Greenwood2
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Post by Greenwood2 on Jan 29, 2021 9:32:37 GMT
I posted yesterday about the dangers of woolly terms in contracts, and this appears a good example. There is a world of difference between aiming to do something and actually doing it (this time next year Rodney, we'll be millionaires). Also who decides what is fair? I assume that if the intention was to share available doses on a pro rata basis dependent on the size of the order placed, then the agreement would have said that. David Allen Green posted his analysis on the contract terms: What can be worked out about the ‘best efforts’ clause in the AstraZeneca vaccine supply agreement?If it's anything like the P2P contracts, by the time they work it out Covid will be a distant memory (I hope).
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agent69
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Post by agent69 on Jan 29, 2021 11:07:55 GMT
I don't think the analysis from Mr Green contains any suprises, noting that in deciding what constitutes 'reasonable best efforts' you must take account of 'the Contractors commitments to other customers'.
Having looked at the APA, there are a couple of things that interest me:
1.11.4 - provided EU authorisations are made in a timely fashion, deliveries in each quarter of 2021 should meet the numbers contained in the table. The first delivery shall take place at the latest by the end of the estimated delivery periods. So in relation to Q1 there does not appear to be any obligation to deliver anything before 31st March
1.12.1 - the parties acknowledge that there is a risk of ....... (ii) the time line for scaling up production of the product may be delayed.
1.12.2 - If there is a delay in the supply of the Product compared to the estimated delivery schedule, the contractor will inform the Commission as soon as reasonably possible, explain the reasons for such delay and submit a revised delivery schedule to the Commission which should be as close as possible to the estimated delivery schedule while taking into account the reasons for the delay.
It appears that AZ have followed the requirements of 1.12.2, by notifying a delay and providing details of a revised delivery schedule. However, I cannot find anything in the APA that gives the EU any involvement in agreeing a revised schedule. It looks like take it or leave it.
Overall it's a mess. Moderna, Jansen and Novavax aren't going to supply anything anytime soon, so the EU are left with Pfizer and AZ. I wouldn't think that p*ssing off AZ was an ideal way to go.
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Post by Deleted on Jan 29, 2021 11:51:22 GMT
I'd love to see their definitions of Manufacture
and
Production
Still part of a contract without all of it is kinda useless
seems a bugger's muddle. They look like they wanted to have their cake and eat it, the product had to made in the EU but in a weird reversion to norm a second element allows them to take goods from the UK.
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mrk
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Post by mrk on Jan 29, 2021 12:05:43 GMT
Overall it's a mess. Moderna, Jansen and Novavax aren't going to supply anything anytime soon, so the EU are left with Pfizer and AZ. I wouldn't think that p*ssing off AZ was an ideal way to go. Moderna are supplying the EU already.
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ilmoro
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Post by ilmoro on Jan 29, 2021 12:27:24 GMT
I'd love to see their definitions of Manufacture
and
Production
Still part of a contract without all of it is kinda useless
seems a bugger's muddle. They look like they wanted to have their cake and eat it, the product had to made in the EU but in a weird reversion to norm a second element allows them to take goods from the UK.
Would on the surface seem to support AZ arguments .... lots of Best Endeavours ... and there doesnt seem to be any primary or secondary producers amongst the mystery 5 produces with the UK plants 3 & 4 in the list (is one of them in India/Israel? - I/IL isnt European and no mention of the Dutch one) However supplies were expected from all 5 plants. Does seem a little naive agrreing to supplies from a country outside the EU jurisdiction which may have its own views on drugs leaving the country - not to mention of course that anything from the UK would be subject to delays to full import checks being required - or was the EU waiving those? Perhaps we should insist that drugs shipments are subject to 'groupage' with a consignment of Scottish fish or Welsh sheep
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ilmoro
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Post by ilmoro on Jan 29, 2021 13:08:49 GMT
Overall it's a mess. Moderna, Jansen and Novavax aren't going to supply anything anytime soon, so the EU are left with Pfizer and AZ. I wouldn't think that p*ssing off AZ was an ideal way to go. Moderna are supplying the EU already. Yes, but more bad news. Just announced reduction in deliveries in Feb, 20-25% Janssen (Johnson & Johnson) 66% effective on single dose regime AIUI
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registerme
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Post by registerme on Jan 29, 2021 13:09:37 GMT
Page 2, para 5:-
"Whereas, as part of that scale-up, AstraZeneca has committed to use its Best Reasonable Efforts (as defined below) to build capacity to manufacture 300 million Doses of the Vaccine, at no profit and no loss to AstraZeneca, at the total cost currently estimated to be XXXXXXXXX Euros for distribution within the EU XXXXXXXXXXXX (the "Initial Europe Doses"), with an option for the Commission, acting on behalf of the Participating Member States, to order an additional 100 million Doses (the "Option Doses")".
