Addressing COVID-19 Vaccine Supply Chain Challenges

At the time of this writing, two companies, Pfizer Inc. and Moderna, Inc., have announced promising early results from Phase 3 of their COVID-19 vaccine trials.  Additional promising results are hoped for from Johnson & Johnson, and AstraZeneca soon, and perhaps from others later.  This is good news.

Developing a vaccine is one thing, however.  Distributing it is another.  Indeed, managing the COVID-19 supply chain will pose tremendous logistical challenges for health care providers and at all levels of government unequalled for any other pharmaceutical product in history – and the stakes could not be higher.  A complicating factor is, undoubtedly, the turnover of presidential administrations.  And while a carefully coordinated handoff from the Trump Administration to the Biden Administration would no doubt be ideal, that may not be forthcoming.  However, this turnover also provides an opportunity to reconsider and optimize the role the federal government could play in distributing COVID-19 vaccines to the U.S. population.

Recently, we wrote an article in Law360, describing “Key Government Tools for Addressing National PPE (Personal Protective Equipment) Shortages.”  Many of the observations in this article concerning how the federal government can normalize and optimize the supply of PPE to health care providers hold true for COVID-19 vaccine distribution as well – as we shall discuss here.

 

The Problem

One distribution challenge associated with the COVID-19 vaccines currently in Phase 3 trials is that each of the leading vaccine candidates requires cold-chain transportation and storage, often the case for vaccines.  The Pfizer COVID-19 vaccine is unique in that it requires extreme cold (-70 degrees C) storage and, even so, is projected to be viable for only 10 days after manufacture.  Accordingly, Pfizer has developed transportation boxes that will accommodate 1000 or 5000-dose shipments, packed in dry ice, and has signaled that it will forego the U.S. government-tapped McKesson Corporation for distribution, in favor of relying on its own systems instead.  These requirements for constant deep freezing, immediate use, and packaging into 1000 or 5000-dose containers likely means that the Pfizer vaccine’s use will be limited to large urban centers that can be reached quickly, stored properly, and have sufficient population to justify the batch size.  (Similarly, the Ebola vaccine also required extreme cold storage, which posed distribution challenges in many of the places in Africa where it was most needed.)

Moderna and the other three Phase 3 vaccine companies also have indicated that their COVID-19 vaccines will require cold storage and transportation, but only to the level of ordinary cold supply chain capabilities – approximately -20 degrees C.  This certainly makes their supply chains somewhat easier to manage, but challenges still remain.  Some sources report that vaccines will be constantly temperature-monitored during transit (rather than at intervals), to protect and ensure vaccine integrity.

Another large COVID-19 vaccine distribution challenge is coordinating the logistics of the supply chain, which will have to distribute COVID-19 vaccines to every person in the country.  While the federal government has instituted its “Operation Warp Speed” (OWS) – an intragovernmental agency collaboration between the U.S. Department of Health and Human Services (HHS) including the Center for Disease Control (CDC), the National Institutes of Health (NIH), the Biomedical Advanced Research and Development Agency (BARDA), and the Department of Defense (DoD) – so far, the OWS has been short on specifics for how this will be accomplished.

Evidently modelled on the federal government’s plan for the 2009 distribution of the H1N1 vaccine (a challenge of considerable, but still less, complexity), OWS has charged itself with funding the rapid development and manufacture of viable COVID-19 vaccine candidates and relaxing associated regulatory requirements.  However, OWS does not include a robust distribution plan to get COVID-19 vaccines to citizens.  Rather, like the H1N1 vaccine distribution plan, OWS plans to simply purchase the required vaccines, allocate them to the states using population-based modelling, and then allow the states to distribute the vaccines to their populations – without regard to whether the states have the funding or capabilities to actually do this.  And in most cases, they don’t.

In late September 2020, OWS directed the states to submit their COVID-19 vaccine distribution plans by October 29, 2020, which most of the states have done.  However, most of the states’ plans at this point are aspirational and non-specific (Ohio’s can be found here) – which is not surprising, considering that the states did not even know in late October 2020 what the cold-chain requirements for vaccine distribution would be.  Virginia’s plan specifically called out a “Preparedness Gap,” describing the logistical and financial challenges facing it on this project.  On October 15, 2020 – 10 days before the states’ plans were due – the National Governor’s Association sent a letter to President Trump, imploring the administration to provide “additional guidance and clarification … on the roles and expectations of states in a successful COVID-19 vaccine distribution and implementation plan,”– and specifically requesting “a meeting with you and your team to discuss what is required to ensure a strong partnership” with the federal government.

