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US bet big on COVID-19 vaccine manufacturer, even as problems mounted

WASHINGTON — More than eight years ago, the federal government invested in an insurance policy against vaccine shortages during a pandemic. It paid Emergent BioSolutions, a Maryland biotech firm known for producing anthrax vaccines, to have a factory in Baltimore always at the ready.

When the coronavirus pandemic arrived, the factory became the main U.S. location for manufacturing COVID-19 vaccines developed by Johnson & Johnson and AstraZeneca, churning out about 150 million doses as of last week.

But so far not a single dose has been usable because regulators have not yet certified the factory to allow the vaccines to be distributed to the public. Last week, Emergent said it would destroy up to 15 million doses’ worth of the Johnson & Johnson vaccine after contamination with the AstraZeneca vaccine was discovered.

Emergent and government health officials have long touted their partnership as a success, but an examination by The New York Times of manufacturing practices at the Baltimore facility found serious problems, including a corporate culture that often ignored or deflected missteps and a government sponsor, the Biomedical Advanced Research and Development Authority, that acted more as a partner than a police officer.

Previously undisclosed internal documents and interviews with current and former federal officials and former company employees depict a factory operation that was ill-equipped to take on such a mammoth manufacturing task, despite Emergent’s having received a $163 million federal contract to improve the facility and prepare it for high-volume production.

The loss of the Johnson & Johnson doses was not the first time the company threw out coronavirus vaccine for fear of contamination. Between early October and January, Emergent discarded five lots of AstraZeneca vaccine — each the equivalent of 2 million to 3 million doses — because of contamination or suspected contamination, according to internal logs, a government official and a former company supervisor.

Audits and investigations — including ones conducted in 2020 by Johnson & Johnson, AstraZeneca, two federal agencies and Emergent’s own quality evaluators — found that Emergent had not followed some basic industry standards at the Baltimore plant, and identified repeated shortcomings in efforts to disinfect and prevent contamination.

While audits always find problems, federal officials and outside experts said that the pattern of lapses suggested deeper quality issues.

“These are the fundamental steps,” said Dr. Ajaz Hussain, a pharmaceutical quality expert who oversaw efforts by the Food and Drug Administration to ensure quality in drug development and manufacturing from 2000 to 2005. “If you are making mistakes or errors in the fundamentals, what else is wrong with your system? That would be my question.”

An audit conducted for AstraZeneca specifically highlighted the risks of viral cross-contamination, which experts believe was responsible for tainting the millions of Johnson & Johnson doses, according to a review of the confidential document by The Times. The audits and investigations also flagged a persistent problem with mold in areas required to be kept clean, poor disinfection of some plant equipment leading to growth of bacteria, the repeated approval of raw materials that had not been fully tested, and inadequate training of some employees.

In their own audit last July, Emergent’s auditors said errors “are not investigated to determine root cause, or are not investigated adequately,” a report stated. “Investigations are terminated without sufficient cause.”

In one example, the Emergent auditors said mold had been repeatedly discovered in the room where cell cultures were grown. Mold can be serious if airborne spores contaminate the vaccine substance. Emergent workers conducted “essentially no investigation” beyond checking the wheels of one cart for mold, and wrongly classified the incident as minor, the audit said.

While the Baltimore plant remains under scrutiny, another 62 million doses of the Johnson & Johnson vaccine made there are in jeopardy until it can be determined whether they were also contaminated. Over the weekend, Johnson & Johnson assumed responsibility for the manufacturing at the direction of the Biden administration, which also limited future production to only the Johnson & Johnson vaccine.

Because other manufacturers are now churning out so many COVID-19 vaccine doses, it does not appear that the disruptions in Baltimore will upend the Biden administration’s expedited timetable for vaccine supplies and availability. But health experts worry the revelations could heighten safety concerns and make some people more wary about getting shots.

