[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                    EXAMINING EMERGENT BIOSOLUTIONS'
                    FAILURE TO PROTECT PUBLIC HEALTH
                            AND PUBLIC FUNDS

=======================================================================

                                HEARING

                               BEFORE THE

             SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS

                                 OF THE

                   COMMITTEE ON OVERSIGHT AND REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 19, 2021

                               __________

                           Serial No. 117-23

                               __________

      Printed for the use of the Committee on Oversight and Reform
      
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]      


                       Available on: govinfo.gov,
                         oversight.house.gov or
                             docs.house.gov                             
                             
                                 __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-686 PDF                  WASHINGTON : 2021                     
          
--------------------------------------------------------------------------------------                             
                   COMMITTEE ON OVERSIGHT AND REFORM

                CAROLYN B. MALONEY, New York, Chairwoman

Eleanor Holmes Norton, District of   James Comer, Kentucky, Ranking 
    Columbia                             Minority Member
Stephen F. Lynch, Massachusetts      Jim Jordan, Ohio
Jim Cooper, Tennessee                Paul A. Gosar, Arizona
Gerald E. Connolly, Virginia         Virginia Foxx, North Carolina
Raja Krishnamoorthi, Illinois        Jody B. Hice, Georgia
Jamie Raskin, Maryland               Glenn Grothman, Wisconsin
Ro Khanna, California                Michael Cloud, Texas
Kweisi Mfume, Maryland               Bob Gibbs, Ohio
Alexandria Ocasio-Cortez, New York   Clay Higgins, Louisiana
Rashida Tlaib, Michigan              Ralph Norman, South Carolina
Katie Porter, California             Pete Sessions, Texas
Cori Bush, Missouri                  Fred Keller, Pennsylvania
Danny K. Davis, Illinois             Andy Biggs, Arizona
Debbie Wasserman Schultz, Florida    Andrew Clyde, Georgia
Peter Welch, Vermont                 Nancy Mace, South Carolina
Henry C. ``Hank'' Johnson, Jr.,      Scott Franklin, Florida
    Georgia                          Jake LaTurner, Kansas
John P. Sarbanes, Maryland           Pat Fallon, Texas
Jackie Speier, California            Yvette Herrell, New Mexico
Robin L. Kelly, Illinois             Byron Donalds, Florida
Brenda L. Lawrence, Michigan
Mark DeSaulnier, California
Jimmy Gomez, California
Ayanna Pressley, Massachusetts
Mike Quigley, Illinois

           David Hickton, Select Subcommittee Staff Director
                     Jennifer Gaspar, Chief Counsel
                         Senam Okpattah, Clerk
                      Contact Number: 202-225-5051

                  Mark Marin, Minority Staff Director

             Select Subcommittee On The Coronavirus Crisis

               James E. Clyburn, South Carolina, Chairman
Maxine Waters, California            Steve Scalise, Louisiana, Ranking 
Carolyn B. Maloney, New York             Minority Member
Nydia M. Velazquez, New York         Jim Jordan, Ohio
Bill Foster, Illinois                Mark E. Green, Tennessee
Jamie Raskin, Maryland               Nicole Malliotakis, New York
Raja Krishnamoorthi, Illinois        Mariannette Miller-Meeks, Iowa
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page
Hearing held on May 19, 2021.....................................     1

                               Witnesses

Mr. Robert G. Kramer, President and Chief Executive Officer, 
  Emergent BioSolutions, Inc.
Oral Statement...................................................     7
Mr. Faud El-Hibri, Executive Chairman of the Board of Directors, 
  Emergent BioSolutions, Inc.
Oral Statement...................................................     9

Written opening statements and the written statements of the 
  witnesses are available on the U.S. House of Representatives 
  Document Repository at: docs.house.gov.

                           Index of Documents

                              ----------                              

Documents entered into the record during this hearing are listed 
  below.

  * Article regarding the President's ban on intellectual 
  property in China; submitted by Rep. Scalise.

4Documents are available at: docs.house.gov.

 
                    EXAMINING EMERGENT BIOSOLUTIONS'
                    FAILURE TO PROTECT PUBLIC HEALTH
                            AND PUBLIC FUNDS

                              ----------                              


                        Wednesday, May 19, 2021

                   House of Representatives
                  Committee on Oversight and Reform
              Select Subcommittee on the Coronavirus Crisis
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 10:40 a.m., 
2154 Rayburn House Office Building, Hon. James E. Clyburn 
(chairman of the subcommittee) presiding.
    Present: Representatives Clyburn, Waters, Maloney, 
Velazquez , Foster, Raskin, Krishnamoorthi, Scalise, Jordan, 
Green, Malliotakis, and Miller-Meeks.
    Chairman Clyburn. Good morning.
    The committee will come to order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time. I now recognize myself for 
an opening statement.
    I want to begin by thanking our members and today's 
witnesses for joining us today. The coronavirus pandemic has 
brought out the best in many of our citizens. We have been 
inspired by the doctors, nurses, and other frontline workers 
who have put their own lives on the line to help others, and by 
the scientists who created coronavirus vaccines in record time.
    At the same time, others have sought to profit from the 
pandemic, put lives at risk, and violate the public trust. That 
is why we are here today. Last year, the Trump administration 
awarded Emergent BioSolutions nearly $650 million in taxpayer 
funds to manufacture coronavirus vaccines that were then being 
developed by companies like Johnson & Johnson and AstraZeneca. 
But nearly a year later, Emergent has destroyed millions of 
vaccines due to contamination, and millions more are being held 
back for testing, to ensure that they can be used, all due to 
Emergent's failure to properly maintain its facilities, 
adequately train its staff, and ensure that proper protocols 
were followed.
    I want to be clear. This hearing is not about questioning 
the safety or efficacy of vaccines that have been authorized 
for use. The vaccines available to the public are safe and 
effective, and I encourage everyone who has not been vaccinated 
to do so as soon as you can. Emergent's failures are 
disappointing precisely because these vaccines are so 
effective. Because the company was unable to deliver, the 
vaccinations to millions of people around the world have been 
delayed, putting their lives at needless risk.
    This morning the Select Subcommittee released its staff 
memorandum detailing several concerning findings from our 
investigation into Emergent. The documents released today shed 
light on the multiple warnings Emergent received last year 
regarding serious manufacturing problems at its plant, 
including a new report regarding a June 2020 inspection, which 
found that Emergent had an inadequate contamination control 
strategy at its vaccine production facility. The documents also 
revealed that after failing to heed these warnings and 
contaminating millions of doses of critically needed vaccines, 
Emergent determined that its executives' performance merited 
millions of dollars in bonuses.
    These documents provide insight into the dysfunction at 
Emergent that caused so many life-saving vaccines to be ruined, 
but also leave us with many questions. We have questions about 
how these vaccines came to be ruined, not just this past 
February, when Emergent destroyed up to 15 million doses of the 
Johnson & Johnson vaccine, but in at least three other 
incidents last year.
    We have questions about why Emergent failed to take action 
to fix the manufacturing problems plaguing its plant, even 
after the company was warned that its poor practices led to a 
very real risk of contamination.
    We have questions about why the Trump administration 
invested so much in Emergent in May 2020, particularly when an 
FDA inspection conducted just a month earlier raised serious 
red flags.
    Former President Trump's own Assistant Secretary for 
Preparedness and Response, has admitted that he knew that the 
decision to entrust hundreds of millions of dollars with 
Emergent was a risk. Yet he did so anyway. Documents released 
today raise new questions about what exactly Emergent was being 
paid to do.
    We have questions about whether Emergent was favored for 
these lucrative Federal contracts because of its close 
relationship with the Trump administration appointee who was 
responsible for them.
    We have questions about how the company's actions, for 
several years leading up to the pandemic, squeezed budgets and 
deprived our country of critical supplies, inhibiting our 
ability to respond when the virus reached American shores.
    We have questions about the Emergent executives, whether 
they earned the millions of dollars in bonuses they were 
awarded while all of this was happening.
    I look forward to hearing from today's witnesses so that 
the American people can start to get answers. But today's 
hearing is only the beginning. The Select Subcommittee, along 
with the Committee on Oversight and Reform, has opened an 
investigation into Emergent and its troubling practices. I 
would like to thank Chairwoman Maloney for joining me in this 
important endeavor.
    I now recognize her for a two-minute statement.
    Ms. Maloney. Thank you, Chairman Clyburn. Thank you for 
calling this important hearing and for partnering with me on 
this joint investigation being conducted by the Oversight 
Committee and Select Subcommittee on Emergent BioSolutions.
    As we work to end the coronavirus pandemic, it is essential 
that we vaccinate as many people as possible in this country 
while supporting a global vaccination effort. To do so, we need 
our contracting partners in the private sector to fulfill their 
commitments. I have concerns, serious concerns that Emergent 
executives, instead of fulfilling their commitments to the 
American people, appear to have wasted taxpayer dollars while 
lining their own pockets.
    In April 2020, the FDA raised concerns about Emergent's 
Bayside facility in Baltimore, including problems with quality 
control standards, inadequate training, and risk of 
contamination. Just one month later, disregarding all the red 
flags, Emergent received a $628 million contract to produce 
coronavirus vaccines. That means Emergent made a commitment to 
the government and the American people that it could safely 
manufacture these vaccines, despite the recent problems and 
concerns of the FDA.
    Unfortunately, the company has failed to live up to that 
commitment. Poor lab practices at Emergent have led to millions 
of corona vaccines being thrown out because of contamination or 
suspected contamination. In other words, the company took 
taxpayers' money, at least $271 million so far that they have 
spent, but failed to deliver the crucial, life-saving 
coronavirus vaccines that the country needs.
    But at the same time that the company was destroying 
millions of vaccine doses, at the direction of the FDA, its 
executives were cashing out. Last year, CEO Bob Kramer received 
$5.7 million in total compensation, an increase of 51 percent 
from 2019. He has yet to have given this country one vaccine, 
yet they have taken $5.7 million, as payment over 275 in 
contracts, and Executive Chairman Fuad El-Hibri cashed out in 
stock worth more than $42 million. So, as they are destroying 
the vaccines they are cashing out, taking stock out of the 
company. These stock trades raised serious questions about why 
top executives were selling shares when they knew about serious 
problems at Emergent's Baltimore plant, but the public didn't 
know about it, and I repeat, they hadn't produced one single 
vaccine.
    I am glad that Mr. Kramer and Mr. El-Hibri have agreed to 
appear today. Thank you very much. I would also like to point 
out that although some of the documents we requested have been 
produced, many, many more are outstanding. It is imperative 
that Mr. Kramer and Mr. El-Hibri commit to producing all 
responsive documents in a timely manner. I also expect, and I 
am sure my colleagues join me in this request, that both 
witnesses commit to return to testify once again that document 
production is complete and our committees have completed our 
investigation. It is very difficult to conduct oversight when 
the documents we request have not been received. So again, 
respectfully I request, for the committee, for the government, 
for the taxpayers, that the documents we requested are 
produced. At least produce the documents.
    I thank you very much for being here, I thank the chairman, 
I thank my colleagues. I yield back.
    Chairman Clyburn. Thank you. I now recognized the 
distinguished ranking member, Mr. Scalise, for his opening 
remarks, and to recognize an additional member of the minority, 
for a two-minute statement. Mr. Scalise.
    Mr. Scalise. Thank you, Mr. Chairman, and I want to thank 
you for holding today's hearing. Each of us had felt the 
renewed freedom, and we enjoy seeing the smiles of our friends 
and neighbors again this past week as mask mandates have been 
dropped. Masks are flying off the faces of Americans faster 
than liberals in Washington spend a trillion dollars. That is a 
great thing to see.
    Those of us on the Select Subcommittee on the Coronavirus 
Crisis have a duty and a responsibility to help educate our 
colleagues, our constituents, the media, and leaders in 
education and business about how we got here. We have had a 
spirited debate about the effectiveness of lockdowns. Let's set 
that aside for today, and God willing, leave that debate in the 
rear-view mirror, where history will ultimately pass their 
judgment.
    But every one of us on this subcommittee should look our 
colleagues in the eye and say that there is bipartisan 
agreement on this subcommittee that it was the vaccine that 
ended this pandemic. So,how did we get to this point where 
America created the fastest vaccine in human history and 
produced, manufactured, and distributed enough vaccine to give 
a shot to every American who wants one?
    The story begins over 30 years ago, when the U.S. Trade 
Representative began negotiating international trade agreements 
in earnest. On a bipartisan basis for three decades, USTR made 
protections of U.S. intellectual property a cornerstone of 
those agreements. Trade agreements have proved controversial 
from time to time, but what has never been controversial was 
that if American ingenuity could flourish and is protected, 
that America can compete and win. And over that period, 
American pharmaceutical companies led the world in both 
research and development and the introduction of new, life-
saving drugs.
    About 25 years ago, after Republicans took back the 
majority for the first time since 1955, Congress decided to 
make a major push on biomedical research. The Republican 
Congress worked with then President Bill Clinton to double the 
size of the National Institutes of Health. During the 
administration of George W. Bush, the Republican Congress made 
yet another major investment in NIH, with strong bipartisan 
support.
    During the Bush Administration, the Federal Government 
began to take seriously the threat of bioterrorism and pandemic 
response. The Executive branch began working with Emergent on 
producing anthrax and smallpox vaccines. It takes time and 
expertise and partnerships to have the infrastructure in place 
to respond effectively. When H1N1 hit during the Obama-Biden 
administration, America was not ready. White House Chief of 
Staff Ron Klein actually acknowledged as much, saying that we 
just got lucky. Well, hoping to get lucky is not a smart 
strategy.
    But we did keep at it. We invested in BARDA. The Executive 
branch's relationship with Emergent continued throughout the 
Obama years, and they continued to develop expertise and 
infrastructure on some highly sophisticated manufacturing 
techniques and technologies. President Bush launched PEPFAR, a 
public-private partnership to save Africa from the AIDS 
epidemic. A key pillar in that was working with U.S. 
pharmaceutical companies on developing key drugs and protecting 
their intellectual property.
    And then came Fred Upton and Diana DeGette, and their 
bipartisan leadership on the 21st Century Cures Act. That was 
one of my proudest efforts during my tenure as majority whip, 
to see that bill signed into law. We doubled NIH yet again, and 
just as importantly, we established the Emergency Use 
Authorization process, upon which this vaccine would be 
approved, a provision that, by the way, is saving millions of 
lives.
    In January 2020, China lied to the world, and the lies of 
the Communist Party of China caused COVID-19 to spread 
throughout the globe, igniting the worst pandemic we have seen 
in 100 years. What we can say now, as far as finding a vaccine 
and a way out of the pandemic, is that America led the world. 
President Trump's Operation Warp Speed built on 30 years of 
smart policy. It was focused on protecting IP, investing in 
biomedical research, and investing in public-private 
partnerships on critical manufacturing infrastructure.
    President Trump's leadership on Operation Warp Speed was 
critical. Importantly, OWS leveraged work going back over two 
administrations, Republican and Democrat, to partner with 
companies like Emergent to begin the manufacturing process 
before the vaccines were even approved. That decision proved to 
be a game-changer. It is why we could get so many shots in the 
arms of Americans so quickly after getting the Emergency Use 
Authorization.
    Mr. Chairman, President Bush--President Biden, has now put 
at risk a key pillar of this strategy, the protection of United 
States intellectual property. You have seen President Biden 
talking about actually giving away America's intellectual 
property. This is something that would be a cave into the 
special interests in Washington, some progressives who don't 
believe that America should be the ones who own our own 
intellectual property.
    For years Republicans and Democrats alike were criticizing 
China's theft of American intellectual property. Today you have 
got the Biden administration talking about giving away our 
intellectual property to China, for nothing. How outrageous 
would that be?
    Imagine where we are because of American ingenuity, which 
is now at risk. Stripping innovators of their constitutionally 
protected patents will undermine that very innovation. It will 
weaken our international competitiveness, and only help 
Communist China, the country that spread this pandemic. It 
would force the American developers of COVID-19 vaccines and 
therapeutics to relinquish their intellectual property rights 
to these medicines.
    But it will likely take manufacturers years to build the 
facilities. If we give this intellectual property away, which 
we strongly urge the Biden administration not to do, but if 
that were to happen, it is not like tomorrow they just start 
making those vaccines that are being made in America. What is 
being made in America is using American infrastructure that was 
built over years, and, in fact, over multiple administrations, 
Republican and Democrat. That ability does not exist today in 
China. If we give away the technology, we lose the technology, 
but China would not be able to safely and effectively mass 
produce those drugs for years. So,make no mistake. This is not 
about helping the world get COVID vaccines quicker. It is about 
undermining American ingenuity and intellectual property.
    Today's hearing underscores that critical point. The 
Federal Government has worked with Emergent over Democrat and 
Republican administrations on complicated, sensitive biomedical 
manufacturing infrastructure, and yet the majority feels they 
need to undermine confidence in the drugs that they produce. 
Does anyone believe that handing over U.S. intellectual 
property to a startup, in a far less developed country is going 
to quickly yield actual safe and effective shots in the arm? Of 
course it will not.
    President Biden is destroying 30 years of successful 
bipartisan policy, and for what? His plan won't even work. Why 
don't we protect American intellectual property? Contract with 
U.S. manufacturers, and help distribute the vaccine to 
countries who are in need. It is a quicker and a smarter 
strategy. There would be more shots given and we wouldn't have 
to kneecap our future pandemic responses to do it. Instead of 
putting shots in arms, the Biden administration is putting U.S. 
IP in China's hands. That is insane.
    With that, Mr. Chairman, I yield two minutes to the 
gentlelady from Iowa.
    Mrs. Miller-Meeks. Mr. Chair, I have a parliamentary 
inquiry first.
    Chairman Clyburn. The gentlelady is recognized.
    Mrs. Miller-Meeks. Thank you. My parliamentary inquiry, Mr. 
Chairman, recent CDC guidelines state, quote, ``Fully 
vaccinated people can resume activities without wearing a mask 
or physically distancing,'' end quote. It clarifies further 
fully vaccinated people, quote, ``can resume activities they 
did prior to the pandemic,'' end quote. It says vaccinated 
people do not need to wear a mask inside. This is all 
regardless of the vaccination status of people around you.
    I wholeheartedly agree with the chairman that these 
vaccines are extraordinarily effective, but contrary to the 
science, the House Attending Physician is mandating mask-
wearing for vaccinated members.
    Mr. Speaker, why isn't the committee charged with upholding 
public health CDC guidelines on masks?
    Chairman Clyburn. My understanding is that this committee 
is being governed by the recommendations of the Attending 
Physician. Now I don't believe that that is a valid 
parliamentary inquiry, and I will recognize whoever is to be 
recognized for their two-minute statement.
    Mrs. Miller-Meeks. Thank you, Mr. Chair.
    On May 11, committee Republicans sent a letter to the CDC 
about the apparent influence of the American Federation of 
Teachers on official government documents. We have yet to 
receive a response. The AFT is not a medical group. It is not a 
scientific group. Yet it is providing verbatim edits to 
scientific and medical guidance, at the CDC's request.
    Chairman Clyburn and the House Democrats spent the better 
part of a year investigating alleged influence at the CDC, but 
remain silent on these egregious reports. This is influenced by 
political operatives that are both unelected and unaffiliated 
with the Federal Government. As one of the two medical experts 
on this committee, this is appalling.
    President Biden promised his administration would follow 
science and truth. Director Walensky said the guidance was free 
from medical meddling. A paper trail shows this to be patently 
false. Biden's Secretary of Education said, quote, ``In-person 
learning offers our young people the best opportunity,'' end 
quote. Why not listen to him?
    The Democrats and the teachers' union kept schools closed, 
and now not only has a generation of young children been robbed 
of a year of education, but mental health problems are up 31 
percent, drug use and addiction resulting in overdose have 
exploded, and children as young as 9 have committed suicide, 
all traced back to the shuttering of schools. Now we know who 
is responsible, the teachers' union. Union involvement in the 
drafting and editing of scientific guidance is the very 
definition of political meddling. It is unclear how many 
children were locked out of school because of the union's 
selfishness, and even today, summer camps don't have guidance 
from the CDC on reopening without masks. Do they need to hire 
the AFT?
    The lives of American children must be governed by medical 
science and not political science.
    Thank you, Mr. Chair. I yield my time.
    Chairman Clyburn.
    [Inaudible] and Chief Executive Officer of Emergent 
BioSolutions. He joined Emergent in 1999 as Chief Financial 
Officer, and held a variety of executive leadership roles until 
becoming CEO in 2019. He is a member of Emergent's board of 
directors.
    Mr. Fuad El-Hibri is the Executive Chairman of Emergent's 
Board of Directors. He founded Emergent in 1998, and served as 
Chief Executive Officer from the company's founding in 2012.
    Will the witnesses please raise their right hands so I may 
swear them in. Do you affirm or swear that the testimony you 
are about to give is the truth, the whole truth, and nothing 
but the truth, so help you God?
    [Witnesses are sworn.]
    Chairman Clyburn. Thank you. Let the record show that the 
witnesses answered in the affirmative.
    Without objection, your written statements will be made 
part of the record. Mr. Kramer, you are now recognized for five 
minutes for your opening statement.

