By Marisa Taylor

WASHINGTON (Reuters] – While the Trump Administration debated whether or not to declare COVID-19 a National Emergency, a less-known U.S. Health Office issued a public appeal to Big Pharma.

Biomedical Advanced research and development Authority invited pharmaceutical and medical devices companies to produce a large number of vital COVID supplies.

The authority, known as BARDA (a Department of Health and Human Services program), sought products, vaccines and testing devices. BARDA was created to aid companies with medical products that can be used to combat public health issues. In its request for proposals, it stated clearly it needed to make sure the product would only be manufactured at U.S. facilities capable of meeting Food and Drug Administration quality standards.

Reuters examined FDA records, and dozens federal contracts that HHS issued under its $60 billion COVID program. The majority of the 50 selected companies to produce and develop supplies in America did not comply with those standards.

Reuters found that less than 20% were experienced producers with a clean FDA record in their U.S. facilities. Reuters discovered that four of the five had never been to America and were either newcomers or experienced in domestic manufacturing.

“These are red flags,” said Peter Lurie, a former FDA associate commissioner who is now president of the Center for Science in the Public Interest. “The government ought to be able to find companies in this country that aren’t tainted by previous poor performance.”

HHS, which oversees both the FDA and BARDA, said it takes “our responsibility as stewards of tax dollars very seriously,” and that it has an “outstanding” record of conducting contract due diligence.

Texas-based Luminex (NASDAQ:), a unit of Italy’s DiaSorin SpA, is one example of a company recruited to the COVID fight while under FDA scrutiny. FDA records indicate that the FDA detected serious manufacturing problems in its Austin and Northbrook plants in February 2020.

BARDA records indicate that the company received the first five COVID-19 COVID-19 contracts, totaling nearly $19million, for the production of new Austin-based tests. Luminex said the government contracts helped it address a vital pandemic need and that the problems didn’t impact its COVID tests.

Other companies recently had product recalls that were designated as “Class 1” by the FDA, signaling a serious risk to health or even death.

One was Smiths Medical, a unit of Britain’s Smiths Group (OTC:) Plc, awarded a $20 million contract from BARDA in July 2020 to expand its U.S. plant in New Hampshire to produce syringes. Smiths Medical issued 20 recalls in the past, two of which were Class 1 recalls.

Smiths Medical indicated that they take immediate action when a problem is detected. “While accelerating our operations to produce this critical equipment, safety and quality have remained our top priority,” the company said.

The FDA found “objectionable conditions” at three U.S. plants operated by contract drugmaker Catalent (NYSE:) Inc in 2018 and 2019 but allowed the company to address them without the agency taking action. The FDA also cited an Indiana vaccination facility. The same plant was later contracted to produce COVID-19 shots for Johnson & Johnson (NYSE:) and Moderna (NASDAQ:) Inc.

Catalent said it “takes these observations very seriously and all observations are addressed.” The company said it is on track to deliver over one billion COVID vaccine doses globally by year’s end.

Manufacturing problems persist since COVID contract award. Reuters has found at least 21 companies that have issued product recalls regarding COVID supplies. They also received bad inspection results by the FDA in plants they planned to grow manufacturing for the government contract. There have been no patient deaths or injuries, but the manufacturing issues delayed vaccines and treatment and affected diagnostic testing.

Reuters reported May that Eli Lilly and Co (NYSE:) delayed production of the COVID treatment because there were problems at the manufacturing plant. HHS then agreed to pay $1.2 million. Separately, Emergent BioSolutions Inc’s $628 million government contract was canceled in November after the company struggled to manufacture COVID vaccines.

STAY DROP IN INSPECTIONS

While FDA domestic inspections dropped precipitously, COVID contracting went ahead under ex-President Donald Trump. Biden’s administration stated its plans to invest billions more in expanding America’s manufacturing base for COVID vaccine production.

It is not clear how the pandemic-era manufacturing process is being assessed. Leading into the pandemic, FDA inspections of U.S. plants producing prescription medicines and medical devices had dropped almost 25% between 2011 and 2019, FDA inspection data show; the numbers don’t include pending inspection reports or inspections prior to a product approval. COVID restrictions caused domestic inspections to drop by almost 64% and nearly 80% respectively in 2020, records indicate.

“As a country we need people to trust the quality of our vaccines, medical devices and medicines,” said Madris Kinard, a former FDA public health analyst. “But the state of affairs when it comes to oversight of any of these companies right now is really worrisome.”

HHS declined to answer questions about specific COVID suppliers’ compliance or performance. The department wouldn’t make its experts available for interviews. BARDA, an office of HHS, said it couldn’t comment without agency approval.

