While President Joe Biden’s newly released plan to speed up vaccine distribution is admirable, its success is highly dependent on the Trump administration’s legacy on vaccine production and its critical supply chain, from specialized ingredients to critical auxiliary items such as glass vials.
Thursday’s revelation by the new administration that the Trump administration had no vaccine distribution plan, following the recent news that there is no additional COVID-19 vaccine in reserve for second doses, hammers this home. In the absence of a federal stockpile, accelerated vaccine distribution requires scaled up and sustained vaccine production that meets both U.S. and foreign needs. It also remains unclear how much the Trump administration knew about the vaccine supply chain, let alone passed such data onto the Biden team. Thus, the first and critical step is to get beyond the Trump Administration’s apparent supply chain “black box” — the information deficit.
The Biden administration took the right action today, its first full day in office, to issue an Executive Order directing agencies to utilize the Defense Production Act (DPA), among other tools, to prioritize production. Yet, the DPA unfortunately is not a panacea. Simply put, even with the DPA invoked, it will be difficult to change short term supply-side realities — especially for items that had long lead times. But it’s important to try.
Biden administration statements aside, it is hard to know from the public record how fragile the COVID-19 vaccine supplier base is today and whether supply chain bottlenecks exist that can derail the Biden distribution plan. One can only hope that the Trump administration, knowing that multiple vaccine firms would be racing to produce billions of vaccine doses and very well could draw on raw materials and equipment produced by the same suppliers, holistically surveyed the supplier base and identified areas of vulnerability.
Unfortunately, what we do know on this subject suggests that the Trump administration took a more hands-off approach — relying on private sector vaccine suppliers to tend to their supplier base rather than taking government action to identify overall supply chain risks and tackle this key challenge holistically.
Indeed, recent press reports indicate that Pfizer has had some supplier issues and requested last year that the Trump administration invoke the DPA to address its ability to access specialized vaccine inputs. What is puzzling is why Pfizer was not issued a DPA rated order for such critical vaccines in the first place, which not only affords this order “priority” over other orders, but would in turn have allowed Pfizer to flow down rated (priority) orders to its suppliers in order to with supply chain issues.
It also appears that rated orders were not issued to Moderna, Johnson & Johnson and other firms for vaccine production – let alone for the variety of supplies needed to store, transport, and administer the doses. Publicly available records, including a November 2020 GAO Report on DPA use, only show very sporadic DPA actions related to vaccines, mostly for syringes.
Today’s EO is a good first step. What comes next is even more important.
We are fighting a war against COVID-19 and the U.S government needs to be fully armed information-wise. Thus, a crucial first step is to peel back the curtain on the vaccine supplier base – using its survey authority under the DPA and other laws to immediately and expeditiously issue data requests to key vaccine input and equipment providers in order to gain a clear understanding of where supply problems lie. Simply put, a pandemic is not the time for vaccine producers and input suppliers to limit the government’s visibility into these supply base matters.
Then, once armed with the facts the new administration should consider its limited options. One of the few realistic, short term approaches is to issue rarely used DPA allocation orders, which can require suppliers to use more of their industrial capacity for national security needs (i.e., production of key vaccine ingredients or equipment).
If, for example, vaccine input suppliers produce a range of non-COVID vaccine items today but can shift more resources toward vaccine inputs in the short term, DPA allocation actions can potentially produce short term results. Thus, the Biden team should use the prospect of invoking this DPA allocation authority as a negotiating tool with suppliers, literally one by one, to try to expand production now.
In contrast, the traditional DPA option — the issuance of “rated orders” to vaccine producers or their suppliers — is unlikely in the short term to expand overall supply. Rather, by definition, rated orders will only prioritize new U.S. government orders over other orders, including orders from foreign governments. It doesn’t require a vendor to expand overall production. Needless to say, putting the U.S. to the front of the line globally will provoke serious consternation among U.S. friends and allies – especially when issued by a Biden administration trying to shake off the Trump administration’s legacy of frayed foreign relationships.
Other options are available but are more likely to produce medium to long- term results. For example, under DPA Title III, the Biden administration could issue loans or other financial incentives to suppliers in order to expand supplier capacity, through investments in additional manufacturing equipment, production lines and facilities. Also, the administration could use its contract authority to potentially license other suppliers to produce vaccines where it funded development – as it likely has been afforded technical data rights that allow it do to so under development contracts with some vaccine producers.
A partner in Eversheds-Sutherland, a global law firm, Mr. Bialos previously served as Deputy Under Secretary of Defense for Industrial Affairs and as a member of Secure Virginia, the state’s homeland security advisory board.
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