, many companies have decided not to share their vaccines with the public due to limited supply, which undermines early claims that privatized schemes would benefit the public too.
Additionally, the United Nations Office on Drugs and Crime (UNODC) identified the lack of government oversight provisions included in Southeast Asian governments’ COVID-19 relief measures as a major corruption risk. Francesco Checchi, anti-corruption adviser at UNODC, said that “direct contracting for procurements (i.e., allowing private entities to purchase vaccines rather than using public tenders)…increases the risks of fraud and corruption manifold.” This kind of profiteering is already evident in Thailand, where the Securities and Exchange Commission recently had to caution investors against buying stock in private healthcare provider THG Group after its chairman reneged on his promise to procure 20 million doses of the Pfizer vaccine.
Options for individual purchase of vaccines may have also exacerbated healthcare inequities. Indonesia intended to sell vaccines to private citizens through the Gotong Royong program, setting the cost for a single dose at $30.50, or $61 for a single person to become fully vaccinated. After intense public backlash and criticism from the World Health Organization, Kimia Farma delayed implementation of the individual purchase program and, less than a week later, revoked the individual purchase option entirely.
However, Singapore moved forward with its “special access route” that allows private healthcare providers to procure and administer vaccines not yet approved by the city-state’s Health Sciences Authority. Through the special access route, dozens of private healthcare centers have received authorization to administer the government’s supply of Sinovac, charging patients an administrative fee between $7 and $18 per dose, and 11 centers have received authorization to procure and distribute their own Sinopharm vaccines.
But although Singapore now allows healthcare providers to purchase Chinese-made vaccines while their approval is pending, the government also excludes them from national vaccine counts, which complicates the government’s ability to make public health policy decisions based on vaccination thresholds. As businesses open, deciding which forms of proof of vaccination to allow could be unclear and ultimately hamper economic recovery.
Negative externalities notwithstanding, the incentive for developing countries to create private vaccine markets ultimately stems from the failure of the global vaccine market to ensure enough supply and overcome obstacles in the supply chain. By early September, COVAX was over half a billion doses short of its vaccine supply goal, and rich countries reserving vaccines were partially to blame.
The WHO on August 10 recognized that booster shots may eventually be needed as vaccine effectiveness wanes, but urged governments to focus on sharing vaccines with countries where most of the population has yet to receive even one or two doses. In the meantime, governments in Southeast Asia face pressure to take action by creating privatized vaccination schemes. However, the inherent inefficiencies in these programs may ultimately hurt more than they help.
This article was originally published on New Perspectives on Asia from the Center for Strategic and International Studies and is reprinted with permission.