Section 7 Funding Process and Audit
The Commission and the Participating Member States shall provide funding to enable AstraZeneca to: (i) harness sufficient drug substance and drug filling and finishing capacity in Europe, (ii) advance procurement of critical components including glass vials/stoppers, media, and other critical components to supply finished product of the Vaccine, and (iii) fill, finish and package the final Vaccine for distribution Funding Commission and the Participating Member States shall provide the Funding in an amount equal to the estimated Cost of Goods which at the Effective Date is estimated to be million Euros for the Initial Europe Doses.
7.2 Initial Funding.
In partial consideration of the Vaccine Dose purchase rights granted by AstraZeneca to the Commission acting on behalf and in the name of the Participating Member States hereunder, the Commission shall pay to AstraZeneca a fixed amount equal to 336 million Euros as an estimate of the Upfront Costs as set forth in Schedule A (the “Initial Funding”) as follows:
(a) The Commission shall pay to AstraZeneca two-thirds of the Initial Funding (first Installment) within five (5) working days of the Effective Date; and
(b) The Commission shall pay to AstraZeneca one-third of the Initial Funding (second Installment) within twenty (20) days following the receipt from AstraZeneca of relevant evidence of the use of the first Installment and a relevant progress report of the continued progress towards manufacture of the Initial Europe Doses (e.g., reservation of manufacturing capacity, commencement of technology transfer, purchase of raw materials and purchase of vials). In the absence of reasonable relevant evidence, the Commission will have no obligation to pay the second Installment and may seek to recover the first Installment or a portion of it if available pursuant to Section 12.2(c).
7.3 Subsequent Funding.
The Participating Member States shall pay the Fill/Finish/Packaging Costs, storage and distribution costs of the Vaccine, destruction for any material produced at risk, and costs and expenses directly incurred for, or fairly allocable to, post-launch safety and risk management studies for the Vaccine in accordance with Schedule A and Sections 7.4 and 10.3 and the Order Forms (the “Subsequent Funding”). All such costs shall be allocated on a per Dose basis on each shipment of Doses and added to the individual invoices for shipments of Vaccine to each Participating Member State.
7.4 Mechanism for Updated Total Costs of Goods
(a) The Parties agree that, notwithstanding any other provision of this Agreement, and while AstraZeneca acknowledges its obligation is to supply the Vaccine Doses at no profit, AstraZeneca shall not be requested or required to supply the Vaccine Doses at a loss. The Parties further agree that the estimated Upfront Costs of million Euros and Fill/Finish/Packaging Costs of 534 million Euros (for a total estimated Cost of Goods of 870 million Euros) were determined based upon available estimates at the Effective Date for the Initial Europe Doses Based on 300 million Initial Europe Doses, the price per Dose is currently estimated to be approximately 2.90 Euros per Dose. Of such amount, 336 million Euros (or approximately 1.12 Euros per Dose) will be paid by the Commission pursuant to the Initial Funding pursuant to Section and the remainder (currently estimated to be 1.78 Euros per Dose) shall be paid to AstraZeneca the Participating Member States as set forth below and in the Order Form total Cost of Goods is subject to adjustment as per paragraphs (b) and (c) below and the price per Dose in the Order Form shall be automatically adjusted to reflect the adjusted price per Dose Each price per Dose as adjusted from time to time is referred to as the “Price Per Dose.”
(b) To the extent that the total Cost of Goods exceed the estimated amount of 870 million Euros by less than 20%, AstraZeneca shall provide an updated purchase and payment schedule to the Commission, which shall state the delivery schedule of the Initial Europe Doses and the corresponding amounts payable by the Participating Member States, along with the corresponding Fill/Finish/Packaging Costs per Participating Member State within thirty (30) days following invoicing for such Doses.
(c) If AstraZeneca becomes aware that the estimated Cost of Goods are reasonably expected to exceed 870 million Euros by 20% or more, then AstraZeneca shall notify the Commission of such excess and provide the relevant evidence in this respect. Following such notice, AstraZeneca and the Commission shall agree to a payment or other mechanism which will result in AstraZeneca supplying the Participating Member States with a number of Doses without incurring a loss. Such mechanism may include a reduction in the number of Doses and/or a further increase in Price Per Dose.
(d) If following the finalization of the matters contemplated hereby, documentary evidence provided by AstraZeneca indicates that the Cost of Goods for the Initial Europe Doses sold is less than 870 million Euros or the Participating Member States paid more than the Cost of Goods for the Optional Doses or Additional Doses, AstraZeneca shall notify the Alliance Manager and work with the Alliance Manager to establish a fair and equitable way to return the amount of the excess payments to the Commission and/or Participating Member States, as applicable.
Section 9 Pricing
9.1 Initial Doses. AstraZeneca shall manufacture and supply to the Participating Member States the Initial Europe Doses at a price equal to their total Cost of Goods with no profit or loss for AstraZeneca, which, as of the Effective Date, is estimated at 870,000,000 Euros, of which 336,000,000 Euros shall be paid by the Commission and 534,000,000 Euros by the Participating Member States. This estimated amount shall be paid through the Initial Funding and Fill/Finish/Packaging Costs according to the terms of Sections 7.1, 7.2 and 7.3 of this Agreement.
9.2 Optional Doses. In the event the Commission exercises the option on behalf of and in the name of the Member States to obtain the Optional Doses in accordance with Section 5.2, AstraZeneca shall manufacture and supply the Optional Doses at a price equal to their Cost of Goods (i.e., the full price is calculated without any credit based on the Initial Funding).
9.3 Additional Doses. AstraZeneca shall provide any agreed Additional Doses at Cost of Goods until 1 July 2021, unless AstraZeneca determines in good faith that the COVID-19 Pandemic has not ceased as of 1 July 2021, in which case AstraZeneca shall provide any agreed Additional Doses at Cost of Goods until such later date as AstraZeneca determines in good faith that the COVID-19 Pandemic has ceased AstraZeneca shall promptly notify the Commission of any such later date suggested by AstraZeneca.