Biden Uses Trump’s ‘America First’ Vaccine Plan to Corner Market
U.S. President Joe Biden removes a protective mask before speaking at the Eisenhower Executive Office Building in Washington, D.C., U.S. (Photographer: Michael Reynolds/EPA/Bloomberg)

Biden Uses Trump’s ‘America First’ Vaccine Plan to Corner Market

The U.S. has injected more than a quarter of the world’s coronavirus vaccine doses so far, thanks to two presidents who share little except a strategy to corner domestic production of shots, employing a 70-year-old law that’s so far prevented exports.

From the moment the FDA authorized the first vaccines by Pfizer Inc. and Moderna Inc., the U.S. government, first under Donald Trump and then under President Joe Biden, had already arranged to buy all of the companies’ known U.S. production for months to come, assuring hundreds of millions of doses for American arms.

Countries without their own capacity to manufacture vaccines have had to wait or turn to sources other than the U.S., including shots developed in Russia and China under less regulatory scrutiny.

Biden last week marked a milestone of 100 million shots administered under his presidency, six weeks ahead of schedule. The U.S. has now put nearly 130 million doses into arms, twice as many as the more-populous European Union.

Biden Uses Trump’s ‘America First’ Vaccine Plan to Corner Market

The achievement is due to contracts that obligate manufacturers to fill massive U.S. government orders first, a de facto ban on vaccine exports despite Biden administration officials repeatedly saying there’s no formal prohibition. In exchange, companies get crucial aid procuring supplies. The nationalist approach taken by both Biden and Trump has been criticized by some allies and public health experts.

“It, depressingly, has gone pretty much exactly as predicted,” said Thomas J. Bollyky, director of the global health program at the Council on Foreign Relations. “In every previous global health crisis where there has been a medical intervention that would make a difference, wealthy countries have hoarded it.”

But other countries will soon benefit. The U.S. is on pace to inoculate most of its adult population by summer and is poised within months to become the biggest vaccine exporter in the world.

As production increases, domestic manufacturers may be able to soon fulfill their U.S. contracts while also using making doses for other countries. The European Union is now drafting similar measures to curb exports to boost supply at home.

Biden Uses Trump’s ‘America First’ Vaccine Plan to Corner Market

Americans First

Both Biden and Trump have been unapologetic that they’ve aimed to vaccinate Americans first. Trump administration officials say American taxpayers deserved to have their orders prioritized because of the former president’s multibillion-dollar “Operation Warp Speed” program that hastened the development of coronavirus vaccines.

“We didn’t want to put billions of dollars of taxpayers’ money at risk only to find out we were third in line for the product we invested in,” said Paul Mango, a former senior official in the Department of Health and Human Services under Trump.

The former administration wrote clauses into contracts with manufacturers and also used the Defense Production Act, which grants the president extraordinary powers over manufacturing in times of crisis, to prioritize U.S. orders.

“We were giving them dollars before they had a product,” Mango said.

Under Biden, officials managing the vaccine rollout aren’t so blunt, but the sentiment has hardly changed. The new president hasn’t rescinded a Trump executive order that declared Americans would be first in line for U.S.-made vaccines, followed by allies.

And the same tools the Trump administration used to keep domestically produced vaccines within the nation’s borders have been employed by Biden’s team -- chiefly, a provision of the DPA that allows the U.S. to assign its orders “priority” over others. The law dates to the Korean War.

The American approach contrasts with the EU, which has exported doses, including some to the U.S., even as it sought to vaccinate its own people. But under growing criticism for a vaccination campaign that has badly lagged the U.S. and U.K., European Commission President Ursula von der Leyen last week proposed using emergency powers similar to the U.S. production law to keep shots in EU countries.

The EU is set to unveil new rules Wednesday that may limit future vaccine exports by blocking shipments if manufacturers haven’t met their European commitments.

The EU, Canada and Mexico have all asked the U.S. for help, and to particularly consider sharing doses of a vaccine its own Food and Drug Administration hasn’t yet authorized, made by AstraZeneca Plc. The White House said last week it would “loan” 4 million doses to its two North American neighbors, the first known U.S. exports.