In response, the White House provided few specifics, and referred the governors to OWS’s September 9, 2020 “COVID-19 Vaccination Program Interim Playbook for Jurisdiction Operations” (which was updated on October 29, 2020).  The Interim Playbook, however, even in its updated form, sets forth a series of what can be characterized as generalized statements of principle on subjects such as identifying critical populations, vaccine provider enrollment, and handling surplus doses.  However, it does not provide the nuts-and-bolts guidance that the states will no doubt need to distribute vaccines effectively.  (For example, the Interim Playbook recommends tabletop exercises and workshops to test distribution plans, but does not attempt to describe what such exercises would consist of.)

To be clear, delegation to the states follows the same model that was used with the H1N1 vaccine (which itself was adapted, albeit imperfectly, on the CDC’s Vaccines for Children Program), but H1N1 vaccine distribution involved less urgency (given its relatively low human-to-human transmission rate) and complexity.  Nor did the H1N1 vaccine involve an extreme-cold supply chain.  And, indeed, following the H1N1 vaccine distribution, the federal government attempted a comprehensive look-back to identify areas of improvement for the time a pandemic required wholesale distribution of vaccines.  But if OWS attempts to build on those lessons, the effort is not immediately obvious.  Nor is it obvious how the states will fund these vaccine distribution efforts.  Although the CDC has estimated that Congress will need to provide up to $6 billion to state and local authorities for vaccine distribution, to date, they have only allocated $200 million.

The Solutions

No matter how managed, distribution of one or more cold-chain COVID-19 vaccines to the U.S. population will pose unprecedented supply chain challenges.  However, it is likely inefficient – and probably ineffective as well – to require each of the states to design and implement separate vaccine distribution models and plans.  The federal government, on the other hand, has a number of tools at its disposal that can be used to smooth the vaccine supply chain.

First, the Defense Production Act (DPA) can be used to facilitate the distribution of vaccines, as we wrote that it could facilitate the distribution of PPE.  The Trump Administration has been parsimonious in its use of the DPA in responsive to COVID-19, asserting that the DPA should be invoked as a measure of last resort.  In reality, however, the DPA has been used to distribute millions of federal dollars every year since its creation in 1950, when needed by America.

Under the DPA, the federal government can marshal the resources necessary to actively coordinate the distribution of COVID-19 vaccines, including by requisitioning logistics providers and supply chain experts to assist in the effort to create a more centralized procurement and distribution process.  Importantly, if there are air transport shortages that impede vaccine distribution, the DPA authorizes the President to activate the Civil Reserve Air Fleet.

Second, part of what makes COVID-19 vaccine distribution so challenging are the unknowns.  While the states are scrambling to put together sensible distribution plans that adequately cover the entire U.S. population – and while the H1N1 vaccine distribution provides some guidance – the federal government is best poised to handle the information-gathering component of vaccine distribution.  This will be particularly helpful for distribution areas that cross state lines, for which intra-state distribution models are inefficient and impractical.  The federal government is also best poised to track feedback data nationwide – which will enable it to adjust distribution plans and quantities as consumption patterns emerge.

Third, the Strategic National Stockpile, which received its first real test under President George W. Bush following September 11, 2001, has played a role in addressing previous crises, including the H1N1 pandemic in 2009.  The knock on the Strategic National Stockpile has been that its planning capabilities have always exceeded its response achievements – but that means that this is its chance to shine.  And the Strategic National Stockpile’s greatest strength may be in its ability to act as a supplemental resource, smoothing out uneven or suboptimal resource distributions between markets and states.  A disciplined Strategic National Stockpile response, coupled with rigorous vaccine distribution information gathering, would take significant resource strain off state and local governments and health care institutions.

Conclusion

 The change in administrations provides an opportunity to re-evaluate the role of the federal government in distributing COVID-19 vaccines.  We should make use of this opportunity to address this national crisis.

