Public Money and Public Health
By Phil Mattera for the Dirt Diggers Digest
Yet Emergent BioSolutions, which has had to throw out
millions of doses of J&J Covid-19 vaccine because of serious production flaws, does
not have a single entry in the database.
This is not because
Emergent has had a perfect track record until the present. On the contrary,
investigations by the New York Times, the Washington Post and the Associated Press have reported that
probes by two federal agencies and by Johnson & Johnson, which contracted
with Emergent to manufacture the vaccine, had found serious deficiencies,
especially with regard to its efforts to prevent contamination.
If you read those
articles carefully, you will see that the findings come from unpublished
documents obtained through Freedom of Information Act requests or that were
leaked to reporters.
In other words, the
public was unaware of the deficiencies being found by inspectors from the Food
and Drug Administration and J&J auditors. There were no public enforcement
actions against the company that would have shown up in the regulatory data
collected for Violation Tracker. There are also no substantive references to
regulatory issues in the publicly traded company’s 10-K filing.
I also searched the Nexis news archive for articles or press releases about Emergent. Prior to the recent revelations, almost all the coverage about the company focused on the numerous government contracts it has received.
Two decades ago, it
was the nation’s sole producer of the anthrax vaccine, as a result of which it
received many millions of dollars in federal contracts. It also received
funding to work on drugs for Ebola and Zika prior to getting on the Covid-19
gravy train.
Among the agencies
providing this backing has been the Biomedical Advanced Research and
Development Authority, an office within the Department of Health and Human
Services.
BARDA was apparently
aware of shortcomings at Emergent but did little about them. The Times
investigation found that in dealing with the company the agency “acted more as
a partner than a policeman.”
Along with the federal
largesse, Emergent has received millions of dollars in state economic
development incentives. In 2004, Maryland provided up to $10 million in
assistance for the facility that was producing the anthrax vaccine. The state
provided a $2 million loan when Emergent built a new headquarters in 2013, with
Montgomery County and the city of Gaithersburg kicking in another $1 million.
More public money was
provided to the company’s Baltimore operations, where the Covid-19 work has
been performed pursuant to an estimated $1.5 billion in manufacturing
contracts.
While the production
problems were kept quiet, Emergent was able to pretend that all was well at the
company. Its CEO Robert Kramer’s total compensation jumped to $5.6 million last
year. The company’s stock price at one point last summer soared to $135.
Now all that is over.
The stock price is at less than half that level. The company is facing multiple
investigations whose results are likely to be made public. Kramer should not
expect a big boost in pay.
It is unclear how much
Emergent’s practices have set back the country’s campaign to defeat the
coronavirus. Yet it seems clear this was an egregious case of a corporation
living high on public money without paying adequate attention to public health.