EU Commission Renegotiates #Pfizer Contracts and Throws Another €5.6 Billion Down Pharma Giant's Throat, Insider
German Member of EU Parliament Martin Sonneborn's Tweets from May 6, 2023
By Martin Sonneborn | English translation by DeepThought
Good afternoon out there at the devices, an interim result of the renegotiations between the EU Commission and the US pharmaceutical giant Pfizer has just leaked out - however not to US or YOU OUT THERE, but to journalists of the British Financial Times and the news agency Reuters. If their reports are accurate, then the Commission is proposing to replace the 10 MILION EURO payment obligation to Pfizer with a 10 BILLION EURO payment obligation to #Pfizer. An interesting shell game. And while we’re still wondering why we can’t find this banger in the German press, let’s briefly recap the genesis & content of the EU vaccine contracts.
In May 2021, the Commission had concluded the biggest deal in pharmaceutical history.
After two initial agreements (dated November 2020 and February 2021) with Pfizer/Biontech to purchase (a total of) 600 million doses, it placed a repeat order for an additional 900 million doses - with an option for 900 million more that (thankfully) was never triggered. It was by far the largest of all EU vaccine contracts – and, with a (putative) volume of 35 BILLION EURO, also the largest purchase contract ever concluded by the Commission with a singular market player. That alone is reason enough for a closer look. With this third Pfizer contract, not only the purchase volume increased by 25% but also the price: from 15.50 to 19.50 euros per dose. A historically unique megadeal, in which the unit prices also rise with increasing purchase volumes?
For the sake of simplicity, we hereby christen this clever mechanism the “Leyen effect”. And when the opportunity arises, we’ll present it to an absolute beginner in business administration for closer examination – together with the scale, Santa Claus and quantity discount effect, lol.
In addition, the Commission gave Pfizer, which had already dominated the market, a quasi-monopoly on the EU vaccine market – an open violation of EU competition law, which is otherwise closely guarded. Last but not least, both manufacturer liability as well as (subsequent) contract adjustments and exit clauses were largely excluded. *cough*. We consider this thing in its entirety to be the lousiest contract ever negotiated (or concluded) by Commission experts – after all, EU officials are not only stuffed with sophisticated knowledge, but also in courses like “Negotiation Skills for Dummies” or “Top Deals - this is how it’s done | TÜV NORD” for the exercise of their main task, which is the correct playing out of their assembled negotiating mass: 450 million guys like you, (the largest single market in the world).
By the way, it had come about after Mrs. vonderLeyen had been in direct telephone & short message exchange with Albert Bourla for months, the CEO of a world-renowned producer of sexual enhancers, which, according to its own corporate history, must be classified as dubious at best, if not as CRYPTOCRIMINAL. No other pharmaceutical company in the world has had to be reprimanded by authorities and courts as often as Pfizer, on average four times a year, because of its business practices. In 22 years, the company has had 90 documented sanctions, some of which were preceded by serious legal violations. (And those are just the ones that have been exposed.)
VonderLeyen, to all appearances, successfully subverted the official EU contract talks with the pharmaceutical industry, which were to be conducted according to a set protocol by mandated Commission negotiators and experts, and usurped the negotiations for this third, largest, most expensive, most competition-distorting, and most bungling Pfizer contract in its crucial parts - exceeding her authority as Commission President and violating the procedural rules binding on EU officials.
At any rate, this would explain why the Commission - unlike all the others - was unable to provide the European Court of Auditors with any internal bureaucratic by-products for this one contract, no negotiation notes, no preliminary contracts, no hand-scrawled gallows men with numbers on them, nothing.
For two years now, the Commission and vonderLeyen, who had always simulated their commitment to transparency with deafeningly tasteless verbal cascades, have refused to publish the concluded CONTRACTS - even Parliament and the Committee of Inquiry get to see nothing but copies made unrecognizable by blackening.
Just as categorically, they refuse to hand over the SMS messages between vonderLeyen and Bourla that were used to prepare the contract - and thus resist not only the (lawful) request for information by journalists and MEPs, but also the requests of the European Ombudsman Emily O'Reilly and even the (rather) insistent request of the European Court of Auditors.
We are really starting to think this is ridiculous. As understandable as all the whispering about deals, profits and secrets may have been (for some) in the strange times of the pandemic, it is now untenable. More than two years after the contracts in question were signed, the continued perpetuation of this institutional opacity is beginning to resemble an act of malicious political obstruction, an "obstruction," according to European Ombudsman Emily O'Reilly, who finds it highly “perplexing” that vonderLeyen still refuses to even address the countless complaints and lawsuits (including from the New York Times).
(Incidentally, we are beginning to think that this lady should become President of the Commission next time. O'Reilly, not vonderLeyen.)
This (persistent) concealment is not worthy of democratic conditions - and it is also completely unnecessary, because every “secret worth protecting” from back then can be openly viewed today in the annual reports, sales strategies and price lists of the fucker company Pfizer.