 STATEMENT OF ROBERT G. KRAMER, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, EMERGENT BIOSOLUTIONS, INC.

    Mr. Kramer. Chairman Clyburn, Chairwoman Maloney, Ranking 
Member Scalise, and members of the subcommittee, my name is Bob 
Kramer. I am the CEO of Emergent BioSolutions. Thank you for 
the opportunity to appear today to discuss Emergent's role in 
the COVID-19 pandemic response.
    We have worked around the clock at every level in our 
company since we were called upon to be a critical manufacturer 
of COVID-19 vaccine. I can assure you that no one is more 
disappointed than we are that we had to suspend our 24/7 
manufacturing of new vaccine. As CEO, I take full 
responsibility for that.
    At Emergent, we focus on public health threats that pose an 
extraordinary danger to the Nation, such as bioterror weapons. 
Currently, our portfolio is comprised of vaccines and therapies 
for anthrax, smallpox, typhoid fever, cholera, and botulism. We 
are also part of the fight against the opioid crisis, with our 
Narcan nasal spray product.
    After the 2009 H1N1 pandemic, BARDA recognized that the 
United States lacked sufficient domestic capability to rapidly 
manufacture vaccines in quantities necessary to meet the 
demands of a pandemic emergency. This prompted BARDA to fund 
three Centers for Innovation in Advanced Development and 
Manufacturing, or CIADM. In 2012, our Bayview operation was 
selected as one of those facilities. However, despite our own 
investment of more than $200 million, the expected pipeline of 
government task orders to utilize the facility persistently 
fell short of what was needed to reach full operating 
potential. As a result, by the end of 2019, Bayview had roughly 
100 employees and was less than a year away from licensure.
    When the COVID-19 pandemic began, Emergent, the U.S. 
Government, and our other partners recognized that while 
Bayview was not yet fully staffed or operating at scale, the 
facility's unique attributes could be used to support the 
challenge of producing mass amounts of vaccine.
    In April 2020, Emergent agreed to manufacture a drug 
substance for the J&J COVID-19 vaccine candidate at Bayview. In 
late May, the government issued a task order, under the CIADM 
contract, requiring us to reserve additional Bayview capacity, 
which we were later directed to release to AstraZeneca.
    Ramping up production of two novel vaccines on a very large 
scale in the same facility is unprecedented, but the government 
decided that given the critical need, Emergent should 
manufacture both drug substances simultaneously, and we moved 
with extraordinary speed to scale up the new technology. We 
began manufacturing of the AZ bulk drug substance in August 
2020, and did the same for J&J in November.
    However, in March 2021, a single batch of J&J's COVID-19 
vaccine candidate failed routine quality control testing. We 
immediately initiated an investigation which determined that 
the bioreactor material used for the J&J program was in the 
vicinity of material being disposed of from the AstraZeneca 
suite. Detailed testing was also conducted on other batches in 
process, and the presence of AstraZeneca virus was not 
detected.
    We have implemented an array of corrective steps. 
Critically, we have removed the AstraZeneca vaccine candidate 
from Bayview, which is now dedicated only to the J&J vaccine. 
J&J has been onsite with us throughout the pandemic, and they 
are now providing 24/7 oversight of all production areas, 
change control, qualifications, and process items.
    I understand that we are here today to answer for the 
contamination incident, and I apologize for the failure of our 
controls, and I give you my personal assurance that I will take 
every step that is needed to resume production safely.
    At the same time, I do want to take this opportunity to let 
you know that many Emergent employees, from frontline workers 
to engineers and managers, have been working around the clock, 
putting much else in their lives on hold, sometimes at 
considerable personal sacrifice amid the pandemic, as they have 
sought to ensure that we all have access to COVID-19 vaccine. 
They have been the true heroes here, and I am deeply 
appreciative of their dedication, their hard work, and their 
sacrifice.
    Thank you, and I look forward to your questions.
    Chairman Clyburn. Thank you very much, Mr. Kramer. We will 
now turn to Mr. El-Hibri. You are now recognized, Mr. El-Hibri, 
for five minutes.

STATEMENT OF FUAD EL-HIBRI, EXECUTIVE CHAIRMAN OF THE BOARD OF 
             DIRECTORS, EMERGENT BIOSOLUTIONS, INC.

