WASHINGTON – The federal government has canceled a contract with a problematic COVID-19 vaccine manufacturer that spoiled millions of doses and was forced to suspend production for months after regulators raised serious quality concerns.
The decision marks a sharp turn of fate for the politically connected contractor Emergent BioSolutions of Maryland and the government’s abandonment of a deal that was supposed to be the centerpiece of Operation Warp Speed.
At the start of the pandemic, the government decided to place its bet on the company, which will become the only domestic vaccine manufacturer Johnson & Johnson and AstraZeneca. But in March this year, testing showed that a shipment of Johnson & Johnson’s vaccine was contaminated, and Emergent agreed to suspend production after inspections identified many problems at its Bayview facility in Baltimore.
The termination of the contract, which Emergent executives announced on Thursday during a call with investors, was the result of negotiations that began after the government stopped making payments earlier this year on a deal that was struck in May 2020 and was worth more than $ 600 million. … … According to company reports, Emergent will now forgo this amount for approximately $ 180 million.
The company said it will continue to work with Johnson & Johnson to manufacture the vaccine in Baltimore, as the agreement with the company, although approved by the government, was not funded as part of the $ 600 million deal. Although the site has yet to receive regulatory approval, it has resumed operations and the FDA has authorized the release of about 100 million doses for potential use.
The contract cancellation also abruptly ends the government’s nearly decade-long attempt to better prepare for the pandemic. In 2012, the Department of Health and Human Services awarded Emergent a $ 163 million contract to expand its Baltimore facility and prepare it to rapidly produce vaccines in response to the new virus.
A decision made public on Thursday ended the deal several years before its expiration date, leaving the property without the approval it had long stated in presentations to investors and potential clients.
Emergent CEO Robert Kramer admitted in a call to an investor that the initiative, “as anticipated back in 2012, was a good idea at the time, but unfortunately it didn’t work out as intended.” Kramer also sought to boost the gap by writing in a guest essay at The Baltimore Sun that the Department of Health agreed to “Emergent’s request to end our 9-year collaboration on pandemic production.”
Kramer put the blame on the government, although he admitted that “not everything went perfect” during the pandemic. “But if you want companies to be involved,” he wrote, “you must be willing to support them in both the challenge and the achievement.”
But a senior Biden administration official, who asked to remain anonymous, challenged Kramer’s account. The official said the health ministry had terminated the contract and that the termination was orchestrated in such a way that the company would not fight it and the government would avoid costly litigation. The company has been asking for payment since the spring, the official said, but the government did not pay as the contamination was discovered.
When the pandemic broke last year, the Baltimore facility was still pending regulatory approval to mass produce any approved product, and a government assessment warned it was risky to rely on this largely untested facility.
Kramer said Thursday that the lack of experience at the plant is due in large part to a lack of sustained government funding over the years. “The required operational investment from all administrations was not matched by what was needed to keep it operational in the event of an emergency,” he said.
Emergent has said since May that it expects federal regulators to soon certify vaccine production at its Baltimore plant. But regulators have yet to issue this certification, although they have certified Johnson & Johnson’s manufacturing facilities in the Netherlands, as well as the plants that produce vaccines for the Pfizer and Moderna vaccines.
Instead of giving the Bayview plant the green light, the FDA approved several batches of AstraZeneca and Johnson & Johnson vaccines – and then only after special testing due to problems with the plant. A batch can include up to 15 million doses.
The cancellation does not appear to have affected the availability of coronavirus vaccines in the United States. The contract only covered the production of the AstraZeneca vaccine, which is not authorized for distribution in the United States.
Although Johnson & Johnson, one of three federally approved vaccines available here, produced tens of millions of doses at its Baltimore plant, it did so under a separate contract with Emergent as a subcontractor.
In a statement Thursday, a Johnson & Johnson spokesman said that “today’s announcement of Emergent BioSolutions will not affect our collaboration to manufacture our COVID-19 vaccine.” The company said it will continue to work with authorities to obtain certification for the Bayview vaccine manufacturing facility.
Johnson & Johnson played a relatively small role in the national vaccination campaign. Just over 15 million people received one dose of Johnson & Johnson’s vaccine, compared with nearly 71 million who received two doses of Moderna vaccine and 107 million who received two doses of Pfizer vaccine. As a result of a series of regulatory decisions since mid-September, at least some recipients of all three vaccines have been eligible for revaccination.
Manufacturing problems at Bayview have impacted immunization efforts outside the US, delaying vaccine distribution in Canada, the European Union and South Africa.
During a call on Thursday, executives stressed that the cancellation will not affect other government contracts that remain the backbone of Emergent’s business. In fact, the company noted, this year, health officials have pledged to purchase additional Emergent anthrax and smallpox remedies worth $ 637 million in the coming months.
The company also said that Mary Oates, a former Pfizer executive who joined Emergent in November 2020 as senior vice president of manufacturing quality, is leaving “to find new career opportunities.”
Emergent announced in September that it had reached a five-year agreement with Providence Therapeutics, a Canadian biotechnology company that specializes in mRNA vaccine therapy, to support the company’s development of a COVID-19 mRNA vaccine.
“Emergent’s commitment to tackling the COVID-19 pandemic is built on our partnership with innovators who share the same mission to address public health threats around the world,” said Adam R. Hayvey, executive vice president and chief operating officer. statement at the time.