EU’s centralised system for vaccine procurement succeeded in creating a diversified portfolio of vaccine candidates and in procuring sufficient doses of COVID-19 during the pandemic, according to an audit report published on Monday by the European Court of Auditors (ECA).
However, the EU started procurement later than the UK and the US, and when severe supply shortfalls occurred in the first half of 2021, it became clear that most contracts signed by the European Commission did not include specific provisions to address supply disruptions. The performance of the procurement process was not sufficiently assessed, the report says.
The auditors did also note that the Commission has not yet scrutinised or benchmarked the process to draw lessons for the future, nor does it currently plan to test its pandemic procurement system through stress-tests or simulations.
“Whether the Commission and Member States have procured COVID-19 vaccines effectively is a very pertinent question”, said Joëlle Elvinger, the Luxembourgian ECA member who led the audit.
“We chose this topic given the central role that vaccines played in the response to the COVID-19 pandemic, the unprecedented nature of the EU’s involvement in vaccine procurement and the expenditure involved. Our findings are intended to contribute to the ongoing development of the EU’s pandemic preparedness and response capabilities.”
The Commission had to act quickly and under uncertainty. When the EU’s vaccine procurement process started in mid-2020, it was not known if or when a COVID-19 vaccine would reach the market. As there were no clear scientific data on vaccine candidates’ safety and efficacy, the Commission chose to back a range of candidates to create an initial portfolio of different vaccine technologies and manufacturers.
By November 2021, the Commission had signed €71 billion worth of contracts on behalf of the Member States to purchase up to 4.6 billion COVID-19 vaccine doses. Most of these contracts were advance purchase agreements in which the Commission shared the development risk of a vaccine with the vaccine manufacturers and supported the preparation of at-scale production capacity through upfront payments from the EU budget.
Was the number of procured doses more than EU actually needed? How much was actually delivered to the Member States and what happened with the rest?
“The Commission proposed in its vaccine strategy, and the Member States agreed, to spread the risk of vaccines candidates failing by backing a range of different companies and technologies,” the audit team told The Brussels Times. “The initial portfolio was therefore broad by design because not all candidates were expected to succeed.”
“Given the rate of failure in drug development, there was an expectation in mid-2020 that some of the vaccine candidates would fail. This is in fact what happened. The theoretical maximum of 4.6 billion doses was never expected to be reached. This figure also includes options which have not been exercised.”
The EU had secured sufficient doses to vaccinate at least 70 % of the adult population by the end of the summer of 2021, after experiencing challenging supply shortfalls from two manufacturers in the first half of 2021.
According to the auditors, negotiations followed a procurement process laid down in the EU’s Financial Regulation, while the heart of the process was the preliminary negotiations that took place before a tender invitation was sent out. During the procurement process, the Commission refused to disclose the condition agreed with the vaccine producers.
Did ECA get access to all information it requested? Could the Commission have been more open about the contracts?
“We had access to the relevant Commission documents, with the exception of those related to the President of the Commission’s involvement in preliminary negotiations with Pfizer/BioNTech,” the audit team replied.
“Regarding the contracts, we are bound by the confidentiality classification the Commission sets for these documents so we cannot disclose details that can be used to identify a specific contract. None of the other countries we looked at had published their COVID-19 procurement contracts either.”
Did ECA examine the price setting in the contracts? Did the Commission pay the ‘right’ price for the vaccines or did it overpay for them?
“We indeed had access to the contracts and examined the price set in them,” the auditors replied. While the information included in each individual contract are confidential, we have calculated that the weighted average cost per dose is approximately €15. Whether the Commission paid the ‘right’ price for the vaccines was out of our audit scope. The publicly available information on the average cost per dose paid by the UK shows that the EU paid a similar price to the UK.”
In one case, linked to Astra Zeneca, the Commission took the manufacturer to court. Was what ECA’s overall assessment of the Commission’s handling of the negotiations and the contract with Astra Zeneca?
“Indeed, the Commission took AstraZeneca to court for breach of contract. Most of the contracts did not include specific provisions to prioritise deliveries to the Member States. This left the Commission with few options other than taking manufacturers to court for failing to make ‘best reasonable efforts’ to deliver vaccines, or for breaching the warranty on the absence of conflicting contracts.”
According to the auditors the EU’s negotiators did not fully analyse the production and supply chain challenges of vaccine production until after signing most of the contracts. The terms of the contracts evolved over time, and those signed in 2021 have stronger provisions on key issues such as delivery schedules and production location than those signed in 2020.
Doesn’t this imply that the Commission did learn lessons during the pandemic and improved the contracting process?
“We do point to the evolution in the terms of the contracts on certain key issues (delivery schedules, access to vaccines, location of manufacturing and liability) and we do conclude that later contracts provided the EU with stronger guarantees for delivery and security of supply. This evolution can be seen as both the result of a fast-learning process by the EU negotiators and the evolution of the pandemic impacting negotiations.”
The terms negotiated are different for each contract, except for adherence to the principles of the Product Liability Directive. Member States agreed to reduce manufacturers’ risks linked to liability for adverse effects. The provisions in the contracts concluded with COVID-19 vaccine manufacturers differ from pre-pandemic practice, as Member States have taken over some of the financial risks normally assumed by the vaccine manufacturers.
The Commission proposed to continue the procurement approach set up for COVID-19 for future health crises, but neither the Commission’s nor the Council’s “lessons learned” reports on the COVID-19 pandemic examined the performance of the vaccine procurement process, beyond its overall outcome.
The auditors recommend to create pandemic procurement guidelines on the basis of lessons learnt, and to stress-test the EU’s medical countermeasures procurement approach to be better equipped if needed in future.
M. Apelblat
The Brussels Times
