EU seeks multimillion euro penalties against AstraZeneca in vaccine case

AstraZeneca should pay multimillion-euro daily penalties if it continues to fail to deliver Covid-19 vaccines on time, the EU told a court in Belgium in the latest round of a bitter legal dispute over the drugmaker's alleged broken promises.

AstraZeneca’s “failure” to deliver the 300 million doses the EU ordered from it last year is hurting the region’s vaccine rollout and Europe’s attempts to recover from the pandemic, lawyers for the European Commission said at a hearing in Brussels on Wednesday.

The company should pay €10 a day for each overdue vaccine dose, said Fanny Laune, a lawyer representing the EU. Fast deployment of Astra’s vaccine is essential “to bring the mortality rate down”.

The EU wants the court to order Astra to supply 20 million more doses than it currently plans to deliver by the end of June. If the court backed the EU the company could have to pay out as much as €200 million a day for those shots. A ruling on an urgent order could come within a month.

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AstraZeneca's supply contract with the EU came into focus after it delivered just 30 million doses in the first quarter, compared with an original target of 120 million. The company blamed the shortfall on difficulties producing the vaccine at European plants.

The EU has insisted the company should have relied on British facilities, raising questions over Astra’s separate deal with the UK.

Europe had a slow start in vaccinating its 448 million population, partly due to uncertainties over vaccine supplies, hampering efforts to reopen economic activity after the coronavirus pandemic forced the region into an unprecedented downturn last year.

AstraZeneca’s lawyer Hakim Boularbah argued that the company made it clear to the EU that manufacturing a new vaccine was fraught with uncertainties. The contract included a provision that the company would not be liable for any delay.

He said the company’s vaccine was not urgently needed in Europe at this point since the EU has said it is now able to inoculate people without it.

The European Commission’s legal action against Astra follows a blame game over its own role in prioritising cost savings over securing supplies. The EU has recently turned to Pfizer and BioNTech for an additional 1.8 billion vaccines. Nearly half of EU adults have now received at least one shot of a vaccine, European Commission President Ursula von der Leyen said in a tweet on Tuesday.

Legal battle

AstraZeneca has not been selling its shot for profit, but the prospect of a long legal battle with 27 governments raises the risk of litigation costs and damage payments.

The EU wants the court to demand Astra to deliver a further 90 million doses by the end of June to reach the 120 million target. The EU is also asking for 180 million doses by the end of September to fulfil the full contract of 300 million doses ordered last year.

The same court will examine later this year whether AstraZeneca violated the terms of its contract. Another lawyer for the EU, Rafael Jafferali, told judges earlier the company had not tried to use all its production facilities to meet the EU order, and the company's record so far was "obviously a failure".

“AstraZeneca did not even try to respect the contract,” the EU’s lawyer Mr Jafferali told a Brussels court in the first hearing on the substance of the legal case. It was “flagrant” that the company had exported some 50 million doses outside of the EU, mostly to the UK and Japan, at the same time. – Bloomberg