    Mr. El-Hibri. Chairman Clyburn, Chairwoman Maloney, and 
Ranking Member Scalise, and members of the subcommittee, my 
name is Fuad El-Hibri and I am the Executive Chairman of 
Emergent BioSolutions. Thank you for the opportunity to appear 
before you today and answer questions regarding Emergent's role 
in responding to the COVID-19 pandemic.
    Emergent started in 1998, as a small company that acquired 
the rights to a laboratory and manufacturing facility. The 
site's primary function was to produce anthrax vaccine for the 
Department of Defense. The manufacturing capacity at that time 
was only a fraction of what the U.S. military required. At the 
time of the acquisition, the facility was subject to an FDA 
notice of intent to revoke its license.
    I served as the President and Chief Executive Officer of 
Emergent from its inception until 2012. Since that time, I have 
been Executive Chairman of the board of directors, which means 
I am responsible for board leadership, governance-related 
external outreach, and advising the management team on 
strategic decisions, rather than day-to-day management.
    Emergent handles some of the most challenging biological 
materials in its manufacturing processes, including anthrax 
bacteria and live virus strains. Since its founding, we have 
strived to manufacture at the highest quality. The board takes 
that responsibility very seriously. On behalf of the board, I 
would like to assure the subcommittee and the American people 
that we understand the importance of responding to the COVID-19 
pandemic.
    As you are aware, we recently had a cross-contamination 
event with one lot of vaccine drug substance at our Bayview 
facility in Baltimore, Maryland. Manufacturing drug substance 
for two viral products in one facility, on a massive scale, 
while incorporating new manufacturing technology into the 
facility is a challenge at any time, even more so in the midst 
of a public health emergency.
    Let me be clear. The cross-contamination incident is 
unacceptable, period. Mr. Kramer will testify regarding the 
specific actions that the company is taking to remedy the 
situation.
    At the board level, we have expanded our oversight. In the 
last six weeks, in addition to our regular meetings, the board 
has met six times to oversee management's progress. At our last 
board meeting, the board authorized the creation of a special 
committee charged with manufacturing and quality oversight.
    In addition, in consultation with the board, Mr. Kramer has 
recently changed the reporting structure for the quality 
organization. Mr. Kramer has also changed management oversight 
for the Bayview facility.
    I want to assure the subcommittee that Emergent is 
committed to addressing all quality and manufacturing issues at 
the Bayview facility with diligence, thoroughness, and urgency, 
so that Johnson & Johnson can deliver safe and effective 
vaccines to the American people and the world.
    I would also like to address the suggestion that my 
personal relationship with Dr. Robert Kadlec influenced the 
award of government contracts to Emergent. This is simply not 
true. Dr. Kadlec has had a distinguished career in the U.S. 
Government, including the Air Force and senior positions in 
Congress and the Executive branch, working on biodefense 
issues. During his time outside of government, he was a valued 
consultant to our company and others. Emergent's contracts with 
the U.S. Government have all been subject to standard 
government contracting procedures, overseen by independent 
career government contracting officers.
    To conclude, I would like to emphasize that Emergent takes 
very seriously its role as a reliable supplier of medical 
countermeasures, vaccines, and therapeutics for public health 
threats to the U.S. Government and patients. We remain very 
focused on addressing the manufacturing challenges at the 
Bayview facility, and the board's top priority is ensuring that 
management takes all corrective actions required to resume 
production.
    Thank you for the opportunity to appear today. I look 
forward to answering your questions.
    Chairman Clyburn. Thank you very much, Mr. El-Hibri. Each 
member will now have five minutes for questions. The chair now 
recognizes himself for five minutes.
    Mr. Kramer, in March, we learned that Emergent's Baltimore 
plant was forced to destroy millions of coronavirus vaccines 
over the last six months due to suspected contamination. Mr. 
Kramer, exactly how many doses of the Johnson & Johnson vaccine 
and AstraZeneca vaccine were destroyed due to contamination at 
your plant, and how many others have not been shipped because 
of ongoing safety testing?
    Mr. Kramer. So, Chairman Clyburn, just to be clear, our 
work for J&J and for AstraZeneca is to manufacture the bulk 
drug substance for both of those candidates. I can't 
specifically comment on the number of doses. What I can comment 
on is the incident that occurred in March resulted in the loss 
of one batch. It was a viral contamination. That was what our 
root cause investigation determined. And the equivalent number 
of doses associated with that one batch was about 15 million 
doses.
    Chairman Clyburn. So, for both AstraZeneca and Johnson & 
Johnson, the total was 15 million.
    Mr. Kramer. Chairman Clyburn, I was just speaking the 
Johnson & Johnson product, not the AstraZeneca product. So, I 
think it is important to understand that when we began this 
work back last year, in April and May, we were challenged, 
along with our network of partners, AstraZeneca, J&J, and the 
U.S. Government, and BARDA, to very quickly tech transfer in 
these two candidates, scale them up, and be in a position to 
make tens of millions, if not hundreds of millions of vaccines. 
That process typically takes one to two years, and we were 
being asked to do that in a period of months.
    The early stages of the manufacturing, particularly of the 
AstraZeneca product, resulted in a number of lost batches, 
because the startup was occurring so very quickly and we were 
really working at unprecedented pace.
    Later, in 2020, once the cadence and the process was 
established and locked down and validated, we were operating in 
areas with a much greater success rate. I can't give you an 
exact number of doses that were lost of the AstraZeneca 
product. I can simply comment that we did lose a number of 
production runs early in the scaling up of the manufacturing 
process, because of the pace that we were responding to, along 
with BARDA, along with AstraZeneca, to be in a position to 
respond to the pandemic very, very quickly.
    Chairman Clyburn. Well, do you think you might be able to 
get that number to us, at a later date?
    Mr. Kramer. Yes, Mr. Chairman. I would be glad to do that.
    Chairman Clyburn. Well, thank you very much. Now I want you 
to understand, we are not second-guessing anything here. This 
committee is really trying to find some accountability for what 
we consider to be some egregious failures. So, let me ask this. 
How many doses of each of these have been shipped abroad, and 
of those, how many are currently being held by foreign 
authorities for testing to confirm whether or not they are safe 
to use?
    Mr. Kramer. So, Chairman Clyburn, we manufacture the drug 
substance for both AstraZeneca and J&J, and after our 
production is complete we ship that product to AstraZeneca and 
to J&J. They, in turn, do the--or through other contractors of 
theirs--do the actual final fill and finish and labeling and 
packaging, and placing of the vaccine in the final vials that 
you are used to seeing when you are immunized. So, I can't tell 
you exactly the number of doses that are in their possession, 
because we ship them drug substance in large volumes. They, in 
turn, put it in the final container, and they determine where 
that product is shipped. I can only describe to you the number 
of drug substance batches that we have manufactured and 
supplied to both AstraZeneca and J&J.
    Chairman Clyburn. So, you can get that number to me also?
    Mr. Kramer. Yes, sir.
    Chairman Clyburn. Thank you. I now yield to the ranking 
member for five minutes.
    Mr. Scalise. Thank you, Mr. Chairman. Mr. Kramer, I first 
want to ask about Operation Warp Speed. What is your view on 
how that worked? Did that work the way it was intended to open 
the door so that we could get multiple vaccinations moved 
through the FDA process quickly, in record time, in a safe and 
effective manner?
    Mr. Kramer. So, Ranking Member Scalise, I think Operation 
Warp Speed had a lot of very positive attributes and 
principles, one of which clearly is this notion of strong 
public-private partnerships, and second, the idea that in order 
to quickly develop and scale and make available hundreds of 
millions of vaccine doses, it was really important to do, in 
parallel, things like clinical development and manufacturing 
development. Typically you wouldn't do those two activities at 
the same time, but in order to ensure that if and when any of 
those vaccine candidates would be showing clinical benefit, 
then we would have a current amount of inventory to be made 
available.
    I think it is important to note that a year ago this time 
we were facing the pandemic without any vaccine available to 
protect the public, and our government and industry partners 
got together and formed an incredibly powerful network of 
public-private partnerships in order to rapidly advance the 
development and the scale-up of multiple vaccine candidates, 
not knowing which, if any of those, would be shown to have 
clinical benefit yet available today. I think it is quite 
remarkable that a year later we have three vaccines that are 
Emergency Use Authorization approved by the FDA, with hundreds 
of millions of Americans being protected from those vaccines.
    Mr. Scalise. Well, thank you, and clearly President Trump 
deserves credit for getting government red tape out of the way 
and just focusing on letting these great drug companies do the 
work that they do in coming up with cures. I mean, here you had 
a virus that was not even known to the world, and less than a 
year later we have got multiple vaccines that have moved their 
way through the FDA process, and clearly the FDA process is 
involved in how your facility runs.
    How many facilities like yours are there in the United 
States, Mr. Kramer?
    Mr. Kramer. Ranking Member Scalise, in 2012, BARDA 
established three different CIADM facilities, ours being one of 
them. There is also one associated with Texas A&M University 
and one in North Carolina. To my knowledge, when BARDA made the 
decision to kind of tap us on the shoulder and access our 
facility to support these two vaccine candidates, the other two 
may not have been ready to do the work that we were asked to 
do.
    Mr. Scalise. So, this happened under the Obama-Biden 
administration that you all started getting into this line of 
business?
    Mr. Kramer. That is correct.
    Mr. Scalise. So, the FDA process that we are talking about 
on the cross-contamination, was it you all who identified this? 
Was it the FDA? Were all the FDA processes followed, or has 
that been resolved?
    Mr. Kramer. So, the contamination event was identified 
through our quality control procedures and checks and balances. 
When we were informed and made aware that the contamination 
occurred, as we always do we opened up an investigation to 
determine the root cause of that contamination event. That 
information was shared with the FDA as soon as the 
investigational report was completed in early April.
    Mr. Scalise. So, you followed those FDA processes. Did any 
of the contaminated doses get out of your facility? Were any 
put in the arms of people, or was this an internal discovery 
that stayed internal?
    Mr. Kramer. Importantly, Ranking Member Scalise, our 
internal quality control procedures identified the out of 
specification and the contamination. None of that material left 
our control. The production lot was quarantined, set aside, and 
never left our facility.
    Mr. Scalise. And I know we are going to have a second round 
of questions. I do want to get into this, though. I understand 
there are some batches that were made that were not 
contaminated but that the FDA has not released yet. Is that the 
case, and if so, how many doses would that amount to that right 
now are not available to be distributed to Americans and maybe 
other people around the world, that the FDA hasn't released?
    Mr. Kramer. Yes, Mr. Scalise. There are a number, a 
significant number of doses that we manufactured. Again, we 
manufacture the bulk drug substance, and it has been reported 
in a number of the news agencies there are probably over 100 
million doses of the J&J vaccine that we have manufactured that 
are now being evaluated by the FDA for potential release and 
availability to the public.
    Mr. Scalise. I am out of time but I want to get into that 
if there is a second round, Mr. Chairman. I yield back.
    Chairman Clyburn. Thank you very much, Mr. Scalise. I now 
yield to Ms. Waters for five minutes.
    Ms. Waters. Thank you very much, Mr. Chairman. I am so 
pleased that you are holding this hearing, because information 
regarding Emergent is absolutely concerning. And so I want to 
two representatives who are here today to try and clear up some 
of this information.
    First of all, let me ask Mr. Kramer, or Mr. El-Hibri, how 
did you get this contract? It was a no-bid contract, and you 
referred to it as a relationship, or a joint venture between 
the government and you. How did you get the contract, and how 
much the government contribute to the contract in order for you 
to be ready and capable of delivery, and how much did you 
contribute? How much did Bayview contribute?
    Mr. Kramer. Congresswoman Waters, are you asking about the 
2012 contract or the 2020 contract, if I could ask, please.
    Ms. Waters. I am talking about the one where you were 
awarded $27 million per month in order to be involved with 
production of the vaccine.
    Mr. Kramer. So, Congresswoman Waters, that was the task 
order that was awarded to Emergent by BARDA. In April or May 
2020, they selected our facility because BARDA wanted to have 
immediate access to manufacturing capacity for COVID-19 
vaccines----
    Ms. Waters. May I stop you for one minute, because I want 
to know what Mr. Robert Kadlec had to do with this contract. 
Now as I understand it, Robert Kadlec was a former consultant 
to Emergent. Is that right?
    Mr. Kramer. That is correct.
    Ms. Waters. And that he had been paid some $360,000 by 
Emergent before awarding the contract, but he had something to 
do with significant participation in your getting the contract. 
Is that right?
    Mr. Kramer. Congresswoman Waters, I am not aware that Dr. 
Kadlec was directly involved in any award of a contract, this 
contract to Emergent.
    Ms. Waters. Why are you not aware of it? He worked as a 
consultant to you. Then he went over to the administration 
where he worked, you know, for the President, and he was 
involved in decisions about contractors, and yours in 
particular. Are you telling me that you did not know that?
    Mr. Kramer. Congresswoman Waters, what I am----
    Ms. Waters. You are under oath, sir.
    Mr. Kramer. Yes, ma'am. I know that. What I am----
    Ms. Waters. Are you telling me that Robert Kadlec had 
nothing to do with the awarding of the contract to Emergent?
    Mr. Kramer. I am not aware of his direct involvement, 
Congresswoman Waters, and the contract. All of our negotiations 
and discussions with the government were with BARDA. BARDA is 
the agency who awarded the contract.
    Ms. Waters. Thank you. If you are basically saying that you 
do not know, let the record reflect that. Thank you very much.
    Now, getting this $27 million per month, were you ever paid 
anywhere between $20 and $27 million, even though you were not 
producing?
    Mr. Kramer. Congresswoman Waters, the nature of the 
contract was to allow the government to have access to our 
facility, for them to direct activity. After awarding the 
contract they directed us to immediately begin work with 
AstraZeneca to tech transfer in, or to transfer their candidate 
into our facility, scale up the manufacturing process, and 
begin the work.
    Ms. Waters. Thank you. I understand that. But were you paid 
$27 million per month despite the fact you were not 
manufacturing in some of those months?
    Mr. Kramer. I believe we were, yes.
    Ms. Waters. OK. Thank you very much. Now let me also ask 
you about the fact that Emergent had more than once, on several 
occasions, been told that your facility was not safe, that 
basically you had contamination problems. How many times were 
you warned, or told about your contamination problems?
    Chairman Clyburn. I am going to ask the gentlelady to hold 
that question for the next round, because her time has expired.
    Ms. Waters. Thank you. Thank you, Mr. Chairman.
    Chairman Clyburn. The chair now recognizes Mr. Jordan for 
five minutes.
    Mr. Jordan. Thank you, Mr. Chairman. I will have a question 
in the second round for Mr. Kramer, but first round here I 
wanted to focus on a fundamental question. Why don't Democrats 
on this committee want to know how the virus started? Seventeen 
months, 150 million cases worldwide, 600,000 Americans lost 
their lives. Where did this thing start? Did it jump from an 
animal to humans, or was it a leak from a lab, a lab in Wuhan, 
China? American people would probably like to know. After all, 
they have had their liberties assaulted for the past year.
    The World Health Organization did a study and issued a 
report, the same World Health Organization that Republicans on 
this committee asked to come in front of this committee three 
separate times and the Democrats denied us our request. Their 
report said this, quote, ``It was extremely unlikely that the 
lab leak was the cause.'' Just one problem with that finding--
nobody believes them.
    President Biden's Director of National Intelligence, Avril 
Haines, said this, ``That is not our assessment.'' Secretary of 
State Blinken said, ``We have got real concerns about the 
methodology and process that went into the WHO report.'' 
Secretary of Health and Human Services Becerra, a former 
colleague of ours, said, quote, ``We have to understand how 
COVID surfaced, but the Select Committee in Congress on COVID 
doesn't want to know.''
    Journalists want to know. Josh Rogin, in a Washington Post 
column two weeks ago, he starts his column off by quoting our 
colleague, Congressman Gallagher. ``Understanding the cause of 
the pandemic and ensuring that something like it never happens 
again is the most important question we face.'' He goes on to 
say this: ``The Republicans are taking the first steps in a 
