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Deadlock on Indemnity Clause Keeps US Vaccines From Indian Market

Deadlock on Indemnity Clause Keeps US Vaccines From Indian Market

Vials labelled “Moderna, Johnson & Johnson, Pfizer-BioNTech COVID-19 vaccine” seen in an illustration. Photo: Reuters/Dado Ruvic

  • More than six months ago, the Indian government announced measures to fast-track the approval of foreign-made COVID-19 vaccines in India.
  • However, companies like Pfizer, Moderna and Johnson & Johnson have demanded the government sign an indemnity clause that would protect them from liability.
  • The government has refused to do so, saying local manufacturers have not been granted indemnity and that the playing field should be level.

New Delhi: Although more than six months have passed since the Union government announced measures to fast-track the approval and import of foreign COVID-19 vaccines to India, a deadlock over the issue of indemnity has prevented them from entering the market.

According to The Hindu, the import of American vaccines made by Pfizer, Johnson and Johnson (J&J) and Moderna has been held up because the Indian government is not inclined to grant indemnity – i.e. protection from liability if a person is adversely affected by the vaccine.

The deadlock persists even as the ‘Quad’ group – India, Australia, the US and Japan – has proceeded with plans to manufacture a billion doses of J&J’s vaccine at Biological E’s facility in Hyderabad. In late October, Quad diplomats also attended a special event in Hyderabad to mark the US’s grant of $50 million for Biological E to produce vaccines.

This means any output from this facility will be ‘export-oriented’, a government official told The Hindu.

Note that on April 13, at the height of India’s vaccine shortage earlier this year, the government said it would fast-track emergency approvals for foreign-made COVID-19 vaccines that have been granted emergency authorisation in the US, the European Union, the UK, Japan and by the WHO.

In June, the Union government also did away with post-approval bridging trials in the country – again, if they had restricted-use permissions from regulators in the US, EU, the UK, Japan or were listed by the WHO for emergency use.

While both these moves were expected to accelerate the entry of foreign-made COVID-19 vaccines to India, that has not happened.

A senior health ministry official told The Hindu that the indemnity clause is under discussion. “India has put across its stand and we are in dialogue,” the official said, without specifying any timeline for the issue’s resolution.

The newspaper added that the indemnity issue has been pending since external affairs minister S. Jaishankar travelled to the US in May 2021 to discuss vaccines supply during India’s second COVID-19 outbreak. The US offered a batch of Moderna vaccines to India through the COVAX network in June – but that shipment was “stopped at the last minute”, The Hindu reported, as Indian embassy officials declined to sign off on indemnity clauses. No Indian manufacturer has been granted indemnity, the officials said.

Pfizer and J&J told The Hindu that talks are ongoing with New Delhi on this point. J&J in particular said that it is in discussions to “accelerate availability” of its COVID-19 vaccine. Pfizer’s global media relations head for Asia, Roma Nair, said that the company seeks the “same kind of indemnity and liability protections in all of the countries that have asked to purchase our vaccine, consistent with the local applicable laws to create the appropriate risk protection for all involved”.

She said that more than 2 billion doses of the Pfizer-BioNTech vaccine have been shipped to 152 countries where the indemnity clause has been accepted.

Also read: Pfizer Demands Governments Gamble With State Assets To Secure Vaccine Deal

What exactly is indemnity?

According to another report by The Hindu, ‘indemnity’ under Section 124 of the Indian Contract Act 1872 means one party promises to save the other from any loss caused to the latter.

So if the Indian government grants indemnity to a vaccine manufacturer or importer and that vaccine is determined to have caused the death or disability of a recipient, any compensation claims will have to be addressed, and fulfilled, by the government – not the company. Even if a court orders payment, the company will be able to recover the amount from the government, The Hindu said.

As Murali Neelakantan and Ashish Kulkarni wrote for The Wire in June 2021 that although there is no precedent for companies receiving indemnity in India, manufacturers hold greater negotiating power thanks to the pandemic and because the global market “is very much a seller’s market”.

In their words:

“There is a global scarcity for these vaccines, and if we choose to be picky about the terms of the contract, Pfizer will simply move on to the next prospective buyer. Of which, remember, there are plenty.”

This has indeed proved to be the case, with no foreign-manufactured vaccines apart from Russia’s Sputnik V entering the Indian market. Sputnik V was approved through the traditional route, after conducting a local bridging trial. However, it accounts for fewer than 1% of doses administered.

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