Emergent is a longtime government contractor that has spent much of the last two decades cornering a lucrative market in federal spending on biodefense. The Times reported last month that sales of its anthrax vaccines to the Strategic National Stockpile accounted for nearly half of the stockpile’s half-billion-dollar annual budget throughout most of the last decade, leaving the federal government with less money to buy supplies needed in a pandemic.

In response to questions about the Baltimore plant, an Emergent spokesman, Matt Hartwig, said in a statement that the company had been cooperating with the federal government “to address issues” and “resolve them in support of the federal COVID response.” He said the company had “a proven track record as a world-class provider of both bulk drug substances and sterile injectable drug products” and that it had “rigorous safety, quality and compliance programs, which include programs, policies, and processes that allow early identification of issues and means to address them.”

He added, “Any allegation that our safety, quality and compliance systems are not working or that we do not take these responsibilities seriously is false.”

But four former company officials, speaking on the condition of anonymity because they had signed nondisclosure agreements or feared retaliation, described an environment where top Emergent leadership tolerated and even encouraged the flouting of federal standards for manufacturing and marketing products.

One of the former officials said that as the company scrambled to meet the heavy demands of vaccine production, a senior manufacturing supervisor often responded to reports of quality errors by asking: “Do you want me to make drugs or fix issues? I don’t have time to do both.”

Even before the COVID-19 vaccine production began, there were concerns about Emergent’s ability to deliver on its contract with the government, The Times found. As a test of Emergent’s readiness, the original contract required the company to demonstrate that it could rapidly produce 50 million doses of a pandemic influenza vaccine, but Emergent hadn’t done so by the original deadline last June.

“This was the way that you demonstrate you’re surge-ready,” said Dr. Nicole Lurie, who until 2017 oversaw the office that awarded Emergent the 2012 contract. Not meeting that requirement after eight years, she said, “would have been of huge concern to me.”

In the end, as the coronavirus swept across the country, federal officials said they had little choice but to turn to Emergent because few companies based in the United States were able to make the type of vaccines developed by Johnson & Johnson and AstraZeneca.

“There weren’t a lot of alternatives,” said Dr. Robert Kadlec, who oversaw the agency that awarded the manufacturing contract under the Trump administration. “We even looked at veterinary vaccine facilities around the country. We couldn’t find the capacity.”

Most large pharmaceutical companies have spurned this work because of the relatively small payouts and the hassle of government contracting. Emergent, by contrast, has deployed a well-funded lobbying apparatus and a web of Washington connections to build its business around preparations for potential bioweapon attacks and infectious disease outbreaks.

Emergent’s stock has suffered in the last week, closing Monday just under $79, down from $94 before news broke that the doses had been ruined. Still, the COVID-19 work has been lucrative for the company.

In all, Emergent’s COVID-19 manufacturing deals are worth up to $1.5 billion, according to company presentations and calls with investors. Profitability for 2020 was “off-the-chart successful,” the company’s chief executive, Robert Kramer, boasted to investors in March.

A web page promoting the Department of Health and Human Services' contract with Emergent BioSolutions to retrofit and expand the company's facility in Baltimore. (Biomedical Advanced Research and Development Authority/Department of Health and Human Services)
A web page promoting the Department of Health and Human Services' contract with Emergent BioSolutions to retrofit and expand the company's facility in Baltimore. (Biomedical Advanced Research and Development Authority/Department of Health and Human Services)

The last one standing

The government’s investment in Emergent’s Baltimore facility was rooted in a lesson from the last pandemic, the 2009 H1N1 influenza outbreak that claimed an estimated 12,000 lives in the United States.

A government report the next year noted that the nation had developed vaccines for the novel pathogen “in record time,” but that “the vaccines were not broadly available before the virus had spread widely among the U.S. population.”

To ensure that didn’t happen again, the report determined, the federal government should partner with companies and universities to expand and sustain domestic manufacturing sites.

In 2012, the Department of Health and Human Services awarded three contracts, including one to Emergent to retrofit and expand its Baltimore site. And between 2015 and 2019, the government placed a handful of relatively small orders for doses of treatments and vaccines being developed for use against viruses including Ebola and Zika.

