'We are not sleeping on the job': Zweli Mkhize reveals tough Covid-19 vaccine negotiations

Health minister Zweli Mkhize has laid bare the extent of challenges faced by the South African government during negotiations to procure Covid-19 vaccines.

“I can assure you that we have not been sleeping on the job. That we previously did not disclose to parliament the blow-by-blow details of intense negotiations was also because we were prioritising closing these agreements to secure the vaccines we require to reach population immunity,” said Mkhize. 

Mkhize conceded this on Wednesday during a portfolio committee on health sitting, where he updated the nation on the Johnson & Johnson (J&J) clinical trials and answered questions about the vaccines, procurement and progress on the rollout programme.

On Tuesday Mkhize said SA would temporarily suspend the J&J vaccination rollout while scientists investigate possible links between it a rare type of blood clot in the brain.

Mkhize told MPs that throughout the negotiation process SA entered into non-disclosure and confidentiality agreements with various manufacturers, but the government acknowledged the constitutional obligation to account to parliament.

In a detailed reply, Mkhize said the national coronavirus command council (NCCC) had approved a recommendation to establish the no-fault compensation (NFC) fund to protect the rights of citizens who will be getting the Johnson & Johnson jab.

Retired chief justice Sandile Ngcobo has been appointed to head up the scheme and “oversee that all claims and processes are followed by the NFC fund to uphold the principles of fairness, transparency, equity and protect the constitutional rights of our citizens”.

Regulations must be published by April 30 and a process to allow South Africans to make public comments on the draft regulations is expected to begin soon.

He said the department of health procured a total of 31 million vaccines from J&J. An initial agreement was signed and the initial purchase price has been paid, he added.

“This agreement included an option for the department to call for 20 [more] million vaccines after the signing of the initial agreement. This option was immediately exercised to ensure that we secure enough vaccines, hence we are now procuring a total of 31 million vaccines from Johnson & Johnson.”

The conditions of the first agreement had been met, said Mkhize.

“In relation to the second agreement, J&J had put a precondition that no-fault compensation regulations must be published by April 30. I must state that this condition has been made by Pfizer. We are pleased that yesterday [Tuesday] the NCCC accepted the recommendations for the draft regulations to be published for public comments to the no fault compensation fund.”

Mkhize, however, said after the second agreement between SA and J&J had been discussed and agreed upon, J&J appeared to change its tune, making things difficult and causing delays in the rollout.

“We have unfortunately received a formal e-mail from J&J advising us that they will not be signing off the additional 20 million doses until they get a letter from the minister of trade industry and competition which expresses support for the local investment that they have made in Aspen.

“We have been taken aback by this as there are clauses in the agreement that express this support and acknowledge that this production will not just be limited to SA and the continent but will also be targeted for the global markets.”

A few weeks ago President Cyril Ramaphosa visited the Aspen manufacturing plant in Gqeberha where, said Mkhize, SA publicly showed its support for the production of the vaccines.

“As it stands, we are of the view that this commitment has been expressed in full. However, J&J has now told us that if we don't give them this letter we are making their global leadership nervous and, to them, we have not shown our political will to support them.”

Mkhize said these revelations were just to illustrate to parliament, “some of the difficult and sometimes unreasonable terms or preconditions that we have had to navigate through”.

“Another classic illustration of these terms that we've had to deal with that were too risky was a precondition for the supply of the vaccines that we received from Pfizer towards the end of our negotiations. This precondition stated that they wanted to have sole discretion to determine additional terms and guarantees for us to fulfil the indemnity obligations. This condition posed a potential risk to our assets and fiscus.”

Mkhize said the department and the Treasury expressed concern with regards to risks being placed on the fiscus.

“This led to further delays in concluding of the agreement and meant a delay in the delivery schedule we were negotiating at the time. After intense negotiations by our teams, Pfizer finally conceded to removing this problematic term and the final agreement signed does not contain this.”

Mkhize said the government had found itself in a “precarious position” of having to choose between saving lives and risk having the country’s assets “into private companies’ hands”.

On how much SA paid for the vaccines, Mkhize said, “The costs of the vaccine from Pfizer and J&J is $10 [R144.64] per dose. The cost of the AstraZeneca vaccine was $5.35 [R77.38] per dose.”

With regards to SA’s decision to sell the AstraZeneca vaccine to other African countries, after it was found to be ineffective on the latest variant, Mkhize said in March SA received payment from the AU for the million doses sold to them.

The total amount paid was $5,250,000 (R75.9m), which was the actual cost of the vaccine minus freight, said Mkhize.

“Last week we were then refunded by SII [Serum Institute of India] for the 500,000 doses that were not delivered in the amount of $2,675,000 [R38.7m]. We are therefore happy that we have avoided what could have been viewed as fruitless or wasteful expenditure.”

Mkhize told MPs to note that the J&J and Pfizer agreements had no refund clauses.

“The agreements specifically state that the down payments that have been made in advance by the department shall not be refundable by the manufacturer to us in any circumstance.

“This is another onerous term that we had to concede as the manufacturers were not prepared for it to be removed. However, the government did check with other jurisdictions if these terms had come through in their agreements and it appears to be the case.”

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