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The European Union and AstraZeneca are locked in a row over COVD-19 vaccine deliveries

The European Union and AstraZeneca are locked in a row over COVD-19 vaccine deliveries after the Anglo-Swedish drugmaker announced it couldn't meet its promised supply targets for the bloc for the beginning of the year.

The delay means the EU could face a 60 percent cut to the tens of million of doses it had ordered, a further blow to the bloc's vaccination campaign which is already lagging behind the U.S. and Britain.

"Europe invested billions to help develop the world's first COVID-19 vaccines," EU chief Ursula von der Leyen said on Tuesday as tensions grew over the vaccine schedule: "Now, the companies must deliver."

So why is AstraZeneca struggling to make good on its promises, how might the bloc force the company to do so, and what does the delay mean for the rollout of vaccines in the EU?

What's the current situation?

AstraZeneca, which developed its shot with Oxford University in the UK, told the EU on Friday it would not be able to meet its agreed vaccine supply targets up to the end of March.

"Initial volumes will be lower than originally anticipated due to reduced yields at a manufacturing site within our European supply chain," AstraZeneca said. A partner plant in Belgium is thought to be where the problem started.

As an example of the shortfall the EU could face, 8 million AstraZeneca doses were meant to reach Italy this quarter but only 3.4 million will arrive, while Austria will receive only 600,000 of a promised 2 million.

The firm also appears to be facing wider supply problems, telling Thailand and Australia it was experiencing "a significant supply shock" that would cut supplies below what was agreed.

While the EU's drug regulator has yet to approve AstraZeneca's vaccine – it's expected to do so on January 29 – the bloc secured around 300 million doses from the company through an Advance Purchase Agreement made in August.

Part of the deal included the bloc reportedly giving AstraZeneca an upfront payment of $409 million for the inoculations, in part to help speed up its production. Now with the deliveries postponed, the EU could see a 60 percent reduction of the 31 million doses it was promised in the first quarter of 2021

Why is the EU angry?

There are growing concerns that pharmaceutical groups, including Pfizer, which announced a short-term slowdown in supplies earlier in January, might be selling the earmarked doses to higher bidders outside the bloc.

Since Friday, the EU has called on AstraZeneca to find flexible ways to deliver the promised doses, while also calling for data on how many vaccines it has exported to other countries.

But EU Health Commissioner Stella Kyriakides said on Monday: "The answers of the company have not been satisfactory so far."

"We want clarity on transactions and full transparency concerning the export of vaccines from the EU," she added, saying the company's plan to supply "considerably fewer doses" than agreed was "not acceptable."

The bloc had "pre-financed the development of the vaccine and the production," she said. Now, the EU "wants to see the return."

Von der Leyen also spoke to AstraZeneca's CEO Pascal Soriot to remind him of the firm's commitments. A company spokesperson said Soriot told her he was doing everything he could to bring the vaccine to millions of Europeans as quickly as possible.

An EU official involved in the talks also said the bloc had asked AstraZeneca if it could divert doses produced in Britain to the bloc, at least through March, but apparently, the company did not give what was considered a sufficient answer to the question.

"AstraZeneca has been contractually obligated to produce since as early as October and they are apparently delivering to other parts of the world, including the UK, without delay," said EU lawmaker Peter Liese, who belongs to the same party as Germany's Chancellor Angela Merkel.

"The flimsy justification that there are difficulties in the EU supply chain but not elsewhere does not hold water, as it is of course no problem to get the vaccine from the UK to the continent," he added.

What are the EU's options?

The EU's first move has been to call for drugmakers to register their vaccine exports in advance so the bloc can keep track of what they are doing and make sure higher bidders are not being prioritized.

"In the future, all companies producing vaccines against COVID-19 in the EU will have to provide early notification whenever they want to export vaccines to third countries," Kyriakides said.

Von der Leyen said, "we will set up a vaccine export transparency mechanism" to "ensure" the firms meet their contractual obligations to the EU, with several countries backing the plan.

Germany's Health Minister Jens Spahn explained on ZDF television: "I can understand that there are production problems but then it must affect everyone in the same way.

"This is not about Europe first, but about Europe's fair share."

However, some EU countries want to go further, with several considering suing AstraZeneca for a breach of contract if the company does not honor its delivery schedule.

Former Italian Prime Minister Giuseppe Conte, who resigned on Tuesday, said Italy could sue both AstraZeneca and Pfizer/BioNTech over what he described as "serious contractual violations, which cause enormous damage to Italy and other European countries."

And despite member states having separate supply contracts with the company, Latvian foreign affairs minister Edgars Rinkevics told local radio they would consider taking "coordinated" legal action as a bloc.

What is the company and the UK saying?

AstraZeneca, which has its headquarters in the UK, has proposed bringing forward some deliveries of its vaccine to the EU, according to EU officials familiar with the case, offering to start supplying vaccines one week earlier than planned.

One source said the firm had also revised its supply goals upward for February from the cuts announced last week. However, the company reportedly offered no clarity on supplies for March and another EU official directly involved in the talks said there was no sound offer to increase supplies.

Both AstraZeneca and the EU Commission have declined to comment on details of the talks, but the latter said the EU wanted "a precise delivery schedule."

While the first doses of AstraZeneca inoculation – made for the UK, the first country to approve the vaccine – were manufactured in the Netherlands and Germany, the majority of shots are set to be produced at factories in Britain.

Britain's vaccine deployment minister Nadhim Zahawi was optimistic about the chances of the UK getting supplies, saying that while they were tight, he was confident AstraZeneca and others would meet their commitments.

"Any new manufacturing process is going to have challenges," he told the BBC. "It's lumpy and bumpy, [then] it gets better, it stabilizes and improves going forward."

UK Health Minister Matt Hancock, hitting back at the EU proposal to restrict the exports of shots, said protectionism was not the right approach, adding Britain would try to work with the bloc to ensure there was no disruption to vaccine supplies.

Could this impact the EU's vaccination program?

On top of Pfizer-BioNTech saying it would also have to delay vaccine shipments for the next few weeks, Friday's AstraZeneca announcement could put the EU's vaccination roll-out in jeopardy.

Von der Leyen, who has spearheaded efforts to have the European Commission procure more than 2 billion doses of vaccines for the EU's 450 million-strong population, had said the goal was to inoculate 70 percent of adults by the end of August.

However, so far fewer than 8.5 million have been vaccinated, with the new delays set to make her goal ever more difficult to achieve.

France's Health Minister Olivier Veran told a news conference on Tuesday that any push-backs on AstraZeneca's vaccine would hit all European countries, despite EU members such as Malta, Denmark and France recently accelerating their programs.

As part of a longer-term strategy to head off this and future health crises, Von der Leyen announced the EU would draft a public-private entity under a new European Health Emergency Response Authority.

But in the meantime, the EU will have to find ways to recoup its losses to ensure the bloc is taking care of its citizens at the same rate as its global competitors.

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