long-overdue effort, but without backing from Democrats who are 
conspicuously absent from these efforts. The investigations 
will struggle.'' Very true. The Select Committee on the 
Coronavirus won't look into how coronavirus started. I find 
that fascinating. I find that amazing.
    Nicholas Wade, former New York Times science writer, said 
this: ``When looking at the two scenarios,'' he says, quote, 
``it is a stretch to get the pandemic to break out naturally 
outside of Wuhan, and then without leaving a trace to make its 
first appearance in Wuhan.'' But he says this for the lab 
escape scenario: ``A Wuhan origin for the virus is a no-
brainer. Wuhan is home to China's leading center for 
coronavirus research. Researchers were genetically engineering 
bat coronaviruses to attack human cells. They were doing so 
under minimal safety conditions. If the virus with an 
uninspected infectiousness had been generated there, its escape 
would be no surprise.'' Journalists want to know.
    The Secretary of State wants to know. The Secretary of 
Health and Human Services want to know. Journalists want to 
know. Republicans want to know. Americans want know. Why don't 
Democrats in Congress want to know where this thing started? Is 
it because Speaker Pelosi called it a diversion last year, when 
we were raising these questions and asking to have these 
witnesses brought in front of us?
    Or maybe it is because--maybe it is because Dr. Fauci, the 
all-knowing Dr. Fauci, who Mr. Rogin, in his piece, said has, 
quote, ``repeatedly thrown cold water on the lab leak theory,'' 
maybe Dr. Fauci would have to answer some tough questions if we 
actually dug into how this thing started. Remember, Dr. Fauci 
gave EcoHealth $3 million. EcoHealth then gave $600,000 to the 
Wuhan lab. Did Dr. Fauci know about this arrangement when he 
OKed the grant? Did Dr. Fauci know the Wuhan lab did not 
operate with the highest level of safety standards, as reported 
by our own State Department personnel in China.
    How about the process? There is a review board at HHS for 
any grants that do, quote, ``gain of function research.'' Now 
two weeks ago, Dr. Fauci told Senator Paul that the grant to 
Wuhan lab was not, quote, ``gain of function research,'' but 
several respected doctors disagree, say it was. How does this 
review board process work? Who sits on the board? The truth is, 
nobody knows. The only thing we know about this board is its 
chairman, and we only know that because he disclosed it in 
January 2020. Report here, ``Chris Hassell, the chairman, 
discloses involvement, January 2020, in a talk before the 
National Science Advisory Board for Biosecurity.'' He said 
during the talk that the current definition of what comes in 
front of his board is, quote, ``very narrow.'' Quote, ``I'll 
just probably be more frank than may be appropriate. I think it 
is too narrow.'' He then went on and suggested that the 
government could be funding gain-of-function research that his 
committee hasn't vetted. There are some important questions 
there for Dr. Fauci.
    How about the fundamental question, the fundamental 
question: Why are we funding research in a lab in Wuhan, China, 
is the first place? Why are we doing that? I think the American 
people would like to know, especially what they went through 
over the last year.
    And just as important--just as important, Mr. Chairman, why 
won't this committee, the only committee in the U.S. Congress 
focused solely on the coronavirus, why won't we look into how 
this thing started? I think the American people would like an 
answer to that question.
    I yield back.
    Chairman Clyburn. Thank you for yielding back. The chair 
now recognizes Mrs. Maloney for five minutes.
    Mrs. Maloney. Thank you, Mr. Chairman, and I thank our 
witnesses too. I would like to thank them for appearing today, 
for producing some of the documents that we requested. But I 
want to note that there are many outstanding documents, even 
though they were due two weeks ago. And so, I would first like 
to ask Mr. Kramer, you have received $628 million in a 
contract. Will you commit to testifying again after we receive 
these documents and complete our investigation? Will you give 
us that courtesy? Yes or no.
    Mr. Kramer. Yes, I will, Chairwoman.
    Mrs. Maloney. Thank you. Mr. El-Hibri, will you commit to 
testifying again after we receive the documents? It is our duty 
to oversee these documents. It is our charge. We have not 
received them. Would you commit to testifying, Mr. El-Hibri?
    Mr. El-Hibri. I do commit, Chairwoman.
    Mrs. Maloney. Thank you very much. We look forward to 
getting the documents we requested.
    I just want to go back to the questions about the 
inspections. Were you aware in June 2020 of these inspection 
findings from Johnson & Johnson that there was contamination 
and there was no plan for the deficiencies that they saw? Were 
you aware, in June 2020, of these inspection findings, Mr. 
Kramer?
    Mr. Kramer. I was aware of the report, Chairwoman Maloney--
--
    Mrs. Maloney. OK. Thank you. And so, you oversee the 
business operations. In the months after that inspection, what 
actions did you take to correct them?
    Mr. Kramer. Chairwoman Maloney, our team responded as they 
do with inspections, whether they be from our clients or from 
regulatory----
    Mrs. Maloney. I am sure they did--reclaiming my time--but 
we still had to destroy millions of AstraZeneca's vaccine doses 
because they were contaminated. And just last week, November 3, 
you entered into an aggressive stock-trading plan to sell over 
10 million of Emergent stock in January and February 2021.
    So essentially, right after your company was in the process 
of destroying, or had destroyed, millions of vaccines that we 
could have used to save lives, but before this was made public 
to the people of this country, you entered into a plan to dump 
over 10 million of your own company stock, which you knew were 
going to go down once the problem came to light. So, that makes 
me think you were more interested in enriching yourself than 
serving the public. If it was my company, I would be there 
trying to get it fixed so that we could get the results of the 
contract.
    So far, we have given your company $628 million. They have 
taken $271 million, and as yet we have not gotten one usable 
vaccine. Is that correct? We haven't been able to jab one 
vaccine to save one American life. Is that correct?
    Mr. Kramer. Chairwoman Maloney, there are a number----
    Mrs. Maloney. Yes or no. Yes or no. Have we gotten any 
vaccines out of your company that we could use?
    Mr. Kramer. Chairman Maloney, those--we have tens of 
millions of doses----
    Mrs. Maloney. Excuse me. Yes or no. Have we been able to 
use the vaccine? Have we been able to save someone's life, out 
of 628 million committed dollars, of which $271 million have 
been spent, have we been able to get one vaccine? Yes or no.
    Mr. Kramer. None of the vaccines that we have manufactured 
has been made available to the U.S.
    Mrs. Maloney. OK. We haven't been able to get one vaccine.
    But you have been able to sell stock. Were you aware of the 
problems at the facility when you went out there and sold your 
stock? At the time you made your stock sale, merchant stock 
prices were hovering around $120 a share, but the price has now 
fallen to under $60 a share. Is it true that if you had sold 
your stocks today instead of before the news of Emergent's 
contamination, it would have been worth about $5 million rather 
than $10 million? But I will answer it. You got the $10 
million. And instead of thinking of ways to address your 
company's contamination, you were thinking of ways to enrich 
yourself. And I am deeply troubled about this. We lost so many 
lives. If we had the vaccines we would have saved those lives. 
And I am concerned how you were able to get a no-bid, sole-
source contract to prepare a vaccine that you had no experience 
in doing, and, in fact, the experiences from your past 
contract, for BioCorp, for anthrax, according to government 
oversight, was a disaster. GAO said that it was not done well, 
that they couldn't use it, that it is half of the strategic 
national stockpile, and scientists are saying it is not needed, 
and all these questions about the production of bio, and now 
you get another one. How do you get a contract when your track 
record was so poor on the first sole-source contract?
    Chairman Clyburn. We are going to hold his answer to that 
question for the next round, Chairman Maloney.
    Mrs. Maloney. I yield back.
    Chairman Clyburn. The chair now recognizes Dr. Green for 
five minutes.
    Mr. Green. Thank you, Mr. Chairman and Ranking Member 
Scalise, and I want to thank the witnesses for being here 
today. As a physician who researched vaccines, I helped write a 
protocol on a vaccine at USAMRIID when I was there, in my Army 
days, I have followed the development of these vaccines very 
carefully, especially as we received real-world data from the 
widespread vaccination population. The three vaccines that are 
being used in the United States are remarkably effective, 
preventing the infection and transmission of COVID-19. Over 150 
million people have received at least one vaccine dose. More 
115 million are fully vaccinated, with more being vaccinated 
every day.
    The results are incredibly clear. The CDC issued 
guidelines. The CDC's guidelines were that if you are 
vaccinated you don't have to wear a mask inside a building.
    Dr. Monahan very quickly had a knee-jerk response to that, 
using his medical decisionmaking, and said, ``Yes, you know 
what? You don't need to wear a mask inside a committee room.'' 
Within 4 days he had reversed his opinion and said, ``Wait a 
minute. Sorry. You can get into an elevator without a mask on, 
with as many people as you want, and not social distance, but 
you have to wear a mask inside a committee room.'' I want to 
know, what data changed in those four days that his medical 
decisionmaking changed. Or was there influence from people who 
just want to continue to exert control.
    I will be having a conversation later with Dr. Monahan to 
figure that out. Obviously, I think that that is an issue, so 
we will take that up with Dr. Monahan.
    I would like to take an issue with at least the 
implications of some of the comments made by my colleagues 
across the aisle. Democrats hate bonuses. They hate them. They 
hate when innovation is rewarded. They want equity of outcomes. 
That is the big push from progressives. And that is why 
President Biden is considering giving away these companies' 
intellectual property on messenger RNA technology. You can't 
have these American companies making billions of dollars off of 
the technology that they have been working on for decades.
    But oh, by the way, it is OK if we give it to China. Let's 
let them take it and let their pharmaceutical companies make 
billions of dollars. Let's let their state enterprises 
subsidize those companies and put American companies out of 
business. Great idea. Let's put our pharmacologic biomedical 
research guys out of business by sharing the very technology 
that has made them distinct. Great idea. Not a great idea.
    Look at Motorola. They went to do business in China. They 
were forced to share their intellectual property on cell towers 
with the Chinese government. They gave that technology to 
Huawei. That company was worth about $11 billion in 1992, and 
in 2011, I think, 2009, they were scrapped for $900 million 
because Huawei stole the technology, and with funding from the 
Chinese government put that American company out of business. 
Fifty thousand Americans lost their jobs. Do you want that 
happening in our biotech industry? President Biden, do you want 
that in our biotech industry? You would share the intellectual 
property, the efforts of hundreds of American scientists. Just 
give that away to the Chinese Communist Party.
    And oh, by the way, also very concerning, worse than all of 
that, messenger RNA has a dual-use national security 
implication. And if biology is a war-fighting domain, and the 
Chinese have said it is, giving them, handing them this 
technology on a silver platter is a threat to national 
security. And yet, here we are, thinking about sharing the 
intellectual property of these companies, interestingly enough, 
who have gotten assistance from the American taxpayer.
    This industry is a proud American innovative industry. It 
needs to be protected. Yes, we need better vaccine distribution 
globally to help people who are hurting. I am the ranking 
member of Western Hemisphere on Foreign Affairs, and we need--
China is out there giving away its ineffective vaccine, trying 
to steal relationships, compelling Paraguay to deny its 
relationships with Taiwan so that they can get the vaccine. 
China trading the lives of people for, you know, disrespect to 
Taiwan, their political endeavor. And here we are talking about 
sharing our intellectual property on messenger RNA technology 
with China. Ludicrous.
    I yield.
    Chairman Clyburn. I thank the gentleman for yielding back. 
The chair now recognizes Ms. Velazquez for five minutes.
    Ms. Velazquez. Thank you, Mr. Chairman. Mr. El-Hibri, in 
2017, former President Trump nominated Dr. Robert Kadlec to 
serve as the Assistant Secretary for Preparedness and Response 
for the Department of Health and Human Services. Mr. El-Hibri, 
you and Dr. Kadlec had a professional relationship for many 
years before he was appointed to serve in the Trump 
administration. Is this correct?
    Mr. El-Hibri. That is correct.
    Ms. Velazquez. What kind of relationship was this? Did you 
work together?
    Mr. El-Hibri. Yes, we did work together. We worked together 
in----
    Ms. Velazquez. OK. No, no, no. This is a yes-or-no answer.
    The Select Committee has received documents showing that 
Emergent paid Dr. Kadlec's consulting firm an annual retainer 
of $120,000, between 2012 and 2015. Mr. Chairman, I have the 
exhibits here, 23, 22, and 24, and that shows a total of 
$360,000. Was Dr. Kadlec paid $120,000 each year?
    Mr. El-Hibri. I trust that your information is correct.
    Ms. Velazquez. Was Kadlec paid a total of $360,000?
    Mr. El-Hibri. Yes.
    Ms. Velazquez. Did Dr. Kadlec receive payment from Emergent 
outside of his retainer? If so, how much?
    Mr. El-Hibri. No, he didn't.
    Ms. Velazquez. I remind the witness that you are under 
oath.
    Mr. El-Hibri. I am not aware that he received any other 
compensation.
    Ms. Velazquez. Dr. Kadlec ended his consulting practice in 
2015 to go and work for Senator Richard Byrd. But just two 
years later he became the Assistant Secretary for Preparedness 
and Response, where he had great influence over large amounts 
of taxpayer dollars.
    In 2017, one of Emergent's business goals was to see that 
the Strategic National Stockpile, then worth $7 billion, was 
transferred from the Centers for Disease Control and Prevention 
to the Office of the Assistant Secretary for Preparedness and 
Response.
    Mr. El-Hibri, when was the Strategic National Stockpile 
transferred to ASPR control?
    Mr. El-Hibri. I believe it was in 2018.
    Ms. Velazquez. OK. This move also played out well for 
Emergent. In 2019, ASPR awarded Emergent a 10-year, $2 billion 
contract for smallpox vaccines, and a $261 million order for 
anthrax vaccines. Then, in 2020, ASPR awarded more than $680 
millions to Emergent.
    Mr. El-Hibri, how often did you speak to your former 
business associate, Dr. Kadlec, when he served as Assistant 
Secretary?
    Mr. El-Hibri. I would say maybe four or five times during a 
two-or three-year period.
    Ms. Velazquez. And how often do you speak to him when 
Emergent received contracts for vaccines in 2019 and 2020?
    Mr. El-Hibri. When there is an outstanding RFP.
    Ms. Velazquez. Did you speak often?
    Mr. El-Hibri. During an open RFP period, I do not speak 
with him.
    Ms. Velazquez. How about you, Mr. Kramer? Did you or any 
other Emergent executives speak to or socialize with Dr. Kadlec 
while these contracts were being issued?
    Mr. Kramer. Congresswoman, I did not have any conversations 
with Dr. Kadlec about this.
    Ms. Velazquez. It is striking that Emergent profited so 
much after their former consultant received an influential 
appointment.
    With that I yield back, Mr. Chairman.
    Chairman Clyburn. Thank you, gentlelady, for yielding back. 
The chair now recognizes, for five minutes, Ms. Malliotakis.
    Ms. Malliotakis. Thank you, Mr. Chairman and ranking 
member. Everyone, including the President, is talking about 
bringing our supply chain home, particularly when it comes to 
the pharmaceuticals. Everyone is talking about manufacturing in 
the United States. It was something that he made very clear 
during his state of the Union address as well through Executive 
order.
    But what I don't understand are the policies that have been 
coming forward that don't achieve that goal. President Biden 
recently announced that he was green-lighting sending American 
vaccine intellectual property to foreign countries. This was 
mentioned by some of my colleagues before. This is something 
that I don't think any American can understand, and it is a 
plan to cave to progressives, it is a plan to disseminate 
American innovation, a plan to keep the U.S. from responding to 
future pandemics, and a plan, by the way, that has been 
internationally condemned. A U.S. spokesman for the German 
Chancellor Merkel said, quote, ``The protection of intellectual 
property is a source of innovation. It must remain so in the 
future.'' The German chancellor is looking out more for the 
American people that our President.
    Without properly protecting American intellectual property, 
there are no future innovations. That is what I hope that my 
colleagues understand, and it is one of the top reasons why we 
have lost manufacturing jobs to other countries, particularly 
the Communist Party of China. And it is the demonization that 
we are hearing here today of our private partners. It is 
entering climate agreements that actually give China and India 
a clear advantage. There is no level playing field. And it is 
proposals like the President's to increase the corporate tax 
rate so the highest level in the modernized world, that is a 
reason why we are having difficulty in finding a manufacturer 
to even produce this vaccine.
    So, I would like to just phrase my questions to talk about 
intellectual property and how that is going to affect future 
innovation. Mr. Kramer, are strong IP protections vital to 
responding to novel emerging diseases?
    Mr. Kramer. Congresswoman Malliotakis, I think it is 
important that IP protections for manufacturers and for the 
pharmaceutical companies who own these products, that they are 
