A failed government-arranged marriage between ill-suited partners has devolved into one last contract squabble.
Monday, Emergent BioSolutions, which made high-profile errors in the production of two companies’ COVID-19 vaccines and caused millions of doses to be discarded, notified (PDF) Johnson & Johnson that it would be on the hook for up to $420 million for bailing on its agreement with the contract manufacturer.
Emergent revealed the notification in an 8-K filing with the Securities and Exchange Commission (SEC), warning J&J of the consequences of a “material breach” of contract if it fails to fulfill its minimum terms.
But what was curiously left out of the filing—according to a J&J spokesman—was that J&J had informed Emergent a week ago that it was terminating the contract, citing breaches by Emergent, “including failure to supply COVID-19 vaccine drug substance," the statement read.
“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,” J&J added.
Emergent countered that it disagrees with J&J's "characterization of events," a spokesman said in an email.
"We did not receive any written notification of their intentions prior to our filing today," the spokesman wrote. "As our filing noted, we have been in discussions with J&J regarding their global COVID-19 vaccine supply needs for many weeks. They have indicated that they no longer need additional supply. We anticipate discussions with J&J will continue as we work to wind down and reach resolution."
J&J is decreasing but not eliminating production of its vaccine. Two months ago, the company said it was not projecting revenue from the shot in 2022. Then in May, the FDA placed restrictions on it because of the threat of rare but serious blood clots. The regulator cited 60 cases of thrombocytopenia, including nine deaths, among the 8 million recipients of the single-dose vaccine.
J&J added Monday that it has "sufficient capacity across our global COVID-19 vaccine manufacturing network … to meet our contractual obligations to supply our vaccine."
In the filing, Emergent warns J&J of its failure to provide forecasts of the required quantity of product to be purchased, calling this a breach. Emergent also says in its filing that it wanted to confirm J&J’s intent to not purchase an agreed-to minimum quantity of vaccine product.
These breaches, Emergent maintained in the filing, would cost J&J between $125 million and $420 million.
Last month, a congressional report revealed (PDF) that Emergent destroyed nearly 400 million doses of COVID-19 vaccines as a “result of Emergent’s failure to meet or maintain quality standards.”
The amount was significantly more than previously reported. The vaccines were dumped because of fears of cross-contamination between vaccines Emergent was producing for J&J and AstraZeneca at its Baltimore Bayside facility.