That first sentence is the kicker.
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Greenwood2
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Post by Greenwood2 on Jan 29, 2021 13:21:09 GMT
Page 2, para 5:- "Whereas, as part of that scale-up, AstraZeneca has committed to use its Best Reasonable Efforts (as defined below) to build capacity to manufacture 300 million Doses of the Vaccine, at no profit and no loss to AstraZeneca, at the total cost currently estimated to be XXXXXXXXX Euros for distribution within the EU XXXXXXXXXXXX (the "Initial Europe Doses"), with an option for the Commission, acting on behalf of the Participating Member States, to order an additional 100 million Doses (the "Option Doses")".That first sentence is the kicker. The whole thing seems to be very short on dates, lead times, etc or any indication of time scale for supply after ordering (or at least I didn't see anything skimming through). Or did the EU assume there would be 300 million doses stock piled waiting to be delivered?
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registerme
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Post by registerme on Jan 29, 2021 13:34:51 GMT
Page 2, para 5:- "Whereas, as part of that scale-up, AstraZeneca has committed to use its Best Reasonable Efforts (as defined below) to build capacity to manufacture 300 million Doses of the Vaccine, at no profit and no loss to AstraZeneca, at the total cost currently estimated to be XXXXXXXXX Euros for distribution within the EU XXXXXXXXXXXX (the "Initial Europe Doses"), with an option for the Commission, acting on behalf of the Participating Member States, to order an additional 100 million Doses (the "Option Doses")".That first sentence is the kicker. The whole thing seems to be very short on dates, lead times, etc or any indication of time scale for supply after ordering (or at least I didn't see anything skimming through). Or did the EU assume there would be 300 million doses stock piled waiting to be delivered? Agreed. Also that para I quoted above is open to multiple interpretations. The lawyers (presumably on both sides) didn't do a very good job.
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agent69
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Post by agent69 on Jan 29, 2021 13:54:46 GMT
Page 2, para 5:- "Whereas, as part of that scale-up, AstraZeneca has committed to use its Best Reasonable Efforts (as defined below) to build capacity to manufacture 300 million Doses of the Vaccine, at no profit and no loss to AstraZeneca, at the total cost currently estimated to be XXXXXXXXX Euros for distribution within the EU XXXXXXXXXXXX (the "Initial Europe Doses"), with an option for the Commission, acting on behalf of the Participating Member States, to order an additional 100 million Doses (the "Option Doses")".That first sentence is the kicker. The whole thing seems to be very short on dates, lead times, etc or any indication of time scale for supply after ordering (or at least I didn't see anything skimming through). Or did the EU assume there would be 300 million doses stock piled waiting to be delivered? I think that there are 2 different issues here: should UK plants be supplying vaccine to EU, and can AZ pass off the reduced production rates in their 2 EU plants as teething problems?
The contract covers 300m initial doses and 100m optional doses, so for what it's worth my views are:
- should UK plants be used for supplying EU vaccine? Possibly, but not yet. Para 5.4 of the agreement says that the vaccine must be manufactured in the EU (for this para only, the UK counts as part of the EU). However, para 5.1 is crystal clear that the initial 300m doses are made in the EU. I would therefore say it is only the 100m optional doses that may partly come from UK. Para 5.1 also details the delivery schedule, although most of the juict bits are redacted. So (redacted) doses shall be supplied by (redacted) in 2020, (redacted) will be supplied by Q1 2021, and the balance by (redacted)
- EU production issues - I guess only time will tell, but I don't hold out much chance of EU using the 'best reasonable efforts' clause in the contract. The definition of BRE is doing the same as a similar sized company with similar resource levels would do. How on earth would you prove in court what an unspecified alternate company would do in similar circumstances?
ec.europa.eu/commission/presscorner/detail/en/ip_21_302
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Post by bracknellboy on Jan 29, 2021 15:46:05 GMT
how is this going to work out in practice I wonder ? Might pose problems for the UK's access to the Pfizer jab, which of course has already been put into many people's arms who are waiting on a second dose.
