Astrazeneca Share News (AZN)

By Allison Martell and Euan Rocha

May 7 (Reuters) - To fight the pandemic at home, the United
States gave its own vaccine manufacturers priority access to
American-made materials needed to make the shots.

As a result, the U.S. government laid claim not only to vast
quantities of finished COVID-19 vaccines but also to vaccine
components and equipment all along the supply chain, according
to a Reuters review of more than a dozen contracts involving
some major suppliers.

That has left some countries desperately in need of those
supplies to scramble for substitutes, exacerbating international
disparities in vaccine access, according to interviews with
suppliers, foreign manufacturers and vaccine market experts.

On Wednesday, President Joe Biden threw his support behind
waiving patents for COVID-19 vaccines, thrilling those who have
been pressuring his administration to help speed production of
doses worldwide. If adopted by the World Trade Organization, the
move would let other countries make their own copies of the
much-coveted shots.

But the waiver would not address a less conspicuous but
equally pressing problem: the growing worldwide shortage of
vaccine ingredients and manufacturing equipment. The United
States has a tight grip on a significant amount of those
materials, such as filters, tubing and specialized disposable
bags essential to making vaccines.

Countries ravaged by the virus - including India, where a
catastrophic explosion of cases has filled hospitals and morgues
- cannot make vaccines without such supplies, even with access
to manufacturers' cookbooks.

The problem stems from the U.S. reliance on a law dating to
the Korean War in the 1950s, called the Defense Production Act
(DPA), which gives federal agencies the power to prioritize
procurement orders related to national defense. For decades, the
law was used to supply the military as well as respond to
everything from natural disasters to roadblocks in the decennial
U.S. census.

The administration of former President Donald Trump invoked
the act to put the U.S. government first in line to buy
American-made vaccines as well as other products needed to fight
the COVID-19 pandemic. In turn, vaccine makers have priority
access to any supplies needed to fill U.S. orders.

Gavi - a vaccine alliance comprising international
organizations, governments, drug companies and others - lauded
the Biden administration’s moves to increase global access to
vaccines. Among other things, it cited the country's $4 billion
commitment to COVAX, a global vaccine buying consortium Gavi
co-leads with the World Health Organization.

But in response to questions about the DPA, Gavi said: “The
greatest challenge to COVAX’s goal of equitable access to
vaccines is constrained global supply. Export controls on raw
materials is a considerable contributor to this and ultimately
only serve to prolong the pandemic.”

A senior Biden administration official, speaking on
condition of anonymity, said there is no export ban, and all
U.S.-based suppliers continue to ship products abroad after
giving priority to U.S. manufacturers. The official said the DPA
has not caused the global shortages of vaccine materials, and
the problems stem instead from overwhelming demand.

"There's just not enough to go around," the official said,
noting that the administration is investing in increased raw
material production.

On Wednesday, Katherine Tai, the U.S. trade representative,
briefly mentioned in her statement about Biden’s patent decision
that the administration would “work to increase the raw
materials needed” to make vaccines. She did not elaborate.

A PLEA FROM INDIA

Vaccine components are produced all over the globe - in
countries including the United Kingdom and China. But some
leading suppliers, including Thermo Fisher Scientific Inc
, and the Danaher Corp units Cytiva and Pall, are
based in the United States. Reuters could not determine
precisely what share of vaccine materials and equipment are made
in America.

The DPA has helped the United States build a huge vaccine
production system, ensuring reliable access to finished doses
for Americans, and driving up revenue for U.S. pharmaceutical
companies.

About 45% of the U.S. population has received at least one
dose of a COVID-19 vaccine. Dozens of other countries, from
South Africa, to Guatemala, to Thailand, have vaccinated about
1% or less of their populations, according to data collected at
the University of Oxford in the United Kingdom.

The DPA has drawn criticism from vaccine makers around the
world, including the Serum Institute of India, the largest
manufacturer globally.

On Twitter in late April, chief executive Adar Poonawalla
requested “on behalf of the vaccine industry outside the United
States” that America lift its hold on raw materials “if we are
to truly unite in beating this virus.”

Starting this month, the company had planned to produce a
billion doses annually of a vaccine developed by U.S.-based
Novavax Inc. But that output will be more than halved
without American raw materials, according to a source familiar
with the company’s plans, speaking on condition of anonymity.

Serum is also manufacturing COVISHIELD, a licensed version
of the AstraZeneca Plc vaccine.

After weeks of public appeals from the Serum, the United
States last month offered India filters needed to produce
COVISHIELD. But India’s need for vaccines and supplies remains
vast. Serum is also meant to be a top supplier to other low- and
middle-income countries. COVISHIELD and the Novavax shot form
the backbone of the COVAX program.

Serum, which declined to discuss the raw materials issue
with Reuters, is not the only vaccine maker in need.

The South African vaccine maker Biovac Institute also relies
on a U.S. company for bioreactor bags, needed for cell cultures.
Biovac has been warned by its U.S. supplier that the usual lead
time for bags may more than double to 14 months because of the
U.S. DPA, chief executive Morena Makhoana told Reuters.
Manufacturers in some other countries say they are in better
shape. Brazil’s Butantan Institute has been able to buy supplies
from both the United States and Europe, an executive told
Reuters.

For instance, an order for supplies to make AstraZeneca’s
vaccine in the United States would be prioritized, even though
the shot is not yet approved for use in the country. That could
delay materials being sent to Serum, which is making the same
vaccine for use in India and many other countries.

For now, three manufacturers’ COVID-19 vaccines - Pfizer
Inc, Moderna Inc and Johnson & Johnson
- are approved for emergency use in the United States.

Asked about the global consequences of getting priority on
U.S. supplies, AstraZeneca did not comment and Moderna and J&J
declined to comment. Pfizer did not directly address the U.S.
DPA but said “we have gone to enormous efforts … as we seek to
serve populations all over the world.”

‘UNPRECEDENTED DEMAND’

Some suppliers say the industry would do a better job than
governments at managing limited resources to maximize access
globally.

“If the end goal is, let's produce vaccines, then we're big
believers that you need to let the industry connect the relevant
parts so that we can deliver the end product,” Thermo Fisher
executive vice president Michel Lagarde told Reuters.

The Biden administration official said experts from various
federal agencies discuss the use of the priority system during
daily operations calls. Sometimes officials can change U.S.
delivery dates to avoid disrupting other vaccine projects
abroad.

But suppliers are planning to get ahead of demand. Leading
purveyors Cytiva, Pall and Thermo Fisher are expanding
manufacturing space in the United States and abroad. Thermo
Fisher has nudged customers to clarify which needs are urgent
and which can wait days or weeks, and the company tries to find
time to fill orders even if they are not rated as priorities,
Lagarde said.

Cytiva said in a statement that it is expanding production,
but is itself limited by some raw materials shortages.

“The world is experiencing an unprecedented demand for
biopharmaceutical products, technologies, and solutions,” Cytiva
said.
(Allison Martell reported from Toronto and Euan Rocha from
Mumbai, India. Additional reporting by Krishna N. Das in New
Delhi, Wendell Roelf in Cape Town, Ludwig Berger in Frankfurt,
Eduardo Simões in Sao Paulo, Michael Erman and Carl O'Donnell in
New York. Editing by Michele Gershberg and Julie Marquis)