EU finalizes €500M boost for COVAX

BRUSSELS/MANILA — The European Union signed over a promised €100 million ($122 million) grant and €400 million loan to Gavi, the Vaccine Alliance Tuesday, reinforcing efforts to ensure people in low- and middle-income countries have swift access to a COVID-19 vaccine.

The money will be channeled through Gavi’s COVAX Advanced Market Commitment, which is working to make 1 billion vaccine doses available to people in 92 LMICs. The AMC is financed mainly through official development assistance, and philanthropic and private sector contributions.

Last month, Gavi announced that it had hit its $2 billion funding target for the AMC in 2020, of which Tuesday’s money from the EU forms a part. However, Gavi estimates it will need another $5 billion in 2021 to fund the procurement of vaccines.

The EU money includes a loan, first flagged in August, from the European Investment Bank, and a grant from the European Commission, announced at the Paris Peace Forum last month.

The €400 million loan — the bank’s largest-ever for public health outside the EU — is to be repaid in five years with zero interest.

“This is not a loan to the poorest countries who would then have to pay back,” EIB President Werner Hoyer told reporters Tuesday. “It’s a loan to Gavi and to COVAX, and that means that the recipients of this vaccine do not pay.”

The commission and EU member states are themselves substantial donors to Gavi, though their contributions are dwarfed by those of the United States, United Kingdom, and the Bill & Melinda Gates Foundation.

"The loan is a zero-interest frontloading facility, which means that it will allow Gavi to secure vaccine doses immediately, backed by future donor pledges," a Gavi spokesperson told Devex.

The €400 million will be used to reserve manufacturing capacity with specific manufacturers for vaccine candidates before they are licensed, an EIB spokesperson told Devex.

“Once vaccines are licensed and prequalified by the World Health Organization, these funds will then pay for the purchase of doses for all 92 ODA-eligible countries,” the spokesperson added. “The EIB loan is advancing funds now so low income countries do not need to wait until other donors are making cash effectively available.”

The EIB loan to Gavi is guaranteed by the EU budget under the commission-managed European Fund for Sustainable Development, which has been rejigged to prioritize the response to the pandemic.

If some or all of the €400 million is lost investing in vaccines that don’t work or that prove too difficult to roll out, the loss would not fall on Gavi and its donors. Should Gavi, for any reason, not honor the debt with EIB, the bank would in turn call on the EU budget to cover its losses.

Oxfam’s health policy manager, Anna Marriott, told Devex Tuesday that the European funding is “a welcome step in the right direction, but it must be complemented by action to ensure pharmaceutical corporations openly share their vaccine know-how and transfer their technology so that more manufacturers can help scale up production of Covid-19 vaccines. Anything less will mean poorer countries remain at the back of the vaccine queue for years to come.”

Gavi CEO Seth Berkley told reporters Tuesday that it expects to start rolling out vaccines to low-income countries in the first quarter of next year.  

“We expect many more vaccines to come into the pipeline in the second quarter and in [the] third quarter, so that’s when we are going to see the scaling up of production across many different vaccines,” Berkley said.

“We will be able to have a balance of vaccines that can be used in different ways,” he added, “but obviously the most important thing is to get vaccines to people.”