Key Take-Away: To avoid ambiguity, parties drafting manufacture and supply agreements should explicitly set out the factors that they deem relevant in assessing a party’s efforts. The manufacturing party may wish to explicitly mention its commitments to other purchasers and expected technical difficulties. This is particularly true in the field of biotechnology where problems in development and early stages of production are common
Vaccines are finally offering hope that the COVID-19 pandemic, which has claimed millions of lives and bulldozed the way we lived “before,” will come to a halt. However, even as the efficacy data is reported and companies obtain regulatory approval, there is another hurdle: global demand far outstrips production capacity.
In this febrile context, AstraZeneca has announced that due to production problems at a Belgian site, it will not deliver to EU member states the expected number of doses of its vaccine, which was granted a conditional marketing authorization in the EU on January 29, 2021. To bolster its contention that AstraZeneca is in violation of its obligation to supply the scheduled doses of vaccines, the EU Commission published a redacted version of the Advance Purchase Agreement for the Production, Purchase and Supply of a COVID-19 Vaccine in the European Union (the APA), which the Commission negotiated and signed on behalf of Member States on August 27, 2020.
What does the agreement say about AstraZeneca’s obligations to supply the vaccines? And what lessons can be gleaned for those negotiating manufacturing and supply agreements in the field?