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Decision: Last week usa Announced to remove prioritization Issued under the Defense Production Act of Vaccines manufactured by Sanofi, AstraZeneca and Novabax. Orders for other vaccines will continue to be prioritized.
The Defense Production Act (DPA) allows the president to prioritize government orders. Accept and force companies to prioritize Order them. Companies with rated orders can also force their suppliers to prioritize their orders, which has implications for the supply chain.
Some vaccine manufacturers have complained that the use of DPA has disrupted vaccine supply chains outside the United States.
Theoretically, removing a priority rating should add flexibility to your supply chain, but it’s not clear if that will actually happen. The shortage of supplies is likely to be a real problem.
Chad Bourne, a senior fellow at the Peterson Institute for International Economics, who studies international trade, said, “We can remove the DPA prioritization, but pursue a small portion of this equipment with limited supply. There is still a lot of demand. “
background: By December 2020, the United States had prioritized 18 contracts for the COVID-19 vaccine, according to the report. Report of the Government Board of Audit..
However, vaccine manufacturers have told GAO that they are still struggling to get the chemicals they need to make their vaccines and may have to wait weeks for important ingredients.
Through Operation Warp Speed, the United States has invested more than $ 18 billion to support the development and purchase of the COVID-19 vaccine.another $ 1.5 billion spent expanding outsourced manufacturing facilities A person who manufactures vaccines.
However, the project did not spend much to expand the equipment and supplies needed to manufacture the vaccine.
Operation Warp Speed has invested $ 340 million to expand production of glass vials. In October 2020, Cytiva won a $ 31 million contract for supplies used to manufacture vaccines. In April 2021, Meissner Filtration Products received a $ 13.4 million contract to expand the domestic production capacity of components used in vaccine production.
Given the high demand, suppliers to vaccine manufacturers have expanded production, but most are at their own expense.
By the end of 2021, Millipo sigma, which manufactures vaccine production equipment, had invested approximately $ 70 million to double its capacity, according to a spokeswoman for the company.
Complaint: The lack of equipment and materials needed to produce vaccines has become a major issue, slowing production.
In December 2020, Pfizer significantly reduced its production targets due to a shortage of raw materials. The Wall Street Journal..
by New York Times, Pfizer asked the US government to evaluate its DPA priority in the fall of 2020, but did not receive it. Officials reported Concerned about competing Pfizer orders With other vaccine makers.
Novavax CEO Stanley Erck has repeatedly said that lack of raw materials and equipment has slowed his company’s vaccine production.
“There is some scrambling to get enough raw materials for all plants to run at full speed, but I think we’ve reached that,” Ark said in a conference call in March. Said in.
May, Erck told Yahoo Finance. We found that the production was delayed due to the lack of disposable parts such as large plastic bags needed to produce the vaccine.
Adar Poonawalla, CEO of the Indian Serum Institute of India, which manufactures both AstraZeneca and Novabax COVID-19 vaccines, blames the lack of equipment and supplies, especially for DPA.
“We are talking about free access to vaccines around the world, but if we can’t get the raw materials out of the United States, that would be a serious limiting factor,” said Punawara. World Bank event March.
A few weeks later, Punawara Followed on Twitter In a direct appeal to the United States to “lift the embargo on the export of raw materials from the United States so that vaccine production can be expanded.”
The real problem: recently Peterson Institute for International Economics Blog, Brown argued that it was unfair to consider DPA as an export ban. Instead, he pointed out the complete shortage of equipment as a real problem.
“I don’t know what lowered the priority. Everyone thinks they are. If there is a shortage, they think it is the cause. [the DPA]”But the real problem is lack of manpower,” he said.
Together with S & P Global Market Intelligence analyst Chris Rogers, Bown finds that shipments of vaccine supplies from U.S. companies to Indian serum laboratories have increased over the past few months despite the use of DPA. Did.
Effect: Pfizer called on the federal government to prioritize, but a Novabax spokeswoman said he welcomed the recent removal of DPA prioritization.
In a statement, Novavax said, “By lifting certain restrictions, we may be able to better manage our global supply chain, and this action is in great need of partners around the world. We are also grateful for the improved access to our supplies. “
In a sense, prioritization under the DPA is a dream come true. Companies can require suppliers to meet their needs quickly. However, Mr Brown said it is possible to imagine a scenario in which DPA prioritization has a net negative impact on a company’s supply chain.
“Maybe Novabax now has everything in the US facility … so they’ll get rid of these high-priority orders and free up all the factories that make Novabax. I like the idea .. elsewhere in the world, “said Bowen ..” They may not have been worried about Novavax’s priorities, but they are from AstraZeneca. I’m worried about my priorities. I’m probably competing with them. “
Novavax also divides the supply chain into two parts. Dosages for patients in the United States are manufactured domestically, while doses in other countries are manufactured in other countries.
US orders are subject to DPA priorities and may accelerate orders for essential equipment. However, international orders do not have a DPA rating, which may lower the priority of orders for equipment that serves those sites.
ABEC, a Pennsylvania company, manufactures the equipment needed to manufacture the COVID-19 vaccine, but downplays the importance of DPA prioritization. ABEC supplies the Indian Serum Institute with a large bioreactor for the production of Novavax vaccine.
“ABEC has a strong supply chain to support its customers, and DPA generally has little or no impact on our business,” a spokeswoman for the company wrote in an email. I am.
A AstraZeneca spokeswoman said the company is working closely with the U.S. government to provide the vaccine, but did not answer questions about changes to the DPA rating. Sanofi did not answer the question. It was.
Due to the opacity of the vaccine supply chain, it is difficult to say for sure how the decision to remove the prioritization of some orders will affect the supply chain.
Conclusion: This decision could change the way supplies are distributed and where they go, but according to Bown, the most important fact remains the same. In other words, there is not enough supplies.
“It’s not enough to go around,” he said. “If you want to solve the underlying problem, it’s not as easy as ringing your finger and saying’Let’s get rid of the DPA’… in reality, you need to make more of these inputs and raw materials.”
https://www.freightwaves.com/news/us-removes-defense-production-act-ratings-for-some-vaccines US removes Defense Production Act rating for some vaccines