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NEWS & ANALYSIS

Federal Government Cancels Contract with Troubled COVID-19 Vaccine Manufacturer


The federal government canceled its contract with a troubled COVID-19 manufacturer that soiled millions of doses and had to halt production for months after regulators raised concerns about quality. 

Early in the pandemic, the government decided to make Maryland-based Emergent BioSolutions the sole domestic manufacturer of the Johnson & Johnson and AstraZeneca vaccines. However, in March, testing found that a batch of the Johnson & Johnson vaccine was contaminated and Emergent agreed to pause manufacturing after an inspection revealed a series of problems at the facility, the New York Times reports

The cancelation of the contract came after negotiations that began after the government stopped making payments earlier this year. The deal was worth more than $600 million and Emergent will now forgo roughly $180 million of that amount, according to company disclosures. 

The company has resumed operations and will continue to produce the Johnson & Johnson vaccine. 

Emergent chief executive Robert Kramer acknowledged during an investor call that the initiative, “as it was contemplated back in 2012, was a good idea at the time, but unfortunately it didn’t work out as it was anticipated.” Kramer also tried to put a positive spin on the termination, writing in a guest essay in The Baltimore Sun that the health department agreed to Emergent’s “request to end our 9-year pandemic manufacturing partnership.”

Kramer blamed the government, even as he said that “not everything went perfectly” during the pandemic. 

“But if you want companies to engage,” he said, “you need to be willing to stand by them through both challenge and achievement.”

A Biden administration official, however, said the health department ended the contract in a way that the company would and could not fight it, so the government would avoid a legal challenge. 

The termination appears to have no impact on vaccine availability, as the contract only involved production of AstraZeneca’s vaccine, which isn’t authorized for distribution in the U.S.