EU decision making incoherency. 3rd Feb 2021

One of the things I'm interested in is how relatively smart people can still make terrible decisions.

Since the middle of January there have been a, quite frankly, bizarre series of events concerning the EU commission, statements they have made and actions they have taken.

A lot of the reporting of these events, and the reporting of the previous events that lead to them have been quite poor (imho), so this blog post started as me trying to just get the facts down. However I now have a strong suspicion about the sequence of events that lead to the bizarre events of the last week.

By the way, if you are at all interested in how organisations make poor decisions, I strongly recommend acquiring a copy of Systemantics.

How did we get here

First, a table of when the UK and EU placed initial orders for vaccines, the time difference between those two, and the status of the vaccines.

Vaccine UK EU Difference Vaccine status
Astrazeneca 100 million 25 May 2020 300 million 27 August 2020 3 months Approved
CureVac No order 225 million 17 November 2020 N/A Phase 2b/3
GSK/Sanofi 60 million July 29, 2020 300 million September 18, 2020 7 weeks Ineffective
Johnson and Johnson/Janssen 30 million 17th Aug 2020 400 million 22nd Oct 2020 9 weeks Phase 3 trials
Moderna 5 million 16th Nov 2020 80 million 25th Nov 2020 9 days Phase 3 trials
Novavax 60 million 17th Aug 2020 No order N/A Phase 3 trials
Pfizer/BioNTech 30 million July 20, 2020 200 million November 11, 2020 4 months approved
Valneva 60 million July 20, 2020 No order N/A Phase 1/2 trials

The EU is consistently far behind the UK in placing orders for the vaccines.

By the time the EU placed it's first order for any type of vaccine, the UK had placed orders for six different types. This diversification in orders reduced the risk of the failure of any single vaccine to work from severely affecting the ability of the UK to vaccinate it's population.

Several EU countries tried to order the AstraZeneca vaccine in June, but were prevented from doing so by the EU:

The following month AstraZeneca reached a preliminary agreement with Germany, the Netherlands, France and Italy, a group known as the Inclusive Vaccine Alliance, based on the agreement with the UK. The announcement was June 13.

But, the EU insisted that the Inclusive Vaccine Alliance could not formalise the deal.

The European Commission insisted it should take over the contract negotiations on behalf of the whole EU.

The EU communique announcing this would be delicious, if it weren't for the human suffering that has resulted from it:

In order to scale this approach up to cover the whole EU, the Commission proposes to run a central procurement process, which creates a number of important advantages. In particular, all EU Member States will be able to benefit from an option to purchase vaccines via a single procurement action. This process also offers vaccine producers a significantly simplified negotiation process with a single point of contact, thus reducing costs for all. Centralising vaccine procurement at EU level has the merit of speed and efficiency by comparison with 27 separate processes.

There have also been mutterings that the EU was slow in ordering vaccines at least in part to provide time for the GSK/Sanofi vaccine to be approved. Unfortunately the Sanofi vaccine has not been shown to work, and some of GSK/Sanofi facilities that were going to be used to make that vaccine, are now being converted to make the Pfizer/BioNTech vaccine.

It's unlikely that we'll ever get definitive proof of the EU commission tipping the balance for Sanofi, but it is tragically comic that those plants are now going to be used for the offer that the EU turned down earlier in 2020:

All of this has left people across the EU really quite angry, as they feel that the EU commission has failed to act competently.

Timeline of events

This isn't the full sequence of relevant events, but it contains the key causes and reactions by the EU commission.

15th January

Pfizer announced that shipments of its vaccine would be lower for a few weeks, so that production at the factory could be ramped up for increased shipments from late February.

23rd January

AstraZeneca announced delays due to problems at a plant run by a partner company (Novasep) in Belgium, so they wouldn't be able to meet their production targets.

25th January

Commissioner Kyriakides made comments in response to AstraZeneca's announcement of lower production than hoped:

Last Friday, the company AstraZeneca surprisingly informed the Commission and the European Union Member States that it intends to supply considerably fewer doses in the coming weeks than agreed and announced.

This new schedule is not acceptable to the European Union.

The European Union wants to know exactly which doses have been produced by AstraZeneca and where exactly so far and if or to whom they have been delivered. ...The answers of the company have not been satisfactory so far. That's why a second meeting is scheduled for tonight.

27th January

Commissioner Stella Kyriakides makes a series of remarks that are filled with falsehoods. Youtube version or text vesion.

The view that the company is not obliged to deliver because we signed a ‘best effort' agreement is neither correct nor is it acceptable.

We signed an Advance Purchase Agreement for a product which at the time did not exist, and which still today is not yet authorised. And we signed it precisely to ensure that the company builds the manufacturing capacity to produce the vaccine early, so that they can deliver a certain volume of doses the day that it is authorised.

"Not being able to ensure manufacturing capacity is against the letter and spirit of our agreement."

And there's also no hierarchy of the four production plants named in the Advance Purchase Agreement. Two are located in the EU and two are located in UK.

I'll go over the contract details below, but these statements are false.

28th January

Belgium authorities inspect the Novasep plant where the AstraZeneca vaccine is being produced, that is experiencing production difficulties.

29th January

Eric Mamer, the European Commission Chief Spokesperson announced that the EU had published a redacted version of the contract with AstraZeneca. He then went on to make comments about the production facilities:

I think you should take your time to go through the contract which is many many pages long to analyze it in detail, clearly I am not in a position to provide extensive comment on the specific clauses of the contract, we might come to that at a later stage, but we have always said here that indeed there are a number of plants that are mentioned in the contract that we have with AstraZeneca some of which are located in the United Kingdom and that it is foreseen that these plants will contribute to the effort of AstraZeneca to deliver doses to the European Union. There is absolutely no question for us that this is what the contract specifies.

