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UPDATE 3-AstraZeneca contract, at heart of row, includes UK as 'best effort' base for output to EU

(Adds more on “best reasonable efforts”)

BRUSSELS, Jan 29 (Reuters) - The European Commission’s contract with AstraZeneca to supply COVID-19 vaccines includes Britain along with the EU as places where the Anglo-Swedish drugmaker should make its best efforts to manufacture vaccines for the EU.

The contract is at the heart of a dispute over access to vaccines, after AstraZeneca announced last week it would fall short of delivering promised vaccines to the EU by March because of production problems in Belgium.

The EU, whose member states are far behind Israel, Britain and the United States in rolling out vaccines, is standing its ground, pressing the Anglo-Swedish drugmaker to deliver the doses as promised in the contract.

AstraZeneca has been making large quantities of its vaccine in Britain, but has said a contract it signed with the British government requires it to fulfil Britain’s order before it can send doses manufactured there abroad, including to the EU.

The company agreed on Friday to publication of its advance purchase agreement with the European Commission. The 41-page contract was published bit.ly/2MBIaoU, although certain parts were redacted.

The contract says that AstraZeneca must uses its “Best Reasonable Efforts” to manufacture the EU doses, but the parties disagree on what this means.

AstraZeneca’s contention is that this is more of a subjective assessment, but a commission official said on Friday it was an objective legal standard.

The official pointed to a sentence in the contract by which AstraZeneca says it is not under any obligation to others that would impede complete fulfilment of the agreement’s requirements.

The commission also contends it does have the right to doses made in Britain and refers to a section at the end of the contract listing two British production sites.

“AstraZeneca shall use its Best Reasonable Efforts to manufacture the vaccine at manufacturing sites located within the EU (which for the purpose of this Section 5.4 only shall include the United Kingdom),” the contract says in a section on manufacturing sites.

At the time the contract was signed, Britain had left the EU but was still subject to most EU rules in a transition period which ended at the start of this year.

The contract goes on to say that AstraZeneca may manufacture at facilities elsewhere to accelerate supply of the vaccine in Europe, provided that it gives prior notification.

The contract does not say whether AstraZeneca is obliged to send vaccines produced in Britain to the European Union.

Asked whether Britain would publish its own contract with the company, a spokesman for Prime Minister Boris Johnson said it was policy not to discuss contractual matters.

The commission official did recognise that a legal challenge would not necessarily result in more vaccines being made available, a view broadly shared by EU governments despite Italy’s request for legal action.

“The centre of gravity of opinion is more like: ‘let’s try and thrash out something with these guys’,” one senior EU diplomat said.

The commission said it welcomed the company’s commitment towards more transparency.

AstraZeneca and the EU had signed a deal for up to 400 million doses of the vaccine. Last week, the firm unexpectedly announced cuts of up to 60% in supplies to the bloc, citing production problems at a Belgian factory, triggering a furious response from the bloc.

The EU is now looking into a scheme to monitor and authorise export of vaccines, potentially blocking them if its own supply is not met.

Reporting by Philip Blenkinsop, John Chalmers and Francesco Guarascio in Brussels and Pushkala Aripaka in Bengaluru Editing by John Chalmers and Nick Macfie

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