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Comment by lhnz | Hacker News Reader

AstraZeneca is currently struggling to produce 2 million doses a week for the UK [0]. How does the EU expect to use UK production to shore up a shortfall of 49 million doses that they require in February/March?

The doses that exist in the UK only exist because of a manufacturing ramp up done under their own contract during the period of time that the EU was still negotiating a lower price. How does it make sense that a separate contract with AstraZeneca allows them to then get the doses produced for the UK re-allocated to another contract?

The Commission is only entitled to those doses that AZ have, after best reasonable efforts, produced for them under their contract. This attempt to grab doses only in existence because of another prior contract is a disgrace.

[0] https://committees.parliament.uk/oralevidence/1505/html/

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>> AstraZeneca is currently struggling to produce 2 million doses a week for the UK [0]. How does the EU expect to use UK production to shore up a shortfall of 49 million doses that they require in February/March?

IANAL but it seems to be part of the agreement. From the posted pdf:

5.4 Manufacturing sites

AstraZeneca shall use its Best Reasonable Efforts to manufacture the Vaccine at manufacturing sites located within the EU (which, for the purpose of this Section 5.4 only shall include the United Kingdom) (...)

In short, AstraZeneca agreed to use UK facilities to manufacture doses for the EU.

>> The doses that exist in the UK only exist because of a manufacturing ramp up done under their own contract while the EU was still negotiating a lower price.

Presumably, AstraZeneca agreed to provide a certain number (censored in the pdf above) of doses to the EU after AstraZeneca had initiated the "ramp up" you describe. They did not object to selling those doses that were manufacture during the "ramp up" to the EU. The contract doesn't mention any ramp up at all.

  > In short, AstraZeneca agreed to use UK facilities
  > to manufacture doses for the EU.

Section 5.1 of the PDF seems to imply that the "Initial Europe Doses" are to be manufactured within Europe [0] "following EU marketing authorization".

Section 5.4 which you quote from specifies that "this section only shall include the United Kingdom". As written, this section does not relate to the distribution of the initial doses in Section 5.1, but instead is about where AstraZeneca _could_ choose to manufacture the vaccine. That is why it explains the process by which they might get prior written notice for non-EU manufacturing sites, and discusses how they could be contracted with if they are unable to deliver doses.

I think that gives them some leeway to ask AstraZeneca to increase capacity in the EU, but it strongly suggests to me that the capacity has meant to come from EU facilities, particularly for the "Initial Europe Doses".

Somebody also linked to this [1] which implies that AstraZeneca stated that they would have no other contracts that should conflict with the "Initial Europe Doses", however, I can imagine AstraZeneca will argue that this is achieved by segregating production in the initial doses stage and that the problem is due to low yields in the EU facilities and not due to competing arrangements.

  [0] https://twitter.com/faisalislam/status/1355120024378335238
  [1] https://twitter.com/antoguerrera/status/1355137923411279878

>> Section 5.4 which you quote from specifies that "this section only shall include the United Kingdom". As written, this section does not relate to the distribution of the initial doses in Section 5.1, but instead is about where AstraZeneca _could_ choose to manufacture the vaccine. That is why it explains the process by which they might get prior written notice for non-EU manufacturing sites, and discusses how they could be contracted with if they are unable to deliver doses.

I'm not sure. You might be right. However section 5.4 also says:

If AstraZeneca is unable to deliver on its intention to manufacture the Initial Europe Doses and/or Optional Doses under this Agreement in the EU, the Commission or the Participating Member States may present to AstraZeneca, CMOs within the EU capable of manufacturing the Vaccine Doses, and AstraZeneca shall use its Best Reasonable Efforts to contract with such proposed CMOs to increase the available manufacturing capacity within the EU.

"Within the EU" in this particular paragraph encompasses the UK, so my reading of this is that if AstraZeneca can't deliver the Initial Europe Doses as it plans, the Commission can propose alternative manufacturing sites that include UK sites. Which seems to cover the Comission's current request that AstraZeneca use UK-made doses to honour its commitment to deliver the Initial Europe Doses (to its best reasonable efforts etc).

Again, IANAL, so I don't know how to interpret this document correctly. I'm reading it as a lay person who does not understand the technicalities of legal terminology.

  > "Within the EU" in this particular paragraph encompasses
  > the UK, so my reading of this is that if AstraZeneca 
  > can't deliver the Initial Europe Doses as it plans, 
  > the Commission can propose alternative manufacturing 
  > sites that include UK sites. Which seems to cover the
  > Commission's current request that AstraZeneca use UK-made 
  > doses to honour its commitment to deliver the 
  > Initial Europe Doses (to its best reasonable efforts etc).

