THE CONTRACT AT the centre of a row between AstraZeneca and the European Union has been published this morning.
The pharma company and the EU have been embroiled in an escalating row over the amount of Oxford-AstraZeneca vaccines that were to be delivered to the EU bloc in the first quarter of the year.
Amid calls from MEPs and others for the contract to be published, the European Commission said that AstraZeneca has now agreed for a redacted version of the contract to be published.
Although the ‘Cost of Goods’ section has been heavily redacted – which was expected as AstraZeneca had expressed concerns about the confidentiality of the agreement – it gives an insight into what the deepening dispute is over.
The contract agrees the details of how to develop and distribute 300 million doses of the Oxford-AstraZeneca vaccine, with an option for a further 100 million doses.
There are two main strands at the heart of the row: whether the pledge made by AstraZeneca to deliver a certain number of vaccines was a cast-iron guarantee or a promise to do their best; and whether two manufacturing plants in the UK can be used to supply vaccines to the European Union.
Here are the most noteworthy elements of the contract, which was signed on 27 August.
TL;DRThe dispute is mostly likely only going to be resolved in a court or other dispute resolution mechanism.
AstraZeneca has struck contracts with both the UK government and the EU bloc to deliver 100 million vaccine doses each in the first quarter of the year. It’s not clear which contract takes precedence – they’re both likely to be of equal legal value, meaning AstraZeneca has a legal obligation to deliver on both contracts.
It’s not immediately clear if AstraZeneca changing the schedule of vaccine deliveries in the EU to later in the year constitutes a breach of the contract.
While the contract clearly stipulates that the ‘best reasonable efforts’ clause applies to ‘development and manufacturing’ of the vaccine, and that UK factories are to manufacture the vaccine for the EU, it’s not clear this means that supply from UK factories should be diverted to the EU bloc.
‘Best efforts’
AstraZeneca has defended its announcement that it wouldn’t be able to deliver as many vaccines to the EU in the first quarter of the year by saying that the contract only committed it to making its “best effort” to deliver.
The published contract cites fifteen uses of the term “Best Reasonable Efforts”.
In the contract, it states that as part of the scale-up, AstraZeneca has committed “to use its Best Reasonable Efforts to build capacity to manufacture 300 million doses of the vaccine”, with an option for the Commission to order an additional 100 million doses.
It also states in the contract that “Best Reasonable Efforts” is defined as: “the activities and degree of effort that a company of similar size with a similarly-sized infrastructure and similar resources as AstraZeneca would undertake or use in the development and manufacture of a Vaccine at the relevant stage of development”.
This phrasing is used regularly throughout the document and is a key part of the row between the pharma company and the European Union.
Manufacturing sites
On the use of the UK manufacturing sites, the contract states that Astrazeneca shall use its “best reasonable efforts” to manufacture the vaccine at manufacturing sites in the EU – which, for the purposes of this part of the contract “shall include the United Kingdom”.
The contract states:
“If AstraZeneca is unable to deliver on its intention to manufacture the Initial Europe doses and/or optional doses under this Agreement in the EU, the Commission or the participating Member States may present to AstraZeneca, contract manufacturing organisations (CMOs) within the EU capable of manufacturing the vaccine doses, and AstraZeneca shall use its Best Reasonable Efforts to contract with such proposed CMOs to increase the available manufacturing capacity within the EU.”
Speaking to TheJournal.ie, MEP Billy Kelleher said that there were two points of interest: the timeline of the vaccine delivery, and the UK factories.
“It seems very clear from the contract that they were talking about the European Union, which included the UK at the time. And so those plants in the UK are within the scope of that contract from my cursory reading.”
Costs
Another key part of the row has been that the EU claims to have paid up front to upscale AstraZeneca’s vaccine production chain. Although there are heavy redaction of price throughout the document, it states at one part of the contract:
“In partial consideration of the vaccine dose purchase rights granted by AstraZeneca to the Commission acting on behalf and in the name of the Participating Member States hereunder, the Commission shall pay to AstraZeneca a fixed amount equal to €336 million, as an estimate of the Upfront Costs”.
What the row is over
A factory in Belgium producing the AstraZeneca vaccine didn’t yield the amount of doses that it had expected, leading the company to announce late last Friday that there would be a delay to the deliveries it said were due in January, February and March.
In Ireland, this has resulted in the number of vaccine doses we had expected to be delivered by the end of March to fall from 1.4 million to 1.1 million.
It also means that people will not be able to go to their GP to get the vaccine, as Pfizer and Moderna need much colder and more complicated storage facilities than the Oxford-AstraZeneca vaccine does.
AstraZeneca’s CEO Pascal Soriot has said that their commitment was to make “our best effort” deliver vaccines by a certain time, and that this does not include the UK factories.
Soriot also suggested in an interview with Italy’sla Repubblica newspaper on Tuesday that the UK signed an agreement three months before the EU did, and that this means the UK deliveries are a priority.
“The UK government said the vaccines coming out of the UK supply chain would go to the UK first. This vaccine was developed with the UK government, Oxford and with us as well. As soon as we can, we’ll help the EU,” he said.
The European Union have been scathing in their criticism of AstraZeneca’s announcement over the past week.
EU Health Commissioner Stella Kyriakides previously said: “There is no hierarchy of the four production facilities named in the advanced purchase agreement.”
European Commission President Ursula von der Leyen said yesterday: “There is no plausible explanation. We want to be clear about that now. There are binding orders and the contract is crystal clear.”
With reporting from Ian Curran.
To embed this post, copy the code below on your site
have your say