protected. At the same time, I think it is important to focus 
on what is the ultimate goal. And if the ultimate goal is to 
make sure that the millions, if not billions of individuals 
around the globe who need access to vaccine, I think there are 
different ways to accomplish that goal.
    Ms. Malliotakis. OK. And if you would like to share some of 
those with me I would appreciate that.
    Mr. Kramer. I would simply say, again, IP protection is 
important. Pharmaceutical companies like ours and many of our 
partners, invest millions, if not billions of dollars in 
constructing and creating that IP, and it is important to 
respect that.
    Ms. Malliotakis. Thank you. It is my understanding that the 
Trump administration tried different angles to get this vaccine 
produced. They had difficulties finding manufacturers within 
the United States who would be willing to take the risk. Can 
you talk a little bit about the type of risks that companies 
like yours, who make drugs that respond to biothreats, take on?
    Mr. Kramer. Yes. Thank you. I think it is important to 
recognize that the ultimate goal of any manufacturer of a 
vaccine, whether it is the J&J vaccine, or Pfizer, or Moderna, 
our collective goal is to ensure that there is a consistent 
manufacturing supply and reliable process that meets all of our 
quality standards to make these critically needed vaccines 
available.
    In order to do that, it is very complex. You need a 
combination of qualified raw materials, a trained work force, 
dedicated equipment, a properly controlled environment, and all 
around that you need proper quality controls and checks. That 
process, to get to that steady state, often requires years and 
years of work, and we were asked to do that in a matter of 
months. And I say that not to be a prelude to making any 
excuses for the work that we have done, but rather that when 
the FDA concludes that companies like ours have adequately met 
all those standards, and they put their approval on FDA-
released material, that should give the public comfort and 
confidence that those products are safe and effective.
    The other thing I would say is once that state of readiness 
and repeatability is achieved, the last thing that you want to 
do is either to change that process or to move that process or, 
heaven forbid, stop that process, because it does call into 
question the continuity of that, which is ultimately critically 
important.
    So, we all strive for getting to that state of control and 
quality operations for our vaccines.
    Chairman Clyburn. The gentlelady's time has expired. The 
chair now recognizes Mr. Foster for five minutes.
    Mr. Foster. Thank you, Mr. Chair. I would like to start by 
just making a couple of quick points. First, that the origins 
of SARS-CoV-2 will be investigated by the House Science 
Committee Investigations and Oversight Committee, and as chair 
of that committee, I can assure you that our hearings will be a 
rational discussion among scientists, rather than a blizzard of 
semi-informed talking points designed for social media.
    Second, the idea of manufacturing vaccines in parallel with 
their test and approval did not originate with Trump's 
Operation Warp Speed. The Gates Foundation was doing this back 
in February and March, and telling Congress to do likewise.
    Then, in April 2020, in a bipartisan letter led by then 
Member Donna Shalala and I, signed by 35 bipartisan Members of 
Congress, we told HHS and FTC, quote, ``Congress has given you 
clear direction and funding to invest in multiple routes to 
mass production, for multiple, plausible vaccine candidates in 
advance of their testing and approval, with the acknowledgement 
that much of that capacity will likely go unused when the final 
set of vaccines is chosen for mass deployment. We re-emphasized 
that direction from Congress, and ask you to inform Congress 
immediately if it appears that mass production capabilities, or 
significantly promising vaccine candidates are being delayed 
for economic reasons.'' So, we gave them money and clear 
direction in advance of Operation Warp Speed's launch.
    But that is not what we are talking about here. I would 
like to first off re-emphasize that these vaccines are safe and 
effective and critical to the health, not only of the person 
being vaccinated but to their families, friends, and the 
communities they live in. But that only works if the vaccines 
are properly manufactured.
    Mr. Kramer's testimony seemed to imply that the 
contamination incident was a sort of unavoidable, one-off, 
random incident that could not have been predicted. But 
Emergent's Bayview plant has been repeated cited by the FDA, 
other Federal agencies, and private auditors in recent years 
for having poor manufacturing practices.
    Mr. Kramer, on a recent call with investors you admitted 
that, quote, ``Cross-contamination is a well-known risk when 
producing drug substance from multiple viral products in a 
single plant.'' So, Mr. Kramer, is it fair to say that you were 
aware of this risk before your company proceeded to ruin 
millions of coronavirus vaccines through cross-contamination?
    Mr. Kramer. Congressman Foster, it is a well-known risk 
that if the precautions are not taken there is a likelihood of 
a cross-contamination. We took that risk seriously, we took all 
appropriate precautions to prevent that from happening, and, 
unfortunately, one incident did result in a cross-
contamination. We take that very seriously. We have put in 
place a number of corrective actions since that incident 
occurred, including strengthening our training, strengthening 
our cleaning, and removing, quite frankly, the AstraZeneca 
virus and vaccine from our facility to eliminate that risk from 
happening again.
    Mr. Foster. OK. I am also a little bit confused about the 
statement that you just made under oath, that it was your 
internal QA checks that first caught the contamination. So, 
where exactly was the laboratory which first detected the 
contaminated batch?
    Mr. Kramer. Congressman Foster, I think I recognized that 
our quality control systems----
    Mr. Foster. Answer the question. Where was the laboratory 
that caught the contamination? Was it your internal QA 
laboratory, you know, process, or was it that of your customer?
    Mr. Kramer. The particular assay and the location of the 
work that detected the contamination was the J&J facility in 
Leiden.
    Mr. Foster. In the Netherlands. So, why did you refer to 
that as your internal QA checks that detected the 
contamination?
    Mr. Kramer. Part of our robust quality controls and quality 
systems include a number of assays that we have done. In this 
particular case----
    Mr. Foster. But they did not detect the contamination. 
Correct? It was detected by your customer seeing a defective 
batch being delivered.
    Mr. Kramer. That assay that was conducted by J&J was part 
of our quality control system. So yes, it was detected by J&J, 
but that test was part of our internal quality control 
procedures.
    Mr. Foster. OK. I am highly confused about how you refer to 
your internal procedures as those of simply your customers 
making sure that you have delivered a product that conforms to 
specs.
    The record also shows that you should have been on very 
high alert for those sorts of risks. The Select Subcommittee 
released new documents today that add to the mounting pile of 
evidence showing that Emergent had plenty of warnings regarding 
inadequate conditions at your facilities, yet Emergent failed 
to act.
    And I will have more questions in my next round of 
questions. I yield back.
    Chairman Clyburn. Thank you. The chair now recognizes Dr. 
Miller-Meeks for five minutes.
    Mrs. Miller-Meeks. Thank you, Mr. Chair. Thank you all for 
coming before the subcommittee today to testify. We have spoken 
extensively about diversified supply chains and bringing 
especially the manufacturing of PPE and pharmaceuticals back to 
the United States. How many facilities, Mr. Kramer, are there 
in the United States that manufacture vaccines?
    Mr. Kramer. Congresswoman Miller-Meeks, I don't have that 
number. I don't know.
    Mrs. Miller-Meeks. OK. Mr. Kramer, when, and under what 
Presidential administration did Emergent receive its CIADM 
contract to begin construction on the Baltimore facility?
    Mr. Kramer. It was under the Obama Administration.
    Mrs. Miller-Meeks. And who was Vice President at that time?
    Mr. Kramer. I believe Joe Biden.
    Mrs. Miller-Meeks. And did the contract state that you 
were, quote, ``Nimble, flexible capacity to produce medical 
countermeasures in the face of any attack or threat, known or 
unknown, including a novel, previously unrecognized, naturally 
occurring, emerging infectious disease,'' end quote?
    Mr. Kramer. I believe that is correct, yes.
    Mrs. Miller-Meeks. And since you are an expert in this 
area, does coronavirus meet those terms?
    Mr. Kramer. I believe so, yes.
    Mrs. Miller-Meeks. So BARDA, not the Trump administration, 
just exercised a task order on that Obama-era contract. 
Correct?
    Mr. Kramer. That is correct.
    Mrs. Miller-Meeks. When did the FDA initiate an inspection 
of your Baltimore facility?
    Mr. Kramer. The last FDA inspection was in April of this 
year.
    Mrs. Miller-Meeks. And when did Emergent announce its 
agreement with the FDA to suspend operations?
    Mr. Kramer. Near the conclusion of that last FDA 
inspection.
    Mrs. Miller-Meeks. And are you currently working with the 
FDA to remediate these issues?
    Mr. Kramer. We are. Immediately following the last FDA 
inspection, which I believe ended on April 20, we began work on 
our corrective action plan and our response to the 43 
observations. We submitted that comprehensive plan on April 30, 
and the FDA is currently is under review.
    Mrs. Miller-Meeks. In fact, the Biden White House said your 
quality control worked as it should. Did quality control catch 
these issues?
    Mr. Kramer. Yes, it did.
    Mrs. Miller-Meeks. Were any Americans harmed?
    Mr. Kramer. No, they were not.
    Mrs. Miller-Meeks. When you are awarded contracts, do they 
come from nonpartisan career contracting officials?
    Mr. Kramer. Yes, that is true.
    Mrs. Miller-Meeks. So, the Democrats' claim of a political 
gift is just false. In fact, Biden's Director of BARDA said he 
is 100 percent confident that this contract was awarded based 
on merit and science and not undue influence.
    Recently, Dr. Roger Ebright of Rutgers identified a 
research article by the Wuhan Institute of Virology scientist, 
``Discovery of a rich gene pool of bat SARS-related coronavirus 
provides new insights into the origin of SARS-Coronavirus, and 
it qualifies as a gain-of-function and was clearly a product of 
NIH funding.'' The paper, drafted by WIV scientists clearly 
states that the underlying research was funded by, among other 
entities, the NIH. NIH's own data base of grantees list the 
research and confirms that over $660,000 was spent supporting 
it.
    Perhaps we should focus more on investigating where this 
virus came from, and if it emanated from a lab which had some 
funding from NIH and Dr. Fauci, rather than trying to make it 
more difficult for vaccines to get into the arms of American 
citizens.
    Thank you. I yield back my time.
    Chairman Clyburn. I thank the gentlelady for yielding back. 
The chair now recognizes Mr. Raskin for five minutes.
    Mr. Raskin. Thank you, Mr. Chairman. Mr. Kramer, here is 
what I don't get. On six different occasions there were 
inspections and audits, in the spring and summer of 2020, that 
ended with warnings to Emergent that you need to take urgent 
action to improve conditions at the facility, to retrain the 
staff in order to prevent cross-contamination, and yet still 
there was cross-contamination, and millions of vaccine shots 
ended up being destroyed. Is that right?
    Mr. Kramer. Congressman Raskin, we were aware with the 
number of audits, and we treat all of that audit information 
seriously. We ways respond with corrective actions to those 
audits and take all possible precautions from it happening 
again. As we described, unfortunately there was the one 
contamination, the cross-contamination issue that occurred 
earlier this year, and we are doing everything we can to 
remediate and to prevent that from happening again.
    Mr. Raskin. Can you explain in more detail how that 
happened, if you had been responding to these multiple 
warnings?
    Mr. Kramer. I am not sure I understand the question.
    Mr. Raskin. How did the cross-contamination take place?
    Mr. Kramer. The cross-contamination occurred as a result of 
material that was leaving the AstraZeneca suite following a 
production cycle and production run. And as it was being exited 
out of our facility it came in the general vicinity of some 
media that was being prepared for the initiation of a J&J run. 
So, we don't know exactly the virus of the AstraZeneca product 
was transferred into the media, but somehow it was. It is our 
determination, based on that root cause investigation, that 
that is how the virus was in the J&J product.
    Mr. Raskin. But how did Johnson & Johnson first discover 
it?
    Mr. Kramer. There are a number of samples, Congressman 
Raskin, that are taken throughout the manufacturing process as 
we monitor the production runs, and as I was describing 
earlier, one of those quality control tests we had asked J&J to 
perform at their facility in Leiden, since they are experts and 
are much more experienced at that test than we are, that was 
where the first sample was detected as being out of 
specification.
    Mr. Raskin. OK. I want to ask you about the bonuses. 
Shortly before you had to destroy 15 million of the Johnson & 
Johnson vaccine shots the company's board found that your 
executive vice president responsible for manufacturing, Mr. 
Kirk, had significantly exceeded performance in 2020, that 
year, right then, and awarded him a bonus of over $360,000 on 
top of his normal salary, bringing his total compensation, as I 
read it, to $1,778,627. How did you make the decision to give 
him a bonus in the middle of this cross-contamination event and 
this debacle in the production process?
    Mr. Kramer. Congressman, throughout 2020, Mr. Kirk played 
an integral role in interfacing with our corporate clients as 
well as with BARDA and HHS Operation Warp Speed. Sean Kirk was 
working literally around the clock, 24 hours a day, for months 
on end in order to supervise and direct all of the work that 
was being done. I think what needs to be underscored is the 
incredible challenge and the work that was required to get both 
of these candidates, AZ and J&J, up and running in an 
incredibly short period of time, under----
    Mr. Raskin. Well----
    Mr. Kramer [continuing]. Extraordinary conditions.
    Mr. Raskin [continuing]. Forgive me. One of our colleagues 
said that Democrats evidently don't believe in bonuses. I think 
we definitely believe in bonuses for success, but we don't 
believe in bonuses for failure. And wouldn't you agree that 
this was a catastrophic failure in the process, and how can 
that be rewarded with, I think he ended up with $420,000 in a 
bonus? I mean, what would it take for someone not to get a 
bonus?
    Mr. Kramer. So, I don't agree that it was a failure. Our 
company's work, in this case Mr. Kirk's work, was 
extraordinary. The amount of work that was accomplished, the 
progress that was made to advance these two candidates into 
manufacturing development, and get them in the state of 
readiness to be prepared to respond to the pandemic was 
incredible.
    Mr. Raskin. Weren't there two separate episodes of 
contamination at the Bayview facility, not one, and didn't it 
result in the destruction of, I think it was 10 million 
vaccines?
    Mr. Kramer. I think it is important to note that there was 
a cross-contamination, which I described, with the J&J product. 
There were a number of contaminations while we were starting up 
the AstraZeneca manufacturing process, which you would normally 
find. Again, when you startup a biologic manufacturing process 
it requires an incredible amount of trained work force, 
manufacturing steps in order to get the process right.
    I think what has not been reported accurately is the fact 
the package of IP that we received from AstraZeneca, under 
normal circumstances that would be well defined, you would 
bring that into your manufacturing facility and be able to 
quickly replicate that. That was not the case with the 
AstraZeneca product. And, in fact, we ended up making 80 
different process changes alone in the first 60 to 90 days of 
trying to stand that manufacturing process up. So, it was very 
difficult, very complicated, and it did result in a number of 
lost production runs.
    Mr. Raskin. Thank you for that. Thank you, Mr. Chairman.
    Chairman Clyburn. The time has expired. The chair now 
recognizes Mr. Krishnamoorthi.
    Mr. Krishnamoorthi. Thank you, Mr. Chairman. Mr. Kramer, in 
May 2020, Emergent was contracted to receive $628 million to 
reserve and prepare its Bayview facility to produce vaccine. 
Correct?
    Mr. Kramer. That is correct.
    Mr. Krishnamoorthi. And under the terms of that contract, 
Emergent was required to maintain its facility, quote, ``in a 
state of readiness to perform current good manufacturing 
practices.'' You don't dispute that, right?
    Mr. Kramer. That is correct.
    Mr. Krishnamoorthi. And a month after the contract was 
awarded, Janssen Pharmaceuticals performed an audit that found, 
quote/unquote, ``mold issues at the Bayview facility.''
    FDA, in April 2021, found that the building used for 
manufacturing vaccine, quote, ``is not maintained in a clean 
and sanitary condition.'' You don't dispute that. Correct?
    Mr. Kramer. I believe that is correct, yes.
    Mr. Krishnamoorthi. And FDA found paint peeling on the 
floors and walls. You don't dispute that either, right?
    Mr. Kramer. I believe that is correct, yes.
    Mr. Krishnamoorthi. And you don't deny that the FDA found 
brown residue and black residue on plant walls. Correct?
    Mr. Kramer. I am not aware of that particular finding.
    Mr. Krishnamoorthi. Yes. It is on page 3. I have got to 
tell you, Mr. Kramer, my son, my teenage son's room gives your 
facility a run for its money in terms of its cleanliness. And, 
you know, on page 8 of this FDA report, which I have right 
here, it says Emergent, quote, ``has failed to adequately train 
personnel involved in manufacturing operations, quality control 
sampling, and engineering operations to prevent cross-
contamination of both drug substances.'' You don't deny that 
that FDA found that, right?
    Mr. Kramer. That is correct.
    Mr. Krishnamoorthi. So, it is no surprise that late last 
year Emergent had to toss out five batches of AstraZeneca 
