WASHINGTON – The federal government has terminated its contract with a troubled Covid-19 vaccine maker that ruined millions of doses and had to halt production for months after regulators raised serious quality concerns.
The decision marks a blatant turnaround for Maryland-based politically-affiliated contractor Emergent BioSolutions and a government abandonment of a deal that was to be a centerpiece of Operation Warp Speed.
At the start of the pandemic, the government decided to rely on the company to be the only domestic manufacturer of the Johnson & Johnson and AstraZeneca vaccines. But in March of that year, tests revealed a batch of the Johnson & Johnson vaccine was contaminated, and Emergent agreed to suspend manufacturing after an inspection revealed a variety of problems at its Baltimore Bayview area facility.
The termination of the contract, announced by aspiring executives on Thursday during a call with investors, was the result of negotiations that began after the government made payments earlier this year under the deal, which was awarded in May 2020, with a value of more than had set $ 600 million. According to the company, Emergent will now forego around 180 million US dollars.
The company said it will continue to work with Johnson & Johnson to manufacture its vaccine in Baltimore, as the deal with that company, while the government endorsed it, was not funded under the $ 600 million deal. Although the website has not yet received regulatory approval, it has resumed operations and the Food and Drug Administration has approved the release of approximately 100 million doses for possible use.
The dissolution of the treaty also ends an almost decade-old effort by the government to better prepare for a pandemic. In 2012, the Department of Health and Human Services Emergent awarded a $ 163 million contract to expand the Baltimore site and prepare it to rapidly manufacture vaccines in response to a novel virus.
The decision, published on Thursday, ended that deal years before it expired, leaving the facility without the approval stamp it had long touted in presentations to investors and potential customers.
Emergent CEO Robert Kramer admitted during the investor call that “the initiative, as it was contemplated in 2012, was a good idea at the time, but unfortunately did not work as expected.” Mr Kramer also tried to make the breakup positive by writing in a guest article in The Baltimore Sun that the Emergents Department of Health had approved “Request to End Our 9-Year Pandemic Manufacturing Partnership.”
Mr Kramer blamed the government, even though he admitted that “not everything went perfectly” during the pandemic. “But if you want companies to get involved,” he wrote, “you have to be willing to stand by them through both challenges and performance.”
But a senior official in the Biden administration, who spoke on condition of anonymity, denied Mr. Kramer’s account. The official said the health department terminated the contract and that the termination was structured so that the company would not fight it and the government would avoid a costly legal challenge. The company has been asking for payment since spring, the official added, but the government has not paid since the contamination became known.
When the pandemic hit last year, the Baltimore site still hadn’t received government approval to mass-produce an approved product, and a state assessment warned that relying on the largely untested facility was risky.
Mr Kramer said Thursday that the lack of experience at the factory was in large part due to the lack of consistent government funding over the years. “The necessary operational investments by all administrations were not sufficient to maintain the efficiency in an emergency,” he said.
Since May, Emergent has been expecting federal regulators to soon certify vaccine production at the Baltimore facility. Regulators have yet to issue this certification despite having certified Johnson & Johnson’s manufacturing operations in the Netherlands, as well as plants that make vaccines for Pfizer BioNTech and Moderna vaccines.
Instead of giving the Bayview plant the green light, the FDA approved multiple lots of AstraZeneca and Johnson & Johnson’s vaccines – and then only after special review because of the plant’s problems. A batch can contain up to 15 million cans.
The cancellation does not appear to have any impact on the availability of coronavirus vaccines in the United States. The deal only covered the production of AstraZeneca’s vaccine, which is not approved for sale in the United States.
Although Johnson & Johnson, one of only three federally approved vaccines here, produced tens of millions of doses at the Baltimore facility, it did so under a separate contract with Emergent as a subcontractor.
In a statement on Thursday, a Johnson & Johnson spokesman said “Emergent BioSolutions’ announcement today will not affect our collaboration in the manufacture of our Covid-19 vaccine.” The company said it will continue to work with authorities to obtain certification for the Bayview site to produce its vaccine.
Johnson & Johnson played a comparatively minor role in the country’s vaccination campaign. Just over 15 million people received one dose of the Johnson & Johnson shot, compared to nearly 71 million who received two doses of the Moderna vaccine and 107 million who received two doses of the Pfizer BioNTech vaccine. In a number of government decisions since mid-September, at least some recipients of all three vaccines have been eligible for booster vaccination.
The production problems at the Bayview site have hampered vaccination efforts outside the United States and delayed the distribution of vaccines in Canada, the European Union and South Africa.
Executives stressed during Thursday’s call that the cancellation would not affect the other government contracts that remain at the core of Emergent’s business. In fact, the company said earlier this year, health officials have pledged to purchase additional $ 637 million worth of anthrax and smallpox products from Emergent in the coming months.
The company also announced that Mary Oates, a former Pfizer executive who joined Emergent in November 2020 as Senior Vice President, Manufacturing Quality Monitoring, will be leaving “to pursue a new career opportunity.”
In September, Emergent announced it had entered into a five-year agreement with Providence Therapeutics, a Canadian biotechnology company specializing in mRNA vaccine therapies, to support the company’s development of its Covid-19 mRNA vaccine.
“Emergent’s commitment to fighting the Covid-19 pandemic is anchored in our partnerships with innovators who share the same mission to address public health threats around the world,” said Adam R. Havey, executive vice president and Chief Operating Officer of the company, in a statement at the time.
Sharon LaFraniere and Sheryl Gay Stolberg contributed to the coverage.