Purchasing COVID-19 Vaccines at Risk: Costs and Benefits for Latin America and the Caribbean
Date
Oct 2020
There are major gains to accelerating access to a COVID-19 vaccine. The World Bank predicts a cumulative $1.02 trillion loss to the economies of Latin America and the Caribbean over 2020 and 2021 due to COVID-19. Based on this estimate, ending the pandemic just three months earlier would yield nearly $125 billion for the region in economic benefits alone. This note describes a framework for assessing the costs and benefits of at-risk investments in COVID-19 vaccines and assesses the net benefits for Latin American and Caribbean (LAC) countries.
It shows that waiting for the normal vaccine timeline would mean long delays for developing countries. However, making at-risk investments that effectively pay for firms to install or repurpose manufacturing capacity while vaccine trials are still in process (before they are proven safe and effective), governments can accelerate access to a vaccine. Even under very conservative assumptions, such at-risk investments in vaccines are in the interest of LAC countries. The conservative analysis presented here shows that the high benefits associated with these investments justify the public spending or even borrowing. Finally, the paper concludes by discussing the ways contract design influences the benefits of vaccine investments because it affects how quickly LAC countries obtain the benefits of vaccine access.
It shows that waiting for the normal vaccine timeline would mean long delays for developing countries. However, making at-risk investments that effectively pay for firms to install or repurpose manufacturing capacity while vaccine trials are still in process (before they are proven safe and effective), governments can accelerate access to a vaccine. Even under very conservative assumptions, such at-risk investments in vaccines are in the interest of LAC countries. The conservative analysis presented here shows that the high benefits associated with these investments justify the public spending or even borrowing. Finally, the paper concludes by discussing the ways contract design influences the benefits of vaccine investments because it affects how quickly LAC countries obtain the benefits of vaccine access.
