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A stockpile of Covid-19 vaccinations.

Vaccines and official development assistance (ODA): What dose-sharing reveals about the OECD rules

30 November 2021
Author: Helen Rumford

As the global community continues to deal with the impacts of Covid, vaccine dose-sharing remains a critical issue.

Wealthy countries have bought up vaccine supplies, limiting the ability of lower income countries to protect their populations against the pandemic. Countries including the UK have made commitments to support worldwide vaccination, both through the Covax AMC facility and sharing doses they’ve already paid for. However, they have opposed the TRIPS waiver which would temporarily waive Intellectual Property rights on vaccines and increase the supply of vaccines available for low-income countries. 

The speed of sharing the promised doses and the amounts committed to aren’t meeting the global need. Vaccine inequity is causing avoidable deaths and increasing the likelihood of new variants emerging, as we can see with the new omicron variant. The UK’s priority must be to increase access to Covid vaccines for lower-income countries, equitably and as soon as possible.

Having decided that excess vaccine doses can be counted as official development assistance (ODA), OECD DAC members are now taking decisions on how vaccine doses are priced as ODA. These conversations will have consequences for our COVID recovery and responses to future crises. Current proposals already risk causing more suffering for marginalised communities as the high cost of vaccine doses will eat into ODA budgets, cutting much needed funding for development, humanitarian responses and tackling climate change

The conversations on whether vaccines are ODA eligible, that Bond and many of us in the sector have been having, have raised some broader questions about our approach to official development assistance: 

1. What counts as ‘poverty-focused’?

According to OECD DAC rules, all ODA must “specifically target the economic development and welfare of developing countries”. Despite this, wealthy countries have hoarded vaccines and are only now passing them on when it’s become clear they’re no longer useful to their own populations. To then classify dose-sharing by these wealthy countries as ODA highlights broader issues of how wealthy countries can create an unjust system then be congratulated for donating a fraction of what is needed to right the injustice they created.  

The UK has committed to donating its vaccine doses in addition to the £10bn ODA budget for the 2021-22 financial year. However, they haven’t committed to making the cost of dose-sharing additional to the 0.5% target for 2021 and 2022. This means the costs of shared vaccine doses could come from within the existing UK aid envelope. 

Countries that have hoarded vaccine doses originally anticipated paying for them through their domestic budgets, for use on their own populations. And though sharing the unused doses is the right thing to do, charging them to existing ODA budgets means cutting other support for lower income countries. Meanwhile, wealthy countries will be making savings on their domestic budgets. The UK, and other countries, need to consider how they respond to unexpected extra resources, such as unused vaccine doses, and they need to consider who should ultimately pay for them. Effectively, low-income countries are paying twice: they’re struggling to access vaccines because of hoarding; and then they’re suffering cuts to other development programmes to make space in ODA budgets for vaccines.

2. How do you price a shared vaccine dose?

The DAC are currently considering proposals for how vaccine doses should be priced when they’re being shared with low-income countries. Usually, any ‘in-kind’ aid, ie. the sharing of physical goods such as food or vaccines, is given an agreed price at which the donating countries can record their donations in their ODA budgets. Not only is this a challenging process, but the price that is set will have serious implications. 

While the sharing of doses in all forms is good, the agreed best route for promoting global vaccination is through the Covax facility. The cost of bilateral dose-sharing must not put countries off supporting Covax,. However, agreeing a fair price has been made more difficult because of vaccine hoarding, which has restricted supply and skewed the market price so that most of these countries have ended up paying high prices for vaccines. It wouldn’t be fair for these high prices to then be automatically taken out of ODA budgets, indirectly passing the cost on to low-income countries receiving doses.

It’s also important to remember that many countries bought their doses at different prices, so setting a blanket price will mean some end up charging more to their ODA budgets than they actually paid. This means their domestic budgets will actually make a profit at the expense of the world’s poor.

Currently, DAC members are considering a price of $6.72 for every vaccine shared. At the scale of doses being donated, this could result in $672million from the UK’s ODA budget. ultimately, low-income countries will lose out while ODA budgets end up profiting pharmaceutical companies. 

3. How do we address global challenges?

Covid is a worldwide challenge and countries have leveraged funding from a wide range of sources to address it. The primary focus of ODA is the welfare of low and middle-income countries; it shouldn’t be used to fund activities which equally benefit high-income countries. In the case of vaccines, this would mean that ODA can’t fund research into vaccines (which would benefit all countries) but can fund their dissemination to low-income countries. 

We’re facing global challenges which affect the whole world but cause most harm to low-income countries.  ODA is a key tool for ensuring global contributions are targeted where the need is greatest, but Covid has revealed something new is required to address truly global problems. Whatever is developed must address the changing face of global suffering while also establishing shared rules that ensure finance goes where it is most needed.

As countries continue to prioritise their own responses to Covid first, it raises the question: what happens when a global challenge like Covid becomes a low-income country problem, because the wealthy countries have helped themselves out of the crisis before the rest of the world? In that scenario, future research into Covid could be ODA-eligible, since it would then primarily be benefiting low-income countries, even though wealthy countries were the reason for the disparity. 

The UK and others need to wake up to their responsibilities on Covid vaccines. The pandemic will not go away if the majority of the world is blocked from vaccination, and the longer this takes the more deaths will happen. Wealthy countries should stop vaccine hoarding, approve the TRIPS waiver and honour their commitments to urgently share doses. Alongside this, they need to ensure the ODA pricing of vaccines does not leave low-income countries worse off. In the long-term, OECD-DAC should reflect on what the vaccines show us about the ODA rules and how we can change them for the benefit of those who have been marginalised.
 

About the author

Helen Rumford
Bond

Helen is the policy and advocacy advisor on aid at Bond.