J&J to Drop Emergent After Mutual Claims of Contract Breach
Johnson & Johnson (J&J) is pulling out of its COVID-19 vaccine supply contract with the troubled drug manufacturing plant, Emergent BioSolutions.
On Monday, the drugmaker gave formal notice of termination of the 2020 contract to Emergent, saying in a statement that the termination was “based on Emergent’s breaches, including failure to supply Covid-19 vaccine drug substance.”
This follows Emergent stating in a securities filing the same day that it had sent a notice of material breach of the agreement to J&J.
Emergent said J&J failed to provide requisite forecasts of the required quantity of vaccines to be purchased, adding that Emergent wasn’t planning to order the minimum quantity of product specified in the contract.
Emergent said the notice it got from J&J on Monday was focused on “asserted material breaches of the Agreement, including failure by the Company to perform its obligations in compliance with current good manufacturing practices or other applicable laws and regulations” and failure to supply J&J’s Janssen subsidiary with the product.
J&J, said Emergent, also alleges that the breaches “are not curable” and, therefore, the termination is to be effective as of July 6.
Emergent said it disputes J&J’s allegations of material breach and disagrees that the breaches are “not curable.”
According to Emergent, which said J&J is slated to end the agreement without fulfilling its minimum requirements, the drugmaker has 30 days to comply with the contract before Emergent has the right to terminate the agreement.
Emergent said J&J would owe between $125 million and $420 million if the contract were terminated immediately.
For its part, J&J said Emergent’s securities filing “is false and misleading both with respect to the contrived breach allegation against Johnson & Johnson and in its failure to disclose our prior notice that Johnson & Johnson would terminate the supply agreement.”
Emergent said it had agreed under its contract with J&J to provide COVID-19 vaccine development and manufacturing services for up to five years and that the contract was valued at about $480 million in its first two years.
Emergent has had a turbulent few years during which it spent many months in the headlines for botching 75 million J&J COVID-19 vaccines after they were cross-contaminated with AstraZeneca’s coronavirus vaccine also produced in Emergent’s Baltimore, Md., facility. The FDA then stopped operations at the facility. And in November of last year, the troubled company lost its $600 million-plus contract with the federal government (DID, Nov. 9, 2021).
In May, a 26-page report on the coronavirus vaccine manufacturing failures of the government contractor released by House Democrats showed that the manufacturing plant concealed proof of quality problems just six weeks before it told the FDA that 15 million COVID-19 vaccine doses manufactured there had been contaminated (DID, May 12).
The report, the result of a year-long investigation, showed that just before an FDA site visit in February 2021, Emergent employees removed from J&J vaccine batches quality-assurance “hold tags” that indicated the containers had a potential quality issue. An email obtained by the committees working on the investigation says the tags were removed “to avoid drawing attention” from FDA investigators. — Suz Redfearn