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European Commission Sues AstraZeneca Over Vaccines - Does It Have a Case?

on Thursday, 27 May 2021.

There was a very public spat earlier this year around the supply by AstraZeneca of vaccines to the European Commission. The Commission has complained about delays of the vaccine delivery and AZ's prioritisation of supplying other places such as the UK.

Now, the Commission is taking AZ to court over the issue.

The contract between AZ and the Commission had targeted a certain amount of deliveries - 300 million doses across the EU bloc, with an option for a further 100 million, during 2021. However, AZ were unable to meet the desired very rapid pace.

The Commission has applied to the court to impose a fine of 10 million euros per infraction on AZ, and to require compensation of 10 euros per dose for each day of delay as compensation for allegedly breaching the EU contract.

Their arguments centre around the need to use "Best Reasonable Efforts" to supply under the agreement. 

What Does The Contract Say?

The Commission had published the contract earlier in the year. The contract defines "Best Reasonable Efforts" as being "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 or commercialization having regard to the urgent need for a vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world but taking into account efficacy and safety". 

The contract is governed by Belgian law, so it may be that Belgian law has a different interpretation on things. However, this definition appears to give AZ a lot of wriggle room. AZ was required to take steps that would be expected from a business of its size and resources, and it should also try to do what it can given the disruption from a pandemic. However, the definition also appears to recognise that there is a global issue, and AZ had to still act responsibly for efficacy and safety. This was not an absolute commitment to deliver a particular number of doses by a particular time, but it had to weigh up different factors in its attempt to do so.

Further Implications

AZ and other pharma research and manufacturing bodies have worked incredibly hard and at warp speed to help the world find a route out of the coronavirus pandemic. Processes and developments that would ordinarily take 10 years were done within less than a year. Everyone involved should be complimented and congratulated. 

Inevitably, there have been supply challenges along the way in doing things at such speed, but we should also remember the philanthropic nature of what AZ has done. As a profit-making company with a duty to give its shareholders a return on investment for huge money spent on speculative research and development, it actually adopted a different approach with its vaccine - it has supplied the vaccine at cost. 

It seems that this is a political issue and AZ has been unfairly caught in the cross fire.

One lawyer for the Commission's team, Charles-Edouard Lambert, has criticised the company for deciding to reserve production at its Oxford site for Britain. He said, "This is utterly serious. AstraZeneca did not use all the means at its disposal. There is a double standard in the way it treats the UK and member states."

Meanwhile, an AZ lawyer, Hakim Boularbah, said that its much earlier agreement with the UK in May 2020, which had involved the UK Government helping to bankroll the vaccine development in return for supplies at cost, had clearly given priority to the UK. He has called the Commission's case "a groundless accusation".

We would welcome your thoughts on these issues. Please contact Paul Gershlick in our Pharmaceuticals and Life Sciences team on 07795 570072, or complete the form below.

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