Master Alliance Provisions Guide (MAPGuide)

UK Secretary of State – AstraZeneca, COVID-19 Vaccine Supply Agreement

  • Business model | Payment Structures

1.1 Definitions
“Cost of Goods” means the fully burdened aggregate reasonable direct and indirect costs and expenses incurred by AstraZeneca (on a “no profit no loss” basis) to manufacture the Product, consisting solely of:
[REDACTED]

In addition to the costs listed above, “Cost of Goods” will also include each of the following fully burdened aggregate reasonable costs and expenses incurred by AstraZeneca to manufacture the Product of the value of (a) to (i) above, consisting of:
[REDACTED]

The term “Cost of Goods” excludes each of the following but each of the items in items (q), (r) and (s) below shall be invoiced (on a “no profit no loss” basis) in accordance with Clause 11.7 as and when incurred:
[REDACTED]

4. Manufacturing Facilities and Materials
[…]
4.4 AstraZeneca shall, with effect from the Effective Date and throughout the Term, use Best Reasonable Efforts to maintain, rotate and replenish an effective supply of Manufacturing materials (including raw materials) required for the Manufacture of the Product in order to ensure that AstraZeneca, its Affiliates and their Subcontractors have sufficient materials and raw materials to Manufacture of the product in order to meet the Delivery Schedule. AstraZeneca shall use Best Reasonable Efforts to mitigate any waste or unused amount of Manufacturing materials purchased and included within Cost of Goods.

11. Price and Charges
11.1 AstraZeneca shall supply Product to Purchaser pursuant to the Order at a price equal to the Cost of Goods of such Product excluding VAT (the “Price”). As at the Effective Date the Cost of Goods for such Product is estimated at the Target Cost of Goods per dose.

11.2 AstraZeneca shall use Best Reasonable Efforts to mitigate and reduce the Cost of Goods during the Term of this Supply Agreement. However, the Purchaser acknowledges that the work performed under this Agreement is for the expedited supply of a vaccine against the current global COVID-19 pandemic and AstraZeneca may not be able to mitigate and reduce costs to the extent it would outside a global pandemic.

11.3 AstraZeneca shall charge the Price and calculate the Cost of Goods on an Open Book Basis and provide transparency to the Purchaser as to the calculation of the same. “Open Book Basis” shall mean providing the Purchaser with access to information (i) in respect of the costs of the Product and (ii) as necessary to demonstrate its calculation is consistent with its approach in respect of other vaccine products, in each case solely to the extent necessary for the Purchaser to be able to verify that Cost of Goods has been calculated in accordance with the methods and principles set out in this Supply Agreement. Open Book Basis shall not require AstraZeneca to disclose detailed information with regard to its cost of goods for other products.

11.4 The Parties acknowledge that, subject to AstraZeneca’s foregoing obligation, the Costs of Goods may vary during the Term as a result of changes in Manufacturing yield or other factors. AstraZeneca shall automatically pass on any increase or decrease in the Costs of Goods as compared to the Target Costs of Goods.

11.4.1 AstraZeneca shall be entitled, on no less than fifteen (15) days prior written notice to the Purchaser, to adjust the Target Cost of Goods to reflect any actual and verifiable change in the Cost of Goods subject to the Purchaser’s right to inquire, challenge and audit any proposed increase [REDACTED] of the prior Target Cost of Goods, in which case, the Parties shall agree on an appropriate Price reconciliation mechanism where applicable to reflect any decrease or increase to the Target Cost of Goods having regard to the actual Cost of Goods.

11.4.2 Notwithstanding any other provision of this Supply Agreement, but without limiting the Purchaser’s remedies against AstraZeneca or increasing the Cost of Goods as a consequence of AstraZeneca’s breach of this Supply Agreement or the supply of Defective Product, in no circumstances shall the Price for Product be such that it would oblige AstraZeneca or its Affiliates to Manufacture and supply a Product at any time lower than the Cost of Goods.

[…]

11.9 If following any audit the accountancy firm determines that the Price charged exceeds the actual Cost of Goods incurred by AstraZeneca for the Manufacture, supply and Delivery of the Product then AstraZeneca shall promptly within thirty (30) days refund such overpayment to the Purchaser together with interest calculated in accordance with the rate set forth in clause 12.5 from the date the overpayment was made by the Purchaser until the date the overpayment is refunded to the Purchaser. If following any audit the accountancy firm determines that the Price charged is less than the actual Cost of Goods incurred by AstraZeneca for the Manufacture, supply and Delivery of the Product then Purchaser shall promptly, but in any event within thirty (30) days, pay to AstraZeneca the outstanding amounts of such underpayment.