Yeah, I understand this mostly the same way, but my read is that while they can make such a request, AstraZeneca can choose not to do this and isn't forced into taking away vaccines from one country contractually as part of "best reasonable efforts".

IANAL also, but I have tried my best to avoid making my own interpretations, and have generally been relaying my understanding of comments by lawyers on Twitter (e.g. https://twitter.com/ShipBrief/status/1355134952405397508). Writing my initial comment kind of forced me into a rabbit-hole of reading what people were saying...

Does the contract matter at all? The EU can just make a new law that says "vaccines made in the EU may not be sent to anyone outside the EU".

Yes, they can do this. But they risk humiliating themselves further [0] with nationalistic displays like this.

[0] https://www.ft.com/content/5c15d7ea-aaf6-46f4-924e-30f168dd1...

> Section 5.1 of the PDF seems to imply that the "Initial Europe Doses" are to be manufactured within Europe [0] "following EU marketing authorization".

You are completely misreading it. That's not at all what section 5.1 implies. Section 5.1 says AstraZeneca should make its best effort to manufacture in the EU after market approval. That's in opposition to improving and relying on foreign production something expressly permitted by the contract. That has no bearing on where the dose should come now.

> Section 5.4 which you quote from

That's the section about where the dose can come and point that all AstraZeneca production capacity are part of agreement.

But the real sinker for AstraZeneca is section 13.1.e.

"[AstraZeneca represents, warrants and covenants to the Commission and the Participating Member States that: ] it is not under any obligation, contractual or otherwise, to any Person or third party in respect of the Initial Europe Doses or that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the complete fulfillment of its obligations under this Agreement;"

At this point, it is clear that AstraZeneca is trying to weasle out of its contractual obligation (unsurprisingly they are a pharma company after all). Short of an agreement being found and considering the EU doesn't have the time for a protractor trial, I think mandatory licensing or nationalisation of the production facilities are in order. But then again, this commission seems extremely weak so who knows.

  > You are completely misreading it. That's not at all
  > what section 5.1 implies.

What I wrote is a composite of a number of lawyer's comments on Twitter (e.g. https://twitter.com/FKeuleneer/status/1355138055305388036, https://twitter.com/BarristersHorse/status/13552864898113208..., https://twitter.com/SpinningHugo/status/1355486990150627329, and https://twitter.com/SBarrettBar/status/1355166944786264064). Do you have expertise that suggests that they are misreading?

Searching around on Twitter, I've not yet been able to find legal opinions that say the Commission is in the right. Since you are apparently french, what are legal experts saying there? Perhaps they see it differently. Can you show me these opinions?

  > But the real sinker for AstraZeneca is section 13.1.e.
  > 
  > "[AstraZeneca represents, warrants and covenants to
  >  the Commission and the Participating Member States 
  > that: ] it is not under any obligation, contractual
  > or otherwise, to any Person or third party in respect
  > of the Initial Europe Doses or that conflicts with or
  > is inconsistent in any material respect with the terms
  > of this Agreement or that would impede the complete
  > fulfillment of its obligations under this Agreement;"

It seems likely to me that (when taken in context of the rest of the contract) this actually proves the opposite of what you're saying. The most bullet-proof way that AstraZeneca could comply with this section is by segregating production of vaccines by country. There can be no conflicts between countries if vaccine allocations of initial doses are from separate factories. (I think the EU reading this as saying "there is no contract between AstraZeneca and the UK" is absolutely nonsensical since the UK's purchase order was widely publicised way before the EU signed.)

Even if they're not letting on, I think it's likely that the Commission understands that they have a different allocation. Their actions show this -- they recently raided AstraZeneca's Belgian Vaccine Plant in an attempt to evidence the claim that AstraZeneca gave away EU doses to the UK. If AZ did this, that would have been an actual breach of 13.1.e of the contract.

> What I wrote is a composite of a number of lawyer's comments on Twitter

A moment there I was worried my reading comprehension was failing me, thankfully none of the link you posted so authoritatively talk about section 5. They are mostly about down payments. Stop pretending you are posting a summary of things when you are talking about something else.

> It seems likely to me that (when taken in context of the rest of the contract) this actually proves the opposite of what you're saying. The most bullet-proof way that AstraZeneca could comply with this section is by segregating production of vaccines by country.

And what seems likely to you would be wrong. The contract says the opposite of what you are writing.

> I think the EU reading this as saying "there is no contract between AstraZeneca and the UK" is absolutely nonsensical since the UK's purchase order was widely publicised way before the EU signed

The EU experts wrote the contract. They don't have reading comprehension issue. AstraZeneca signed that their contract with the UK didn't contain conflicting obligations.

