By Julia Pamilih

In the final post of this summary series, we will take a closer look at how the agreement between the U.K. government, University of Oxford and AstraZeneca for vaccine production made novel use of conditionalities.

The onset of the Covid-19 pandemic was a watershed moment in shaping the relationship between the government and private sector. In the early stages of the pandemic, the U.K. government set up a Vaccine Taskforce (VTF), whose role was to coordinate with the private sector and drive efforts to secure vaccines for the United Kingdom. The VTF, and the wider U.K. government, played an instrumental role in creation and distribution of the Oxford/AstraZeneca vaccine (now known as Vaxzevria).

On 30 April 2020, just over a month after the U.K. government had announced a national lockdown, Oxford University and AstraZeneca signed a landmark agreement for the development and manufacture of a Covid-19 vaccine. Crucially, both parties announced that they would operate on a not-for-profit basis throughout the pandemic. Any subsequent royalties earned by the University from the vaccine would be reinvested into research, such as a new Pandemic Preparedness and Vaccine Research Centre. These commitments secured equitable access to the vaccine, a clear public benefit.

The U.K. government had been involved in vaccine development long before the pandemic. Since 2010, UK Research and Innovation (UKRI), the government-funded research funding body, had supported the development of AstraZeneca’s ChAdOx1 vaccine technology - the technology that underpinned Vaxzevria.

But the pandemic required a big step in public-private collaboration. Following the Oxford-AstraZeneca agreement signed in April 2020, the U.K. government pledged £65.6 million towards Vaxzevria in May 2020. This pledge took a novel approach to risk and reward sharing mechanisms for the U.K. government. The grant was non-refundable, even in the case of vaccine failure or failure to achieve regulatory approval.

In line with Mazzucato and Rodrik’s risk/reward framework, this agreement significantly lowered the commercial risk for AstraZeneca and Oxford University. The government bore high risk in investing in all stages from research, trials and distribution. However, this was weighed against the high reward for public health, and for the U.K. government, an investment in bolstering its international reputation for science and medicine.

The May 2020 agreement was the basis of the full contract between the government and AstraZeneca, which was signed later in August 2020. A redacted version of this full supply agreement is publicly accessible and allows us to see its widespread use of conditions.

Many of the conditions ensure affordable and equitable access to vaccines. This is one of the more important behaviors targeted since the efficacy of a vaccine depends on its widespread adoption. It also included permission for the U.K. government to donate or reassign surplus vaccine doses to other nations, governments, or organizations. The policy design also targeted future equitable access, mandating the reinvestment of royalties into medical research.

The agreement makes use of fixed conditions, such as AstraZeneca committing to notifying the U.K. government at least 30 days before each delivery of vaccines with a “firm and final” schedule, as well as conditions for monitoring and evaluation. Both the U.K. government and AstraZeneca designated project managers who were responsible for performance and progress of the supply agreement.

The U.K. government played an essential role in the creation and distribution of the Oxford/Astrazeneca vaccine. Over three billion doses have been administered, saving an estimated 6.3 million lives.

Behind this outcome is an excellent example of the potential of the entrepreneurial state. The U.K. became the first nation to administer an approved Covid vaccine, and the U.K. Vaccine Taskforce is widely recognized as a highly effective model of coordinating public-private collaboration. Oxford’s Pandemic Sciences Institute was opened in 2022 - with AstraZeneca named as one of its primary backers. All parties involved with the Taskforce – public, private and academic – have recognized the success of this unique model.

Industrial Policy with Conditionalities

This is the third and final post in a series on the working paper Industrial Policy with Conditionalities: A Taxonomy and Sample Cases by Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, and Dani Rodrik, Faculty Co-Director of Reimagining the Economy.

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