Emergent CEO Tells Lawmakers Firm Ready to Produce Shots in Days
(Bloomberg) -- Executives of embattled vaccine manufacturer Emergent BioSolutions Inc. defended the company at a U.S. House hearing on Wednesday, saying its Baltimore facility was stretched by the emergency production of shots.
A congressional probe into Emergent has found that the contract manufacturer failed to address deficiencies in vaccine production at its facilities despite warnings following a series of inspections in 2020.
Emergent Chief Executive Officer Robert Kramer told lawmakers at the House hearing that the U.S. government had directed the company to take “unprecedented” steps to ramp up production of two vaccines developed by Johnson & Johnson and AstraZeneca Plc in a single facility, even though the site wasn’t yet fully staffed or operating at scale.
Kramer and Executive Chairman Fuad El-Hibri testified virtually before the Committee on Oversight and Reform and the Select Subcommittee on the Coronavirus Crisis.
Whether doses of the J&J vaccine produced by Emergent will reach the U.S. market is a question now in the hands of regulators at the Food and Drug Administration. The agency found multiple failures at Emergent’s facility, and the company has indicated that it has addressed them. Emergent is no longer producing the AstraZeneca shot.
If the FDA clears the factory it could open access to tens of millions of doses of J&J’s single-shot vaccine that have sat idle for weeks as the agency scrutinized the facility’s quality controls and remediation plans.
While House Democrats lambasted Emergent for troublesome production practices and political connections, Republicans were sympathetic to the company, and used their time to support vaccine patent protections and take aim at China for its role in spreading the virus.
“The documents released today shed light on the multiple warnings Emergent received last year regarding serious manufacturing problems at its plant,” said House Majority Whip James Clyburn, a South Carolina Democrat who chaired the hearing.
Shares of the Gaithersburg, Maryland-based contract manufacturer fell 3.7% to $56.05 at 2:11 p.m. in New York on Wednesday.
A probe by the U.S. Congress built on the FDA’s recent findings with Democratic lawmakers issuing a report on Wednesday critical of the company’s production processes at the Baltimore facility.
Emergent has faced setbacks after conflating ingredients from the J&J and AstraZeneca Covid-19 shots. The error at its Baltimore plant in late February led it to discard 15 million doses worth of the active ingredient used in the J&J shot, and has delayed the vaccine maker’s ability to supply the U.S. and world.
In the wake of the production stumbles, two House panels launched an investigation into the problems Emergent has faced in making the shots, and how it allegedly leveraged connections to the administration of former President Donald Trump to secure government contracts.
In a memo, Democrats on the joint investigation pointed to documents from two separate inspections performed in June 2020 to highlight that Emergent was repeatedly warned that it needed “extensive training of personnel” and “strengthening of the quality function,” and that it had a “deficient” virus contamination control strategy.
The joint probe obtained a private report authored on June 17 by Carlo de Notaristefani, who advised the Trump administration’s Operation Warp Speed on manufacturing. He said equipment, personnel and compliance practices posed significant risks, and suggested resources be deployed for remediation activities. The following month, J&J identified in its own audit a lacking contamination control strategy, citing a deficient disinfectant program, mold and handling issues.
The findings from the congressional investigation echo and build upon those of the FDA. U.S. regulators said in April that Emergent had failed to thoroughly investigate unexplained discrepancies, including the cross-contamination of a vaccine substance batch with ingredients from another shot. The Bayview facility lacked sufficient oversight and conditions were unsanitary, it said.
Output at the plant has remained on hold for more than four weeks. On May 12, Emergent said it had responded to the FDA’s observations with a quality enhancement plan and had already begun making improvements at the facility.
“I can tell you there’s no one more disappointed than we are that we had to suspend our 24/7 manufacturing of the vaccine,” Kramer said, adding that the company has made headway in its remediation activities. The CEO confirmed a Bloomberg News report that the company has produced more than 100 million doses of the J&J’s drug substance.
The FDA wouldn’t say how long it might take to authorize the facility. The agency said it’s working closely with the companies that had contracted Emergent to manufacture their vaccines.
At the request of the Biden administration, Emergent permanently stopped manufacturing AstraZeneca doses in early April. Though the White House has said it would help the U.K.-based drugmaker find a new manufacturing partner, it has not announced one.
Democrats on the committees also scrutinized the contract awarded to Emergent by the Trump administration in May 2020. The inquiry found that Emergent was paid $27 million a month to reserve space and manufacturing capacity. The agreement required Emergent to maintain the cleanliness and readiness of its facilities, equipment and personnel.
“Despite its failed performance,” the congressional memo said, Emergent has been paid more than $271 million in fees through May 12.
After the Department of Health and Human Services was notified about contamination of vaccines at the facility in the Bayview neighborhood of Baltimore, it partially stopped payment, according to the memo. HHS withheld $18.5 million of the $27 million monthly reservation fee.
The joint probe focused on one Trump administration official in particular: Robert Kadlec. The former assistant secretary for preparedness and response had “extensive professional ties to Emergent,” alleges the memo, and he received at least $360,000 in consulting fees prior to joining HHS.
In response to allegations of Kadlec’s ties to the company, El-Hibri said at the hearing, “This is simply not true.”
The investigation found that Emergent executives were given bonuses for their work to quell the pandemic, with CEO Kramer receiving the top bonus of $1.2 million last year. Sean Kirk, who headed manufacturing and technical operations, received a cash bonus of $320,611 and a “special bonus award” of $100,000 last year for his work expanding the Covid-focused manufacturing operations.
Emergent announced on April 29 that Kirk is taking a leave of absence to address personal matters.
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