Cross-Post from Law360: The Legal Implications Of Mobile Health Advancements

This is a cross post from Law360.  Please contact Sarah Rathke, Kristin Bryan or John Wyand with any questions.

In response to American health care needs during the COVID-19 pandemic, the U.S. is seeing a rapid acceleration in mobile health care, however, this new age form of health care does present some risk and legal implications.  In the recently published Law360 article, we discuss the legal implementations facing mobile health care.  Read the full article here.

 

Cross-Post from Law360: Key Gov’t Tools For Addressing National PPE Shortages

This is a Cross-Post from Law360.  Please contact Sarah Rathke with any questions.

The COVID-19 pandemic has revealed shortcomings in U.S. supply chains requiring immediate action to continue to provide personal protective equipment (“PPE”) during the ongoing crisis.  Here, we’ve been published in Law360, discussing federal solutions for our national PPE shortages.  Read the full article here.

Cross Post from SDCE Supply & Demand Chain Executive: L.I.N.K. | The Delicate Balance of Negotiations with Scotwork, Squire Patton Boggs

This is a Cross-post from SDCE Supply & Demand Chain Executive.  Please contact Sarah Rathke with any questions.

This podcast interview led by SDCE Associate Editor Brielle Jaekel discusses surprising findings regarding buyer-supplier negotiations with Scotwork CEO Brian Buck and supply chain negotiation best practices with supply chain lawyer Sarah Rathke.  You can listen to the podcast here.

Cross-Post from The Trade Practitioner: Trump Officials to Probe Produce Imports, Raising the Risk for More Tariffs in 2020

This is a Cross-post from The Trade Practitioner blog. 

On September 1, the Office of the US Trade Representative, working with the Departments of Commerce (DOC) and of Agriculture (USDA), announced a number of actions aimed at supporting domestic producers of seasonal/perishable produce.  Their plans – which include new trade actions targeting certain fruit and vegetable imports – could have widespread impacts on produce prices and in how the US government responds to allegations of unfair subsidies supporting foreign-grown fruits and vegetables.

As part of the report, USTR announced:

  • Plans to launch a Section 201 global safeguards investigation into imports of blueberries.
  • Continued bilateral negotiations with Mexico over the next 90 days to address concerns regarding US imports of Mexican strawberries, bell peppers, and other seasonal/perishable products.
  • USTR’s plans to work with domestic producers to launch an investigation by the US International Trade Commission (ITC) into strawberry and bell pepper imports, which could lead to “expedited” Section 201 investigations on these imports later this year.

DOC and USDA each also pledged to take actions aimed at supporting domestic producers of seasonal/perishable products, including efforts to promote domestic growers and to educate growers on unfair foreign subsidies.

Section 201 investigations are conducted by the ITC, which examines whether domestic industries have been seriously injured or threatened with serious injury as a result of increased imports.  Notably, these actions do not require domestic parties to allege any unfair actions by the foreign producer (such as “dumping,” or selling merchandise for less than fair value, or benefiting from unfair foreign government subsidies).  If the ITC finds in the affirmative, the President himself will decide what relief, if any, should be imposed.  This relief could take the form of tariffs or quotas targeting foreign imports, either of which are almost certain to increase prices of the affected goods.

The joint agency actions comes after years of concerns voiced by domestic industry and congressional stakeholders that existing trade actions do not adequately address concerns with unfair imports of these goods, including as part of negotiations to modernize the North American Free Trade Agreement under its successor deal, the US-Mexico-Canada Agreement now in force.

For sovereign governments and businesses that may have questions related to Section 201 investigations and US trade enforcement proceedings, our team can help draft and submit comments during the investigation, work to secure congressional support for our arguments and counsel on the political dynamics underpinning any presidential action targeting foreign imports.

Please contact us with any questions.

Cross-Post from Capital Thinking: Kamala Harris – Where Biden’s Vice President Pick Stands on Key Trade and Foreign Policy Issues

This is a Cross-post from the Capital Thinking blog .  Please contact Stacy Swanson with any questions.

