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WASHINGTON — The federal government has canceled its contract with a troubled Covid-19 vaccine manufacturer. ruined millions of doses and had to stop production months after regulators raised serious quality concerns.

The decision marks a complete reversal of fortunes for the politically connected contractors of Maryland-based Emergent BioSolutions, abandoning a deal by the government that should have been the centerpiece of Operation Warp Speed.

At the beginning of the epidemic, the government has decided Relying on the company to be the only domestic manufacturer of Johnson & Johnson and AstraZeneca vaccines. But testing this March found that a batch of the Johnson & Johnson vaccine was contaminated, and Emergent agreed to halt production after an investigation revealed a number of issues at its facility in Baltimore’s Bayview area.

The termination of the contract, announced by emergency managers during a meeting with investors on Thursday, was the result of negotiations that began earlier this year after the government stopped paying under the deal signed in May 2020, valued at over $600. million. According to company statements, Emergent will now give up about $180 million of that amount.

The company said it will continue to work with Johnson & Johnson to manufacture its vaccine in Baltimore because the deal with that company was not funded under the $600 million deal, although it was approved by the government. Although the site has not yet received regulatory approval, it has continued to operate and the Food and Drug Administration has allowed the release of approximately 100 million doses for potential use.

The cancellation of the contract also abruptly puts an end to an almost ten-year effort by the government to better prepare for a pandemic. In 2012, the Department of Health and Human Services awarded Emergent a $163 million contract to expand the Baltimore area and prepare it to rapidly produce vaccines in response to a new virus.

The decision, announced Thursday, halted that deal years before it expired and left the facility without the stamp of approval it had long touted to investors and potential customers.

Emergency CEO Robert Kramer admitted during the investor call that the venture “was a good idea at the time, as thought in 2012, but unfortunately it didn’t work as expected.” Mr. Kramer also tried to put a positive spin on the breakup in a guest article. Baltimore Sun He said the health department has accepted Emergency’s “request to end our 9-year pandemic manufacturing partnership.”

Mr. Kramer admitted that “all was not going perfectly” during the pandemic, but he put the blame on the government. “But if you want companies to get involved,” he wrote, “you have to be willing to stand by them through both challenge and success.”

But a senior Biden administration official, speaking on condition of anonymity, disputed Mr. Kramer’s account. The official said the health department terminated the contract and the termination was structured in such a way that the company would not fight it and the government would avoid a costly legal battle. He added that the company has requested payment since spring, but the government has not paid since the contamination was disclosed.

When the pandemic hit last year, the Baltimore facility had not yet received regulatory approval for mass production of any approved products, and a government assessment warned that relying heavily on untested facility is risky.

Mr. Kramer said Thursday that the lack of experience at the factory was largely due to a lack of consistent government funding over the years. “The required operational investment by all administrations has fallen short of what is required to maintain capacity in an emergency,” he said.

Emergent said since May it expects federal regulators to certify vaccine production at its Baltimore facility soon. However, regulators have not yet issued this certification, despite certifying the factories that produce vaccines for Johnson & Johnson’s production operation in the Netherlands, as well as for Pfizer-BioNTech and Moderna vaccines.

Instead of giving the green light to the Bayview facility, the FDA cleared multiple batches Only after private review due to AstraZeneca’s and Johnson & Johnson’s vaccines – and later plant issues. A batch can contain up to 15 million doses.

The cancellation appears to have no impact on the availability of coronavirus vaccines in the US. The contract only included the manufacture of AstraZeneca’s vaccine, which was not authorized for distribution in the United States.

Johnson & Johnson, one of three federally authorized vaccines here, has produced tens of millions of doses at its Baltimore facility, though it has done so under a separate contract with Emergent as its subcontractor.

“Today’s announcement by Emergent BioSolutions will not affect our collaboration to produce our Covid-19 vaccine,” a spokesperson for Johnson & Johnson said on Thursday. The company said it will continue to work with authorities to obtain certification of the Bayview site for vaccine production.

Johnson & Johnson played a relatively minor role in the nation’s vaccination campaign. More than 15 million people received one dose of Johnson & Johnson vaccine, compared to the approximately 71 million who received two doses of Moderna vaccine and 107 million who received two doses of Pfizer-BioNTech vaccine. In a series of regulatory decisions since mid-September, recipients of at least all three vaccines have become eligible for booster vaccines.

Production problems at the Bayview site have affected vaccination efforts outside of the United States. delay the delivery Number of vaccines in Canada, European Union and South Africa.

Executives stressed in Thursday’s call that the annulment would not affect other government contracts that remain the core of Emergency’s business. In fact, the company noted that health officials have committed to purchasing $637 million worth of Emergency anthrax and smallpox products this year in the coming months.

The company also announced that Mary Oates, a former Pfizer executive who joined Emergent in November 2020 as senior vice president of production quality, left “to pursue a new career opportunity.”

In September, Emergent announced that it has reached a five-year agreement with Providence Therapeutics, a Canadian biotechnology company specializing in mRNA vaccine therapies, to support the company’s Covid-19 mRNA vaccine development.

“Emergent’s commitment to tackling the Covid-19 pandemic is anchored in our partnerships with mission-shared innovators to address public health threats worldwide,” said Adam R. Havey, the company’s vice president and chief operating officer. statement at the time.

Sharon LaFraniere and Sheryl Gay Stolberg contributed to the reporting.