1. News
  2. Explained

All There Is to Know About the Brazil Covaxin Scandal

Jul 1, 2021 8:13 AM 5 min read

Countries around the world have been dealing with the crises triggered by COVID-19 for over a year now, some better than the rest. 

Unfortunately, Brazil belongs to the rest. A lukewarm response to the pandemic in the beginning, the President's callous (and often misleading) takes on the dangers posed by the virus, the government's reluctance to impose strict lockdowns and rising caseloads as well as fatalities - all made it worse. 

The country is now faced with a new challenge - alleged corruption in vaccine purchases. 

Over the last few weeks, Brazilian media has been rife with reports of a scandal involving the government's order to acquire 20 million (2 crore) doses of Covaxin from India for R$1.6bn ($324.2m). A parliamentary probe has revealed that the representatives of the Brazilian government put "excessive pressure" on officials to procure Covaxin doses at inflated prices. The deal has since been called off. 

The effects of this scandal have been substantial and widespread. It calls into question the integrity of sovereign vaccine acquisitions around the world. It also casts a shadow on the institutional credibility of vaccine manufacturers like Bharat Biotech for being a party to the alleged corruption. 

Let's see what exactly happened and what lies at stake. 

The "CovaxinGate"

Luis Ricardo Miranda, the head of imports in the Brazilian Health Ministry, accompanied by his Congressman brother, informed Brazilian President Jair Bolsonaro in March this year about how he was being strong-armed to approve Covaxin orders despite his concerns about the purchase. 

A deal had been placed to buy 2 crore vaccines from Bharat Biotech at $15 per dose, which is excessively higher (almost 1,000% higher on an average) than most other vaccines available in the market today. The government had reportedly passed on an offer from Pfizer (at a much lower price) over Bharat Biotech. 

Public support in Brazil for the government has begun to dwindle lately owing to the massive mismanagement of the pandemic. A Parliamentary Commission of Inquiry (CPI) was set up in April to look into the general "acts of commission and omission" by the Bolsonaro government while managing the coronavirus crisis

The Commission pivoted its focus towards the vaccine purchase deals after the Miranda brothers came forward to testify in the hearings. Luis Miranda said that the government was issued an invoice worth $45m for 30 lakh doses of the vaccine from a Singapore-based firm called Madison Biotech, an entity which had no mention in the paperwork until then. 

Bharat Biotech has acknowledged Madison Biotech as its global sales and marketing unit. But Miranda believes it to be a shell corporation likely established with the intent of siphoning funds. He testified that he had been receiving calls from his superiors compelling him to authorise the $45m upfront payment. 

Above: The Commission probing the Covaxin purchase


India-Brazil Vaccine Relationship

Brazil's health regulatory body, ANVISA, had given emergency approval for Covishield vaccines in January. 2 million doses were shipped by the Serum Institute as part of a commercial consignment. Talks over the Covaxin deal followed in February. 

But following the explosive breakout of the Second Wave in India during April-May, there was a halt in all vaccine deliveries from India. In spite of this delay, the country had turned down offers of importing other vaccines like the Chinese-made CoronaVac or the Russian-made Sputnik V citing "irregularities in efficacy and safety" in both. Instead, it kept pursuing vaccines of Indian origin like Covaxin. 

As per Miranda's testimony, on being informed about the red flags in the Covaxin deal, President Bolsonaro said, "...this is serious but the matter could worsen if I interfered with it". 

Why was the President reluctant to engage? Miranda says it was because one of his chief allies in the Parliament - Roberto Barros - was revealed to be the architect of this alleged deal. 

Bharat Biotech has defended the pricing structure reported in the deal saying that $15-20 per dose is the company's standard charge for foreign governments. Hence, Brazil falls within the bracket. 

In any case, both the company as well as the Brazilian government are united in their commitment to one statement - not a single dose of the vaccine changed hands and not a single cent was paid. 

Mismatched Details and Implications

Mismatch No. 1: Covaxin has faced a lot of flak both at home and abroad for the way it was rushed through the trial stages and approved for emergency use in India.

In March 2021, ANVISA published a report citing the deficiencies in the vaccine. Bharat Biotech CEO Krishna Ella attempted to discredit the report by blaming it on Brazil's "nationalism" to reject the Indian vaccine.

The recent scandal doesn't seem to fit well with this narrative. Why would Brazil's health regulator disparage a vaccine if its authorities were pressuring bureaucrats to import it?

The Parliamentary Commission enquiring the matter, however, has documentary evidence proving the government's push for a deal with Bharat Biotech.

Mismatch No. 2: The Brazilian importer signed a deal with Bharat Biotech on February 25th 2021. Shipments were expected 20-30 days thereafter, as per the official announcement on the ANVISA website. 

But in a statement released on February 26th, Bharat Biotech issued a different delivery schedule, one that extended till September. Not a single dose was delivered and ANVISA ultimately rejected Covaxin on its merits a month later. 


The Inglorious Impacts

This isn't the first instance of irregularity in Brazil's vaccine drive. In November 2020, the country suspended clinical trials of the Chinese vaccine CoronaVac reportedly because it was backed by Bolsonaro's chief political rival. The President has remained a vocal critic of China, even though it happens to be Brazil's largest trading partner. 

There are also reports describing the vast inequalities in vaccine distribution amidst the country's different economic groups. 

President Bolsonaro has fervently campaigned against the merits of COVID-19 vaccines from the beginning, following the infamous lead of President Trump last year. He has also endorsed unproven drugs like hydroxychloroquine (HCQ) in the past. 

(FYI: The Brazilian Senate is looking into the alleged lobbying in the procurement of HCQ as well. Incidentally, the money trail involved here also leads to India.)

However, when Covaxin received regulatory approval in India, the Brazilians began shedding their vaccine hesitancy and came up with an "exceptional importation" scheme to get the vaccine from India. The President is said to have interceded personally with PM Modi in this regard which indicates an executive-level commitment to the transaction. 

This has intensified the unpopularity for President Bolsonaro back home who is now lagging behind his chief political opponent in polls for elections next year. It also puts Bharat Biotech's operations under scanner. The reputation of the company as a credible vaccine manufacturer lies at stake and involvement in such transactions could damage its potential business and alliance with other procurers, especially in the COVAX. 

It doesn't matter if it's bureaucratic squabbles (instead of efficacy results) which raise concerns about a vaccine. The public perception of vaccine makers has become increasingly important in recent days. Millions of Covaxin's recipients would be impacted if incidents like the Brazilian scandal lead to the vaccine's exclusion from the "green passes" which enable cross-border mobility.


Congratulations! You've made it to the end. Looking for more takes on Business, Finance, Markets and Investing? Subscribe to TRANSFIN. E-O-D for informative and insightful daily news updates