Updated: Troubled Emergent claims J&J will owe up to $420M if it pulls the plug on its Covid-19 vaccine
Embattled contract manufacturer Emergent BioSolutions, which trashed tens of millions of J&J’s Covid-19 vaccine doses because of its contaminated Baltimore plant, is now telling J&J that it will have to pay somewhere in the range of $125 million to $420 million if it terminates its Covid manufacturing contract with Emergent.
In an SEC filing Monday, Emergent said that it provided Janssen with “a notice of material breach” because Janssen is essentially winding down its Covid-19 vaccine operations before fulfilling the minimum requirements in its contract with Emergent.
But Janssen’s decision to pull back from Covid-19 came as the FDA said last month that cases of a rare, life-threatening syndrome warrant severely restricting the authorized use of the vaccine. The agency said it confirmed a total of 60 cases of what’s known as thrombosis with thrombocytopenia syndrome, including 9 deaths reported to the agency’s Vaccine Adverse Event Reporting System, out of about 8 million doses of the one-dose shot administered.
“Cases of TTS following administration of the Janssen COVID-19 Vaccine have been reported in males and females, in a wide age range of individuals 18 years and older, with the highest reporting rate (approximately 8 cases per 1,000,000 doses administered) in females ages 30-49 years; overall, approximately 15% of TTS cases have been fatal,” the agency said in an updated fact sheet for health care providers. “Currently available evidence supports a causal relationship between TTS and the Janssen COVID-19 Vaccine.”
Despite the safety issues, Emergent tries to make the case that its contract with Janssen initially was set to produce “drug substance at large scale for up to five years.”
“Termination of the Agreement will not affect the obligation of either party to make any payments for which it is liable prior to or upon such termination, including payment by Janssen for certain raw materials purchased pursuant to the Agreement prior to its termination, and payment by Janssen for all services related to the required minimum quantity,” Emergent said. “At the time of the Notice, it is the Company’s position that the payments owed to the Company by Janssen, if the Agreement were to be terminated, would be in the estimated range of approximately $125 million to $420 million.”
A J&J spokesperson told Endpoints that it informed Emergent last week:
“that we intended to terminate our manufacturing agreement based on Emergent’s breaches, including failure to supply COVID-19 vaccine drug substance. Today, Johnson & Johnson provided formal Notice of Termination and Breach. Emergent’s SEC filing today 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. We have sufficient capacity across our global COVID-19 vaccine manufacturing network, and we continue to meet our contractual obligations to supply our vaccine. We remain focused on ensuring our COVID-19 vaccine is available where people are in need.”
News of the notice comes as a Congressional report from last month found that nearly 400 million doses of vaccine (J&J and AstraZeneca) manufactured by Emergent at its Baltimore plant had to be destroyed because of quality and contamination issues. The company also received more than $625 million from the US government, and its contracts with both J&J and AstraZeneca were worth a combined $656 million, according to the New York Times.
Editor’s note: Article updated with J&J comment.