Vaccine Dogfight Puts AstraZeneca in a Hard Spot
(Bloomberg Opinion) -- Even in a pandemic, no good deed goes unpunished. Having embarked on a mission to distribute Oxford University’s Covid-19 vaccine to the world for no profit, AstraZeneca Plc is now caught up in both vaccine politics and Brexit blowback. The Anglo-Swedish drugmaker is in a mire it cannot easily escape on its own. Having come out fighting, it’s now time to de-escalate the situation — and seek support from the U.K. government.
At issue is the supply of the Oxford vaccine to the European Union. Two unfortunate events have coincided to reduce the bloc’s expected dosages in early 2021. At the same time that AstraZeneca has had problems in producing the so-called drug substance that goes into its shots, Pfizer Inc. curtailed its vaccine production to upgrade the efficiency of its manufacturing output.
The EU is angrily holding AstraZeneca to its supply agreement, saying the company should shift doses manufactured in the U.K. to compensate. But AstraZeneca boss Pascal Soriot suggests the terms of its agreements with the U.K. and EU don’t easily allow for that redistribution of existing supply. A contract signed in June with the U.K. prioritized domestic production for Britain, he told European newspapers on Tuesday. For that reason, the subsequent EU agreement was for the company to provide doses on a “best effort” basis, he added.
If this represents the substance of the agreements, following them to the letter may lead to questionable outcomes. It could mean that less vulnerable U.K. citizens are vaccinated before European citizens in higher-risk categories. That doesn’t sit well with AstraZeneca’s broader aim of facilitating broad and equitable access of the vaccine globally. But the issue has only come into view because one leg of the parallel supply chains established to deliver that goal has faltered.
The EU’s tone softened on Wednesday evening after what both sides described as “constructive” talks. Its ability to claim the high ground is weakened by the simple fact its agreement came three months after the U.K.’s, allowing less time to get supply chains in place. The European Medicines Agency also has yet to approve the vaccine for use. Complicating matters, on Thursday Germany’s immunization commission recommended that the Oxford-AstraZeneca vaccine be authorized only for 18- to 64-year-olds. If that position were to become EU policy, the demand for supply from the U.K., which is still vaccinating the over-80s, becomes much trickier.
U.K. politicians must nevertheless take some blame for the atmosphere here. Education Secretary Gavin Williamson’s December boast that the U.K. was the first to approve a vaccine because “it’s a better country,” and spurious suggestions from Health Secretary Matt Hancock that Brexit enabled the quick approval, were extremely ill-judged and counter to the necessary cross-border cooperation needed to fight the pandemic.
There are no easy ways out of the crisis. Demand exceeds supply in the U.K. and Europe. Difficult decisions must be made about who gets the vaccine within countries and between countries. These are not for AstraZeneca to make. Its role is to manufacture and distribute the vaccine to the most reasonable interpretation of the agreements it has entered into.
If AstraZeneca has made missteps here, they seem to be down to naivety about the politics of this situation, and perhaps over-optimism around its manufacturing capabilities. Could the company have better communicated the risks of this situation arising, encouraging the EU to redouble efforts to diversify vaccine sources? As Soriot points out, his company has no commercial incentive to shift supply in any one direction. This is a non-profit endeavor during the pandemic, and in perpetuity when it comes to supplying low-income countries.
The U.K. government must now decide how to help its European neighbors. One government minister pointed to forthcoming assistance on Thursday morning. There are several reasons to consider redistributing supply. The main one is humanitarian. The U.K. must also recognize the benefits to its own citizens of a constructive relationship with the EU — however hard it is to communicate that message at home. The virus is mutating. Future priorities around both vaccines and treatments may be different. The U.K. may need the EU in future.
For one, a potential vaccine from Johnson & Johnson could soon become the next sought-after inoculation. J&J has a similar not-for-profit pledge, its vaccine doesn’t require ultra-cold storage, and is designed as a single-shot prophylactic.
It bodes ill that vaccine distribution is already subject to rows between rich nations, given the the developing world needs jabs just as much. The involvement of the pharma industry on a non-profit basis mustn't be discouraged. Those working on preparations for the next pandemic have many lessons to learn here.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
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