J&J settles COVID vaccine dispute with Emergent

J&J’s Janssen Pharmaceuticals entered an agreement with contract development and manufacturing organization (CDMO) Emergent BioSolutions in 2020 to produce its investigational SARS-CoV-2 vaccine, a viral vector recombinant based on J&J’s AdVac technology platform.

Emergent won a government contract worth $628 million to produce COVID-19 vaccines for Johnson & Johnson (J&J) and AstraZeneca. The then ‘pandemic ready’ CDMO devoted its Bayview, Maryland drug substance facility in Baltimore, which was designed and built in partnership with the US government specifically with the intention to respond to a pandemic.

The Maryland-based firm entered the pandemic era forging alliances with vaccine developers including Vaxart, Novavax, J&J, and AstraZeneca.

However, Emergent’s Bayview facility was hit by several quality issues including an ingredient mix up in 2022, which soured its partnership with J&J. A Form 483 was issued by the US Food and Drug Administration (FDA) with nine observations. At the time, nearly 15 million vaccine doses at the site were deemed unusable.

Citing breaches in GMP compliance, J&J terminated its partnership with the CDMO in 2022, following which Emergent responded with an SEC filing claiming $420 million from J&J. Initially, the CDMO said in the filing: “The Company had agreed to provide contract development and manufacturing services to produce drug substance at large scale for up to five years, originally valued at approximately $480 million in the first two contract years.”

However, Janssen filed a complaint seeking arbitration, and said in its notice, “if the Agreement were to be terminated by either party pursuant to any of its terms, would be in the estimated range of approximately $125 million to $420 million.”

The now settled dispute has given Janssen a period of “(a) July 31, 2024, and (b) 28 calendar days following the effective date of the Settlement Agreement” to pay Emergent a compensation worth $50 million the SEC filing said.