So, if it was indeed someone’s intention to “strengthen” “transparency”, “democracy”, “closeness to citizens” and “trust” in “politics” (you read: excerpts from the inaugural speech of your highest executive official), we can only shout to the Commission President: WELL THEN, LET’S GO. Nobody is stopping you.
And while the criminal investigation of the original contracts by the European Public Prosecutor’s Office EPPO, known since October last year, is still in full swing, the Commission has done it again.
It has entered into new negotiations with Pfizer - not, of course, without the determined intention of repeating in slow motion each of its previous transgressions: Once again, decisions are being made behind closed doors in secret negotiations, in camera and bypassing its (own) accountability, on the use of EU funds to purchase products from a single U.S. manufacturer across the EU. A system entrenched behind institutional undergrowth could not show its notorious inability to correct itself more clearly.
The (accessible) information is (therefore again) sparse and not free of ambiguities. Nevertheless, we dare to put together the current events as follows.
The issue is the “adjustment” of the gigantic (third) vonderLeyen-Pfizer contract, under which the Commission had made a binding commitment to purchase 900 million doses by the end of 2023. About 400 million of these units have already been delivered, the remaining 500 million still have to be purchased by EU members this year.
Needless to say, demand for vaccines has come to a virtual standstill, while vaccine warehouses are bursting at the seams and all the expiration dates previously announced by print (even in braille) - one after the other - have now, surprisingly, actually occurred.
For over a year now, the member states (which are already under multiple burdens) have been trying to somehow wriggle out of their contractual fate. In the hope of goodwill on the part of the manufacturers, some ask for a price reduction in the best official Danish, while others believe that a reference to overcrowded warehouses (“No room!”, “Warehouse full!!”, “Closed due to overcrowding!”) could somehow help them (Slovenia).
Slovakia and Latvia are ready to swallow a huge pile of other goodies from Pfizer’s (colorful) range of drugs instead of the vaccine, never mind, something against headaches and potency problems, perhaps. And while Spain has already resignedly destroyed surplus stocks so that at least the misery no longer has to be seen on a daily basis, in Greece they had the extremely anarchistic idea of simply degrading the parcel shipments of the pharmaceutical industry to Amazon returns and sending them back: “doesn’t fit at all, send correct size next time, bye-bye!”
Of course, all this was in vain, the purchase contract does not allow the states any escape. Pfizer insists on compliance with the contract, threatens with legal action and does not even accept meteorite impacts and the outbreak of war as exceptional circumstances for amending the contract. Poland has tried, in vain.
Surprisingly, the [EU] Commission also resisted for a long time to touch this bombastic mother of all failed contracts again - despite an oversupply (of vaccine in the EU) that could no longer be overlooked. Only after massive pressure from Bulgaria, Poland, Hungary, Lithuania, Italy, Austria, Romania and others did the Commission agree to start renegotiations, albeit with a bloodcurdling gnashing of teeth of level 8 (Richter scale).
The starting point for the renegotiations is the 500 million doses still to be purchased. At the list price of 20 euros/dose, this results in a liability (stemming from the lay contract concluded in 2021) of 10 BILLION euros.
According to the Financial Times, the renegotiated contract now provides for a reduction in the volume of vaccine to be purchased from 500 million doses to a total of 280 million. In the future, 70 million doses per year are to be purchased while at the same time extending the delivery period to 2026. Pfizer is prepared to cancel the units originally ordered but now not purchased in return for a “cancellation fee” of 10 euros/dose. But only if the EU would accept in return a higher price for the doses to be delivered until 2026. In dark schoolyard corners (and the pharmaceutical industry), such a thing is called a “flexibility fee”.
If we have not miscalculated, then with 220 million vaccine doses to be cancelled in deviation from the original contract, that makes an amount of 2.2 BILLION euros.
2.2 BILLION euros cancellation fee for a service that is not to be provided - that sounds like a business that we would also like to do - especially since this is the purest of all net profits, because on the company side, not even the unit costs of around 70 cents should be incurred. Unless, of course, Pfizer produced the canceled vaccine doses anyway, only to torpedo its own act of creation immediately with complete destruction - just for fun, perhaps. (A fate, by the way, that was granted to 90% of the vaccines delivered to the EU by Sanofi and Novavax).
A written statement from Health Commissioner Stella Kyriakides said that in addition to this “substantial reduction in doses” (cancellation fee: 2.2 BILLION), they also achieved “the extension of our contract well beyond 2023.”
Extension, you heard right. According to the latest draft, the Commission wants to commit to buying 70 million doses a year until 2026 to organize its “switch to newer vaccines.” However, these are no longer to be remunerated according to the current (20 euros/shot) but to a yet unknown new price list, which provides for an equally “adjusted” higher price for each vaccine “adjusted” in the future.
If we have not miscalculated, then at least another 5.6 BILLION Euros from binding EU contracts will come to Pfizer’s savings accounts and offshore accounts, if they have not burst by then. And in view of the sales price of 110 - 130 dollars/dose currently called by Pfizer in the USA, we are so dizzy that we can no longer reliably calculate the result here.