On Tuesday, August 11, presumptive Democratic presidential nominee Joe Biden announced that he has selected Senator Kamala Devi Harris (D-California) as his vice presidential running mate.  Since joining the U.S. Congress in 2017, Harris has in some instances served as a bridge between progressive and moderate Democratic positions and policies.  However, Harris is typically characterized as a liberal, progressive Democrat.  She has made immigration, equal pay and abortion rights core planks of her policy proposals.  Her current congressional committee assignments in the 116th Congress include the Senate Judiciary, Homeland Security and Governmental Affairs, Intelligence and Budget.

A native of California, she was born in Oakland to immigrant parents from India (mother) and Jamaica (father).  Prior to Congress, Harris, a lawyer, served as Attorney General of the State of California (2011-2017).  She graduated from Howard University in Washington, D.C., and earned a law degree from the University of California, Hastings College of Law in San Francisco.

Early in her Washington, D.C., career, Harris was confronted with taking a public position on trade.  During her 2016 Senate campaign, the Trans-Pacific Partnership (TPP) was one of the hottest political issues.  She initially declined to take a firm stance on it, saying in 2015:  “We want to strike a balance that allows America’s economy to prosper, and that’s going to be about our workers and our businesses.”  After Representative Loretta Sanchez (D-California), a staunch TPP critic, challenged Harris for the Senate seat in California’s “top two” primary process, Harris came out in opposition to the trade pact, stating it did not adequately protect U.S. workers or the environment, citing in particular concerns with infringement on California’s environmental laws.

With respect to the U.S.-Mexico-Canada Agreement (USMCA), Harris was among a handful of Senators that opposed the trade pact even after it was modified to include additional labor and environmental enforcement provisions following negotiations between House Democrats and the Trump Administration.  Biden voiced support for congressional approval of the deal that replaced the North American Free Trade Agreement (NAFTA).  In voting against the USMCA, Harris stated the agreement would “set the [environmental] standards for decades, and I believe Californians and all Americans deserve better and more immediate action. For these reasons, I oppose this deal.”

During her 2019 presidential campaign, Harris sought to differentiate herself as a non-protectionist Democrat, saying, “We need to export American products, not American jobs.  And to do that, we have to have a meaningful trade policy.”  Harris has also said that the Trump Administration’s “trade taxes” (or tariffs) are taking $1.4 billion “out of working people’s pockets every month.”

She has criticized U.S. President Donald Trump’s proclivity to announce trade policy via Twitter.  In a 2019 interview with CNN’s Jake Tapper, Harris said of U.S. trade policy, “I believe very strongly that we have to have policies that understand that, as it relates to the issue of trade, as it relates to the issue of various countries, including China, . . .  that we have to supply and equip the American worker with the skills and the resources that they need to thrive, not only survive, but thrive.”  Regarding Climate Change, Harris said, “[W]e need to do a better job in terms of thinking about the priorities that should be more apparent now perhaps than they were there, which are issues like climate, the climate crisis, and what we need to do to build into these trade agreements.” 

Harris was an early supporter of the progressive’s “Green New Deal,” which seeks to reduce carbon emissions and create jobs by spending more on renewable energy.  After the Senate voted down Senator Edward Markey’s (D-Massachusetts) Green New Deal bill in March 2019, Harris said, “Climate change is an existential threat, and confronting it requires bold action.  . . .  Combatting this crisis first requires the Republican majority to stop denying science and finally admit that climate change is real and humans are the dominant cause.”  In July 2020, Harris introduced the Environmental Justice for All Act, companion legislation to a measure introduced earlier in the House of by Congressmen Donald McEachin (D-Virginia) and Raúl Grijalva (D-Arizona).  The bill would give communities of color tools to address environmental disparities, including by engaging government decision-making processes, such as federal permitting decisions for infrastructure projects, the creation of climate resiliency plans, and the transition to clean energy.  During the 115th Congress, Harris was a member of the Senate Environment and Public Works Committee.

Given her Climate Change platform and California origins, Harris will likely continue to support policies that favor electric cars over gas-powered cars in the United States.  She has opposed the Trump Administration’s efforts to reverse the Obama-era fuel efficiency standards.  During a 2019 Town Hall, Harris also stated she would push to have basically zero-emission vehicles only by 2045, however her climate plan as a then-presidential contender called requiring 100% of vehicles be zero-emission as soon as 2035.

