EU sues AstraZeneca over breach of Covid-19 vaccine supply contract
Prediction based on a discussion I had with an experienced contract litigator based in Belgium (this will be under Belgian law):<p>It&#x27;s hard to predict how any court proceeding goes but the European Commission will probably lose this.<p>Why? Considering how badly behind they are on their deliveries?<p>Simply, the best available efforts structure of the contract gives them an extremely high bar to clear to succeed in this action.<p>The fundamental problem AZ has had is that their yields from their bioreactors has been lower than anticipated and they haven&#x27;t been able to increase them as fast as they had hoped. Yields of biologicals is essentially a black art as much as a science, batches can vary by orders of magnitude even in well characterised and mature processes (i.e. not this one). It&#x27;s very much not like small molecule chemistry where it&#x27;s all much more deterministic.<p>From the litigation point of view then, if AZ shows that based on their own experts in production, they had made reasonable efforts to size the production facilities correctly in order to meet their agreed delivery schedule, it becomes almost impossible to show that they had not made &quot;best reasonable efforts&quot;.<p>This is why most contracts are <i>not</i> structured like that. Normally all that risk sits with the producer and they just have to develop a sufficiently good understanding of their process and how its yield can vary to hold enough inventory at intermediate and end-stages to buffer variations. In this case though, there was no choice, since there was no time to characterise a scaled up production process. They had to guess on the needed bioreactor capacity. If the EC wants to win this, they will have to show that this estimation was not just empirically wrong (obviously it was) but that it was sufficiently badly estimated <i>procedurally</i> that it constituted breach of the contract.<p>This is also why claims about the UK somehow having a better contract are much too simple. The UK&#x27;s contract was also best available efforts and in-fact the UK&#x27;s order is by some measure even more delayed than the EU order (was originally 30m doses by September... 2020 and 100m by end of 2020). What is true is that months before the sales contracts were finalised, the UK had spent quite a lot of money through the University of Oxford on starting production scale-up in factories in the UK. Those factories had production contracts either with Oxford Biomedica or with the UK government some of which may have been novated across to AZ when they were selected as production partner. However the EU also spent quite a lot of money before finalising its purchase contracts including some on scale-up. Without a really in-depth understanding of what was spent where, and when, it is impossible to determine exactly how all these agreements relate to each other but anyone who wants to talk to you about the date that &quot;the contract&quot; was signed either doesn&#x27;t know what they&#x27;re talking about or is lying to you because there is no singular contract, this is a sequence of complicated agreements for research, scale-up, and production which is capped off in each case by a formal advanced purchase agreement.<p>I think it is worth incidentally considering how incredibly lucky we&#x27;ve collectively been on the vaccine front. Essentially because of how well Moderna and particularly BionTech&#x2F;Pfizer&#x27;s vaccines have performed, people now seem to think that we were collectively owed vaccines of this quality and quantity by the universe and that AZ is somehow uniquely incompetent at not delivering something so simple.<p>The reality is that some of the world&#x27;s most experienced vaccine producers, Merck and the collaboration of Sanofi&#x2F;GSK complete failed to produce working vaccines. Merck&#x27;s recombinant rVSV vector performed poorly during trials, Sanofi messed up their dosing and is having to redo trials. CureVac still hasn&#x27;t released P3 data, NovaVax has but hasn&#x27;t got regulatory approval yet, J&amp;J filed for approval relatively late and has also had a pretty significant production problem (albeit not a factory under their control). Instead of looking at AZ&#x27;s production problems as some unbelievable outlier event, it makes more sense to recognise it as one particular event within a continuum of possible events in a very difficult context.