“Under Commission President von der Leyen, the tendency of EU institutions (and officials) to evade their due accountability by collectively hiding behind a democracy-defying bulwark of opacity has reached alarming proportions.”
If you blinked, you probably missed it: The European Commission has renegotiated its highly controversial COVID-19 vaccine contract with Pfizer-BioNTech, against a backdrop of almost zero press coverage. When parts of an interim report on the contract renegotiation recently leaked out, it was not to MEPs or the EU public but to journalists from the Financial Times and the Reuters news agency. And then the story quickly disappeared. Which is probably no surprise given how little difference the renegotiation will make, as Martin Sonneborn, a German MEP and former editor-in-chief of the Satirical magazine Titanic, documents in a withering account:
If their reports are correct, then the Commission is proposing to replace Pfizer’s existing €10 BILLION payment obligation with a €10 BILLION payment obligation to Pfizer.
An interesting shell game.
The EU may even end up paying more for less (more on that later).
The renegotiation had become necessary because many EU member governments had grown weary of amassing (and paying for) ever-larger mountains of COVID-19 vaccine vials that hardly anyone wants and will never be used. Yet new supplies kept arriving. As I reported in January, Germany’s government had accumulated more than 150 million unused vials in its central warehouse and was even talking of cancelling or reducing the additional orders it had made through the EU Commission for 2023 and 2024. Many states in Eastern Europe were saying much the same.
This was enough to get the Commission, kicking and screaming, back to the negotiating table. But if past is prologue, the most important details of the renegotiation will never be made public.
On May 26, the Commission announced it had reached a deal with Pfizer to revise the terms of the May 2021 contract. The new deal cuts down the 450 million doses that were still due to be delivered in 2023, and spreads them out over the next four years. As Politico noted in its piece Pfizer, the EU, and Disappearing Ink, “that’s all the information you get. The Commission isn’t revealing the new number of doses that member countries must buy, nor any of the financial terms of the amended contract.”
Sonneborn has tried to make some sense of the bare bones on offer (machine translated):
It is about “adjusting” the gigantic (third) von der Leyen-Pfizer contract, with which the Commission had made a binding commitment to purchase 900 million doses by the end of 2023. Around 400 million of these units have already been delivered, and the remaining 500 million still have to be accepted by the EU members this year.
The starting point for the renegotiations are the 500 million doses still to be purchased. At the list price of 20 euros/dose, this results in a liability (from the legal contract concluded in 2021) of €10 billion.
According to the Financial Times, the renegotiated contract now envisages reducing the total number of vaccine doses to be purchased from 500 million to 280 million. In the future, 70 million vials are to be purchased per year, with the delivery period being extended to 2026. Pfizer is willing to cancel the units that were originally ordered but have not been purchased in return for a “cancellation fee” of €10/dose, but only if the EU accepts a higher price for the vials to be delivered by 2026. In dark corners of the schoolyard (and the pharmaceutical industry) this is called a “flexibility fee”…
[T]hese [new vaccines] are no longer to be priced like the previous one (20 euros per shot), but according to a new, as yet unknown pricing system, which provides for an equally “adjusted” higher price for every future “adjusted” vaccine.
If we haven’t miscalculated, then at least another €5.6 BILLION euros from binding EU contracts will go to Pfizer’s balance sheets books and offshore accounts, if they haven’t burst by then. And in view of Pfizer’s current sales price of 110 to 130 dollars per dose in the USA, we are so dizzy that we can no longer reliably calculate the result here. That would correspond to 280 million 100 euro notes.
To summarise: The Commission is proposing to give up 220 million originally ordered Pfizer doses for a cancellation fee of 2.2 billion euros and in return is giving up a new order disguised as a renegotiation of 280 million units, for a sum of between €5.6 and €28 billion.
One seeming result of the renegotiation is that Pfizer-BioNtech have secured a quasi-monopoly in the EU for their hugely lucrative vaccine business. According to an unnamed source cited by the FT, if Pfizer-BioNTech were to ship around 70 million doses a year over the next few years, it would more or less cover the entire market. This would surely contravene the EU’s antitrust laws, and is a serendipitous outcome for a medical product that has proven to be not nearly as effective or as safe as initially marketed. In fact, BioNtech is facing a rash of lawsuits in its native Germany for suspected injuries and adverse events caused by its COVID-19 vaccine.
Given the original vaccine contract is the single largest procurement deal the Commission has ever signed and that EU taxpayers will essentially be footing the bill for vaccines that most of them do not want and will not take, one might expect that its renegotiation would be a matter of broad public interest. Yet the story has met a wall of deafening silence from the continent’s mainstream media (with Politico proving an honourable exception).
More worrisome still, VdL’s Commission is seeking to carve out a much larger role for itself in securing joint procurement deals for the EU’s 27 Member States, not only in healthcare but also in energy and arms. In relation to the latter, similar procedural irregularities and opacity are already in evidence, as Sonneborn explains:
The Commission has entrusted the approval of projects from the €8 billion European Defence Fund to an opaque network of ‘external experts’ without even remotely guaranteeing that conflicts of interest will be avoided and that the EU code of conduct will be observed. According to Politico, Ombudsman Emily O’Reilly pointed out that the names of these experts were nowhere to be found, which is unusual by EU standards and which she says undermines public scrutiny.