The FDA said it “cannot comment” on contract decisions made by BARDA, as the agency said it generally did not participate in discussions about such contracts in order “to avoid any appearance that procurement or investment considerations may influence the FDA’s regulatory decision-making.”

FDA stated that the decline in domestic inspections is partly due to a 2012 law change which allowed it prioritize facilities on the basis of risk. The FDA was not required to inspect U.S. facilities within a certain time frame and can now focus its inspections on countries with higher regulatory issues, such as plants from abroad. The FDA said the numbers don’t reflect other ways it monitors companies for manufacturing problems and that it has begun to increase domestic inspections.

“We try to prioritize surveillance inspections by risk,” FDA Acting Commissioner Janet Woodcock told Reuters. “We don’t inspect a plant every time a new product is added. We may have recent inspection data that showed everything was ok, we may have data from another regulatory authority, we may have done a remote assessment.”

Federal agencies can sometimes work in isolation. In response to Reuters’ questions, HHS said BARDA considers publicly available information about a manufacturer’s track record under federal procurement regulations, but that nonpublic interactions between a company and the FDA are considered trade secrets.

“Companies’ historic interactions with the FDA are considered commercial confidential and since these activities were conducted prior to U.S. government funding, we can encourage but cannot require the companies to provide those previous interactions,” HHS said. This information must be shared with HHS after the award of a contract, as long it is relevant to actual products.

Using the Freedom of Information Act, Reuters asked HHS for any records related to BARDA’s interactions with the FDA or performance assessments before or after contract awards. HHS denied that any records had been found.

“If they don’t have records,” said former FDA official Kinard, “then how can they claim they did any performance assessments? Did they even talk to the FDA?”

TINY OFFICE, TALL TASK

At its inception, BARDA was set up not as an official agency, but as a program overseen by HHS’s Assistant Secretary for Preparedness and Response (ASPR).

BARDA, the ASPR office with a budget in excess of $3 billion, works together to encourage research and development for medical supplies. They aim to “reduce the time and cost,” in ASPR’s words, of developing products by funding and helping U.S. biomedical companies navigate what the office called the Valley of Death, or the late stage of development where products have “languished or failed” before regulatory approval.

When the pandemic hit, BARDA’s plea for assistance from manufacturers was met with applications by hundreds of companies, many of which had little experience interacting with the FDA, said two government officials involved in the process who spoke on condition of anonymity.

The two HHS officials stated that HHS specialists rushed to learn about the newer companies and the cold-called businesses they have worked with in the past to augment the applicant pool. BARDA was given the task of selecting COVID-producing manufacturers within the United States. HHS had so many ideas that it requested assistance from the Pentagon.

The controversial process of contracting became very quickly.

BARDA specialists were reviewing proposals from companies for COVID products that had been submitted via its website. A second channel, set up by Trump’s ASPR appointee Robert Kadlec and run by his office, was also researching potential suppliers.

In April 2020, Kadlec moved to reassign BARDA’s director, Rick Bright, a veteran government health official. Bright responded with a whistleblower lawsuit that claimed Kadlec ignored FDA safety concerns. Bright was then fired to hide the fact that he had steered contracts for political allies. Bright has now settled the matter with the government and declined to comment.

Kadlec denies that Bright was targeted. However, he stated that Bright was not targeted by Kadlec.

“What was intended was that the government would help create these manufacturing capabilities that would be robust and regularly tested,” Kadlec told Reuters. “They were not robust. They weren’t invested in, and were never tested. It was a shit show.”

Kadlec confirmed that Trump’s White House intervened in COVID-19 contract negotiations. “I would suggest to you that any president facing re-election in his last year of his first term who also has a major public health crisis would politicize the process,” he said. “Obviously the Trump persona was a hell of a lot different than other presidents, and that magnified the problem.”

According to him, the White House officials negotiated a ventilator contract for $647million with Philips NV. The House subcommittee determined that Philips NV had overcharged Congress by hundreds of million of dollars. According to the inquiry, Jared Kushner (White House advisor and Trump’s son-in law) and Peter Navarro (White House trade adviser) were involved in negotiations for this COVID contract.

House also found that HHS contract executives were left out of the talks at the end. “By then, the generous terms of the contract had already been agreed to by the White House,” the report said.

Navarro stated that he played a part in the ventilator discussion during an interview. Following resistance by the FDA, Navarro stated that he participated in COVID supply meetings. However, he denied any responsibility. Instead, he blamed Philips who denied charging too much to the government.

Kushner representatives declined to comment, and Trump spokespersons did not answer questions. Trump ordered Navarro, in November 2017, to resist a subpoena by a House separate committee looking into the COVID-19 response.