vaccine, amounting to roughly 10 to 15 million doses of 
vaccine, and then yet again, as you testified this morning, you 
had to throw out, discard, destroy, bulk drug substance 
amounting to 15 million doses of J&J vaccine.
    Now let me point you to the scorecard for what you folks 
actually achieved. In 2020, you received a contract for about 
$648 million--that is two or three contracts. You personally 
were paid $5.6 million in 2020, and the number of usable doses 
delivered to the American people was a grand total of, you 
guessed it, zero. Zero. A spectacular failure. And yet, in a 
February 2021 meeting of the compensation committee of 
Emergent's board of directors, I will show you what was 
presented to them. They said you, quote/unquote, 
``significantly exceeded expectations for 2020.'' I have got to 
tell you, Mr. Kramer, if you look at this chart right here, 
given the fact that no usable doses made it into anyone's arms, 
you did not significantly exceed the American people's 
expectations.
    Interestingly, that same presentation recommends that you 
get a bump from $5.6 million in 2020 to $7.8 million in 2021. 
That is this year. You earned $3.7 million in 2019, so you 
experienced a 51 percent increase in your compensation, 
amounting to almost a $2 million increase.
    Sir, given that you take full responsibility for what 
happened in 2020, that you apologized to this committee today, 
sir, would you commit to turning over your $1.9 million bonus 
to the taxpayers of America?
    Mr. Kramer. Congressman, I will not make that commitment, 
no.
    Mr. Krishnamoorthi. I didn't think so, sir. In fact, in 
2020, you were evaluated for 2020, the compensation committee 
said you, quote, ``ensured successful execution of all six 
corporate goals.'' Unfortunately, none of those six corporate 
goals related, in any way, to the number of vaccines that you 
put into American arms.
    Now you wrote in an op-ed, in the Baltimore Sun, that, 
quote, ``People in our country, or at least some in our media, 
tend to put a target on the backs of people doing good.'' You 
don't think that you are testifying before us because we 
thought you did good in 2020, do you?
    Mr. Kramer. Uh----
    Mr. Krishnamoorthi. I didn't think so. Thank you. I yield 
back.
    Chairman Clyburn. The gentleman's time has expired.
    We now will take a five-minute break before the second 
round. Thank you. We stand in recess for five minutes.
    [Recess.]
    Chairman Clyburn. The committee will come to order. We will 
now proceed with our second round of questions. I now recognize 
myself for five minutes.
    Last month, the FDA released an inspection report detailing 
new findings about Emergent's previous failures, and found that 
many of the company's manufacturing problems were still 
unresolved. I have a chart here behind me that indicates some 
findings. The FDA found that even after Emergent was made aware 
of three separate incidents of vaccine contamination at the 
Baltimore plant, the company failed to, quote, ``conduct 
thorough investigations.''
    Now if you look at these findings here, ``Emergent failed 
to conduct thorough investigations,'' ``Emergent's vaccine 
production facility is not maintained in a clean and sanitary 
condition,'' ``Emergent's procedures to prevent cross-
contamination are not followed,'' ``Emergent failed to 
adequately train personnel to prevent cross-contamination of 
bulk drug substances,'' Mr. Kramer, is there an excuse for this 
kind of finding?
    Mr. Kramer. Mr. Chair, we take those findings very 
seriously. It is always disappointing when you have any finding 
of deficiency. I think what is important is that with our 
response to the FDA on those observations that we have put 
together and submitted to them on April 30, included a number 
of significant and robust remediation plans and corrective 
actions, including significantly increasing the housekeeping 
and sanitization process. We made a number of improvements to 
the personnel and material flow and the design for that 
activity throughout the facility. We have also undergone a 
number of training programs for all of the employees in Bayview 
on viral contamination risk and how to avoid it, good 
manufacturing procedures.
    So, we are taking all those actions seriously, including 
the replacement of any floor or surface activity throughout the 
facility in order to be responsive to those observations. We 
submitted that to the FDA on April 30. We look forward to their 
feedback, and importantly, we think that those robust 
corrective actions will put us back on track to resume 
production soon.
    Chairman Clyburn. Well, may I ask, when do you plan, or 
what are your expectations about resuming production?
    Mr. Kramer. Sir, as we articulated to the FDA in our 
response to the 483 plan and observations, there were a number 
of steps that we suggested be implemented before we would 
resume production. We have made significant progress against 
all of those commitments. We are very close to completing them, 
and I would expect we will be in a position to resume 
production within a matter of days.
    Chairman Clyburn. Well, Mr. Kramer, you may recall at the 
beginning of my opening statement I made it very clear that 
this was the beginning of an investigation, and we have asked 
for some documentation, which we have not yet received. Now 
will you commit today to getting those documents to the 
subcommittee so that our investigation can go forward?
    Mr. Kramer. Absolutely. Yes, sir.
    Chairman Clyburn. Well, thank you very much, and with that 
I will yield to the ranking member for five minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I want to get back to 
the question about the 100 million or more doses of the Johnson 
& Johnson vaccine that are in your facility. I don't know if 
there has been any determination made, but it sounds like the 
FDA has not resolve this issue. Is there any concern that those 
were contaminated, or are these 100 million doses that more 
than likely are safe and need to be adjudicated by the FDA? Can 
you explain, how long has the FDA been sitting on that?
    Mr. Kramer. The FDA is evaluating, to my understanding, the 
doses that have been manufactured for bulk drug substance that 
most of which has been provided to J&J. As far as I understand, 
there have been requests for some additional testing on all of 
those lots and doses that have been provided by J&J to the FDA, 
and it is under their evaluation right now.
    Mr. Scalise. How long have they had it?
    Mr. Kramer. I think they have had some of the data for 
probably a week or two.
    Mr. Scalise. And, Mr. Chairman, I wish the FDA was here, 
because, you know, if there are 100 million doses, I know one 
of the successes of Operation Warp Speed was that President 
Trump had gotten the FDA directly working with the drug 
companies that were developing the vaccine so that any time 
that there was red tape, any time that there was a question 
about something, they could get an answer within a day, not 
within weeks--it may be almost a month in some of these cases--
where the FDA was working overtime to get these questions 
addressed. I mean, we are talking about 100 million doses of 
vaccine that could be all completely fine, safe, and effective.
    Obviously, that is a determination that the FDA should be 
working overtime to do, because again, you have got President 
Biden talking about giving away the intellectual property to 
China, for free, giving it away. And, by the way, China doesn't 
have any ability to start turning around and making that 
vaccine in a safe and effective way. They have got no track 
record, by the way, of doing that, if we give it away to them. 
And in the meantime you have got 100 million doses that FDA 
should be working overtime to get an answer on, because if it 
turns out that those are safe and effective, why don't we allow 
those to get out and used instead of giving the entire 
intellectual property away?
    Let me ask you this, because you work with a lot of 
companies, not just Johnson & Johnson. AstraZeneca has been 
mentioned too. You have seen this proposal by the Biden 
administration to give away the intellectual property for the 
vaccine of COVID-19. What kind of impact would that have on the 
ability for companies to come up with, or even be willing to 
invest the billions it takes to find a vaccine, if they know 
that for the next virus that is out there that President Biden 
will give that away too? What kind of impact would that have on 
the willingness of some of these innovators to even get 
involved in this, versus just saying we are not even going to 
try to find a vaccine because if we find it, Biden is just 
going to give it away.
    Mr. Kramer. Yes, Ranking Member Scalise. I think clearly IP 
protection is critically important to companies like ours, and 
importantly to the developers of these critically important 
products. I have not seen the exact proposal by the current 
administration so I cannot comment on that, but fundamentally I 
think IP protection is very important.
    Mr. Scalise. Well, let me ask, Mr. Chairman, if I can ask 
unanimous consent to get this article included in the record, 
which talks about the President's plan to give away the 
intellectual property to China, as well as other countries.
    Chairman Clyburn. Without objection.
    Mr. Scalise. Thank you. There are other countries, by the 
way, that are watching this. I will give you an example. A 
spokesman for German Chancellor Merkel just said, quote, 
regarding the giving away proposal by Biden, to give away the 
IP, quote, ``The protection of intellectual property is a 
source of innovation and must remain so in the future,'' close 
quote. In fact, Germany is criticizing President Biden's 
proposal to give away the IP because they know what that means 
and what devastating effect it would have on the ability to get 
future vaccines.
    My God, I mean, isn't it a sad state of affairs that the 
German chancellor is more concerned about American intellectual 
property than the President of the United States? I would urge 
President Biden to talk to some of our other allies around the 
world who realize this is a crazy idea, to give away our IP to 
China, who has no track record of even having the ability to 
make anything safely and effective like a vaccine. It might 
take them years, and in the meantime we have given away, as Dr. 
Green pointed out, not only the vaccine but the template for 
other things that could be used against us by China. This is a 
dangerous idea we should not do.
    Mr. Chairman, I yield back the balance of my time.
    Chairman Clyburn. Thank you, Mr. Scalise. The chair now 
recognizes Ms. Waters for five minutes.
    Ms. Waters. Thank you very much, Mr. Chairman. As we have 
reviewed information about Emergent today, of course we find 
that there was a no-bid contract and that this contract was 
participated in, in some way, by a former consultant to the 
tune of $360,000 paid to Robert Kadlec. We also have found that 
based on testimony today we have learned that Emergent sold 
stock in what could be considered, or appears to be, insider 
trading. They have been paid millions of dollars despite 
destroying millions of vaccine doses.
    And they can't be trusted. They have had serious 
manufacturing problems, multiple inspections and audits that 
were conducted in 2020, that warned of serious quality control. 
Evidence recently obtained by the committee shows that Emergent 
was aware of serious control issues at its Bayview facility, 
but failed to act. In June 2020, an advisor to Operation Warp 
Speed identified risks in relying on Emergent to handle the 
production of two coronavirus vaccines. During a separate 
audit, Janssen Pharmaceuticals, a subsidiary of Johnson & 
Johnson, found that the Bayview facility had a deficient 
contamination control strategy.
    On June 17, 2020, Carlo de Notaristefani, the lead 
manufacturing advisor for Operation Warp Speed, issued a 
private report on Emergent. The report identified multiple 
risks at the Bayview facility, including concerns about 
facility readiness, personnel, and compliance. The report 
stated most of the large-scale, existing equipment is not 
suitable for the new processes and will be either removed or 
mothballed. The supporting infrastructure is very limited and 
will need substantial remediation and expansion to allow 
manufacturing to proceed at the planned rate. Personnel risks 
are significant. The stacking plans presented seem inadequate 
to the level of current activities required for all full-scale 
production of the program.
    Let me just say this. The Republicans here today have tried 
to basically make this an argument about intellectual property. 
Today this is really not about intellectual property and 
whether or not we are giving away, or the President is giving 
away intellectual property. This is about the safety of all 
Americans and other countries that hopefully we can be involved 
with in helping them to get the vaccines that they need in 
order to deal with the problems that have occurred, the 
pandemic, and all of the other countries who are looking to us 
for some assistance. And I am hopeful we will be able to do 
that. But we cannot do that if we are investing in a company 
like Emergent, who is endangering us all.
    And so I would certainly ask this committee not only to 
continue the investigation but please, based on all of the 
information that we have, it can be concluded that Emergent 
should not be in the business of developing vaccines, whether 
it is trying to work with Johnson & Johnson or AstraZeneca or 
anybody else, because they cannot be trusted.
    And so I am hopeful that the moneys that we are paying, the 
moneys that the Federal Government is paying for reservation, 
without getting any result, be directed to another and other 
companies that have proven that they can safely produce and 
manufacture the vaccines that are needed to deal with this 
pandemic.
    I thank you so very much for holding this hearing today, 
Mr. Clyburn. This is so important. But I think we know enough 
about Emergent not to trust them. Why would we continue to deal 
with a company that has violated the contract in so many ways, 
who have a dirty facility, and have us believe that, oh, there 
may be a contamination because of the way that a vaccines was 
traveling. No. This vaccine may be contaminated because the 
facility is dirty. It is not clean. It is not in shape to do 
the kind of production that they have said they would do, and 
they are in violation of this contract. As a matter of fact, 
they should be trying to present themselves from being sued, or 
jailed because of what they have done.
    And this is very serious, and this cannot be swept under 
the rug. This cannot be, oh, we need it so badly, we have just 
got to continue with them, despite everything that we know 
about them, and we need to trust them one more time.
    Mr. Chairman, thank you so very much. We should not trust 
them, not another minute, not another day.
    I yield back the balance of my time.
    Chairman Clyburn. I thank the gentlelady for yielding back. 
The chair now recognizes Mr. Jordan for five minutes.
    Mr. Jordan. Thank you, Mr. Chairman. Mr. Kramer, the 
government came to you, right? The Obama-Biden government came 
to you and said, ``In the event there is a pandemic, we need to 
be ready. You are one of the places we think can be ready.'' 
So, they initially came to you. Is that accurate?
    Mr. Kramer. Yes, that is accurate.
    Mr. Jordan. And they came to you because you were one of a 
handful of companies who could do this kind of work. I think 
you said in your opening testimony there like two or three of 
you in the whole country. Is that right?
    Mr. Kramer. That is correct, Congressman Jordan, and, 
importantly, we have been doing work in the public health 
threat area for now decades.
    Mr. Jordan. Yes. Mr. Kramer, the government wasn't just 
like--they just didn't pick you out of a hat and say, ``Oh, you 
are one of the three companies, and there are only three.'' 
They came to you because you have got a proven track record. It 
is my understanding, and Mr. Green served our country in the 
military, he said he has got all kinds of vaccines that you 
helped manufacture in his arms. You helped with the anthrax 
vaccine, the smallpox vaccine. I think you have worked on the 
Zika virus. You have worked on the Narcan treatment that so 
many communities around our country have had to have with this 
opioid crisis. So, you have worked on all those issues. Is that 
accurate?
    Mr. Kramer. Yes, it is accurate. Thank you.
    Mr. Jordan. And when government came to you this time, they 
asked you to do something unique. They asked you to ramp up, 
stand up this facility in a record amount of time, because we 
were dealing with the COVID virus that, unfortunately the 
Democrats on this committee don't want to figure out where it 
started, but we were dealing with a virus we had never really 
seen, a magnitude we had never really seen before. So, they 
asked you to do it in a record amount of time, and they asked 
you to deal with two vaccines at the same time. Is that 
accurate?
    Mr. Kramer. Yes, it is.
    Mr. Jordan. All the other work, you had only dealt with one 
at a time in your facility, one vaccine or one issue you were 
working on, not Johnson & Johnson and AstraZeneca, not Astra 
Vinegar, as the chairwoman from the Financial Services 
Committee, but Johnson & Johnson and AstraZeneca. Is that 
right?
    Mr. Kramer. That is correct, Congressman Jordan.
    Mr. Jordan. And then you had a cross-contamination that you 
guys found, because of the fact that you had two vaccines you 
were working on at the same time.
    Mr. Kramer. That is correct.
    Mr. Jordan. And since that was discovered, as the ranking 
member was just pointing out, you have not been able to use the 
over 100 million doses of the J&J vaccine that you currently 
have at your facility. Is that accurate?
    Mr. Kramer. It is, Congressman. Those doses are actively 
under review by the FDA as we meet today.
    Mr. Jordan. Has your company or J&J raised any concerns--is 
there anything that tells you those vaccines aren't good 
vaccines?
    Mr. Kramer. Those vaccines have passed all of our internal 
quality control measures, and I believe J&J would say the same 
on their part.
    Mr. Jordan. So, J&J hasn't raised any concerns, you think 
they are fine vaccines, but they are not being used.
    Mr. Kramer. That is correct.
    Mr. Jordan. And instead, the Biden administration is 
thinking about giving over the intellectual property to foreign 
countries, and as we know, we have got some heads of state 
around the world who are saying that is a crazy idea. But they 
are thinking about doing that instead of using the 120 million 
