Washington, D.C. As a result of regulators raising serious concerns about the quality of the Covid-19 vaccine, the federal government has terminated a contract with the Covid-19 manufacturer.
Maryland-based Emergent BioSolutions has had its fortunes turned upside down by this decision. It also marks the government’s abandonment of a deal that was to be the centrepiece of Operation Warp Speed.
To ensure that Johnson & Johnson and AstraZeneca vaccines would be produced solely in the United States, the government made this decision early on in the outbreak. A contaminated batch of the Johnson & Johnson vaccine was discovered in March, and Emergent agreed to stop production after an inspection revealed numerous issues at its Baltimore Bayview facility.
Negotiations began earlier this year when the government stopped making payments under the contract, which was awarded in May 2020 and was worth more than $600 million. On Thursday, Emergent executives announced that they had terminated the contract. As a result of this, Emergent has agreed to forfeit approximately $180 million of that amount.
In a statement, the company said it would continue working with Johnson & Johnson to manufacture its vaccine in Baltimore, despite the government’s endorsement of the arrangement. Even though regulators haven’t given their blessing yet, the site has resumed operations and the Food and Drug Administration has allowed the release of approximately 100 million doses for future use.
The government’s nearly decade-old effort to better prepare for a pandemic comes to an abrupt end with the cancellation of the contract. After receiving a $163 million contract in 2012 from HHS, Emergent was tasked with preparing the Baltimore site to quickly produce vaccines in response to a new viral threat.
When the deal was announced on Thursday, it had already expired, leaving the facility without the stamp of approval it had long touted in presentations to investors and potential customers.
When Robert Kramer spoke to investors on the Emergent call, he acknowledged that the initiative, as it was originally conceived in 2012, was a good idea at the time, but it didn’t work out as expected. According to a guest essay by Mr. Kramer published in The Baltimore Sun, “the health department has agreed to end our 9-year pandemic manufacturing partnership’s request to end.”
While admitting that “not everything went perfectly” during the pandemic, Kramer blamed the government for its inability to control the epidemic effectively. If you want companies to engage, you must be willing to stand by them through both challenges and successes,” he wrote.
While Mr. Kramer’s account was challenged by a senior Biden administration official, speaking anonymously, According to the official, the health department had terminated their contract, which was structured in a way that the company wouldn’t fight it and the government wouldn’t have to pay for a costly legal battle. According to an official, the company had requested payment since spring, but the government had not paid since the contamination had been publicly disclosed in June.
When the pandemic struck Baltimore last year, the facility had not yet received regulatory approval to mass-produce any approved products, and a government assessment warned that relying on the largely untested facility was risky.
On Thursday, Mr. Kramer attributed the lack of factory experience to a lack of government funding over the years. According to him, “the necessary operational investments by all administrations fell short of what was needed to maintain capability in the event of an emergency”.
Vaccine production at Emergent’s Baltimore facility has been certified by federal regulators several times since May, according to the company. That certification has yet to be issued, despite the fact that regulators have already certified Pfizer-BioNTech and Moderna vaccine manufacturing facilities in the Netherlands.
AstraZeneca’s and Johnson & Johnson’s vaccines were cleared by the FDA, but only after additional scrutiny because of the Bayview plant’s problems. As many as 15 million doses may be in a single batch.
Coronavirus vaccinations in the United States appear to be unaffected by this cancellation. Only AstraZeneca’s vaccine, which is not authorised for distribution in the United States, was produced under the terms of the contract.
Although Johnson & Johnson produced tens of millions of doses at the Baltimore plant, it did so under a separate contract with Emergent as its subcontractor, as one of only three federally authorised vaccines in this country.
“Today’s announcement by Emergent BioSolutions will not impact our collaboration to produce our Covid-19 vaccine,” a Johnson & Johnson spokesman said in a statement on Thursday. That’s why they’re still working on getting Bayview certified for vaccine production.
Johnson & Johnson has had a minor role in the vaccination campaign across the country. About 15 million people have received a single dose of the Pfizer-BioNTech and Moderna vaccine, respectively, while nearly 71 million people have received two doses of the Moderna vaccine. Since mid-September, at least some recipients of all three vaccines have been eligible for a second dose of their vaccine.
Vaccine deliveries to countries like Canada, the EU, and South Africa have been hampered because of production issues at the Bayview site.
During the company’s Thursday conference call, executives made it clear that the cancellation would not have an impact on any of Emergent’s other government contracts. Health officials have already agreed to purchase $637 million worth of Emergent’s anthrax and smallpox products in the next few months, according to the company.
An Emergent executive who joined the company in November 2020 as senior vice president of manufacturing quality, Mary Oates, has left the company “to pursue new career opportunities,” the company said.
Providence Therapeutics, a Canada-based biotechnology company that develops mRNA vaccine therapies, has agreed to a five-year agreement with Emergent to support the development of the Covid-19 mRNA vaccine.
EVP and COO Adam R. Havey said in a statement: “Emergent’s commitment to fight the Covid-19 pandemic is anchored in our partnerships with innovators who share the same mission to address public health threats around the world.”
Both Sheryl Gay Stolberg and Sharon LaFraniere contributed to the story.