> AstraZeneca gave away EU doses to the UK

There are no EU doses and UK doses. AstraZeneca is manufacturing doses from different plants and has contractual obligations with multiple clients. The EU thinks their deliveries were mismanaged.

> A moment there I was worried my reading comprehension was failing me, thankfully none of the link you posted so authoritatively talk about section 5.

Everybody I posted has spoken about Section 5. Additionally at least one spoke about it in a link I posted. Your reading comprehension is failing you.

> The EU experts wrote the contract.

Interesting if true, but please source. I heard that it was Belgian Law.

> There are no EU doses and UK doses.

As I said, this is not what I've read.

> I heard that it was Belgian Law.

In case you didn't notice, Belgium is part of the EU. The EU is not a jurisdiction for contract law. The contract will obviously have to rely on the law of one of the EU member state, here Belgium as it's where the comission is located.

> Interesting if true, but please source. I heard that it was Belgian Law.

EU commercial contracts are all drafted by EU civil servants i.e. EU experts. How do you think the EU works (apparently you don't have much idea)?

I replied inelegantly but my point was that, just because a contract is written in a country within the EU, it doesn't mean that the Commission's understanding of Belgian law is correct. The way you wrote "it was written by EU experts" implied that the law would necessarily side with the EU because of this -- you almost implied that it was written by the same people kicking up fuss. That isn't the case.

As I linked to earlier in the thread, the first Belgian lawyer I saw tweeting about the contract wrote "I cannot conclude that the Commission has [...] the right on its side. Quite the contrary." [0]

Another legal expert also recently wrote "[The European Commission appears to be wrong] Belgian lawyers so far seem to agree with this analysis." [1]

Finally, this Belgian lawyer also agrees [2] and gives more detail about why. He explains that "we have a classic distinction between obligations to achieve a result ("result") and obligations to use efforts ("means")" and that "using "best efforts", "reasonable efforts" or any other effort standard simply refers to an obligation of means".

I will not be the judge of this but I can say that I've yet to see a Belgian legal expert claiming anything like what you have. When you can't find a single expert to support your position that should be a red flag.

[0] https://twitter.com/FKeuleneer/status/1355138055305388036

[1] https://twitter.com/davidallengreen/status/13561494226866585...

[2] https://www.linkedin.com/posts/frcoppens_the-contract-betwee...

Thanks - your explanation gives a lot of clarity.

I assume a lot of people are reading it as “the EU is defined as just the U.K. for the purpose of this section” but you are right that it’s just saying “this section is about the U.K., not the EU”

That does not say anything about exclusivity of doses. It just states that manufacturing has to occur in particular places. What the EU gets out of this is parity between different purchasers within the group.

Also it doesn't seem reasonable to expect AZ to ignore other contracts.

Not sure I understand your second sentence, it might be saying what I am about to write. From reading several articles on the issue, the EU seems to demand that the slow-down in production be shared equally across orders. This puts AZ in a pickle: it would then mean they are not only breach of contract with the EU but also UK. Hence, they publicly reiterate the "first come first serve" argument which resonates well in the UK media and rallies support (I think AZ is pitting EU against UK in all of this). I do not believe the "first come first serve" principle is how supply chains like this usually work though. Totally not my field of expertise, but hearsay from some friends working in supply chain management.

It's not actually a "first come first serve" argument as I understand it - it's that contractually the UK and EU supply chains are separate, each contract only requires them to supply the contracted vaccines from that supply chain, and the EU one is in much worse shape yields-wise because the EU dragged their feet on signing the contract for internal political reasons leaving AZ with less time to fix the problems. (There's a contractual provision in the EU contract allowing them to supply some vaccines from the UK which the EU is trying to stretch into them requiring it.) The whole claim that AZ is doing first come, first serve and it isn't fair seems to be EU spin, and pitting the EU against the UK seems to be an intentional EU tactic. In particular, as I recall EU officials started making evidence-free claims early on that AZ had been exporting doses from their European facilities to the UK and this caused the shortage, something they deny and that no evidence has been found for despite raids on their facilities.

AstraZeneca's CEO said this in an interview:

> As soon as we have reached a sufficient number of vaccinations in the UK, we will be able to use that site to help Europe as well. But the contract with the UK was signed first and the UK, of course, said “you supply us first”, and this is fair enough. [1]

It’s just an out of context quote and the problem is more complex than this, but I think it’s fair to say that you could interpret this statement as “first come first serve” and since the contents of the contract with the UK are still unknown, this also raises some questions.

[1] https://www.repubblica.it/cronaca/2021/01/26/news/interview_...

I guess it comes down to the legal interpretation of "Best Reasonable Efforts".

