[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
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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
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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
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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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