In the absence of a domestic supply of COVID-19 vaccine, Canada finds itself a beggar in a global marketplace in which a handful of multinational companies hold all the cards.
By Pete Hudson
The frantic shopping spree for COVID-19 vaccines has prompted Manitoba's government to buy its own insurance, gambling on a Calgary-based company with no record in producing vaccines.
Canada has also reached into the political realm, unsuccessfully appealing for aid from other nations.
A longer-term response has been to persuade private sector producers to set up in Canada. Overtures have been mostly rebuffed. Some limited success illustrates the strong bargaining power of the private sector in its ability to negotiate concessions.
The United States company, Novavax, is pledged to begin vaccine production in the next year. The taxpayer is forking over for the cost of building and equipping the facility from which Novavax will operate.
Similarly, French giant Sanofi promised to build a facility in Toronto when public subsidies totaling $70 million were negotiated. Pfizer has lobbied the Canadian government for tax and other “business friendly” concessions despite anticipating record profits from the sale of its vaccine to Canada.
How did Canada arrive at this vulnerable state? Birthed in corporately funded think tanks, the belief that governments should stand aside and trust the private sector to meet all of our needs has become central.
The adoption of this laissez faire ideology by mainstream political parties was a major factor in enabling large companies to move production across the globe wherever cheap labour, absence of regulation, and low-tax regimes promised greater profit.
A proactive part of this globalization trend involved a series of free trade agreements, prior to which, Canada had been host to a large number of foreign-owned branch plants. Free trade agreements abolished or lessened import tariffs, thereby removing this incentive to remain in Canada.
The specifics of the departure of domestic pharmaceutical production during this period are not well documented, but are known to have been a part of the general erosion of Canada’s manufacturing sector.
A derivative feature of this ideology has been the transfer of the delivery of goods and services from the public sector to the private sector.
Canada once had a publicly owned capability to carry out research, production and distribution of pharmaceuticals.
Two examples are the Institute Armand Frappier and the Connaught Laboratory. The former was sold to UK-based GlaxoSmithKline and the latter was sold in 1986 to a French company which, after a series of acquisitions, is now owned by Sanofi. Ironically, Sanofi is now one of the suppliers contracted by a panicky Canadian government. Although the old Connaught building is still standing, and Sanofi still has some limited production facilities in Canada, it plans to produce the contracted 72 million vaccines elsewhere.
One of the messages of Covid-19 which contradicts the small government, low-tax ideology, has been the realization that government is the only institution capable of leading a coordinated response to a global pandemic. The great irony is that 45 years of policies that expanded the role of the private sector, while reducing the role of government, has resulted in a decreased capability of governments to meet that challenge.
Securing a reliable offshore supply of vaccines has been difficult and expensive. Nor has courting the private sector to restore a domestic supply been very successful.
Might we then look to the public sector to take control of such a vital process? Before this suggestion is dismissed as heresy, let’s have a look at the record of the Connaught Laboratory.
When established in 1913, it produced a vaccine for diphtheria. It produced affordable treatments and vaccines for tetanus, typhoid and meningitis. It played a major role in the development of penicillin and polio vaccines. It also contributed to the eradication of smallpox.
This is not pie in the sky. There remain pockets of publicly owned facilities that can be cloned or expanded.
The National Microbiology Laboratory in Winnipeg developed a vaccine to successfully combat Ebola. The Canadian Centre for Vaccinology in Halifax has a long track record in vaccine research. University of Saskatchewan Vaccine and Infectious Disease Organisation (VIDO) is involved in Covid-19 vaccine research and has plans for a production facility.
Canada cannot continue to rely on a strategy of offering inducements to private, offshore drug companies to produce vaccines domestically. Even if successful, there remains the constant threat of taking their marbles elsewhere—evident when Canada recently proposed to strengthen its ability to control drug prices.
Beginning with the development of the diphtheria vaccine, because few could afford the one on offer from the private sector, the Connaught Laboratory’s 70-year contributions to life-saving pharmaceuticals were based on the principle of need, not profit. The model is looking increasingly attractive.
Pete Hudson is a Senior Scholar in the Faculty of Social Work University of Manitoba and a Research Associate with the CCPA Manitoba.