Last week, the
The Commission released a redacted version of the supply contract2 and unredacted versions circulate widely online.
In this article,
1. How big is the shortfall?
Big!
The contract anticipated delivery of 30-40 million doses in 2020, a further 80-100 million by the end of March this year, and a total of 300 million by the end of June.
Against these targets, the EU received around 30 million doses by the end of March and expects only around 70 million more by the end of June.
The shortfall is therefore in order of 160 million doses, or more than 50% of the total order.
2. Is
It is unclear why
Once produced, the vaccine must be placed into vials or syringes, sealed and packed for shipping - a process referred to in the industry as "fill and finish". The agreement expressly contemplates shortages of critical components such as glass vials and stoppers, including as a result of other manufacturers also seeking to fulfil orders placed by the EU.
While the causes of the current shortfall are unclear,
3. Is
"the activities and degree of effort that a company of similar size with a similarly-sized infrastructure and similar resources as
4. Is the EU entitled to vaccines produced in the
According to the
The Commission may have been referring to a clause that requires
5. Was
In addition to criticizing overall manufacturing levels, the EU clearly intends to argue that it has not received an adequate share of the doses that were produced.
In this regard, it may point to
That said, the
6. How much is at stake?
It is unclear exactly how the EU intends to calculate losses suffered from under-delivery (and what impact the Member States' stop-start approach to deploying the vaccine will have) but
This is potentially €870 million for the 300 million doses referred to above, the price based on estimated production costs without any profit element.
7. Is this really about the money?
While the sums at stake are substantial, they represent only a fraction of both parties' costs associated with the pandemic and subsequent vaccine race.
Perhaps the EU sees this litigation as leverage to obtain a greater share of vaccines as they become available. Hopefully, it is more than simply a political distraction or a clash of egos.
8. Who will win?
In reality, the case will likely settle. If not, the Belgian courts will have to make a decision based on their interpretation of the relevant facts and law.
That said, there is something deeply unattractive about one of the few companies to have developed and manufactured vast quantities of a safe and effective vaccine, being penalised for overly optimistic production targets or struggling to meet competing obligations. Even more so in this case, given this contract precludes
It is also difficult to see how anyone benefits from either party being focused on litigation, rather than vaccine production and rollout.
9. When will we find out more?
Large international disputes are often resolved by confidential arbitration. That is not the case here and, assuming the courts in
Footnotes
1. https://www.bbc.co.uk/news/world-europe-56891326
2. https://ec.europa.eu/commission/presscorner/detail/en/IP_21_302
3. https://www.chemistryworld.com/news/why-manufacturing-covid-vaccines-at-scale-is-hard/4013429.article
4. https://www.ft.com/content/d814b2dc-a803-4680-b8c4-ffa2a4c370ad
5. https://www.contractsfinder.service.gov.uk/notice/2ce928f2-0e8b-48cd-b0e7-bccff514d281?origin=SearchResults&p=1
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Interpark House,
W1J 7AJ
Fax: 203092 8411
E-mail: morgan.wolfe@astraea-group.com
URL: www.astraea-group.com
© Mondaq Ltd, 2021 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source