A History of Opacity
The EU’s vaccine procurement scandal began in earnest in April 2021 when European Commission President Ursula Von der Leyen (whom I shall refer to from now on as VdL) bragged in an interview with the New York Times that she had personally helped secure a massive vaccine deal with Pfizer BioNtech through direct phone conversations and text messages with Pfizer CEO Albert Bourla. Weeks later, the Commission closed the world’s largest ever pharmaceutical deal, worth apparently €35 billion. As Sonneborn notes, it was a complete con:
With the new contract not only did the purchase quantity increase by 25%, but so too did the price: from 15.50 to 19.50 euros per dose. A historically unique mega deal, in which the unit price increases as the amount purchased increases.
Shortly afterwards, the Belgian journalist Alexander Fanta made a freedom of information (FOI) request for von der Leyen’s text messages with Pfizer. The Commission’s initial response was to stonewall him, arguing that its “record-keeping policy would in principle exclude instant messaging.” Indeed, as Fanta noted in a Politico article, the Commission has never archived a single text message, despite (or perhaps because of) the fact that text messages are playing an increasingly important role in EU politics.
EU Ombudsman Emily O’Reilly launched an inquiry into the matter which concluded that the Commission’s refusal to properly consider the request constitutes “maladministration.” A report by the EU’s Court of Auditors found that VdL had directly participated in preliminary negotiations for the vaccine contract, in a total departure from the EU’s standard negotiating procedures. The Commission refused to provide the auditors with records of the discussions with Pfizer, either in the form of minutes, names of experts consulted, agreed terms, or other evidence. This was enough to trigger a formal investigation into the Commission’s acquisition of COVID-19 vaccines by the European Public Prosecutor’s Office.
On two occasions Pfizer CEO Albert Bourla was invited to give testimony to a European Parliament hearing on the EU’s COVID-19 response. Both times he declined. Worse still, when the same hearing summoned VdL to give testimony, European Parliament bigwigs rallied around to protect her from a public grilling. Instead, she was invited to answer questions in private at a future meeting of the Conference of Presidents. Weeks later, a motion tabled by French Green Party leader Michèle Rivasi to at least curtail Pfizer lobbyists’ privileged access to EU institutions was blocked by the European Parliament President Roberta Metsola.
The irony is that now many of the same top EU officials are calling for Hungary to be stripped of the rotating EU presidency on corruption grounds (as Yves explained a couple of days ago, the real motive is the Orban government’s lack of enthusiasm for the Ukraine conflict and imposing further sanctions on Russia). Former ALDE European Parliament Leader Guy Verhofstadt tweeted yesterday, with no apparent trace of irony, that “Lawbreakers have no place at the EU’s top table… least of all to preside over it.”
Yet at the very top of the EU’s top table is Ursula von der Leyen, who in her State of the European Union speech last September pledged to wage a global war on corruption while refusing to answer questions in public about her own repeated violations of basic rules and procedures in her opaque dealings with Pfizer BioNTech.
VdL has also faced accusations of conflicts of interest over her husband’s ole as scientific director at US biotech company Orgenesis, which received around €320 million in subsidies from the Italian government. After Orgenesis received the money, which was backed by EU funds, Heiko von der Leyen was elected to sit on the supervisory board of the project. He stepped down from the board after EU lawmakers and Italian media had drawn attention to his role. As NC reader Isla White points out in a comment below, VdR’s public declaration of interest did not mention her husband’s position on the board and only got updated once the discovery was in the public domain.
“Fuelling Distrust” of EU Institutions
While senior EU lawmakers, with help from most European media outlets, are doing everything they can to bury the Pfizergate story, others are refusing to let it go. In late January, the New York Times lodged a complaint against the Commission in the EU’s top court, the Court of Justice of the European Union (CJEU), arguing that the Commission has a legal obligation to release VdL’s text messages, since they could contain information on the bloc’s deals to purchase billions of euros worth of COVID-19 doses.
Transparency is one of the EU’s “key principles”, says the EU’s official web page on access to information. “It requires the EU to disclose information on policy-making and spending and to uphold the principle of freedom of information.” These principles are enshrined in the EU treaties, including Article 10 of the Treaty on the European Union and Article 15 of the Treaty on the Functioning of the European Union.
The EU Ombudsman Emily O’Reilly recently warned that the EU’s mounting political scandals risk having a “shattering effect” on how people perceive and trust the entire project of European integration.
You cannot have political legitimacy without moral authority. You can’t have political legitimacy either unless the people (have) trust in you.
In Belgium a lobbyist called Frédéric Baldan has filed a complaint against VdL in the first instance court in Liege arguing that her actions have undermined his country’s public finances and public trust. According to the lobbyist, VdL has acted outside the EU treaties and beyond her mandate on behalf of the member states, including his native Belgium. Greens MEP Michèle Rivasi tweeted:
SMSgate takes a criminal turn. The European Commission President is accused of “usurpation of functions and title”, “destruction of public documents” and “illegal conflicts of interests and corruption.”
Meanwhile, in the European Parliament the frustration is growing. According to the Spanish news website The Objective, around 100 MEPs (out of around 700) have sent letters to the Commission accusing VdL of acting “opaquely, violating the right of citizens to be informed of the performance of public institutions,” and have demanded to know the content of the communications between the president and Pfizer executives. As Sonneborn says, procedural transparency is not a gift granted by “metaphysically remote authorities;” EU citizens are entitled to it:
“Under Commission President von der Leyen, the tendency of EU institutions (and officials) to evade their due accountability by collectively hiding behind a democracy-defying bulwark of opacity has reached alarming proportions. Always remind yourself: Transparency is not a gift granted to you by metaphysically remote authorities; you are entitled to it. You have the (inalienable) right to know exactly what the officials you put in power are doing on your behalf.”