Politics, Policy & Power | Viruses Mutate While Political Promises Don't

07/26/21 10:53AM EDT

Editor's Note: Below is a brief excerpt from a complimentary Health Policy Unplugged note written by our Health Policy analyst Emily Evans. Click HERE to learn more about Emily's research process and the analysis subscribers receive.

Politics, Policy & Power | Viruses Mutate While Political Promises Don't  - 7 26 2021 10 48 38 AM

Politics

One more time with feeling:

One does not order (some) constituents to stay home, citing unrealistic goals of virus eradication and timely delivery of a vaccine without political consequences when things do not go according to plan.

SARS-CoV-2, blissfully unaware of promises made by ill-advised political leaders, has and will continue to do what viruses have done since protoplasm crawled out of the sea to make its long trek toward sentient life.

It has mutated.

True to form, its evolution – helped along by the stunning scientific achievement of vaccine development - has moved toward greater transmissibility but lower virulence, as demonstrated by deaths and hospitalizations in recent weeks.

Having promised disease eradication - something the world has accomplished but once with smallpox after several centuries of trying – political leaders in the U.S., Europe, Australia and Asia has now casting about looking for ways to deflect responsibility.

Protests erupted in Europe in response to a requirement that proof of immunity be presented before entering bars, restaurants and movie theaters. The idea was to provide an incentive for vaccination which may be working, initially. However, not everyone is willing to be sorted in this way and so they took to the streets.

Australia joins Albania and North Macedonia in having received enough vaccine deliveries for just 22% of its population. Rock bottom showing for a developed nation.

As COVID-19 has returned, political leaders, apparently fresh out of other ideas, and unable to take responsibility for a botched vaccine rollout have ordered more shutdowns. Over the weekend, thousands marched to the tune of a tongue lashing from the New South Wales Premier.

As everyone is aware at this point, the U.S. system of governance means digital proof of immunity is not likely to occur. Same goes for business and school closures. The most likely response may be mask mandates in some regions.

Unfortunately, for the mainstream, if that is still a thing, the talking point has been that any inconvenience the Delta variant may cause can rest firmly at the feet of the unvaccinated who have been led astray by a certain former president. (Mercifully, the White House has stuck to the more traditional approach of persuasion.)

The demonization of the unvaccinated – however appropriate one might think it to be – creates an opportunity to leverage populist grievances into political movement. In countries without western style democratic protections, lockdowns in the name of persuading the unvaccinated while valuable in punishing enemies and rewarding friends may prove just too much to resist.

Policy

Lockdowns are not merely an academic question for the International Relations faculty. Of the $2.5B of Surgical Appliances and Supplies (read: PPE) that is imported into the U.S. each month, or about 30% of the required supply, $1.2B originates in Malaysia and China.

Politics, Policy & Power | Viruses Mutate While Political Promises Don't  - Slide2

Another $300M is imported from Ireland which, in turn, relies in APEC countries for components. Viet Nam, which just began 15 days of lockdown accounted for $31M in imports in May.

Making the dependency on imports more precarious is the increased demand for PPE due to delayed services and precautionary measures in place to protect health care workers and patients. Demand is up and supply is now subject to political and public health risk.

Work on supply chain risks were well under way before the COVID-19 pandemic. The Department of Defense in particular, has been actively advocating for alternatives, especially for the pharmaceutical industry.

It is a years-long project when years are not available. It is likely to be 2022 or 2023, if then, before enough of the globe is vaccinated to eliminate the ongoing risk posed by virus outbreaks and political responses thereto.

There is evidence that the shift to nearshoring is underway. Imports of Medical Equipment and Supplies from Mexico have increased since the start of the pandemic. If the trend continues, the U.S. health system will source many of its critical supplies from the Americas.

Per unit prices will have to rise but these may be partially offset by transportation expense. Regardless, federal policy makers may have to help with reimbursement incentives, something that is being actively discussed.

Politics, Policy & Power | Viruses Mutate While Political Promises Don't  - Slide1

Power

While the pharmaceutical industry has feigned concern over the WTOs interest in waiving IP protections for COVID vaccines and therapies, most industry leaders know that things as simple as a purified water supply are not easily had in certain parts of the world.

Training and equipment are also barriers to widespread manufacturing. The Biden administration has supported the WTO effort largely because they know it will never happen.

They are right.

Last week, PFE and BioNTech announced a partnership with South Africa’s Biovax to produce 100M doses annually beginning in 2022.

South Africa, with aspirations to become a pharmaceutical manufacturing powerhouse, submitted the WTO resolution for a waiver of IP and now appears to be poised to get some of what they want.

The arrangement calls for PFE and BioNTech to manufacture the vaccine at their European facilities and then ship drug product to Cape Town for “fill and finish.” From there Biovax will ship the vaccine to the 55 nations in the African Union.

For its bit of political theater, South Africa gets credit for manufacturing even if it the least demanding – but still important – part of the process. PFE and BioNTech get to declare the problem solved so it can urge the WTO to drop the subject.

It is a win-win or, if you prefer, a successful extortion.

© 2021 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.