Belgium was cautioned ahead of time that the EU’s contract with drugmaker AstraZeneca didn’t include harsh consequences if the company failed to deliver coronavirus vaccines on schedule, according to an opinion the consultancy Deloitte prepared for the Belgian government.
The revelation — detailed in documents acquired through a freedom of information request from the Belgian magazine Knack and analyzed with POLITICO — shows that at least one EU country was told the EU’s contract might lack teeth before it was signed. But Belgium ultimately didn’t act on these warnings because the contract was already largely completed.
“We assume that there are good reasons to expect that the foreseen delivery schedule will be respected,” Deloitte wrote on August 17, 2020, after assessing the EU’s contract for the Belgian government. “However, the [advance purchasing agreement] does not provide for sanctions when the delivery dates and quantities are not respected.”
It’s an issue that has come back to haunt the EU as it tries to hold AstraZeneca to account for only delivering roughly a third of the 300 million vaccine doses it initially promised by June. The contact’s language is now at the center of a lawsuit waged by the European Commission, alleging that AstraZeneca did indeed fail to deliver its agreed doses to the EU.
The opinion also raises questions about the naïveté of EU negotiators, who signed a deal that, compared to one the U.K. inked, didn’t spell out specific consequences if the drugmaker under-delivered. The contract even has a clause saying the Commission cannot sue AstraZeneca if it doesn’t deliver on time — a clause lawyers believe the Commission will seek to invalidate in a Belgian court.
Deloitte’s opinion didn’t address that clause, but honed in on other questions about under-delivery: Would such a failure terminate the contract? Or would it merely allow both parties to postpone the dates? Would the company’s other contracts prevent it from delivering to the EU?
The issue, Deloitte pointed out, is that the contract didn’t give countries a robust tool to penalize the firm if the vaccines were delivered late. And it placed the onus on Belgium to assist the vaccine producer in delivering on time, including helping the company find vials and other materials.
Accordingly, to beef up enforcement, Deloitte recommended that Belgium sign a separate “quality agreement,” akin to an annex, with AstraZeneca that could detail what would happen if it didn’t deliver on time or produced vaccines with quality issues. But those recommendations were disregarded.
Deloitte’s opinion was noted by some Belgian government officials, who raised the same concerns during an advisory group meeting on August 19, according to Belgian government notes that were also seen by POLITICO and Knack.
However, Belgium’s representative on the EU’s steering board on vaccines at the time, Xavier De Cuyper, didn’t flag the issue with the other member states because he thought the opinion came too late. “The content of the contract could no longer be changed at that time,” said De Cuyper, who was succeeded by the EU’s Vaccine Task Force Chairman Dirk Ramaekers in February, in an interview with Knack.
Concerns from Deloitte
Along with its concerns about a lack of sanctions for under-delivery or quality control, Deloitte questioned whether AstraZeneca might have competing contracts with third countries that would impede its ability to deliver the quantities set out.
“It is assumed that sufficient quantities will be in place?” the group asked. “It may be warranted to include a sanction for AZ if it is unable to comply with its contract obligations as a result of supply agreements with third countries.”
The company has claimed it doesn’t have any competing contracts. But EU officials have accused the drugmaker of prioritizing its contract with the U.K., pointing to how doses have been sent from EU sites to the U.K. Meanwhile, no U.K. factory has sent any doses to the EU even though AstraZeneca’s two U.K.-based factories producing drug substance are included in the EU’s contract as production sites for the bloc’s vaccines.
The EU contract instead puts the onus on Belgium to help AstraZeneca in the event of delivery issues — a provision that the consultancy also warned about. Deloitte noted that earlier in the pandemic, Belgium and other countries struggled to source enough personal protective equipment like face masks and ventilators, and a similar scramble could happen with vaccines.
“It is unclear whether Belgium will want to commit to such a Best Reasonable Effort … as it may be struggling again in the future to find sufficient materials,” the group wrote. “Belgium will bear the consequences if the APA is then terminated or executed later/for lower quantities.”
In addition, Deloitte raised other possible contractual issues. It pointed out there was no plan for conformity assessments or for the event that European regulators recalled a batch of vaccines. Its consultants also warned that the contract’s indemnification language is “extremely broad” in giving the drugmaker protection from legal action.
If Europeans sue the drugmaker for any issues arising from the vaccine, member states will have to “hold AZ harmless,” it wrote.
Deloitte’s concerns came too late, according to officials involved with the AstraZeneca contract.
On August 19, officials in an advisory group to the Belgian government raised many of Deloitte’s concerns, arguing it would be better to change parts of the contract or have a separate agreement with the drugmaker.
“It would be desirable to amend some of the provisions,” they wrote in a letter to government public health officials. “It would be advisable to conclude a separate quality agreement, but it is not clear whether this is possible.”
There were two meetings of the EU’s Joint Steering Board — which oversees the EU’s vaccine deals and has a representative from each member state — in the time between August 17, when Deloitte sent its advice to Belgium, and August 27, when the contact was signed. By then, it was too late to make substantive changes, according to De Cuyper.
For that reason, he said, it wasn’t “possible” to pass on the recommendations to his colleagues on the Steering Board, he said: “The content of the contract could no longer be changed at that time.”
A Commission official agreed with that assessment, noting that the College of Commissioners already “gave its blessing to the contract on August 14.”
“Afterwards, the content could not be changed,” the EU official said, adding it was far too late “to come up with substantive changes at that point.”
A possible reason for this lack of flexibility might stem from the fact that the Commission’s AstraZeneca contract grew out of an earlier, preliminary agreement among France, the Netherlands, Germany and Italy, who had formed an alliance before the Commission stepped in to formally negotiate vaccine purchases for the bloc.
EU diplomats have said that the liability and indemnity issues proved to be a challenge for Commission negotiators once they tried to turn the four countries’ makeshift agreement into a more solid contract.
“When we received the mandate from all member states … a number of things were already fixed,” the EU official said. “We were not able to start from a blank sheet, which explains why the AstraZeneca contract is different from commitments with other manufacturers.”
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