Last week, a Belgian Court issued a ruling in the EU’s court case against pharmaceuticals giant AstraZeneca over its vaccine provision. The Court in Brussels, which was competent, due to the contract being governed by Belgian law, declared that “each of the parties is partially unsuccessful in their respective claims”, notably rejecting the European Union’s bid to speed up deliveries. This is yet another embarrassment for EU Commission President Ursula von der Leyen, who has been conducting a long battle with the company.
Even if the Brussels court ruled in favour of the European Commission’s view that the Anglo-Swedish pharmaceutical giant had failed to honour its commitments, which the European Commission tried to present it as a win, AstraZeneca itself pointed out that “the judge ordered delivery of 80 million doses by 27 September 2021”, something which it does not seem to consider to be a big challenge as it declares deliveries will “substantially exceed 80 million doses by the end of June 2021”, further boasting that “all other measures sought by the European Commission have been dismissed”.
— Euro Guido (@EuroGuido) June 18, 2021
Just as my wife has ordered me to have wine with lunch.
— Euro Guido (@EuroGuido) June 18, 2021
Court says it can't order AZ to deliver all 220 mln doses because it can't pre-judge – the company may yet comply with its contract on those.
It also says it can't grant a "defacto priority right" to the EU, noting there are "contentious contractual obligations" to other buyers.
— Naomi O'Leary (@NaomiOhReally) June 18, 2021
In understanding why the whole ordeal has been such an embarrassment for the European Commission, one needs to go back to the middle of 2020. Then, the world was in lockdown for more than five months, and scientists were finally making breakthroughs in understanding the Coronavirus – including early attempts at developing vaccinations.
The leading companies in the race for a cure were Pfizer in the United States – partnered with BioNTech in Germany and AstraZeneca in the UK and Sweden – partnered with Oxford University, alongside numerous other ventures in France, Russia, and China.
As the drugs entered their clinical trials stage during the Summer of 2020, the various companies were busily negotiating contracts for purchase. Most companies agree to do so at cost, rather than making a profit.
It is at this stage that many countries started to put in their orders. Quick out the gate were Israel, the United States, Chile, The United Kingdom, Serbia, Italy, Germany, the Netherlands, and France. However, the latter four suddenly decided to hand the initiative for vaccine procurement to the European Commission, – something which lies outside of its usual competencies conferred by the Treaties.
When the European Commission took charge
In a bid to save face after its disastrous handling of the crisis during the early months of the pandemic, the European Commission, was eager to take charge of this. Sandra Gallina, deputy director general in the Commission’s trade department, was made responsible for coordination, despite the fact that she didn’t have a health background, but rather a specialisation in trade. The United Kingdom was offered the option to join, but quickly refused and instead appointed Kate Bingham, a former British venture capitalist with a lot of pharma experience to head up the procurement process.
The UKs refusal to join was met with heavy skepticism both at home and in the European Union. Likewise, Israel went it alone, appointing the military to oversee the process. Meanwhile, U.S. President Donald Trump also appointed a former pharmaceuticals executive, Moncef Slaoui, a Moroccan-born Belgian-American. All of these nations ordered as much as they could, in effect hedging their bets – ordering more than needed.
The European Union by contrast approached the procurement of the vaccines in the same way as procuring any other equipment. In order to avoid spending too much, they put great effort into negotiating a lower price for Pfizer vaccines while only ordering 200 million doses. At the same time, they promised to also purchase the French vaccine when it is ready.
Pfizer offered to sell a further 500 million doses to the European Commission at the same price, but the Commission dismissed this offer, despite the fact that the order would have been enough to cover the entire population of the EU.
As the Astra-Zeneca vaccine approached clinical trials and approval, the European Commission also put in an order. However, unlike with the Pfizer vaccine, there was no strict timeframe for delivery. The contract, which would later be released in January 2021, made clear that unlike the UK’s contract, the EU’s agreement had not thought through the entire Oxford/AstraZeneca supply chain, whereby it was also unclear which plants would need to be used.
December 2020: the start of vaccine administration
In December 2020, the vaccine programmes started in the UK and Israel, beginning with the most vulnerable in society, including the elderly. By the end of January, Israel, the United Arab Emirates and the United Kingdom were ahead on vaccinations – all of them primarily using the Astra-Zeneca Oxford vaccine.
By contrast the European Union was lagging. As Politico wrote: “Over the past 10 months of the global vaccine race, the EU was often a step or two behind”. The initial orders from Pfizer that were distributed amounted to only a few hundred thousand doses per country in the beginning, with citizens and member state governments becoming increasingly frustrated.
Vaccine tensions, contributing to more vaccine skepticism
In order to try and save face, the European Union challenged Astra-Zeneca over their delivery. With many of the vaccines being manufactured in Belgium and exported to the United Kingdom and other states, the EU demanded an explanation.
Executives at Astra-Zeneca quickly fired back, arguing that they were respecting the contract. Frustrated, the EU demanded the release of the contract, which failed to clear up the row, although it did confirm AstraZeneca was merely bound by an obligation to make its “best reasonable effort.”
It was at this point that the Commission acted well outside of its own constraints. A call was made to have the Belgian police visit and search Astra-Zeneca’s labs outside of Brussels to examine production. Naturally, crates being prepared to ship were found, but not for the EU.
The news of the police search fuelled a political storm in Brussels, with many journalists demanding to know what had happened. However, the bigger storm was yet to come.
A day later the European Union issued a statement, late at night, threatening that they would impose vaccine export restrictions. The government in the United Kingdom quickly shot back a response stating that it was both illegal and would count as a breach of contract if such an action took place.
The political storm increased, with both the British government and European journalists demanding an explanation. In what wasn’t a good look, European Commission President von der Leyen first blamed her Trade Commissioner, Valdis Dombrovskis, for having invoked Article 16 of the Northern Ireland Protocol, which enabled controls on vaccines to Northern Ireland. Dombrovskis however claimed to have no knowledge of the memo. It later emerged that the decision had come from the office of Commission President Ursula von der Leyen herself.
This was followed by calls for an urgent explanation and even for her resignation. However, instead, the EU switched tactics and started briefing that the Astra-Zeneca vaccine didn’t work. An article in German financial newspaper Handelsblatt suggested that the vaccine was only 6% effective amongst over 65s, panicking citizens and governments in cutting the use of the vaccine. When in reality the journalists responsible had simply misinterpreted the research, as there were insufficient data for a robust statistical statement on effectiveness for this age group.
The damage however was done. The European Commission, German and French Governments, and European media had been hurting confidence not only in their ability to deliver the vaccines, but also in vaccine effectiveness itself. A poll shortly after the scandal in February 2021 found that only 50% of the French public would be willing to take the vaccine, and that vaccine hesitancy in the Netherland and Germany was rising.
A policy was agreed to allow vaccine shipments to be blocked from leaving Europe – including a decision by Italian authorities to seize a shipment destined for Australia, although it later emerged that they were part of the international COVAX programme to send the vaccine to developing counties.
With all other options exhausted, and in a final attempt to save face, the European Commission announced that it would be taking Astra-Zeneca to court, culminating in last week’s ruling.
Even after this latest embarrassment, major questions continue to go unanswered: why did the EU not hedge its vaccine purchases in the same way as other countries, by trying to buy all the vaccines it could get? Why weren’t actual experts appointed to coordinate the procurement? And perhaps most of all – how was the Commission allowed to severely violate basic market principles by imposing protectionist measures and threatening private businesses? The fact that the United States or others would be engaged in questionable vaccine protectionism can never serve as an excuse.
When the time comes, an independent inquiry into the actions of the European Commission will need to be conducted.