The contract also required Emergent to stand ready to produce up to 50 million doses of vaccine within four months in the event of an influenza pandemic. To show that it was up to the task, Emergent was supposed to work with a company developing a flu vaccine candidate and seek FDA approval to manufacture it by June 2020.

As the deadline neared, however, Emergent still had not met the requirement. The vaccine candidate of its chosen partner company had failed in clinical trials, and Emergent had not found a replacement. “Emergent does not have a candidate, strategy or plan for fulfilling the flu requirement,” according to a government document in June 2019. “Emergent needs to make this a priority so they are not in default.”

By then, the government had scaled back its partnership with Emergent, shortening its maximum possible duration to 15 years from 25 years.

Kadlec, who ran the office overseeing the contract, said he commissioned a review of the government partnerships, including the one with Emergent, that concluded in 2019 that their ability to deliver in a pandemic remained largely unproven.

“What I perceived is that we did not pressure-test those systems on a regular basis to see what they could do,” said Kadlec, who had previously worked as a consultant for Emergent. “The military term is ‘live fire.’”

When the June 2020 deadline arrived, Emergent hadn’t met the flu requirement, but the government nevertheless awarded it a $628 million contract to manufacture COVID-19 vaccines.

By then, only two of the three government-funded centers remained, and Emergent’s was the only one with the ability to make the type of vaccines being developed by Johnson & Johnson and AstraZeneca. Justifying an exception to normal contracting requirements, the government said it needed to act fast.

“Discussions with Emergent have revealed that they are in discussions with multiple vaccine developers interested in reserving the capacity” at the Baltimore plant, according to a government contracting document. Should that happen, it added, the government “would not be in a position to manufacture vaccines in a relevant time frame” to meet the Trump administration’s goal of 300 million vaccine doses.

Kadlec said he knew it was a risky decision.

“It’s like trying to take the finest Champagne in France and recreate it in parts of the United States,” he said. “You could bring the grapes over, but it’s a science and an art.”

A majority of the contract — more than a half-billion dollars — was allocated for monthly fees to reserve manufacturing space at Emergent’s facilities. Emergent’s chief financial officer acknowledged during a July call with Wall Street analysts that for the company, there were “minimal costs associated with the reservation piece itself,” and executives have since cited the reservation fees during investor calls as one reason for an increase in Emergent’s gross profit margins.

Hartwig, the Emergent spokesman, said the government funding “reserved manufacturing capacity and allowed Emergent to acquire the equipment and hire the workforce necessary to support vaccine production on a scale of 1 billion doses annually.”

The government later extended the flu vaccine deadline under the original contract. A spokeswoman for the agency administering the deal, the Biomedical Advanced Research and Development Authority, or BARDA, said Emergent’s COVID-19 work “is meeting” the original contract’s “intent.”

Meanwhile, the company struck separate deals with Johnson & Johnson and AstraZeneca worth roughly another $875 million. In a July conference call with investors, Emergent announced that it was tripling its projected contract manufacturing revenue for the year.

“Emergent is uniquely prepared to answer the call for COVID-19 pandemic,” Kramer told investors.

A photo provided by the office of Maryland Gov. Larry Hogan shows Emergent BioSolutions Chief Executive Officer Robert Kramer, right, leading Hogan, center, on a tour of the company's facility in Baltimore on Feb. 8, 2021. (Joe Andrucyk/Office of Gov. Larry Hogan)
A photo provided by the office of Maryland Gov. Larry Hogan shows Emergent BioSolutions Chief Executive Officer Robert Kramer, right, leading Hogan, center, on a tour of the company's facility in Baltimore on Feb. 8, 2021. (Joe Andrucyk/Office of Gov. Larry Hogan)

A pattern of lapses

In the days that followed, investors flocked to Emergent’s stock, pushing it to a record high. But out of public view, internal monitors and auditors from the company’s new partners, Johnson & Johnson and AstraZeneca, were finding the Baltimore factory’s procedures deficient, especially in disinfecting the plant and preventing contamination.

