May 20, 2021 - Health

Emergent paid execs bonuses despite ruining millions of J&J doses

Representative James Clyburn peaks during a Select Subcommittee On Coronavirus Crisis hearing in Washington
Rep. Jim Clyburn (D-S.C.) speaks Wednesday during a hearing the Emergent BioSolutions CEO and executive chair of the board was questioned. Photo: Susan Walsh/AP Photo/Bloomberg via Getty Images

Emergent BioSolutions paid its executives hundreds of thousands of dollars each in bonuses in February just months before the manufacturer ruined 15 million of Johnson & Johnson COVID-19 vaccine doses.

Driving the news: Emergent BioSolutions’ executives faced questions from lawmakers during a House Select Subcommittee on the Coronavirus Crisis hearing on Wednesday as part of an investigation into the plant's failures.

  • The federal government paid the company $271 million as a reservation for its manufacturing capacity, documents posted Wednesday by two House committees show. Yet, to date, U.S. regulators have not cleared any doses for use from its manufacturing plant in Baltimore.

Background: Workers at the plant, which had been producing vaccine materials for J&J and AstraZeneca, conflated ingredients between the two different types of vaccines this spring.

  • The FDA cited 'discrepancies' at the plant dating back to January.
  • Production at the plant stopped last month after the FDA faulted Emergent for failing to thoroughly review the incident and said the plant suffered from multiple unsanitary conditions, including peeling paint in sensitive manufacturing areas and improper waste disposal.

The findings: Despite the company's knowledge of these serious quality problems as it was paid $27 million a month to make COVID-19 vaccines, the company failed to fix the ongoing issues identified in audits.

CEO of Emergent Robert Kramer said more than 100 million doses of J&J vaccine are stalled for distribution as regulators check for potential contamination.

The subcommittee's memo said the company's board praised the CEO and chairman for leveraging "critical relationships with key customers, Congress, and other stakeholders."

  • Kramer was awarded a cash bonus of $1.2 million in recognition of his performance in 2020, on top of a base salary of $875,014 and $4.1 million in stock awards and options issued earlier in the year.
  • Emergent's chairman Fuad El-Hibri was found by the company's board to have “exceed[ed]” expectations and was granted a 2021 compensation package worth more than $3.7 million, including a salary of $1.13 million and stock awards and options totaling $2.6 million

The committee memo also mentions Robert Kadlec, a former senior adviser to President Trump, who awarded Emergent the vaccine contract and "requested in August 2020 that Emergent's contract receive a 'priority rating.'"

  • Kadlec received more than $360,000 in consulting fees from Emergent before working under the Trump administration.

What they're saying: “Emergent’s failures are disappointing precisely because these vaccines are so effective. Because the company was unable to deliver, the vaccinations of millions of people around the world have been delayed, putting their lives at needless risk,” said Rep. Jim Clyburn (D-S.C.), chair of the subcommittee, said at the hearing.

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