J&J and Merck combine forces under Defense Production Act

WASHINGTON (Sinclair Broadcast Group) — The Biden administration expanded its use of the Defense Production Act this week to broker a rare partnership between two of the country's largest competing pharmaceutical companies, Johnson & Johnson and Merck.

The White House announced Tuesday that Merck would dedicate two of its U.S. facilities to fulfill Johnson & Johnson's vaccine production needs. One facility will be outfitted to produce doses. The other will run a fill and finish operation to load vaccine vials and package them for distribution.

As a result of the collaboration, the United States is on track to have enough vaccines for every American adult by the end of May, President Joe Biden said Tuesday.

The White House applauded the "historic manufacturing partnership" to accelerate vaccine production. "While these companies are competitors most of the time, heeded by President Biden's call, they are undertaking a wartime effort to come to the table for the good of the country," said White House senior adviser for COVID response Andy Slavitt.

Using the Defense Production Act, the federal government invested an initial $105 million to help Merck convert, upgrade and equip its facilities to meet the safety and manufacturing standards necessary to mass-produce J&J's newly approved vaccine.

Merck, which abandoned two unsuccessful vaccine candidates in late January, indicated that it could accommodate more production beyond J&J. In a statement, the company said it entered into multiple agreements to make available "a number of existing manufacturing facilities" for vaccines and COVID-19 drug production. Merck continues to develop therapeutic and antiviral drugs with government backing.

Biden also used DPA authorities to expedite the production and delivery of the equipment, machinery and supplies needed to convert and operate the new plants. The Department of Defense, with its vast network of manufacturing contractors, was instructed to provide daily logistical support for the effort.

Johnson & Johnson is expected to start operating its manufacturing facilities 24/7. The Merck facilities should be converted and production should be on the rise by May, Slavitt told reporters Wednesday. The actions will double Johnson & Johnson's capacity to produce and finish vaccine doses.

The announcement came less than 72 hours after the Food and Drug Administration granted emergency use authorization for J&J's single-dose vaccine. The shot proved 72% effective in the U.S. against moderate to severe COVID-19 infections and 100% effective against hospitalization and death. As of Tuesday, Americans started receiving the J&J shot, with 4 million doses expected to be delivered nationwide this week.

The Merck-J&J partnership shaved about two months off the Biden administration's timeline for securing vaccine supply. After taking office, Biden learned Johnson & Johnson was behind on manufacturing and would not be able to fulfill its promise to deliver 100 million shots by June.

Not knowing if J&J would get the green light from the FDA or be able to ramp up production, President Biden projected last month that it could take until July to get enough vaccine for every American.

"We are not in a habit of overpromising," Slavitt said Wednesday. "This is truly a story where there are no bad guys; there are only good actors here. Everybody got together and found ways to bring forward the timeline so we can get Americans fully vaccinated."

In a statement Tuesday, Johnson & Johnson said the arrangement with Merck would allow the company to exceed previous goals and "supply beyond our current commitments." J&J has also pledged to supply 500 million doses to COVAX, the global vaccine distribution program.

According to Michael Greenberger, founder and director of the University of Maryland Center for Health and Homeland Security, the pharmaceutical partnership shows the power of the Defense Production Act.

"You can see by the fact that they got this agreement and now Biden is saying everybody who needs a vaccination can get one by the end of May, this really opens a tremendous potential roadblock for the distribution of these vaccines," Greenberger said.

Passed during the Korean War and updated several times in recent decades, the Defense Production Act allows the federal government to secure priority contracts for scarce national security goods up and down the supply chain. The government can also incentivize manufacturers by providing loan guarantees, grants or purchase commitments for a final product or constituent parts, like plant equipment or biologic materials.

The DPA protects companies against negative action from other customers whose orders may be disrupted in favor of priority government contracts. In this case, it also shields the companies involved from anticompetitive actions that would otherwise arise from the teaming up of two pharma giants.

Combining two large competitors to produce a single product is an unusual use of the Defense Production Act, Greenberger said, but completely authorized under the broad scope of the statute.

"It's really just a quarterbacking of the private sector to ensure that objectives are fulfilled," he explained. "Frankly, without this kind of advanced intervention, this would be a mess."

President Biden has used the Defense Production Act several times in his first six weeks in office. In early February, Biden invoked the act to provide manufacturing support to Pfizer and Moderna so they could accelerate vaccine production. As a result, the companies announced they would deliver 300 million doses each of their vaccines by the end of July. The White House claimed the previous timeframe for fulfillment was September.

One of Biden's first acts as president was to sign an executive order invoking the Cold War-era law to shore up pandemic response supplies, including vaccines, syringes, vials and personal protective equipment. Biden has also used the DPA to force rapid production of at-home point of care tests and shore up supplies of raw materials to produce billions of nitrile gloves domestically.

The approach is different from his predecessor. President Donald Trump first invoked the Defense Production Act in March 2020 but his administration used the authorities in a "sporadic and relatively narrow" manner, according to the nonpartisan Congressional Research Service.

The Government Accountability Office documented a total of 43 agreements signed under DPA authorities, including contracts for ventilators, vaccine supplies and production agreements for PPE, swabs and diagnostic supplies.

On Tuesday, a New York Times reporter pressed the White House about whether the Trump administration deserved credit for initiating discussions between Johnson & Johnson and Merck. The Times broke a story about the possible vaccine partnership Jan. 21. At the time, J&J said it could take until the end of the year to convert Merck's facilities.

White House press secretary Jen Psaki responded that "there’s a difference between conversations and it moving forward, and the use of the Defense Production Act, which is something this president, and not the prior president, committed to invoking."

Members of the Biden administration have criticized the Trump administration for its vaccine program, saying they inherited a "mess" and that the former president had not secured enough vaccine supply or developed a real plan to vaccinate all Americans.