Mexico has given enough shots for 2.2% of its population, compared to 5.6% in Canada and 19.7% in the U.S, according to the Bloomberg Vaccine Tracker.

Biden would face outcry if he allowed U.S. manufacturers to export doses while domestic demand still far exceeds supply.

“The bottom line is that, politically, the Biden administration is in a tough spot if they’re going to try to start providing extra doses” before Americans are widely vaccinated, said Jennifer Kates, senior vice president at the Kaiser Family Foundation, a nonprofit health research group.

Contracts, Priority Ratings

The U.S. government has not released its contracts with vaccine manufacturers in full, but clauses in the unredacted portions suggest an emphasis on domestic production and exclusivity.

“It is critical that the vaccine be produced in the United States. Domestic production of the vaccine is the only assurance that Americans will have access to the finished product,” reads one contract with Moderna Inc., which was a full participant in “Operation Warp Speed.”

The contract also includes a clause with a blacked-out reference to “rights of first refusal.” A contract with Pfizer, heavily redacted, similarly indicates it’s crucial that “domestic manufacturing” supply U.S. doses.

The DPA provides the government even more power to corner vaccine supplies. The law allows the U.S. to slap what’s called a “priority rating” on contracts, which moves the government to the front of a line, but also usually gives the manufacturer better access to supplies they need.

The U.S. applied priority ratings to its contracts with both Moderna and Johnson & Johnson a month after signing them in August, according to the Department of Health and Human Services. The designation meant the companies had to fill their U.S. orders before those from other countries. AstraZeneca’s U.S. contract also included a priority rating.

Pfizer’s initial contract did not include a DPA priority rating, but the contract language required the company to provide 20 million doses to the U.S. monthly, beginning in November, Trump officials said. Early shipments fell short of forecasts, but the deal also included a clause that said all timing estimates were “subject to change based on emerging data, regulatory guidance, and manufacturing and technical developments, among other risks.”

A second contract the Trump administration signed with Pfizer, raising the U.S.’s total order to 200 million doses, included a priority rating that the company requested, an indication it was willing to put U.S. orders at the front of the line in order to benefit from the government’s power to secure scare supplies.

Spokespeople for Pfizer, Moderna and Johnson & Johson all declined to comment on their export plans.

“Any questions about exports restrictions need to be addressed by the U.S. government,” Pfizer spokeswoman Sharon Castillo said. The company has shipped 82 million doses from its U.S. plants as of March 23.

Spokespeople for Biden’s White House declined to comment.

Biden Uses Trump’s ‘America First’ Vaccine Plan to Corner Market

Supply the World

The government has leaned on the DPA to hasten vaccine production in other ways, for example by financing expansions of production lines or awarding contracts to suppliers. In other cases, the mere threat of using war powers against manufacturers has been enough to get companies to do what the government wants, two officials said.

“The powers are quite broad,” said Craig Fugate, a former Federal Emergency Management Agency Administrator under Barack Obama. “They also literally have the power to say to some place: ‘you’re going to make this, not that.’”

FEMA frequently relies on the DPA in its responses to natural disasters.

After he took office, Biden placed a third order of 100 million doses each from Moderna and Pfizer. Biden also announced a priority rating for Pfizer.

Biden announced this month he would order another 100 million doses of J&J’s single-dose vaccine, doubling the U.S. total; the government and the company remain in talks on terms of the deal.

Altogether, the U.S. government has placed orders for enough vaccines to inoculate its entire adult population nearly twice over. White House Press Secretary Jen Psaki has said that the administration wants the surplus in case scientists determine that booster shots are needed to combat variants or the FDA authorizes a shot for children.

The Biden administration won’t say whether any domestic production has gone to other countries. But contract terms with manufacturers and delivery totals suggest that all, or nearly all, U.S.-made shots so far have gone to the U.S. government.

The American vaccine wealth holds the promise of supplying the world.

“Because we’re building such robust capacity, when we get our vaccines done, we’re going to be able to be a rather significant player in getting proven vaccines out in the international market,” Fugate said.

It’s not a matter of charity, he said: “Until you vaccinate everybody, including your enemies, we’re not safe from Covid.”

©2021 Bloomberg L.P.

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