doses that everyone believes are just fine. That is the 
situation right now. Is that right?
    Mr. Kramer. I think that is an accurate description, yes.
    Mr. Jordan. So, giving IP to China, the very country where 
the virus started, that is what the Biden administration is 
looking at doing, instead of using 120 million doses that 
Johnson & Johnson and both you all think are just fine.
    Finally, I just have a few seconds left. The previous 
member basically accused you of committing a crime, saying you 
engaged in insider trading. It is my understanding, from public 
reports, that the stock purchase that you exercised were 
determined long before there were any concerns about anything 
at your facility, and those were on schedule to happen, 
regardless of any decisions that may or may not have been made. 
Is that accurate?
    Mr. Kramer. It is accurate, Congressman Jordan, and thanks 
for the opportunity to clarify. All of my stock sales were made 
pursuant to the plan that was approved by the company, and 
importantly, was put in place during a quiet period that was 
also approved by the company. And most importantly, once that 
plan was filed, and it was a 10b5-1 plan, my participation was 
completely removed from the execution of those trades.
    Mr. Jordan. Mr. Chairman, I would just--thank you, Mr. 
Kramer--Mr. Chairman, I would just add, why won't this 
committee have a hearing on this IP issue, which is of 
paramount importance, and just as importantly, why won't this 
committee, the only select committee in the U.S. Congress, have 
a hearing on the origins of the very virus that caused all this 
chaos over the last year, not only in America but around the 
world?
    Chairman Clyburn. Thank you very much for the questions. I 
think Mr. Foster answered that question earlier.
    Mr. Jordan. No, he didn't. He said Science is going to look 
into it at some point. Our charter is very clear, Mr. Chairman. 
Our charter says ``prepare for future pandemics.'' The best way 
to prepare for future pandemics is to figure out how this 
pandemic started, and the fact that the select committee on the 
COVID virus won't look at how it started makes absolutely no 
sense to me. But more importantly, it makes absolutely no sense 
to the American people. Journalists want to know. The Secretary 
of Health and Human Services wants to know. The Secretary of 
State wants to know how this started. The only ones who don't 
want to know are Democrats on the select committee and 
Democrats in the Congress.
    Chairman Clyburn. Thank you very much. You wanted to know 
where we have been, I would like to spend some time on where we 
are going. And with that I will yield five minutes to Mrs. 
Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman. Thank you, Mr. 
Ranking Member.
    Mr. El-Hibri, if I could ask you a few questions. You 
testified in 1999, before the Committee on Government Reform, 
about your company's failure to fulfill its commitments under a 
contract to produce anthrax vaccine for the U.S. Government. Do 
you recall that hearing?
    Mr. El-Hibri. Yes, I do, Congresswoman.
    Mrs. Maloney. And you testified that your company, Bioport, 
which, as I understand, now is a subsidiary of Emergent, was 
not meeting commitments because of unforeseen delays. Also that 
year, the Government Accountability Office came out with a 
report that said that your company's inability to achieve its 
business plan, they also said the company could not perform. 
And it appears that we are having a similar situation today. 
There is a pattern here. Now, Emergent, your primary company of 
which Bio is a subsidiary, has been unable to fulfill its 
commitment to the government. We haven't gotten the vaccines 
that we ordered.
    But not only does your company have a history of 
underperforming, it has a history of unreasonable price 
increases. The price you charged the government for a dose of 
anthrax vaccine increased from $3.35 in 1998, to around $30 in 
2020. That is an 800 percent increase.
    So my question is, the cost of producing the anthrax 
vaccine has not increased by 800 percent--I guess the question 
I want to ask is how much does it cost you to produce a dose of 
anthrax vaccine? Has it jumped 800 percent? How much does it 
cost, either Mr. Kramer or Mr. El-Hibri? Do you have that 
answer, or can you get it to us later?
    Mr. El-Hibri. We will get you that information later, 
Congresswoman.
    Mrs. Maloney. I couldn't hear you. What?
    Mr. El-Hibri. I said I will give you that information 
later, if I may.
    Mrs. Maloney. OK. Great. And what is Emergent's 
approximately profit margin on each dose of anthrax vaccine 
sold in the U.S., and this one, if you could get that to me 
later, and I will give you some other questions. But what 
percentage of your sales of anthrax vaccine are to the U.S. 
Government? Do you export your vaccine to any other country, or 
do you just sell to America? Do you know, Mr. El-Hibri? Do you 
sell to other countries or only to America?
    Mr. El-Hibri. Yes, we do have international sales of 
anthrax.
    Mrs. Maloney. Could you get us that report on where you 
sell it over there?
    Mr. El-Hibri. I will.
    Mrs. Maloney. So, what I find sort of disturbing is really 
a procurement question. Why does the country give a contract to 
a company that has a history of not completing the contract, 
and then on top of it, charging huge price increases, 800 
percent? And I think that is something that the committee needs 
to look at, because this is unfair to the American taxpayer, to 
say the very least. When you have a contract, you should 
produce the product. So far, we haven't even gotten one dose of 
the product out to the American taxpayer, yet you have been 
able to get bonuses, millions of dollars in pay going out to 
executives, and they have not completed the contract.
    So, I am really posing to my colleagues, we should at least 
write procurement laws that if you are not producing the 
product you shouldn't be paid. You certainly shouldn't get a 
bonus, and you should not give a contract to a company that 
does not have a track record of completing the task. I, for 
one, support American manufacturing. I come from New York. We 
couldn't even get gowns or masks. They were walking around in 
trash bags, going to work in them, because we couldn't produce 
them. The only time we got them is when we, ourselves, 
seamstresses, businesses converted overnight to make the 
personal protection equipment for our people and the vaccines. 
We did produce vaccines in record time.
    So, I feel very strongly that we should have strong 
procurement laws that gest a good product for the American 
people. We need to produce our personal protection equipment, 
our vaccines, and everything else related to a pandemic here in 
the United States. We cannot rely on other countries, and I 
believe that is something we need to look at.
    I, for one, Mr. Chairman, would like to question whoever 
approved this contract in the U.S. Government. What were they 
thinking when they said you could allow a company to increase 
the cost 800 percent, and that there was no requirement that 
you actually produce the product before you get paid 
substantially with bonuses and everything else?
    My time has expired. I thank you, Mr. Chairman, for your 
hard work and all of my colleagues. Thank you. I yield back.
    Chairman Clyburn. Thank you, Mrs. Maloney. The chair 
recognizes Dr. Green, for five minutes.
    Mr. Green. Thank you, Mr. Chairman, and I would like to 
begin my second round of comments just reiterating this issue 
about the origins of the vaccine. There are multiple articles 
coming out now that make all sorts of implications. We need to 
get to the bottom of it. It is a shame this committee has not 
addressed it. We are the Coronavirus Select Committee, and we 
haven't even looked at the origins of this thing. We haven't 
looked at the World Health Organization and their complicitness 
with China on messaging. Those things have to be looked at.
    I was excited to hear that Representative Foster, a 
gentleman whom I have deep respect for, said that someday that 
will happen in Science and Tech. I certainly want to ask 
Representative Foster, what are you all waiting on? Let's get 
going.
    BARDA tasked you guys, talking to our witnesses now, to 
take both vaccines onto your assembly line, J&J and 
AstraZeneca. I think, as I understood from your previous 
testimony, you did think that there was some concern about 
having both vaccines. Is that correct, that there was potential 
for problem with you have both on two assembly lines? Is that 
correct?
    Mr. Kramer. I think it was widely acknowledged by Emergent 
as well as our network of partners that there was inherent risk 
of bringing both vaccines into our facility and ramping them up 
very quickly.
    Mr. Green. So, that is what I understood to be a risk. And 
J&J, as I understand it, you guys had 16 batches, one of which 
was cross-contaminated, 15 of which were not, or at least are 
still being inspected, and that equals 140 million doses that 
are waiting to make sure that the FDA is checking to make sure 
they are OK, and when that happens they get shipped. Is that 
correct?
    Mr. Kramer. Generally, correct. Yes, sir.
    Mr. Green. OK. So, these slides that are being shown around 
where money was given and zero vaccine, granted there are 140 
million doses sitting there waiting on FDA approval, that may 
eventually, maybe next week, be sent to people who need it. OK. 
Thank you for that.
    You know, I am a former military officer. I think most 
people know that. I deployed all around the world in combat. I 
took the anthrax vaccine--I think you guys created that--and I 
really appreciate your work in the biodefense world. You know, 
even Barack Obama recognized you are one of the only companies 
that can do this kind of stuff, and gave you business way back 
when.
    Botulism toxin, smallpox--I got the smallpox. You know, 
after Sverdlovsk we knew that the Russians were weaponizing 
smallpox, so as we went into Iraq I got another smallpox 
vaccine, and I really appreciate you guys doing that. Typhoid, 
cholera. You also do a lot of treatment drugs. I think as an ER 
physicians, I have used nasal Narcan to save a patient's life, 
and I think you guys make that too, right?
    Mr. Kramer. Yes, sir, we do.
    Mr. Green. So, the overdose come into the emergency 
department, we spray this nasal Narcan, we save their life. 
That is your company, as I understand it. Correct?
    Mr. Kramer. Yes, sir. That is right.
    Mr. Green. But you have all these products out there. You 
had company goals. You were managed by a board. The board set 
goals for the CEO. Those goals were met--at least that is what 
the, you know, minutes from the meetings have been read 
earlier--and bonuses were paid. And as I understand it, 
everybody in the company got a bonus. Is that right? I mean, 
can you elaborate on that for just a second?
    Mr. Kramer. Yes, sir. All of our employees are eligible for 
a bonus based on their individual performance as well as the 
corporate performance, and separate from that, in 2020, we 
offered a special equity award of roughly $7,500 in our stock 
to all of our employees in recognition of the significant----
    Mr. Green. All these other things. All these many other 
things that your company is producing and saving lives all 
across America. So, you gave your folks a bonus for their 
incredible work in all of these other products. You had one 
contamination line, 15 other batches, 140 million doses that 
are sitting there that may get approved and may get sent into 
arms, and we are here, spending this committee's time, talking 
about this when we ought to be talking about where this virus 
came from in the first place.
    I cannot believe we are even having this conversation. You 
are a reputable company that has done yeoman's work to protect 
this Nation in biodefense. You have one contamination, and they 
want to take you to court. Yet China, cooperating with the 
World Health Organization, everybody knows what happened. There 
is not a human on this planet that doesn't say, ``Hey, China 
screwed all of us,'' and we suffered more because of it. Yet we 
can't get this committee to say a word about it. But let's take 
on this great company who did its best to try to get a vaccine 
out there. Meanwhile, it is doing all these other things to 
save Americans' lives.
    I yield.
    Chairman Clyburn. I thank the gentleman for yielding back. 
The chair now recognizes Ms. Velazquez for five minutes.
    Ms. Velazquez. Thank you, Mr. Chairman. Mr. Kramer, 
Emergent last year was warned multiple times regarding 
persistent staffing problems at its Bayview plant in Baltimore. 
Specifically, in April 2020, the FDA warned in an inspection 
report, that, and I quote, ``Employees are not given training 
in the particular operations they perform as part of their 
function.'' Exactly a year to date later, FDA cited Emergent 
for exactly the same thing. Is this correct, Mr. Kramer?
    Mr. Kramer. Those observations by the FDA are correct, 
Congresswoman. We take them very seriously. We have put in 
place a number of corrective actions to increase our training--
--
    Ms. Velazquez. OK. Mr. Kramer, so you are stating that is 
correct, that the report was correct.
    Today, the select subcommittee released an audit report 
drafted by the lead manufacturing advisor for the former 
Operation Warp Speed, who found that Emergent had, and I quote, 
``significant personnel risks.'' He wrote, and I quote, ``The 
staffing plans presented seem inadequate,'' and also noted the 
need for extensive training. Is that correct? Yes or no.
    Mr. Kramer. I haven't seen that report, but I believe that 
is correct and accurate. I think what is important to recognize 
is last year at this time, as we started up the process of 
working with both AstraZeneca and J&J, we incurred a 
significant staffing challenge, increasing from 100 employees 
to 400 employees last year. That is always a challenge.
    Ms. Velazquez. Well, Mr. Kramer, I would like to know, and 
the members of the select subcommittee would like to know that 
under your watch, what assessments were in place to guarantee 
that staffing plans were adequate for the unprecedented crisis 
at hand?
    Mr. Kramer. I am not sure I understand the question, 
Congresswoman.
    Ms. Velazquez. Well, look. Report after report, audit after 
audit, they found inadequate training. We just want to know 
that you are taking the necessary steps so that whenever we 
face again another unprecedented crisis, that you will have 
what it requires in terms of your personnel and the work force 
to perform the job at hand.
    Another audit performed by BARDA found that Emergent has 
just one employee coordinating testing to ensure that the 
materials used for the coronavirus vaccines remain stable. 
BARDA concluded that the employee's heavy workload likely 
caused a mistake to be made. Is that true, Mr. Kramer?
    Mr. Kramer. I am not aware of that particular finding.
    Ms. Velazquez. So, I think we all see a pattern here. And 
according to The New York Times, as Emergent scrambled to meet 
the heavy demands of vaccine production, one senior 
manufacturing supervisor responded to reports of quality errors 
by asking, and I quote, ``Do you want me to make drugs or fix 
issues? I don't have time to do both.''
    This is a very concerning pattern with predictable results. 
I want to make it clear, I am certain that the workers at the 
Bayview plant have been working very hard, under difficult 
circumstances, to do their job and manufacture these critically 
needed vaccines. This isn't about what they are doing. It is 
about what you haven't done, sir. Why did it take an FDA-
imposed shutdown of your plant for Emergent to find the time to 
properly train its employees? Shouldn't these employees have 
been trained before they mishandled coronavirus vaccines?
    Mr. Kramer, Emergent needs to do better. You need to do 
better. You should treat your work force, your employees, with 
respect, and provide the tools they need in order to perform 
their jobs.
    I yield back.
    Chairman Clyburn. I thank the gentlelady for yielding back. 
The chair now recognizes Mr. Foster for five minutes.
    Mr. Foster. Thank you, Mr. Chairman. Mr. Kramer, you have 
repeatedly emphasized how much you care about employee training 
and quality control. Does your company spend more on quality 
control training for employees or on government relations and 
lobbying?
    Mr. Kramer. I don't have those exact numbers. I do know, 
Congressman, that we have a significant number of our employees 
that are dedicated to both quality assurance and quality 
control, and as I commented earlier, we are using this 30-day 
period from when the inspection concluded, roughly 30 days ago, 
to even today, to conduct extensive training for all of our 
employees in the Bayview site so we can get them prepared to 
resume production soon.
    Mr. Foster. Yes. Well, you can generally tell how much an 
organization really cares about things by looking at how much 
they spend in different areas. And so if you could get us those 
numbers for the amount you spend on government relations and 
lobbying, as well as quality control training, both currently, 
after you presumably upgraded your game in that, as well as 
historically, after the last year. I think that would be very 
informative.
    Let's see. Something that is actually more quantifiable or 
specific. In June 2020, not the government but your customer 
vaccine manufacturer, J&J, through its subsidiary, Janssen, 
performed its own audit of Emergent's facilities, and it found 
that there were, quote, ``mold issues associated with the 
facility shutdown/startup.'' And then 10 months later, when the 
FDA came in for an inspection, they found that the building 
used for manufacture of vaccine, quote, ``is not maintained in 
a clean and sanitary condition,'' unquote, and that there was, 
quote, ``brown residue was observed on the wall.''
    So, Mr. Kramer, do you have a knowledge of what this brown 
residue was?
    Mr. Kramer. I am not aware of the brown residue material.
    Mr. Foster. So, you generally don't read the FDA inspection 
reports. Is that correct?
    Mr. Kramer. I do read the majority of the FDA inspection 
reports. I just don't recall this particular reference.
    Mr. Foster. OK. So, brown residue on the wall is not 
something that caught your attention. OK.
    And so now I guess one of the things our committee is going 
to have to be doing is trying to understand the balance of 
effort going forward in putting our country in a better posture 
on this. So, do you--actually, either of you--have any advice, 
if you were in our shoes, as to how to make sure that when we 