And, more specifically, the interpretation of that phrase (as it's defined in the AstraZeneca/EU contract) under the laws of Belgium by the courts located in Brussels, Belgium.[0]

Assuming this aspect of Belgium contract law sufficiently resembles its US counterpart, the interpretation of variants of "reasonable efforts" is a rabbit hole with few rivals. In the book written by a leading authority on US contract drafting[1], the topic commands its own chapter:

  Chapter 8 Reasonable Efforts and Its Variants

—

[0] per sections 18.4 and 18.5 of the AstraZeneca/EU contract linked to here

[1] A Manual of Style for Contract Drafting by Ken Adams (https://www.americanbar.org/products/inv/book/297140045)

"Best Reasonable Efforts" is defined in clause 1.9 of the contract:

> 1.9. “Best Reasonable Efforts” means (a) in the case of AstraZeneca, the activities and degree of effort that a company of similar size with a similarly-sized infrastructure and similar resources as AstraZeneca would undertake or use in the development and manufacture of a Vaccine at the relevant stage of development or commercialization having regard to the urgent need for a Vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world but taking into account efficacy and safety; and (b) in the case of the Commission and the Participating Member States, the activities and degree of effort that governments would undertake or use in supporting their contractor in the development of the Vaccine having regard to the urgent need for a Vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world.

On this basis, AZ can argue that they have indeed made reasonable best efforts to manufacture the vaccine within the EU: I believe most vaccine companies are struggling to fulfil their targets at the moment because of things like a shortage of supplies, worker sickness because of coronavirus, etc. It would seem to be difficult for the Commission to point to a company who's doing it any better except perhaps US-based companies.

Furthermore the contract does not mark their UK manufacturing facilities as being exclusively for the EU - AZ can then argue that this contract is naturally subject to available resources in their UK manufacturing facilities and so, given this is a condition precedent, their obligations under this part of the contract have not become due just yet.

I've been a lawyer for quite some time, and I can't recall the last time I saw this phrase used. I'm not sure I ever have.

The term is capitalized, which means it is defined in the first section of the document, more precisely on p. 3 in that case:

1.9. “Best Reasonable Efforts” means (a) in the case of AstraZeneca, the activities and degree of effort that a company of similar size with a similarly-sized infrastructure and similar resources as AstraZeneca would undertake or use in the development and manufacture of a Vaccine at the relevant stage of development or commercialization having regard to the urgent need for a Vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world but taking into account efficacy and safety; and (b) in the case of the Commission and the Participating Member States, the activities and degree of effort that governments would undertake or use in supporting their contractor in the development of the Vaccine having regard to the urgent need for a Vaccine to end a global pandemic which is resulting in serious public health issues, restrictions on personal freedoms and economic impact, across the world.

As an close observer, I’ve lost a lot of respect watching how the EU in general has handled the whole covid and vaccine mess. They got a away with a lot of shit because USA/Trump/India was a bigger and more obvious bogeyman/disaster. Multiple times there were stories that were just factually untrue that were parroted by leaders in Europe about covid or the vaccine effort. The same bogeyman stories came out about masks being hijacked, Drugs being boarded by Indians or respirators being seized and the USA “buying” all the vaccines and drugs and leaving Europeans to die. Meanwhile the USA and European covid rates pulled equal and Europe now has the dubious honor of leading total cases by 4 million.

What is now true is that Europe has staked itself to a inadequate short term supply, and is now hell bent on limiting vaccine to the UK to make up for its distribution woes.

In the United States it’s looking like a half of project warp speed failed. The GSK vaccine is dead on arrival (2.1 billion) and novavax hasn’t even fully recruited their US study. 4 out of eight billion for vaccines unlikely to make a difference in the USA but the other 4 looks like enough to vaccinate the whole population by late summer.

Hopefully it looks like Europe is going to get Novavax. Despite the USA spending $2 billion prepping that vaccine, it probably won’t be available until early fall in the states at best - so the US company will instead supply Europe. Astra Zenca made mistakes on their studies, and we still don’t know what the over 65 response rate is. It’s being approved because people are hoping that it’s effective. It’s a crappy place to be. But between those two vaccines, there might be enough. The

The entire vaccine mass is a reflection of lack of cooperation between Europe and USA right now.

> AstraZeneca is currently struggling to produce 2 million doses a week for the UK [0]. How does the EU expect to use UK production to shore up a shortfall of 49 million doses that they require in February/March?

open-source the vaccine, the recipes, processes, etc. everything needed so EU can look for a capable manufacturer on its own?

Because bill gates convinced them not to: https://khn.org/news/rather-than-give-away-its-covid-vaccine...

There doesn’t seem to be a primary source for that, just the author’s statement that that is what happened.

As such I’m skeptical...

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