Let’s briefly summarize: The Commission proposes to waive 220 million Pfizer doses originally ordered in exchange for a cancellation fee of 2.2 BILLION euros, and in return gives up a 280 million unit reorder disguised as a reallocating renegotiation, for a sum ranging from 5.6 BILLION to another we can no longer reliably calculate.
Thus, it replaces a payment obligation to Pfizer in the amount of (pretty much exactly) 10 BILLION euros with a payment obligation to Pfizer in the amount of (at least) 10 BILLION euros. An interesting shell game.
Needless to say, Pfizer - keyword tax optimization - naturally processes its profits generated in the EU, before they finally flow out, via the (still) legal EU tax havens Ireland, the Netherlands and Luxembourg - at a tax rate that should bring tears to your eyes out there (12.5%).
And needless to say, this is the second time the Commission has given the company unchallenged MONOPOLY in the European Covid vaccine business. “If BioNTech/Pfizer supplies about 70 million doses a year over the next few years, that’s pretty much the entire market,” the Financial Times quotes “a person familiar with the negotiations.” Not only is this a fresh violation of the EU-wide sacrosanct principle of competition, but it also stands in stark contrast to the imperative of diversification, which applies to the EU’s procurement policy no less than to its healthcare portfolio: “Diversification of the portfolio is critical,” says the head of the European Medicines Agency, Emer Cooke.
At this point, we should perhaps remind ourselves once again who the decision-makers appearing here are. Neither is the EU Commission on a manned mission into the lawless space of a value-nihilistic orbit, nor does Commission President vonderLeyen have a status that would even tentatively allow her to move into the vicinity of banana republican potentates or the absolutist monarchy of bygone periods of history. The Commission and vonderLeyen are executive officials - and as such accountable to EU citizens, behind whatever secret calendar doors their treaty adjustments may be hidden.
“Transparency is one of the EU’s most important principles, obliging it to disclose information about political decisions and spending and to uphold the principle of freedom of information,” is how the European Union’s self-representation states this principle with its usual nerdy accuracy. And the last time we checked, its multiple anchors in the EU treaties had not yet been repealed either: Article 10 of the Treaty on European Union, Article 15 of the Treaty on the Functioning of the European Union, and so on and so forth.
Under Commission President vonderLeyen, the tendency of EU institutions (and officials) to evade their owed accountability by collectively entrenching themselves behind a democracy-denying bulwark of opacity has taken on alarming proportions.
Make this clear to yourself again and again: Transparency is not a mercy to be granted to you by metaphysically carried away authorities; it is something you are absolutely entitled to. You have the (inalienable) right to know in full what the officials you have put in power are doing in your name.
And the media should be their reliably booming bass amplifier. Anything else would not be modern democracy, but the social order of 1648. Or a live concert by the Kelly Family (unplugged).
The same principle, by the way, applies to your EU’s increasingly disinhibited arms and munitions purchases. The Commission has entrusted the approval of projects from the €8 billion European Defense Fund to an opaque network of “external experts,” without any guarantee that conflicts of interest will be avoided or that the EU Code of Conduct will be upheld. Ombudsman Emily O'Reilly “pointed out that the names of these experts are nowhere to be found - which is unusual by EU standards and, in her view, undermines public scrutiny.” (Politico)
We think so too. And, by the way, we again think that this lady should become the next president of the EU Commission. Because of all the effects she has reliably triggered, we cannot afford a second von der Leyen term.
P.S.: In the European Parliament, by the way, Greens did not hinder a Covid inquiry committee, but pushed it forward - not the German ones, of course, but the French ones, who have long since shared not much more than the party name with their neglected colleagues in the German Bundestag.
P.P.S.: By the way, Albert Bourla did not have time to answer the COVI inquiry committee of the European Parliament, maybe he had to dig a pit for a new money store, smiley. Nor does he seem to have any modern communication equipment, otherwise he would have made use of the possibility to face the bundle of open questions via comfortable video link.
The same applies to the President of the Commission - despite being summoned to appear before the committee of inquiry, she never showed up for questioning.
P.P.P.S.: A motion introduced by the French Green Michèle Rivasi to at least cut off the Pfizer lobbyists’ privileged access to the EU institutions in return for their disregard for European democracy was blocked by the Bureau of the European Parliament, which, in addition to the face of Parliament President Roberta Metsola, also includes the “world-famous” [German] vice-presidents Rainer WIELAND (CDU), Katarina BARLEY (SPD) and Nicola BEER (FDP). The presidium announced that it wanted to question Mrs vonderLeyen on this subject, but at the most with the involvement of the parliamentary group leaders, but with the exclusion of any public, of course. And that, too, will not happen until some distant day, as we can see, because only ten meetings of the Executive Committee and ten and a half weeks have passed since then.
Must see: Martin Sonneborn speech @ EU Parliament (1m22s; engl. subbed)