AstraZeneca is finding it hard to keep its COVID-19 vaccine promises

January 25, 2021, 2:30 PM UTC

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.

As countries scramble to inoculate their populations against COVID-19, the vaccine developed by AstraZeneca and the University of Oxford has been seen as a crucial element of that program. That’s not only because of its relative ease of deployment—unlike the vaccines from Pfizer/BioNTech and Moderna, it doesn’t require extreme cooling—but also because of its low cost.

However, the events of recent days have cast doubt on AstraZeneca’s ability to deliver what it’s promised.

Most recently, AstraZeneca enraged European leaders by saying Friday that a manufacturing glitch meant it would be delivering less than half the doses it had promised during the first quarter of the year.

A day before, it emerged that South Africa will be paying $5.25 per dose for AstraZeneca vaccine as produced by the world’s largest vaccine-maker, the Serum Institute of India. That’s more than twice as much as far-richer European countries are paying, per a list that was accidentally leaked last month, and considerably more than the $3 price cap AstraZeneca promised in November.

European shortage

AstraZeneca’s Friday surprise added to existing concerns about Europe’s short-term vaccine supply, coming as it did soon after Pfizer and BioNtech also warned of reduced output.

In that case, the issue lay in the need to retool a Pfizer plant in Belgium, so it could produce more doses. However, AstraZeneca is being more opaque about its problems, saying only that “initial volumes will be lower than originally anticipated due to reduced yields at a manufacturing site within our European supply chain.” The company refused to specify which site is proving problematic, and how ongoing the problem might be.

The European Union has not yet authorized the use of the Oxford/AstraZeneca vaccine—its drug regulator is expected to give a crucial opinion on that this week—but it has a contract with AstraZeneca to provide up to 400 million doses. Around 80 million of those were supposed to arrive in the first quarter of this year, but AstraZeneca told officials Friday that the actual volume would be 60% lower, meaning just 31 million doses.

According to Austrian media reports, only 600,000 of a promised 2 million AstraZeneca doses will make it to the country this quarter. In Italy, 8 million doses were due this quarter, but only 3.4 million will arrive.

Italian Prime Minister Giuseppe Conte has threatened to sue both AstraZeneca and Pfizer/BioNTech over what he called “serious contractual violations, which cause enormous damage to Italy and other European countries.”

On Monday, Commission President Ursula von der Leyen had a phone call with AstraZeneca CEO Pascal Soriot and, her spokesman subsequently said, “she made it clear she expects AstraZeneca to deliver on the contractual arrangements foreseen in the advanced purchasing agreement.”

“She reminded Mr. Soriot that the EU has invested significant amounts in the company upfront precisely to ensure production is ramped up even before the conditional market authorization is delivered by the European Medicines Agency (EMA),” said the spokesman, Eric Mamer. “Of course, production issues can appear with a complex vaccine but we expect the company to find solutions and to exploit all possible flexibilities to deliver swiftly.”

Charles Michel, the president of the European Council—the body that comprises the leaders of EU countries and the Commission—said Monday that “the EU intends to enforce the contracts signed by the pharmaceutical industry” and “we can use all the legal means at our disposal for this.”

“We will be supplying tens of millions of doses in February and March to the European Union, as we continue to ramp up production volumes,” said an AstraZeneca spokesperson in an emailed statement.

South African pricing

AstraZeneca said last year that it would only charge cost price for its doses until the pandemic is over—though as the Financial Times reported in October, it retains the right to declare the pandemic “over” by July this year.

In November, AstraZeneca France said it would charge only $3 per dose, “in order to be able to provide this vaccine to the widest possible population, under the most equitable conditions of access possible.” The Serum Institute of India (SII) also announced the same per-dose price cap for the AstraZeneca and Novavax vaccines that it would produce for low and middle-income countries, under an arrangement involving the Bill & Melinda Gates Foundation and Gavi, the Vaccine Alliance.

However, on Wednesday it emerged that South Africa will be paying $5.25 a dose for the Serum Institute’s AstraZeneca shots, in an order for 1.5 million doses. By way of comparison, EU countries are paying just $2.18 a dose.

“We were advised that SII has applied a tiered pricing system, and given that [South Africa] is an upper-middle-income country, their price is $5.25,” said Anban Pillay, the deputy head of South Africa’s health department, according to local media. “The explanation we were given for why other high-income countries have a lower price is that they have invested in [research and development], hence the discount on the price.”

It may be that South Africa’s government agreed to pay this relatively high price because it was under pressure over its early failure to secure vaccines for its populace. The vaccines, the first to make it to the country, should start arriving this month. In March, more SII-made doses should become available under a separate arrangement between the Indian manufacturer and the African Union—these will supposedly enjoy the $3 price cap.

However, Serum Institute CEO Adar Poonawalla reportedly said last week that the AstraZeneca vaccine was being sold for under $3 per dose “nowhere on the planet.” He dismissed reports of the amounts EU countries are paying, claiming that the leaked figures only account for half the price.  

Fortune has repeatedly asked the Serum Institute why it is charging South Africa so much for its 1.5 million AstraZeneca doses, but the manufacturer has refused to comment, instead saying that AstraZeneca is “in a better position to answer the query.”

But AstraZeneca has also refused to explain who sets the pricing for the SII-made doses, saying only that “AstraZeneca has committed to making the vaccine available to as many countries as possible, and at no profit during the pandemic period.”

“We are calling on AstraZeneca to explain how this pricing has happened, given their promise to cap charges,” said Nick Dearden, the director of campaign group Global Justice Now, in a Friday statement.

“This is the problem when you have essential medicines in the hands of big business, with almost no transparency as to pricing,” Dearden added. “We urgently need technology and patents placed in public hands, so we can share this knowledge and produce more vaccines now. Our ability to defeat this virus fairly and effectively depends upon it.”

Read More

COVID VaccinesReturn to WorkMental Health