Advance payment for vaccine

On Sept. 14, 2020, President Duterte criticized pharmaceutical companies in Western countries for asking advance payment for their COVID-19 vaccines. The President complained, “Kung sabihin mo na, sige wala pa ‘yung vaccine, there is nothing with finality and you want us to make the reservation by depositing money, you must be crazy.” Besides, the President stated, “The procurement law of the Philippines does not allow you to buy something which is non-existent or to-be-produced as yet.” The President was referring to Republic Act No. 9184 or the Government Procurement Reform Act.

The President vowed to prioritize buying COVID-19 vaccines from China and Russia because of their “generosity” in not demanding advance payment. “If the vaccine of Russia and China are equally good and effective just like any other vaccine invented by any country, I will buy first,” the President declared.

The President is sadly mistaken in his pronouncements. First, Philippine law expressly authorizes the President to approve advance payment in any amount for the purchase of goods, particularly in case of calamities like a pandemic. Second, China and Russia will prioritize their own citizens since their state-owned companies are developing their vaccines.

Under Presidential Decree No. 1445 or the Government Auditing Code, the President is empowered to approve advance payment for the purchase of goods. Section 88 of PD 1445 provides, “Except with the prior approval of the President (Prime Minister) the government shall not be obliged to make an advance payment for services not yet rendered or for supplies and materials not yet delivered under any contract therefor.” In Resolution No. 06-2020 dated April 6, 2020, the Government Procurement Policy Board requested the President to exercise his power under Section 88 of PD 1445 to “increase the allowable amount of advance payment from fifteen percent (15%) to thirty percent (30%) of the contract amount” of certain goods, including common medicine, in view of the existing pandemic. In Memorandum Order No. 48 dated April 20, 2020, the Office of the President approved this request for increase in advance payment. Under Section 4(u) of RA No. 11494 or the Bayanihan to Recover as One Act, the procurement of supplies, goods, and equipment determined by the Department of Health as needed to address the COVID-19 pandemic constitutes “exemptions from the provisions of the bidding process required under Republic Act No. 9184 or the Government Procurement Reform Act.” Under Section 12 of the Bayanihan to Recover as One Act, “the requirement of Phase IV trials for COVID-19 medication and vaccine stipulated in the Universal Health Care Law is hereby waived to expedite the procurement of said medication and vaccine.”

Under Operation Warp Speed, the US government allocated almost $10 billion to fund the research, development, and manufacture of COVID-19 vaccines by pharmaceutical companies. While this funding is a donation, the pharmaceutical companies in turn agreed to donate to the US government a certain quantity of any successful vaccine produced. The European Union has also financed part of the research, development, and manufacture of vaccines by pharmaceutical companies, with the financing considered as down payment on the vaccines that will actually be purchased by EU member states.

The US and EU member states will have priority in the distribution of any successful vaccine since they have invested in the research, development, and manufacture of the vaccine. The US and the EU have calculated that gaining six to 12 months’ head start in deploying any successful vaccine will be worth the risk considering the damage the lockdowns and work suspensions have inflicted on their economies.

The President now realizes that the West, China, and Russia will prioritize their own citizens in the distribution of vaccines and that Filipinos may be among the last in the long queue. On Nov. 11, 2020, the President explained: “So you can expect that in the few months until next year, all of those vaccines produced will be used by the Americans. Same story with the European countries who have successfully developed a vaccine. And it’s the same situation with China. Again, we have to keep in mind that they have a population to worry.” China will take care of its own citizens first before they give vaccines to others, the President admitted.

So how will President Duterte provide a vaccine to the Filipino people?

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