Harris has said of the People’s Republic of China (China), “They steal our products, including our intellectual property. They dump substandard products into our economy. They need to be held accountable.”  However, she opposes unilateral action against China, expressing a preference for working with allies to address issues with China, including “the threat that it presents to our economy, the threat it presents to American workers and American industries.”  She has also previously acknowledged China could possibly help address climate change concerns and North Korea.  Despite having connections to India, Harris has not been vocal on the ongoing trade talks or trade concerns with respect to that country.

In September 2019, Harris joined ten other Democratic Senators in sending a letter to U.S. Trade Representative Robert Lighthizer urging him against going forward with any trade negotiations with Brazil.  The Senators expressed environmental concerns, saying Brazilian President Jair Bolsonaro needs to enforce fully his country’s environmental laws and regulations to protect the Amazon from continued illegal deforestation.  The Senators also urged Ambassador Lighthizer to resolve the ongoing trade war with China, observing disrupted global trade patterns have driven China to rely increasingly on Brazil for beef and soybeans, which has in turn resulted in Brazil clearing more of the Amazon forest for agriculture.

Notably, Harris has broken with progressive Democrats with respect to their increased criticism of the Israeli Government.  Married to Douglas Emhoff, a Jewish attorney who at previously served as partner-in-charge at Venable LLP’s Los Angeles office and currently at DLA Piper in Los Angeles, Harris takes a moderate position and supports a two-state solution in Israel and Israel’s “right to defend itself” from Hamas attacks from Gaza.  She has also expressed support for the United States rejoining the Iran nuclear agreement, if the United States can verify Iran is complying with the strict requirements detailed in the Joint Comprehensive Plan of Action.

As a politician and former prosecutor, Harris will likely also push to tighten regulations.  In her words, “In California, we have some of the strongest consumer protection laws in the country. While it is easy to conceive of innovation and regulation as mutually exclusive, California is proof that we can do both. We can innovate responsibly.”  Ultimately, as his running mate, Harris will advocate Joe Biden’s policies and platforms.  However, her positions can help influence Biden’s policies, including on trade and foreign policy matters, during the campaign and beyond.

Cross-Post from The Trade Practitioner: It’s August in an Election Year – No Rest for the Trump Administration on Trade Actions

This is a Cross-post from The Trade Practitioner blog.  Please contact Frank Samolis and Ludmilla Kasulke with any questions.

Despite the Congressional recess and continued focus on COVID-19 economic relief, Trump officials announced several major trade actions over the last week that could impact global trade and supply chains.  Here is a quick round-up of recent developments and what may be coming next.

  • On Thursday, August 6, President Donald Trump signed four executive actions related to trade.
    • An executive order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs are Made in the United States, which directs agencies to consider how they can increase domestic procurement and identify vulnerabilities in supply chains for these products.
    • A proclamation reimposing Section 232 tariffs on imports of unwrought, unalloyed aluminum from Canada, effective August 16.  US producers of primary aluminum alleged that imports of these products surged after Section 232 tariffs were lifted in May 2019; Canadian officials argued that the markets were responding to COVID-19.
    • Two executive orders aimed at Chinese social media apps TikTok and WeChat, and their parent companies. Further details are available here.
  • On Friday, August 7, Canadian officials responded to the Section 232 tariff action, releasing a list of $2.7 billion worth of aluminum and aluminum-containing goods from the United States that could be subject to retaliatory tariffs.  The list will be subject to a comment period before the final list of goods subject to tariffs is released, but Canadian Deputy Prime Minister Chrystia Freeland said that she envisions a “dollar-for-dollar” approach.
  • On Tuesday, August 11, Customs and Border Protection (CBP) published a notice in the Federal Register that requires goods originating in the Hong Kong Special Administrative Region (Hong Kong) to be marked as being made in the People’s Republic of China (China).  This action could lead to the imposition of existing Section 301 tariffs on these goods.  Further details are available here.
  • On Monday, August 10, the Commerce Department and European Commission initiated discussions to evaluate the potential for an enhanced EU-US Privacy Shield framework to comply with the July 16 judgment of the Court of Justice of the European Union (EU) in the Schemes II case, which invalidated the original framework for the cross-border data transfers of personal information from the EU to the United States.  The Commerce Department hopes to limit the negative consequences of the invalidated agreement.
    • Here is our latest transatlantic trade report.

