EU citizens looking enviously at the U.K.’s rapid coronavirus jab rollout may ask why vaccine-maker AstraZeneca is going so much slower in the bloc. The answer (at least in part) may lie in the small print.
The company overestimated how many vaccine doses it could produce — blaming unforeseen production problems. But much to the fury of EU officials it has chosen to honor its British contract, and in Brussels’ view, not the deal it struck with the bloc.
AstraZeneca is set to deliver 40 million doses of its jab in the first quarter of the year, far less than the 100 million it had promised. But instead of diverting supplies from elsewhere in the world — notably production facilities in the U.K. that appear to be operating effectively — the EU has faced a shortfall.
The vaccine-maker’s approach may come down to its reading of the contracts it signed governing delivery of the vaccine: one with the U.K. government under English and Welsh law, and the other with the European Commission (acting on behalf of member states) under Belgian law. Legal experts say that the two jurisdictions interpret contracts very differently, with U.K. courts more conducive to a rapid resolution based on the letter of the document.
In addition, the two contracts read very differently — according to experts who have seen them both — with the Commission’s document prioritizing a well-meaning push for political/societal unity over a more hard-nosed enforceable agreement.
With drug pricing such a sensitive issue for pharma companies, they are usually highly resistant to revealing the terms of their agreements with national health authorities. But unusually, the Commission published a redacted version of its contract with AstraZeneca, to underline what it argued was an indisputable commitment by the drug company to use U.K.-made doses to fulfil orders not presently being met by continental factories.
Commenting on the EU contract, Geert Van Calster, a Belgian lawyer and specialist in contract litigation, said that while the EU contract “does have teeth,” it is written more like an EU directive — a legislative act that sets out a goal that all EU countries must achieve. That may be because the Commission had its eye on the broader significance of what the contract represented. “Here, you have the European Commission aware that these contracts are baby steps in a pan EU health policy,” said Van Calster, rather than the “hard-nosed-contractual atmosphere which the U.K. is more used to.”
The U.K. has not been so transparent with its own contract, but POLITICO has spoken to people who have seen it, allowing a comparison between the two. It suggests that while both documents have legal bite, the EU document places lofty aspirations above swift enforceability. That may be one reason why, when the company found itself in the position of not having enough vaccines to fulfil its order with the EU, it didn’t simply redirect all its doses made in the U.K. to Brussels.
For the U.K., having specific contractual provisions built upon a strategy to drastically scale-up domestic vaccine manufacturing was the brainchild of the government’s Chief Scientific Advisor Patrick Valance, according to an official familiar with the AstraZeneca deal’s development.
According to people who have seen it, the British contract is explicit about the country’s claim to doses created within its domestic supply chain and the capacity of domestic manufacturing. It stipulates that the needs of U.K. citizens must be met first. The EU document aims for something similar but is less specific and precise about manufacturing capacity.
One example of such an effort is section (13.1 E) in the EU’s contract. This states that at the point the contract was signed in August last year, AstraZeneca didn’t have any other contractual obligations that “would impede the complete fulfillment of its obligations” under the EU agreement. The U.K. contract predates the EU agreement.
“We are in constant contact with the vaccine manufacturers and remain confident that the supply of vaccine to the U.K. will not be disrupted,” a spokesperson for the British health department said in a statement. And AstraZeneca appears to understand it the same way. Tom Keith-Roach, president of AstraZeneca’s U.K. arm, told U.K. lawmakers in January that there was a “dedicated U.K. supply chain” for the drug.
Butcher’s shop logic
That’s not how Brussels sees it. Health Commissioner Stella Kyriakides said last month that she rejects the logic of “first come, first served.”
“That may work at the neighborhood butcher’s but not in contracts and not in our advanced purchase agreements,” she said, adding that where the doses are produced is irrelevant as far as the Commission is concerned.
“The U.K. plants are not optional plants, they are not backup plants,” said an EU official. “They are part of the network of plants that are mentioned in the contract in order to supply the doses.”
Lawyers and officials familiar with both contracts agree that Kyriakides is broadly correct on one point: that contracts are not a queue, unless explicity made so. Rather, they are a deal between two parties, not all possible parties that one side might have dealings with.
In the event of a dispute, how and where a contract can be litigated matters — that might explain why the company is treating the two orders differently. English contracts are interpreted by British courts as, by-and-large, doing exactly what they say, in a manner like how some other legal systems might read statute law, said contract expert Van Calster.
In English law, “what you commit to is what’s on paper,” he said, meaning that it is harder to escape a commitment in the contract.
Belgian contract law is very different, where the document is more open to interpretation and good faith is an important consideration. What’s more, the country’s sluggish court system is not ideally suited to a race for doses.
Using U.K. law would have been more conducive to swift enforceability by the Commission, said Van Calster, though “that was not the spirit in which the contracts took place.”
Yet people familiar with both contracts said the company’s position may not be watertight either, given that the EU contract includes a clause stipulating that other agreements cannot interfere with delivery commitments to the EU.
AstraZeneca did not respond to a request for comment ahead of publication.
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