EU Failed to Sway AstraZeneca to Tap U.K. Supply for Vaccines

(Bloomberg) -- The European Union remains at loggerheads with AstraZeneca Plc after the Anglo-Swedish drugmaker refused to cave to demands that it take vaccine supplies from its U.K. factories to increase doses going to the bloc.

The root of the dispute is Astra’s decision to prioritize the U.K. over the EU following a Belgian production glitch, in what Brussels claims to be a breach of contractual commitments. The two sides spoke Wednesday evening and held their ground with another meeting expected.

“We regret the continued lack of clarity on the delivery schedule and request a clear plan from AstraZeneca for the fast delivery of the quantity of vaccines that we reserved for the first quarter,” EU health chief Stella Kyriakides said after a virtual meeting with Astra’s chief executive.

The face-off could mean further delays to the bloc’s sluggish inoculation campaign. It also thrusts the maker of the life-saving shots into a political fight with 27 governments and their restive voters, desperate to pull their economies out of the steepest recession in living memory.

The battle is another thorn into the tense post-Brexit ties between Britain and the EU. The U.K., which put in an order with Astra three months before the EU, is trying to steer clear of the controversy while also keen to showcase the benefits of going it alone.

“Constructive”

Prime Minister Boris Johnson told reporters in a news conference that shortages in the EU “are really a matter for our EU friends and the companies concerned’ and that “we’re very confident of our contracts, we’re very confident of our supply.”

The bloc accuses Astra of using European funding intended for the development of manufacturing capacity to ramp up production in its U.K. plants, and now prioritizing British deliveries. Member states are furious with the company, according to diplomats familiar with a meeting of government envoys in Brussels earlier.

Publicly, Kyriakides described the meeting as “constructive” and a spokesman for the company used the same word to describe the discussion.

Earlier, Astra CEO Pascal Soriot used an interview with European newspapers to deflect blame, saying the company has a so-called best-effort agreement. That position hasn’t changed.

Speaking privately, an EU official made clear just how unhappy countries were and that while the bloc did not want an escalation in the tensions, much work was still needed to break the impasse.

The bloc reacted with anger to the news that Astra will deliver fewer vaccines than it had promised, and vowed to establish a mechanism that could potentially impose hurdles on exports of the life-saving shots from European production facilities.

The proposal, expected later this week, risks triggering a wave of protectionist measures that could disrupt supply chains with billions of people still waiting for the shots that could allow the global economy to return to some kind of normality.

Having delivered just 2.2 shots for every 100 people, the EU lags way behind both the U.S. and the U.K., and is several months away from immunizing a sufficient number of people to allow a return to normalcy.

The European Commission last year signed an advance purchase agreement with Astra for as many as 400 million Covid-19 vaccine doses -- part of a total 2.3 billion doses secured so far for the EU. The Astra jab may get the EU regulatory green light by the end of this week following the bloc’s approval of Pfizer Inc.-BioNTech SE and Moderna Inc. vaccines.

The dispute could also reverberate across the world, as governments race to stop the spread of the pandemic, before a multiplying number of mutations renders vaccines less effective against Covid-19.

“Contractual obligations must be met, vaccines must be delivered to EU citizens,” Kyriakides said.

While the EU is also unhappy about a lack of a schedule by Astra for vaccine deliveries beyond March, the bloc’s priority is to get a rollout plan from the company specifically for the first quarter, according to a European official, who said the goal is to reach a solution “rapidly.”

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