The manufacturing issues that the FDA claimed it discovered at the Philips ventilator factory in California were lost in all the scandal. Before the Trump administration began negotiations, three months ago the FDA declared the violations serious enough for the FDA to issue an order to correct them. The agency also cited Philips for failing to give notice that another ventilator model manufactured at the plant could “cause or contribute to a death or serious injury,” according to the FDA’s database.

HHS said it took delivery of over 12,000 Philips ventilators and then cancelled the rest of the contract in September 2020. It did this shortly after House findings.

This past summer, Philips issued a Class 1 recall of 15 million sleep devices and ventilators amid concern a polyester-based polyurethane foam could degrade “and be ingested or inhaled by the user.” The company also recalled 22,300 ventilators in the U.S. government’s stockpile due to problems with pressure levels when the devices were used on infants and children; Philips said the recalled products, which included all 12,000 ventilators sold to the government for COVID, are being corrected with a software update.

“When issues arise, we work quickly to take action and focus on the needs of our patients and the clinicians that serve them,” said Philips spokesman Steve Klink.

CONTRACTS AND INSPECTIONS

At the same time that they were signing contracts with BARDA, many companies had been negotiating with FDA about manufacturing problems.

The FDA, for instance, finished inspecting Luminex’s Austin and Northbrook plants on Valentine’s Day 2020 and found serious manufacturing problems, according to a warning letter the agency issued to the company four months later. The FDA designated the problems as “Official Action Indicated,” a recommendation for regulatory action.

The FDA also said in its warning letter that a Luminex testing device, known as Verigene, failed to detect a patient’s superbug infection. The patient did not receive appropriate treatment and died two days later – possibly because of the test failure – the warning letter states. The FDA said Luminex did not properly inform the agency that it had removed the device from the market after the incident, and that such violations could impact a company’s ability to receive federal dollars.

Luminex stated to Reuters that it had informed the FDA of the situation and was in compliance with any additional FDA directives.

Luminex saw new opportunities when the pandemic sprang forth. Luminex obtained FDA emergency authorization to use its COVID-19 tests kits in March 2020. The company pledged as a consequence to greatly expand manufacturing.

Luminex issued Class 2 recalls in 2020 and 2021 for Verigene’s diagnostics system. These were due to possible errors as well. Luminex was awarded a $11.3 million contract by the Biden administration in February. This is its largest ever contract.

In a statement, Luminex said BARDA’s support helped it boost manufacturing capacity by 300% during the pandemic and quickly produce “high-quality tests to meet the expanding need.”

Others who were awarded contracts did not have any experience in operating a U.S. facility.

Under the Trump administration, Ellume, a diagnostics company secured $30 million in October 2020 to create at-home COVID testing that was made in Australia. Ellume received $232M more from the Biden Administration in February. The company stated that it will use this money to construct its first U.S. facility for COVID manufacturing.

In October 2021, the FDA issued a safety warning on certain lots of Ellume’s COVID-19 home test because of the risk of false positive results. The problems involved a “manufacturing issue,” the FDA said. In November, the agency designated the company’s voluntary recall as a Class 1, with 2 million affected tests.

“The FDA is not aware of any confirmed serious injuries or deaths related to the false positive results with the affected Ellume COVID-19 Home Tests at this time,” the FDA said in its safety warning. It stated that none of the tests it currently has on shelves were affected by the recall. In the United States, it is anticipated that 15 million COVID testing will be performed per month.

Ellume told Reuters it “remains steadfast in its commitment to deliver home tests to communities across the United States.”

Other businesses also had problems following the award of contracts.

Smiths Medical issued two major recalls on products after it was granted its COVID-19 contract. The first involved insulin syringes which could fail to deliver enough or too much insulin. Another involved an aluminum-leaching device in patients who were being treated for hypothermia.

Smiths said the recalled syringes used for insulin were manufactured in the company’s New Hampshire plant but not associated with COVID-19 vaccines. “The COVID-19 pandemic created unprecedented staffing and supply chain constraints,” the company said. “The incentive that BARDA provided allowed for expansion of our domestic production.”

One company decided to cut its losses early when it became clear it couldn’t deliver. John L. Warden Jr. is the CEO of Hememics Biotechnologies. He said that the company was unable to develop their COVID diagnostic devices in time for Trump’s deadline.

“BARDA was doing its best but it was getting daily calls from the White House. They were under enormous pressure,” Warden said. “We were all told that our deadline was November 2020, and the fact that it was around the election was not a coincidence.”

BARDA offered Hememics $600,000. BARDA offered $600,000 to Hememics for its development. It took $25,000 and then turned down the remaining funds so it had more time to submit for FDA emergency authorization.

“We were frankly too inexperienced at that point,” Warden said. “We just needed more time.”