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Tuesday, May 18, 2021

Explained: Why has the EU initiated legal action against AstraZeneca?

AstraZeneca started delivery of vaccines to the EU in February and under its contract with the bloc, it promised to deliver about 300 million doses by the end of June. However, in mid-March, the company announced a shortfall in vaccine shipment meant for the EU.

By: Explained Desk | New Delhi |
Updated: May 5, 2021 10:52:13 am
AstraZenecaAstraZeneca noted in its statement that half of the EU's supply in the second quarter and about 10 million doses in the first quarter were due to be sourced from the company’s international supply chain. (File photo)

On Monday, the European Commission (EC) initiated legal action against AstraZeneca over the shortfall in the company’s supply of vaccines to the European Union (EU), which has been a contentious issue between the two for a few weeks now.

Earlier in March, several European countries had temporarily paused the use of the vaccine after reports of blood clots emerged. However, the European regulatory body said that the known benefits of the vaccine outweigh the potential risks.

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So, why has the EC launched legal action against AstraZeneca?

Dispute between the EC and the Anglo-Swedish company have been ongoing for a few weeks now. AstraZeneca started delivery of vaccines to the EU in February and under its contract with the bloc, it promised to deliver about 300 million doses by the end of June. However, in mid-March, the company announced a shortfall in vaccine shipment meant for the EU. It said that it would deliver 100 million doses in the first half of 2021, of which 30 million doses would be delivered in the first quarter.

The company cited a lower-than-expected output from the production process as one of the reasons for the shortfall and said that it would compensate by sourcing vaccines from its international supply network. Significantly, AstraZeneca noted in its statement that half of the EU’s supply in the second quarter and about 10 million doses in the first quarter were due to be sourced from the company’s international supply chain.

According to Euro News, in terms of absolute number of vaccinations, the UK is leading in Europe and is “way ahead of the rest of Europe”, with over 46 million vaccinations. Germany, Turkey and France follow with 25 million, 21 million and 19 million doses, respectively. As per a Reuters report, the delays in delivery of the AstraZeneca vaccine are slowing down the EU’s vaccination drive since the bloc was mainly relying on this vaccine. However, after repeated cuts in the supplies, it is now mainly relying on the vaccine developed by Pfizer-BioNTech.

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What has AstraZeneca said in response to the legal action?

In response to the EC’s decision, the company has said that it is about to deliver about 50 million doses to European countries by the end of April. “AstraZeneca has fully complied with the Advance Purchase Agreement with the European Commission and will strongly defend itself in court. We believe any litigation is without merit and we welcome this opportunity to resolve this dispute as soon as possible,” the company said in a statement.

Does the Serum Institute of India have a role to play in this?

The Serum Institute of India (SII), which is the largest vaccine manufacturer in the world, is one of the sites where the Oxford-AstraZeneca vaccine for COVID-19 is being manufactured, which will be used in India and other countries around the world. Earlier in January, when the vaccine received Emergency Use Authorisation (EUA) from India, AstraZeneca said in a statement, “The approval in India is an important milestone as it will enable to supply India but also a large number of countries around the world.” This also includes low and middle-income countries, to which vaccines are being supplied under the COVAX program.

In June 2020, the company reached a licensing agreement with SII to supply one billion doses of the vaccine to low and middle-income countries, with a commitment to provide about 400 million doses “before the end of 2020” under the COVAX program.

The program is led by the vaccine alliance GAVI, the World Health Organisation (WHO) and the Coalition for Epidemic Preparedness Innovations (CEPI) in partnership with UNICEF, vaccine manufacturers and the World Bank, among others. The aim is to ensure equitable distribution of COVID-19 vaccines globally in what is being called the largest vaccine procurement and supply operation in history.

In late February, Ghana became the first country in the world to receive a shipment of coronavirus vaccines under the COVAX program. About 600,000 doses of the Oxford-AstraZeneca vaccine, manufactured by SII, were sent to Accra in Ghana on February 23.

However, deliveries of the vaccine manufactured by SII meant for countries participating in COVAX were delayed from March onwards after India banned the exports to meet domestic demand. Critics of the government said that India’s vaccine diplomacy hurt its own domestic needs. As of March-end, COVAX had been supplied with 28 million doses of Covishield (the variant of the Oxford-AstraZeneca vaccine made by SII).

As of April 27, India has exported doses of both Covishield and Covaxin to over 95 countries, including Bangladesh, Bhutan, Brazil, Sri Lanka, the UK and Syria. These 95 countries do not include the 27-member countries of the EU and it is not clear to what extent India’s ban of exports of vaccines has impacted AstraZeneca’s supply chain to the EU.

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