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Contract Flexibility in the Time of Swine Flu

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By Neetal Parekh on July 21, 2009 12:04 PM

Countries May Have No Legal Recourse in Enforcing Vaccine Contracts with International Pharmaceutical Companies

The swine flu pandemic has already had a forceful impact across the globe, but with fall flu season just months away and pharmaceutical companies racing to fill vaccine orders, it may also prove to be a major game-changer in international contract law. 

Many countries have contracted to receive enough of the vaccine to satisfy their nation's needs; however, the are not subject to binding international law.  And in the light of the pandemic nature of swine flu, aka an "extraordinary circumstance", legal experts are cautioning countries scheduled to have vaccines imported, to have a back-up plan.  Many of the vaccine order contracts contain clauses that allow breaking of the contracts under extraordinary circumstances opening the door for governments of countries with pharmaceutical plants to lock down vaccine stores to serve their country's needs first before exporting the vaccine abroad.

In a specific example of these contract clauses, the Canadian government in 2001 entered into a with a pharmaceutical company acquired by GlaxoSmithKline obligating it to provide every Canadian citizen with vaccine doses in the event of an pandemic.  The contract was the first of its kind and was followed by other countries following suit. 

With about 70% of global vaccines being produced in Europe, this potential break in contract norms could stand to disproportionately impact countries such as the U.S.--which estimated well over half of its vaccine supplies to be imported into the country.  However, the U.S. government is playing down fears of vaccine shortage with a spokesperson from the Centers for Disease Control and Prevention (CDC) stating "  Additionally, Canada's chief public health officer also expressed optimism about the H1N1 vaccine supply in an , in which he projected the country to produce enough of the vaccine to meet its needs as well as to be in a position to export to other countries.

Variables such as the severity of the swine flu during the coming season and actual production of a reliable vaccine will determine what role, if any, these contract clauses ultimately play in responding to this pandemic.  An agency within the CDC is scheduled to hold an emergency meeting to discuss the swine flu vaccine and issues surrounding its availability on .

 

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