Internal logs show that Emergent had to toss out one batch of AstraZeneca’s vaccine in early October because of suspected contamination, and four more in December. Those four were spoiled by bacterial contamination of equipment, a former company official said.

In November, production of a batch of Johnson & Johnson vaccine was discarded after workers “hooked up” the wrong gas line and accidentally “suffocated” the cells where the virus for the vaccine is grown, the logs show. The next month, the records indicate, workers making AstraZeneca’s vaccine deviated from manufacturing standards on average more than three times a day. About one-fifth of the deviations were classified as major.

Because of the pandemic, most of the auditors drew their conclusions from documents and video tours, during which Emergent workers controlled the camera angles, one former company official said.

Johnson & Johnson’s auditors said monitoring reports for bacteria or other contaminants were filed four to six months late. AstraZeneca’s said that Emergent repeatedly loosened monitoring criteria so it appeared to meet them, resorting to measures like “historical averages.” But even then it failed the tests, the report said.

In another audit, BARDA officials documented similar concerns, classifying some of them, including the risks of microbiological contamination, as “critical.” That designation is reserved for the most serious problems that pose an immediate and significant risk.

Emergent’s own internal audit in July also said the flow of workers and materials through the plant was not adequately controlled “to prevent mix-ups or contamination.”

The reports echoed quality-control shortcomings documented in an April inspection by the FDA, reported earlier by The Associated Press, that concluded the facility was “not ready for commercial operations.”

Multiple audits underscore how poorly the company was prepared for the huge workload it accepted.

The COVID-19 projects required significantly more testing to ensure materials remained stable, but Emergent had just one employee coordinating it all, the BARDA audit found. Emergent acknowledged at the time that its testing system was “not ideal” and pledged to train at least one more Emergent worker and hire a third. BARDA did not respond to requests for comment on its audit or any of the others, beyond saying that it had “worked with Emergent to resolve the issues” raised during the FDA inspection.

Another internal investigation in August found that Emergent approved four raw materials used to produce AstraZeneca’s vaccine without first fully testing them. That type of shortcut, called a conditional release of material, occurred on average twice a week in October, internal logs show. The measure was deemed necessary because the company was working with shortened production times, testing backlogs and the needs of Operation Warp Speed, the Trump administration’s crash vaccine development program. And while a manager “knowingly deviated” from standards, the report said, the batches of vaccine would be not released without quality and safety tests.

Plant supervisors often cited pressures from Operation Warp Speed as a justification for glossing over violations of manufacturing guidelines, according to one former company official. But even before Emergent launched into COVID-19 vaccine production, a major client charged that the firm was too complacent about mistakes.

A New Jersey-based company called Soligenix had hired Emergent to produce its experimental vaccine against ricin, a toxin, for use in clinical trials. But shortly after the trial began in December 2019, Emergent informed Soligenix that it had failed to properly test the vaccine before releasing it, according to Soligenix’s filing with the Securities and Exchange Commission, which was reported earlier by The Washington Post.

By then, two volunteers had already received doses, the filing stated.

Forced to suspend the trial, Soligenix is now seeking $19 million in damages from Emergent, which has denied negligence or deliberate wrongdoing.

In a follow-up audit in February 2020, Soligenix auditors said “the primary driver” of the mistake was that Emergent had fostered “a culture where written instructions are regularly not followed with no consequences.”

A vial of the Johnson & Johnson COVID-19 vaccine in Jersey City, N.J., on March 5, 2021. The Emergent BioSolutions plant in Baltimore that recently had to scrap up to 15 million ruined doses of COVID-19 vaccine had flouted rules and downplayed errors, according to internal audits, ex-employees and clients. (Bryan Anselm/The New York Times)
A vial of the Johnson & Johnson COVID-19 vaccine in Jersey City, N.J., on March 5, 2021. The Emergent BioSolutions plant in Baltimore that recently had to scrap up to 15 million ruined doses of COVID-19 vaccine had flouted rules and downplayed errors, according to internal audits, ex-employees and clients. (Bryan Anselm/The New York Times)

62 million doses in the balance

Shortly before 6:20 p.m. on March 25, an urgent email landed in the inboxes of top officials at the Department of Health and Human Services. “Developing Situation _ Emergent Bayview,” the subject line read.