Is the UK going to waive its rights to some deliveries of UK produced Azn in exchange for deliveries of Pfizer ?
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michaelc
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Post by michaelc on Jan 29, 2021 16:39:41 GMT
I am very interested to learn the views of Remainers here.
Are they treating this as a completely separate issue to brexit? And if so are they minded to side against the Commission?
Or are they more likely to agree with the Commission's point of view and argue that the AZN facilities in the UK should divert vaccine to the EU and at the same time agree with the export controls soon to be put in place on vaccine production in the EU?
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Post by Deleted on Jan 29, 2021 16:56:19 GMT
As a Remainer I always thought the EU needed us as much as the UK needs the EU. This deal, the qualification of the vaccines, the loss of a major member and the terrible deal with China demonstrates that what is left (EU-UK) is much weaker than the old EU and it shows.
It isn't they are better or worse than us. It is we were much better and now WE are poorer.
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Post by bracknellboy on Jan 29, 2021 17:32:20 GMT
how is this going to work out in practice I wonder ? Might pose problems for the UK's access to the Pfizer jab, which of course has already been put into many people's arms who are waiting on a second dose.
Is the UK going to waive its rights to some deliveries of UK produced Azn in exchange for deliveries of Pfizer ?
My uninformed random guess.
AZ UK contract was drafted under UK law by UK lawyers because ... well... we know what Boris & chums think about the jurisdiction of European courts.
AZ EU contract was drafted under Belgian law because it likely made sense for both parties.
Left hand most likely did not talk much to the right hand, and there may have been a degree of over-commiting going on ... on both sides of the Channel.
Added to which, given the UK government propensity to suddenly find large sums of money down the back of the sofa (cf. PPE etc. etc.), it would not surprise me if Boris & chums offered AZ UK an unholy sum for all or substantial exclusivity over UK factory output. This might also be why UK govt is hiding behind "security" as the reason they can't or won't disclose details.
What should happen going forward ?
UK should stop the vaccine nationalism and allow AZ UK to supply a proportion of output to the EU.
Failure to do otherwise is not a good look on the world stage, especially as the UK has already been reaching ever lower lows in loosing all that soft power goodwill it built up over the decades and centuries.
The UK should respect the fact that AZ is a global company.
I think your average person on the street (i.e. not brexit loonies) would agree that any customer of a global company, whether UK, EU or otherwise, would make the reasonable assumption that a global company would use its global resources to fill orders. Such is the modern interconnected world that we live in.
I sort of agree with that, but this is not an entirely normal situation or normal contracts. If we understand correctly, the UK taxpayer made quite significant investment into production capacity in the UK, and made that investment commitment early, as well as giving AZ the commercial cover of substantive orders much earlier (it partly had to do so, because UK capacity for vaccine production was, I believe, not far off non-existent (a market we had retreated from)). So this area is not just normal commercial contracting considerations. I also think someone posted on here that the UK investment into vaccine (I guess trials, research and expansion of manufacturing) has been 7x that of anyone else on a per capita basis.
There is an argument that you should first reap the benefits of where you decided to place your bets.
The UK has also I think contributed to the global vaccine effort 'above its weight' in other ways, particularly I think through both research but also through trials (NHS patient data being a major enabler). It is also clear that ultimately the UK is intending to use an surplus in its orders to supply less well of parts of the world.
I agree that vaccine wars are not what we need right now. But to coin a phrase, its looking a bit like this could get to the "well you started it" phase.
EDIT: just to add another thought. Prior to Covid, AZN was NOT a vaccine manufacturer/supplier. IIUIC, its the UK govt brokerage and investment which has significantly contributed to making it such.
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agent69
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Post by agent69 on Jan 29, 2021 17:46:13 GMT
As a Remainer I always thought the EU needed us as much as the UK needs the EU. This deal, the qualification of the vaccines, the loss of a major member and the terrible deal with China demonstrates that what is left (EU-UK) is much weaker than the old EU and it shows.
It isn't they are better or worse than us. It is we were much better and now WE are poorer.
It also goes without saying that people ought to be reminded the non-existent Brexit deal kicked many cans down the road, including some very large cans, such as those with Financial Services written on the side.
Sticking two-fingers up at the EU in relation to AZ UK factory output is not likely to bode well as a foundation for future discussions about access to EU markets.
I think the UK government is trying very hard not to get involved. Ultimately we cannot allow the EU to dictate to us what we can or can't do ad infinitum
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