AstraZeneca claim legal victory against the EU
AstraZeneca has claimed victory in the legal case brought by the EU Commission over vaccine supplies after judges in Brussels ruled that it does not have to speed up vaccine deliveries.
The EU had demanded immediate delivery of hundreds of millions of AstraZeneca jabs, including those manufactured in the UK, plus a €10 per dose per day penalty, potentially costing billions of euros. Instead, the court ruled that AstraZeneca must deliver just 80 million doses of its Covid vaccine before the end of September. If the company fails to meet the latest delivery schedule it will be fined €10 per dose not delivered. As AstraZeneca has already supplied 70 million doses, they will have delivered the court's ruling by the end of this month, so they will not pay any penalties.
The EU claimed that AstraZeneca has reneged on their contract to provide 300 million doses of their vaccine. The firm only provided a fraction of the expected delivery in January after claiming "production problems" in their European plants. The EU, embarrassed by the successful UK vaccine roll out so soon after Brexit, were furious that they were not being provided with AstraZeneca vaccines manufactured in their UK plants as compensation. This in turn triggered the court case.
The judge ruled that the EU had no exclusivity or right of priority over other countries with which the drugmaker has a contract. Whilst ruling that AstraZeneca had not made its "best reasonable efforts" to deliver the vaccines by excluding British factories, it acknowledged that the difficulties experienced by AstraZeneca in the unprecedented rush to develop, licence, scale up and roll out a vaccine during a pandemic had a substantial impact on the delay.
Ursula von der Leyen, the European Commission president, put a brave face on the ruling and said it was a "good result" for Europe. "The court judgment ordering AstraZeneca to deliver 50 million doses is good news for our vaccination campaign," she said.
Lawyers for the European Commission said future AstraZeneca jabs could now come from an Oxford Biomedica plant in the UK. But this was always the case, because the deal struck between AstraZeneca and Oxford University (who own the vaccine) only promised to provide the first 100 million doses from its factories to the UK's National Health Service.
Legal contracts between companies and their customers have always been sacrosanct. If agreements signed into law are routinely not honoured by either party business quickly becomes impossible. Suppliers could not plan their future requirements for raw materials, labour and capital, leading to increases in bankruptcy. Customers would have no certainty about receiving the goods and services they need. This quickly becomes critical if lives depend on goods and services being delivered in a timely manner. Eventually, commercial trust evaporates, investment quickly falls away and businesses move to territories where the business environment is more predictable. So, the "best efforts" contract between AstraZeneca and the EU is just that - a promise to do your best. The EU should not have expected a guarantee of supply nor relied on it. Their contract did not trump the binding licensing deal between Oxford University and AstraZeneca.
The Covid pandemic is the biggest crisis to hit Europe since World War 2 and therefore the biggest test of the EU in its history. Early in the pandemic the EU insisted on centrally purchasing all vaccines for its member states but got off to a very slow and bureaucratic start in securing contracts. It was also important for them to reverse the UK's success in securing early contracts, especially those for AstraZeneca and Pfizer vaccines manufactured in the EU. They were terrified that the UK would appear to benefit from leaving the EU in January. At a time when confidence in the EU was particularly low and criticism was particularly high they wanted no encouragement for other EU members to consider their own exit. In desperation, Von der Leyen threatened to trigger the EU Treaty’s Article 122 that effectively would have put the EU on a war footing to secure essential supplies, especially those going to Britain. This could have included waiving the intellectual property rights and patents of drug makers, the confiscation of their factories and the imposition of export bans in contradiction to their existing contracts with customers.
To confirm that these actions were aimed specifically at the UK, the EU allowed its member states to impose vaccine export bans to countries outside its borders, but with exceptions for almost every nation except the UK. This allowed the Italian government to block the export of 250,000 doses of the AstraZeneca jab to Australia from one of its factories near Rome. Such was the EU's fear of UK success, in March they ordered a surprise raid by an elite unit of Italian military police on the same factory. They discovered 29 million vaccines that appeared to confirm their suspicion that AstraZeneca was giving the UK special treatment by secretly exporting doses to its home country. In fact, most of the doses discovered in the Italian factory were destined for the EU itself, with the remainder headed for poorer countries across the world. One former Europe minister called it possibly the "most embarrassing day in the EU's history".
The EU even went as far as to briefly invoke Article 16 of the Northern Ireland Protocol, which would have put a hard border between the Republic of Ireland and Northern Ireland to further ensure no vaccines reached the UK from EU factories. This was quickly reversed after they received global condemnation for fear it would create a major threat to security on the island of Ireland.
It seems the EU has failed to understand that they do not make vaccines - private companies do. For these companies to continue to invest in the EU they must be confident that their contracts with customers and suppliers will be honoured, and their intellectual and physical property rights will be protected.
It seems the EU either brought the court case to cover up their failings early in the pandemic or they did not know what deal they were signing. Or maybe both. Either way, they have demonstrated spectacular incompetence at the time of the EU's greatest need.
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