What followed was even more alarming: “Viral cross-contamination confirmed in the control cells for JANSSEN GMP Lot #8.”

The message, referring to the Johnson & Johnson vaccine production at Emergent’s Baltimore factory, set off a series of hurried nighttime telephone calls, according to officials familiar with the situation.

The Johnson & Johnson and AstraZeneca vaccines use the same technology: A harmless version of a virus — known as a viral vector — is transmitted into cells to make a protein that stimulates the immune system to produce antibodies.

Sometime in February, Emergent workers had unknowingly contaminated Johnson & Johnson’s viral vector with AstraZeneca’s. The error was not discovered for weeks, until, in one of the final checks before release, Johnson & Johnson sampled a batch of 13 million to 15 million doses’ worth of vaccine for purity.

In short order, top Biden administration health officials directed a hold on shipments from the Baltimore facility and instructed Johnson & Johnson executives to take charge of its operations. Days later, they quietly told AstraZeneca officials their vaccine would no longer be made at the Baltimore plant, to avoid a repeat of that error.

At a Monday morning staff meeting at the plant, Emergent officials claimed the mistake was an isolated incident and the media had exaggerated its significance, according to a person briefed on the meeting. They urged workers to be proud of what the plant had accomplished in such a short time.

But quality-control managers are now required to test anew every lot of Johnson & Johnson vaccine made at the plant — 62 million doses in all — to make sure they weren’t also contaminated. Another roughly 70 million doses of AstraZeneca’s may also need to be tested.

FDA inspectors are expected to intensely scrutinize the plant before certifying it to release doses to the public. It remains uncertain whether that would occur in time for Johnson & Johnson to deliver the 24 million doses it has promised to ship to the federal government this month.

In the meantime, the Emergent factory faces a complex and costly makeover to devote itself solely to producing the Johnson & Johnson vaccine. Experts said it could take weeks to phase out production of AstraZeneca’s vaccine at the 112,000-square-foot plant and restart it somewhere else. Emergent announced on Monday that the government had awarded it another $23 million to help expand Johnson & Johnson’s production lines.

The plant remains a risky bet for the government. While Johnson & Johnson is expected to roughly double the number of supervisors on-site, to about 12, the workforce of hundreds is still Emergent’s. Some federal officials are privately concerned that the government is stuck in an unhappy marriage with Emergent and that Johnson & Johnson, whose manufacturing expertise is largely overseas, may not be able to salvage it.

For President Joe Biden, who has vowed to “always level with the American people,” the factory’s error — which was not known publicly until The Times reported it last week — is as much a public-relations problem as a supply problem.

Even without any doses made by Emergent, administration officials say they will have enough vaccine by the end of May to cover as many as 240 million of the roughly 260 million American adults. That puts them on track to meet Biden’s goal of having enough for everyone who wants to be vaccinated.

But the story of the ruined doses is also unfolding against the backdrop of a highly politicized public health crisis, just as the administration is trying to convince skeptics that COVID-19 vaccines are safe.

“I want to emphasize the issue at the Baltimore plant did not impact any J&J doses that had been distributed, as all J&J finished doses to date were produced in a different, FDA-approved facility,” Jeffrey Zients, the White House coronavirus response coordinator, told reporters last week.

The Biden administration must also figure out how to rein in a company accustomed to getting its way with the government.

After the administration announced Saturday that Johnson & Johnson would take control of the COVID-19 manufacturing from Emergent, the company issued its own statement Sunday night noting that it “continues to own and operate” the plant while also suggesting it welcomed “the additional oversight and support.”

The Biden team was apparently displeased. Hours later, sometime past midnight, the statement was amended to acknowledge that Johnson & Johnson now has “final signoff of manufacturing” its vaccine at the Baltimore plant.

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