have standby capacity that we have been spending huge amounts 
of money for, how we should properly exercise that, to know 
that when the emergency hits that capability is actually, you 
know, can be stood up and all of the, you know, nuts and bolts, 
like quality assurance, is in place so that we have a well-
exercised muscle when we need that energizing in the future. 
Yes, any lesson learned that you think you would pass to us?
    Mr. El-Hibri. May I answer that, Congressman?
    Mr. Foster. Yes, please.
    Mr. El-Hibri. I think the Obama-Biden administration was on 
the right track to identify manufacturing facilities that are 
suitable to respond to a future pandemic crisis and emergency. 
So, I think that concept is a very good concept.
    Now what happened over an eight-year period, nine-year 
period, is that the task orders, in order to keep the facility 
up and running, weren't adequate over this period of time, so 
that really the facility, even though it was meant to be at a 
state of readiness, was not quite at that level. So, we had 
maybe 100, and sometimes less than 100 employees in any given 
year, except for those few times where we did get a task order 
for the H1N1 flu vaccine and for Ebola and Zika.
    Mr. Foster. So, if you could come up with an estimate of 
what the total missing investment was during that period, and 
also the total amount of, you know, high employee bonuses that 
were issued, just to understand sort of the balance of funding 
during that period.
    Mr. El-Hibri. Yes. I will be happy to do that and provide 
that for you.
    I just want to make one thing clear, if I may, which is 
that when all these audits were performed by AZ and by Johnson 
& Johnson and by BARDA, this was before they entered into a 
contract with us, not after. So, everyone went into this with 
their eyes wide open, that this is a facility that had never 
licensed a produce, had manufactured a licensed product before, 
that is a facility that although not in perfect condition, far 
from it, was the facility that had the highest level of state 
of readiness. And it was in partnership with Johnson & Johnson 
and AstraZeneca and BARDA, after they have done their audits, 
that we agreed to work together to manufacture vaccine at risk. 
As you have said, that they sent the congressional letter to 
HHS or to BARDA, saying, ``Hey, listen. We need to take risks 
in an environment where we need to respond rapidly,'' and this 
is exactly what the government did. So, I am happy to----
    Mr. Foster. Yes, the idea of taking technical risk, I think 
we are all completely on board with. But the idea of just 
failure to properly execute on the plan, the admittedly risky 
plan to try manufacturing in several sites, I think that is a 
different level of question and investigation that we are going 
to be pursuing here.
    Anyway, my time has expired, and I yield back.
    Chairman Clyburn. Thank you for yield back. The chair now 
recognizes Dr. Miller-Meeks for five minutes.
    Mrs. Miller-Meeks. Thank you, Mr. Chair. I find it 
interesting that President Biden stopped construction on the 
border wall on January 20, but those contracts are still being 
honored and still being paid. And I would certainly encourage 
my colleagues who are concerned about taxpayer money being 
spent when a contract has not been fulfilled to have support 
for construction completion of the border wall that has already 
been paid.
    Earlier this month, President Biden endorsed using 
intellectual property waiver at the World Trade Organization 
for COVID vaccines and therapies. Not only would a waiver of 
this kind destroy billions of dollars in U.S. intellectual 
property by handing over U.S. IP to countries such as Russia 
and China, but would also set a precedent for future pandemics 
and pharmaceutical investment. As a former director of the Iowa 
Department of Public Health, I know first-hand how important it 
is to have private sector partners working with us to prepare 
for future emergencies.
    Mr. Kramer, how many vaccines do you have sitting your 
facilities which were not contaminated and could be shared with 
other countries or put into the arms of Americans?
    Mr. Kramer. I don't have an exact number, and the reason is 
that we, again, make the bulk drug substance and then we 
typically ship that to our customers, either J&J or 
AstraZeneca, and from there they are ultimately responsible for 
doing the filling, finishing, packaging, and labeling. So, we 
lose transparency of the equivalent number of doses after we 
ship our product to them.
    Mrs. Miller-Meeks. If you were cleared by the FDA today, 
how quickly could you begin manufacturing more J&J vaccines?
    Mr. Kramer. We would be ready to resume production in the 
next couple of days.
    Mrs. Miller-Meeks. And how long does it typically take, in 
a first-world country such as the U.S., to increase 
manufacturing capacity and have the infrastructure in place to 
manufacture vaccines, such as the J&J vaccine?
    Mr. Kramer. It normally would be measured in years, 
Congresswoman.
    Mrs. Miller-Meeks. So, is it reasonable to assume that it 
would take longer in other countries?
    Mr. Kramer. It likely would, yes.
    Mrs. Miller-Meeks. Well, I think it is interesting that in 
2007, melamine pet food from China caused dogs to die and had 
to be removed. In 2008, in July 2008, milk and baby formula was 
deliberately adulterated with melamine in order to pass quality 
control measures. Babies were harmed. In October, similar 
adulteration to eggs; in 2012, sweet potato dog treats from 
China causing kidney failure; and in June 2020, manufacturers 
in China charged with three counts of violating FDCA for 
misbranded, substandard respirator masks, falsely purported to 
be N95 standard. The FBI said this was a blatant disregard for 
the safety of American citizens.
    And on March 7 of this year, 2021, The Wall Street Journal, 
``U.S. officials at the State Department indicated Russian 
intelligence agencies have mounted disinformation campaigns to 
undermine confidence in the Pfizer and other vaccines.''
    With both Russia and China seeking to increase the 
utilization of their vaccines abroad, overt efforts to 
denigrate Pfizer have been well documented. So, given these 
deliberate manufacturing safety violations, not an error, that 
did not harm anybody, given these deliberate safety violations 
when we are not in a pandemic and don't have to ramp up 
production immediately, can you foresee a medical manufacturing 
or a national interest in waiving intellectual protection of 
property for vaccine manufacturers?
    Mr. Kramer. I am not sure I understand completely your 
question.
    Mrs. Miller-Meeks. Do you think it is beneficial to the 
U.S. to waive intellectual property protections for the 
vaccines to foreign countries, given their manufacturing and 
safety violations?
    Mr. Kramer. I think there are clearly some risks, as you 
have articulated.
    Mrs. Miller-Meeks. And are there other biodefense 
capabilities here in the United States, to whom would we turn 
that over to if it were not companies such as Emergent, who are 
willing to take that risk?
    Mr. Kramer. I think it has been fairly well documented that 
Emergent is unique in that we have, over the last two decades, 
focused on public health threats. We manufacture products that, 
in many cases, are the only products of their nature in the 
world that are approved by the appropriate regulatory 
authorities. So, I think that it would be a significant risk.
    Mrs. Miller-Meeks. Well, as a 24-year military veteran, 
former director of the Iowa Department of Public Health, and 
one who has administered vaccines in the 24 counties in their 
congressional district, I thank you for all the work you have 
done in biodefense capabilities and helping prepare the United 
States for this pandemic and future pandemics.
    I yield back my time.
    Chairman Clyburn. I thank the gentlelady for yield back. 
The chair now recognizes Mr. Raskin for five minutes.
    Mr. Raskin. Thank you, Mr. Chair. Mr. Kramer, the 
subcommittee is releasing documents today which show that 
Emergent has been charging the U.S. Government $27 million a 
month to reserve its facilities for use. Can you explain where 
that provision in the contract came from? You get $27 million a 
month, as I understand it, regardless of whether or not you 
produce any vaccine. Is that right?
    Mr. Kramer. The nature of the contract with BARDA that we 
signed this time last year was to ensure that the U.S. 
Government, in this case through its agency, BARDA, had 
immediate access to certain areas within a couple of our 
facilities. They subsequently, in the case of the AstraZeneca 
vaccine, directed us to make certain space available in our 
facility to support the work that we are doing with 
AstraZeneca.
    Mr. Raskin. OK. And so, did you have any other 
responsibilities for that $27 million a month, other than just 
to have the space available if they needed it?
    Mr. Kramer. It was primarily an access matter, Congressman 
Raskin. I would say that right before this task order was put 
in place we had been in negotiations with another company to do 
COVID-19 vaccine work in the facility. So, it was not as if 
that space was going to go unutilized. We, quite frankly, had 
another opportunity to do work in that same space.
    Mr. Raskin. OK. But there was nothing in the contract then, 
as you read it, that required you to bring the facility up to 
par, so that it met standards in the event that it was needed 
to be used. In other words, you had no obligation to do 
anything that would have prevented the problems that you later 
encountered.
    Mr. Kramer. The nature of the task order was to make sure 
that the government had access to certain areas of our facility 
so they could direct additional vaccine development and 
manufacturing work, at their priority, to Emergent.
    Mr. Raskin. OK. And I know that you touted this arrangement 
as one of the primary drivers of your big profits in 2020, on 
one of your earnings calls, so you were obviously aware, this 
was good deal. Where did that $27 million figure come from? 
Have you ever been able to charge that before to a private 
customer?
    Mr. Kramer. The dollar figure is really based on different 
activity on a per-production-run basis that is market rate. We 
were in lengthy negotiations with another party to utilize that 
same space at essentially that same rate of production suite 
time.
    Mr. Raskin. I see. So, they were paying you basically $27 
million because somebody else was about to pay you $27 million, 
as a monthly fee for the use of the facilities. Is that right?
    Mr. Kramer. Yes, I think the interest by BARDA and the U.S. 
Government was to ensure that they had availability to much-
needed capacity to make COVID-19 vaccines.
    Mr. Raskin. OK. I understand that HHS is deducting some of 
that money, not paying for all of it for the failures in 
actually being able to produce the vaccine. And so, first of 
all, did you accept that, that HHS is withholding some of that 
money, and what kind of restitution do you think is owed the 
taxpayers for the failure to produce any vaccine once that part 
of the contract was activated?
    Mr. Kramer. So, I am not aware that there is any reduction 
in the contract value that is being exercised by the 
government, so I am not aware of that.
    Mr. Raskin. OK. So, you are expecting $628 million for 
essentially the reservation of this space, regardless of 
whether or not you are able to deliver on the vaccine.
    Mr. Kramer. The task order that was put in place this time 
last year, in total, was approximately $628 million. It 
included a portion for what you are referring to, which was the 
reservation fee. There was also roughly $85 million of funding 
for some additional fill finish equipment, and the installation 
of that, in order to increase drug product or fill finish 
capability at another one of our sites here in Maryland.
    Mr. Raskin. OK. I got you. Well, Mr. Kramer, thank you for 
your testimony. Mr. Chairman, I just wanted to say, you know, 
with more than a half a billion dollars involved in this 
project, I hope we can get to the bottom of whether this 
contract and its terms were really, in fact, fair terms, and 
whether that is what the taxpayers have a right to expect.
    And I turn it back over to you, Mr. Chairman.
    Chairman Clyburn. I thank the gentleman for yielding back. 
The chair now recognizes the ranking member for any closing 
statement he would like to make.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate the 
hearing today, and Mr. Kramer, I appreciate the testimony you 
gave.
    One of the things that we should be pushing for that comes 
out of this hearing, Mr. Chairman, is that as the testimony 
revealed there may be over 100 million doses of the Johnson & 
Johnson vaccine that could be OKed that are being held right 
now, help up, that could be in the arms of people. The FDA, as 
we saw with Operation Warp Speed, where the red tape was cut, 
where we pushed Federal agencies to work smarter and faster, 
turn things around quicker, all hands should be on deck to get 
that answer. And if, as both Emergent and potentially Johnson & 
Johnson's internal reviews have said, that those 100-plus 
million doses are OK, then why hold them up?
    I mean, you have got the Biden administration right now 
talking about giving away the intellectual property of this 
vaccine to China, for free, undermining the very protections 
that our American companies enjoy, that encourages them to go 
out and create new vaccines. If you give that away you will 
send a chilling effect on any company going out there on a limb 
and saying, ``We are going to put up our money to find a 
vaccine for the next thing,'' whether it is ALS or Alzheimer's 
or cancer, or a future virus that might be started by China. 
That would be gone. And instead you have got 100 million doses 
that could be going to put into use, saving more lives. FDA 
needs to get us that answer. They need to get that issue 
resolved quickly.
    But it gets to the bigger question. Mr. Chairman, President 
Biden needs to just come out and say he is not going to give 
away our IP. Our friends around the world are saying this would 
be ridiculous to do. When the German Chancellor is saying, 
``Don't do it,'' because they know how dangerous that would be, 
especially giving it to China, who does not have a good record, 
not only on intellectual property--it is bad enough that they 
steal intellectual property all the time, but then to give it 
away to them, where it is a national security threat, 
potentially. How they could be thinking of doing this boggles 
the mind.
    I will be getting a letter together, with anybody else on 
the committee that wants to sign on, please let me know, urging 
President Biden to drop this crazy idea of giving away--giving 
away--what is an American success story. We came up with 
multiple vaccines for a virus that we didn't even know in less 
than a year. Revolutionary. Never happened before that quickly, 
and safe and effective. And to give it away to China, it just 
boggles the mind.
    Which brings me to the final point, Mr. Chairman. We ought 
to have a hearing in this committee on the origins of COVID-19. 
There may be other committees that might look at it, but as Mr. 
Jordan pointed out, this is the Select Subcommittee on the 
Coronavirus. And there are a lot of scientists out there 
suggesting that it may have actually come not from transmission 
between a bat and humans but potentially from the lab in Wuhan. 
We ought to know that. We ought to find out about that. We 
ought to do actual investigation and hearing to look into it, 
because we sure don't want this to happen again, but we also 
ought to know what really got us to this point, a point that 
caused hundreds of thousands of lives in America, millions 
across the globe. Hardship, heartache.
    You still have millions of kids that aren't in school, 
against the science. We should have a hearing on that, because 
every school--we should be bringing school systems who are 
keeping the kids out of school right now in front of this 
committee and have them answer about the science. Dr. Fauci, 
every doctor has said they should be in school, and, in fact, 
you are doing long-term harm to these kids by not having them 
in school, just to appease some union bosses who don't have the 
kids' best interests in mind. We will look back on this year 
later and say it was a national scandal that some of these 
systems kept millions of our young kids out of the classroom, 
and they will never catch up. That is something we ought to 
have a hearing on to.
    But I appreciate the time we have had looking into this. 
Hopefully we can move forward. Mr. Chairman, with that I yield 
back.
    Chairman Clyburn. I thank the gentleman for yielding back. 
Let me close today's hearing by thanking Mr. Kramer and Mr. El-
Hibri for your testimony and for taking the time to be here 
with us today.
    As the coronavirus pandemic continues, the select 
subcommittee is focused on identifying shortcomings in our 
response and correcting them to ensure future success. In that 
spirit, we need you to do better. We need you to do a better 
job cleaning your facilities and training your staff. We need 
you to recognize that inspections by the FDA, your partners, 
and your own auditors are vital to helping Emergent be 
successful. And we need you to take their recommendations 
seriously and fix the problems they identify.
    Accepting public funds requires upholding the public's 
trust. Emergent has wasted public funds and broken the public's 
trust. Mr. Kramer and Mr. El-Hibri, to repair this breach of 
public trust, Emergent must consider returning those wasted 
public funds. That includes the amount spent on doses that have 
been destroyed, on testing, and for the time you have wasted 
while production is put on hold, and problems were fixed. The 
errors that we have heard about today must never happen again. 
We have heard your promises, but what we need now is 
performance.
    As I said in my opening statement, the select 
subcommittee's investigation is ongoing. This hearing is just 
the beginning. With Chairwoman Maloney's partnership, we will 
pursue this investigation until we understand why these 
terrible errors happened, and how they can be remedied, and 
what can be done to make sure they never happen again.
    With that, and without objection, all members will have 
five legislative days within which to submit additional written 
questions for the witnesses to the chair, which will be 
forwarded to the witnesses for their response.
    This hearing is adjourned.
    [Whereupon, at 1:39 p.m., the subcommittee was adjourned.]

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