As part of his remarks at a Whirlpool manufacturing facility in Ohio last Thursday, President Trump suggested that additional trade actions could follow.  It is not clear whether he was referring to the TikTok/WeChat executive orders, which were signed later that afternoon.  Furthermore, the Office of the US Trade Representative is expected to announce whether and how it will modify the tariff list in the large civil aircraft dispute with the EU as soon as this week.

August is traditionally a quiet time in Washington, especially in an election year, but not for trade.  Our team continues to track developments and advise clients on how to shape their supply chains and operations in response to the latest developments.

Please contact Frank Samolis and Ludmilla Kasulke with any questions.

Cross-Post from the Conflict Minerals Law: Countdown to EU Conflict Minerals Regulation (7 Months)

This is a Cross-post from the Conflict Minerals Law blog.   Please contact Dynda A. Thomas with any questions. 

In less than 7 months, the EU conflict minerals regulation will take full effect, and importers into the European Union of certain threshold amounts of tin, tantalum, tungsten and gold (3TG) and of metals containing 3TG will be subject to it.  As of today, despite Brexit, importers into the UK will be subject to it as well. Those Union importers should be taking action now to supplement their compliance programs to address the due diligence, risk mitigation and audit requirements of the EU regulation.  In anticipation of those requirements, some importers may consider replacing certain of their direct and indirect suppliers.  And, such changes take time.

The EU conflict minerals regulation is expected to cover over 1,000 Union importers and will indirectly impact tens of thousands of economic actors in the European Union – many more than are covered by the US conflict minerals rule. The EU regulation covers more forms of minerals and metals and has a much broader geographic focus than the US rule. Further, Union importers will be required to obtain third-party audits and undertake consultations with stakeholders if they reach certain conclusions about the direct and indirect suppliers in their supply chains.

EU Conflict Minerals Regulation — Adding to Your Compliance Program outlines the types of initial steps a Union importer can take to develop (or expand) its conflict minerals compliance program to address the requirements of the EU regulation.

Update to Main Street Lending Program

On June 8, 2020, the Federal Reserve (or “Fed”) published updated FAQs (the “FAQ”) and updated term sheets for the Main Street Lending Program (“MSLP”). The new FAQ, which may be further revised, updates prior FAQs that were published on April 30, 2020 and revised on May 27, 2020. The most recent revisions increase the appeal of the program for US businesses in a number of ways, including by (1) lowering the minimum loan size for “New Loans” and “Priority Loans” to $250,000, (2) increasing the maximum loan size for all Main Street Loans, (3) lengthening the term of the loans from 4 years to 5 years, and providing an additional year of payment deferment, (4) increasing the FRB Boston participation rate in “Priority Loans” to 95% (from 85%), and (5) reducing the amortization schedule for “New Loans”.

Our colleagues, James Schneider, Kirk Beckhorn, Adam Nazette, James Barresi, Thomas Reems, David Stewart, and Danielle Asaad, have prepared a client alert that summarizes key updates provided by the Fed over the past two weeks and summarizes the program forms provided by FRB Boston. It also calls attention to aspects of the MSLP that potential borrowers and lenders should consider when participating in the MSLP, and highlights some ambiguities that might affect their analysis of the program and its terms. In addition, it contains a chart at the end that summarizes the differences and similarities between the three categories of loans under the MSLP.  Read the full client alert below:

Making Rhyme or Reason out of Reopening

Most states and U.S. territories have now begun reopening at least parts of their economies.  The reopening efforts purport to follow a three-phase White House plan, even though not many states have met the plan’s benchmarks, including a “downward trajectory” in coronavirus cases.  The White House guidelines are not mandatory.  Rather, they advise governors to take a state-wide or county-by-county approach to analyzing the progress made in combating the coronavirus hotspots and permitting economic and social activity accordingly.  Easier said than done.  Reopening is proving challenging as leaders across the country are weighing health, economic, and political ramifications of opening too soon, too quickly, or not soon enough.  At a congressional hearing last week, Dr. Anthony Fauci warned that reopening too quickly poses “a real risk that you will trigger an outbreak that you may not be able to control.”

Our colleagues Kristina Arianina and Dimitar Georgiev have prepared a thoughtful article that considers the roles both state and local officials have in determining the pace and approach at which to reopen.  Read the full article here.

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