And then also made comments about the expectations for delivery schedules:

In our mind there is absolutely no doubt that we have a firm commitment with the company as with all other companies to deliver doses according to specific schedules, and that the clauses we have are there to take into account as is absolutely normal at the time the contract was signed these products did not yet exist.

Again, I'll cover the contract details below, but these statements are false.

Executive Vice President is Valdis Dombrovskis says that companies applying for export authorization, must also reveal where the previous 3 months of shipments have gone:

I wanted to outline one provision from the regulation which foresees that companies applying for export authorization will also have to provide information on their exports and export destinations quantities and so on, for the period covering three months prior to entering into force of this regulation, so I think this will also help to shed a full light on export tendencies in recent weeks and months.

29th January early afternoon

EU invokes Article 16 of the Northern Ireland Protocol

29th January about 11pm

EU commission revokes invoking Article 16.

The source said the article may have been inadvertently triggered by “someone who did not understand the political implications” of the decision.

And then also pretends it had never been invoked.

So, that was quite a series of events

While the events were unfolding, a lot of the actions and announcements by the EU commission seemed to make no sense to me.

When other people's behaviour doesn't make sense, I've come to learn that either they have different values to me, or they are making decisions based on a different set of 'facts' than I have.

The behaviour of the EU commission makes quite reasonable sense, if they believed that:

  • producing huge quantities of a novel vaccine is a trivial endeavour.
  • the contract with Astra Zeneca had different terms than it actually has.
  • vaccines being produced in the plants located in the EU were shipping vaccine doses to the UK.

I hope I don't need to explain why mass producing a novel vaccine is difficult, and there has been no evidence of any vaccine doses from the AstraZeneca plants meant for EU production, but as promised a quick analysis of the contract details.

Contract details

The redacted version of the EU AstraZeneca contract is here.

Although reading contracts is not particularly exciting, it's a skill worth practicing as it's normally not that difficult.

Best reasonable effort versus hard committments

Whereas, as part of that scale-up, AstraZeneca has committed to use its Best Reasonable Efforts to build capacity to manufacture 300 million does of the Vaccine...

The phrase "Best Reasonable Efforts" is repeated multiple times through the contract. At no point does the contract say that AstraZeneca must hit scheduled dates, or mention any penalties that would be incurred if they did miss dates.

Locations

Section 5.1 covers where AstraZeneca was planning to produce the vaccine for the EU:

AstraZeneca shall use its Best Reasonable Efforts to manufacture the Initial Europe Doses within the EU for distribution, and to deliver to Distribution hubs, following EU marketing authorization, as set forth more full in Section 7.1, approximately ...(number of doses redacted)

Section 5.4 does mention facilities in the UK, but only in terms of "if AstraZeneca can't meet it's production goals from the planned EU or UK plants, that AstraZeneca will help partner with other companies in the EU to manufacture the vaccine". It definitely does not say that AstraZeneca

Questions that should be answered

Even assuming that the EU commission was making appropriate decisions but based on bad data, I have many questions:

Is the EU commission aware of how difficult it is to scale up vaccine production?

This is the most disconcerting question for me.

The behaviour of the EU commission over the past few weeks is consistent with them believing that AstraZeneca chose not to honour the contract, rather than it being an incredibly difficult thing to achieve.

The EU has been talking about building up partnerships with large technology firms, but they seem to just not comprehend that some things are difficult.

Why was the AstraZeneca announcement that production was behind schedule a surprise to the EU commission?

I would have expected that the EU commision would be working closely with all of the vaccine manufacturers to help resolve any issues as fast as possible.

I would have expected this to include scientists having daily meetings with AstraZeneca, so that any deviation from the planned schedule could be managed without too much surprise.

This obviously was not happening, and the slippage in schedule came as a shock to the EU commission, who then did not believe AstraZeneca was telling the truth.

What information led the EU commission to believe that vaccines being made in the EU were being shipped to the UK?

Multiple statements by European politicians include those of Executive Vice President Valdis Dombrovskis indicate to me that they honestly believed that vaccines being produced in the EU by AstraZeneca had been being shipped to the UK for weeks.

Invoking Article 16 could have been an appropriate thing to do, if they believe that there were trucks full of vaccine on their way to the UK, but this appears to not be based in reality.

Who is providing legal analysis of the contracts to the EU commission?

Multiple statements said by Commissioner Stella Kyriakides and Chief Spokesperson Eric Mamer regarding the contract that were false.

The way that the EU released the redacted version of the contract to back up their false claims makes be believe that they honestly believed those falsehoods.

It's understandable for individual people to make slips of the tongue regarding contracts. It is not understandable that senior members of the EU commission can make serious allegations of breach of contract against a company, and for no lawyer in the EU to double-check that they aren't dramatically incorrect.

Was the appropriate process for invoking Article 16 followed?

Having someone who is apparently ignorant of the implications of international treaties be able to invoke hostile clauses of those treaties is...disconcerting.

In particular, according to one report I read (sorry lost the link) invoking Article 16 was supposed to be preceded by notifying multiple people, and that notification did not happen. Again, yikes.

Summary

This series of events seems to indicate a failure of communication and facts at the highest level of the EU, leaving them making decisions on false premises.

Even worse, it almost makes Boris Johnson look good in comparison.

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