COVID-19 vaccines – bringing hope to many, but presenting challenges to forwarders

In early December 2020, the UK government announced with considerable fanfare its approval of Pfizer/BioNTech’s COVID-19 vaccine. Around 40 million doses were ordered, and the UK’s mass vaccination programme commenced in December 2020, with the US, Canada, Bahrain and Saudi Arabia close behind. On 30 December 2020, the Oxford AstraZeneca vaccine received UK approval with the first doses administered in early January.

The COVID-19 vaccines – either approved or waiting in the wings - have some pretty demanding requirements in terms of logistics. The Pfizer/BioNTech vaccine has to be stored and carried at a temperature of around -70C. It can be stored for a short time in a fridge (about five days) and then has to be used within six hours. It is also affected by the number of times that it is taken out of the fridge and exposed to ambient temperature. There is, therefore, a considerable amount of information which is needed throughout the supply chain of this product before it can be used on patients.

The Oxford AstraZeneca vaccine is rather less demanding in terms of its temperature requirements in transit and storage. However, as with all pharma products, the conditions under which it is carried and stored have to be carefully managed and recorded.

This gives rise to some very interesting issues for the logistics companies involved in storing and transporting these products. The nature of the product and the publicity surrounding its distribution will highlight any issues in the supply chain.

Temperature maintenance – a contractual issue

The demanding requirements of temperature control is not a new situation for many pharma products.

Temperature can be controlled using active or passive methods. Typically, passive temperature control tends to be cheaper than active temperature control. However, passive temperature control has limitations. It is particularly susceptible to delays in transit as it tends to have a very limited period of effectiveness. It is also limited in terms of the control which can be exercised over the temperature of the cargo.

Freight forwarders often offer passive control and suggest that this will be sufficient to maintain the temperature. Even if the forwarder does not positively assert that such a method of maintaining the temperature is adequate, they are often unwilling to say that it is not sufficient.

When faced with such an offer and the (often substantially) lower price, it is, perhaps, not surprising that the pharma companies often choose the cheaper option.

Even where forwarders do have reservations about the effectiveness of passive temperature control, they often choose somewhat unfortunate phrases with which to modify or qualify their obligations; for example, clausing waybills to suggest that they will use “best endeavours” to maintain the temperature or that they will use “all reasonable efforts” to keep the cargo at the required temperature.

As a matter of English law, the parties are likely to be held to such bold statements and, rather than limit or qualify their obligations, forwarders may substantially expand their duties towards the goods, and may find themselves under an obligation to use (and perhaps fund) alternative methods of maintaining the temperature. This can be an expensive lesson!

If a forwarder considers that the chosen method of maintaining the temperature is not sufficient, it is far better (from a legal perspective) to be up-front about this at the outset. If the customer is given a range of services with a range of prices, the limitations behind these services should be set out clearly. Forwarders are expected to know their trade and to advise their customers on methods of shipping and transporting goods.

Monitoring temperature

Of equal importance is monitoring and recording the temperature. This is a requirement of the Good Distribution Practices (GDP) and if temperature records are not maintained, the product cannot be released for use. However, the issue of temperature recording, the methods used and the accuracy of such records is often at the centre of disputes concerning transportation and warehousing of goods.

If the forwarder is to rely on the customer’s temperature records, it is important to:

Assess what records are to be kept
Assess how the records are to be monitored
Ensure that the equipment is properly maintained, installed and set.

The positioning of the temperature monitoring equipment is also important. Many products are kept within insulated equipment or packaging. When being moved between the warehouse and the vehicle there is likely to be a short period when the goods are exposed to ambient temperatures. If the temperature monitoring equipment is placed on the outside the packaging, it will show fluctuations which the cargo itself may not experience.

If the pharma company cannot rely on the information it has about the cargo, it cannot comply with the GDP and cannot release the cargo for distribution. Nevertheless, the pharma company may have difficulty in demonstrating that the cargo has suffered actual physical damage. This can make claims under insurance policies or claims against carriers very difficult.

Quantum issues

As with any pharma product which has just been produced and is unique in its market, if there is a loss of product, it can be very difficult to assess the value. The sales price, may not reflect the true value of the product.

Some elements can inflate the price , such as R&D costs which are often written into early sales of such products.
Discount for bulk sales to national health or charitable organisations may be offered, so the invoice value may not represent the loss.
If surplus vaccine is to be shipped at little or no cost to less developed countries, the loss suffered due to loss or damage to the product is unlikely to be accurately reflected by any invoice value.

If a carrier fails to deliver a consignment on time or causes damage to a consignment, should its liability be tied to the impact this has on other consignments? For example, if patients miss their second jab (as required by both vaccines currently approved by the UK Government) and have to start the process again, should the carrier be responsible for the cost of the earlier, wasted dose? This extended liability is all the more debateable where the interval between jabs may be based on a lack of research as opposed to any certainty about the qualities of the vaccine.

Comment

The news of a breakthrough with a vaccine has been widely anticipated and has received a great deal of attention. Developing the vaccine is, however, only one part of that process. The vaccine now has to be delivered and distributed - and it can be expected that this process will be equally scrutinised.

The vaccines being released onto the market have some pretty demanding requirements - and these may arise due to the lack of research into the parameters rather than any particular sensitivities of the cargo. There are also some interesting quantum issues arising in relation to these products.

These are not new issues - pharma products often give rise to such arguments when loss or damage occurs. Frequently, forwarders will address such issues with their customers in the contract terms, closely defining the quantum of loss and circumstances in which cargo is considered to be lost. However, such gentlemanly understandings often do not extend to the subcontractors then used by the forwarders. That being the case, these disputes are often explored further down the contractual chain when the forwarder is trying to pass on its liability to subcontractors or subcontractors of subcontractors…

Read other items in London Market Brief - February 2021

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