Canada’s vaccine agreements: A strategy to cover all bases

Vaccines typically take years of research and testing before getting into people’s arms. The race for a safe and effective COVID-19 vaccine began within hours of researchers releasing the genetic sequence of the coronavirus in January 2020. The most optimistic scenario for the development of viable vaccines was thought to be late summer to fall 2021, but many warned that the world would need to wait much longer.

Based on the advice of experts, Canada adopted a sweeping vaccine strategy to supply everyone in Canada with the most promising COVID-19 vaccines. At the time, it was unknown which vaccines would be successful or when.

A summer of intense negotiations resulted in Canada signing advance purchase agreements (APA) with 7 manufacturers of promising vaccine candidates. By the fall of 2020, Canada had bought more doses per capita than any other country, with enough orders to vaccinate every Canadian 5 times.

Vaccine Task Force scouted the world for vaccines to buy

Canada’s vaccine planning began in April 2020, when the government created the COVID-19 Vaccine Task Force. This team of experts was asked to develop medical and health advice based on a review of the emerging science and technology of the companies racing to develop vaccines to combat the coronavirus.

The task force tracked and sought out companies around the world working on vaccines and, in June, began identifying the most promising vaccines. It advised that the best approach for Canada was to diversify supply as much as possible with different types of vaccines, based on ones that looked most likely to work and be delivered the fastest.

Based on the task force’s recommendations, the Public Health Agency of Canada decided which vaccines to buy. A vaccine procurement team, led by Public Services and Procurement Canada (PSPC), was assembled in early July to initiate negotiations with vaccine suppliers.

Advance purchase agreements to secure vaccine supply and mitigate risks

Canada built its vaccine portfolio through APAs with 7 companies. The first 2 agreements, with Moderna and Pfizer, were announced in August, followed by similar agreements over the next 3 months with Johnson & Johnson, Novavax, Sanofi and GlaxoSmithKline, AstraZeneca and Medicago. None of the portfolio vaccines had a Canadian-based manufacturing capability at the time.

In most cases, initial agreements were signed through memorandums of understanding and term sheets with international sources to secure access to an early vaccine supply for Canada, while providing time for the regulatory process and to work through complex terms and conditions with the manufacturers.

The APAs have the obligations of a contract, while being structured to allow flexibility given uncertainties around the development of new vaccines. Essentially, they allow for the purchase of something that doesn’t yet exist.

When these agreements were signed, it was not known which vaccine candidates would go on to receive regulatory approvals, and if so, when that would be. As well, production capacity and supply chains were still being developed. All of these unknowns meant that it was impossible to establish detailed delivery schedules. Instead, the agreements include quarterly delivery targets.

Each company had its own negotiating strategy and different demands and pricing per dose depending on the investments made in research, manufacturing and supply logistics, which added to the complexity of landing agreements. As a common element, all agreements required initial investments with the vaccine manufacturers to support vaccine development, testing and at-risk manufacturing.

In February 2021, an additional contract with Verity Pharmaceuticals Canada Inc./Serum Institute of India was announced.

While waiting for vaccine approvals, Canada began to procure the additional material the companies needed to ensure the logistics for vaccines, storage and distribution were in place once the vaccines would be approved and ready for distribution.

Options to buy more

Under current agreements, the government could buy more than 400 million doses of COVID-19 vaccines if all vaccines are approved and all options in the agreements are exercised. So far, the Johnson & Johnson, AstraZeneca, Moderna and Pfizer-BioNTech vaccines have Health Canada regulatory approval.

Negotiating faster deliveries

Canada has consistently sought ways to secure quicker deliveries of approved vaccines. In December 2020, PSPC successfully secured early doses from both Moderna and Pfizer-BioNTech, with the first vaccines arriving on Canadian soil before the end of the year, weeks earlier than originally imagined. Recently, the government negotiated an accelerated delivery schedule with Pfizer-BioNTech to deliver millions more doses than originally scheduled between April and September 2021. This means that more people in Canada will get a vaccine sooner.

Canada is on track to be able to provide a vaccine to everyone in Canada for whom these vaccines are recommended by the end of September. Along the way, it’s likely that we will see fluctuations in vaccine deliveries as manufacturers work to develop and reengineer all aspects of the supply chain for raw materials and sophisticated manufacturing capability to meet intense global demand. Despite this challenge, Canada has received assurances from our suppliers that they remain committed to meeting their quarterly targets, and the government continues to negotiate with them to firm up delivery schedules. Vaccines continue to arrive in Canada, and provinces and territories and their health care workers continue to plan their immunization campaigns.

Transparency

All of Canada’s vaccine contracts include confidentiality clauses to protect both the government’s negotiating position and companies’ competitive information, such as pricing per dose and delivery targets. In line with our commitment to transparency, information concerning vaccine purchase amounts and delivery schedules has been made public. In addition, the government is working with suppliers to explore opportunities for increased transparency around contracts in a way that respects confidentiality requirements and does not harm Canada’s capacity to secure doses and negotiate future agreements, if required.

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