Clyburn and Maloney Release Initial Findings from Investigation into Emergent BioSolutions

May 19, 2021
Press Release
Evidence Raises New Questions About Trump Administration Contracts, Company’s Failure to Address Manufacturing Problems, Executive Bonuses

Washington, D.C. (May 19, 2021) — Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and Rep. Carolyn B. Maloney, Chairwoman of the Committee on Oversight and Reform, released a staff memo identifying initial findings and releasing new documents obtained in the Committees’ ongoing investigation into Emergent BioSolutions, Inc. (Emergent).  Documents released by the Committees today shed new light on contracts awarded by the Trump Administration in 2020 and provide additional details on the extent of manufacturing failures that led to the destruction of millions of coronavirus vaccines since October 2020.

 

Today’s memo states:  “The Committees’ investigation raises troubling new questions about the lucrative contract Emergent received under the Trump Administration, the company’s failure to address manufacturing problems that led to the destruction of millions of desperately needed coronavirus vaccine doses, and large bonuses paid to top executives despite these failures.”

 

The memo is being released in advance of today’s testimony by Emergent’s CEO, Robert G. Kramer, and Executive Chairman, Fuad El-Hibri, before the Select Subcommittee.

Below are the findings from the joint investigation.

 

The Trump Administration agreed to pay Emergent millions despite its failure to produce vaccines. 

  • Under the May 2020 contract issued by the Trump Administration, Emergent has charged the federal government $27 million per month in reservation fees to maintain its “readiness” to manufacture vaccines pursuant to “current good manufacturing practices” whether or not the company was producing vaccines.
  • Under these terms, taxpayers have already paid Emergent more than $271 million.  Emergent executives have acknowledged that the reservation fees were among the “primary drivers” of the company’s high profit margins last year.  The Biden Administration reduced monthly payments to Emergent by more than half of the fee after the contamination came to light. 

Emergent’s systemic failure to address serious deficiencies at its facility led to the destruction of millions of vaccine doses. 

  • From June 9 through June 18, 2020, Janssen Pharmaceuticals conducted a virtual audit of Emergent’s Bayview facility.  On July 24, Janssen sent Emergent a report with its audit findings, which concluded that Emergent’s “quality systems may have weaknesses or gaps that require CAPA [Corrective and Preventive Actions].”  The report also stated:  “The site virus contamination control strategy is deficient,” noting that “There is not a formal Bayview contamination control strategy for the site“ and “the disinfectant program used in the facility is deficient.”
  • On June 17, 2020, Carlo de Notaristefani, the lead manufacturing advisor for Operation Warp Speed, issued a private report on Emergent.  The report identified multiple “risks” at the Bayview facility, noting:  “Most of the large scale existing equipment is not suitable for the new processes, and will be either removed or mothballed,” and “staffing plans presented seem inadequate to the level of current activities required for full scale production of 3 programs.”  The report also raises other concerns about facility readiness, personnel, and compliance. 
  • Despite the serious nature of these findings, Emergent failed to remediate the problems at the facility.  Ultimately, this led to the contamination of millions of vaccine doses in separate incidents in October 2020, December 2020, and February 2021.  

Emergent has privately admitted to serious manufacturing problems. 

  • In its response to an April 2021 Food and Drug Administration (FDA) inspection report, Emergent admitted that the “sudden scale-up to full-scale manufacturing activities for two different Covid-19 vaccine drug substances” contributed to “a dramatic increase in storage and staging demands” and “strained the capacity” of Emergent’s equipment as the facility “operated at full capacity for the first time.”  Emergent also acknowledged FDA’s finding that Emergent employees were not adequately trained. 

Key official who awarded contracts had previously been paid by Emergent. 

  • New documents released by the Committees show that Dr. Robert Kadlec—a former consultant to Emergent who later became a senior Trump Administration official—received at least $360,000 in consulting fees from Emergent prior to joining the Department of Health and Human Services (HHS) and awarding Emergent billions of dollars in contracts.  The awards included a $261 million order for anthrax vaccines in 2019; a ten-year, $2 billion contract for smallpox vaccines in 2019; and $650 million in coronavirus vaccine manufacturing agreements from 2020, which Dr. Kadlec later acknowledged were a risky decision.  

Company executives reaped a windfall as vaccines were destroyed. 

  • In February 2021, Emergent awarded millions in raises and bonuses to its senior executives, praising them for their “exceptional leadership” and “exemplary” performance in 2020—despite the dysfunction at the Bayview plant. 
  • Emergent even awarded the executive vice president responsible for manufacturing a “special bonus award” of $100,000 for “significant CDMO [Contract Development and Manufacturing] expansion related to COVID-19” and in recognition of “his exceptional performance in 2020.”

 

On April 19, 2021, the Select Subcommittee and the Committee on Oversight and Reform opened a joint investigation into Emergent.

 

Click here to read today’s memo.

 

Click here to read Exhibits 1 – 9, here to read Exhibits 10 – 18, and here to read Exhibits 19 – 26 released by the Select Subcommittee and the Committee on Oversight and Reform.

 

Click here to watch the Select Subcommittee’s Hybrid hearing on “Examining Emergent BioSolutions’ Failure to Protect Public Health and Public Funds” on May 19, 2021, at 10:30 a.m.

 

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Issues: 
117th Congress