Question Period Note: PSPC Contract Confidentiality

On November 2, 2023, the National Post published an article that raised questions about the transparency of contract costs related to an item in the Public Health Agency of Canada’s 2022-2023 public accounts. After PSPC obtained permission from the company to release commercial confidential information, the Minister of Health confirmed on November 4, 2023, that a $150 million loss as reported was for a non-refundable advance payment made to Medicago as per the COVID-19 vaccine advance purchase agreement.

On December 8, 2023, it was reported that the Government of Canada reached an agreement with Mitsubishi Chemical Group (MCG) regarding Medicago’s obligations to the Strategic Innovation Fund. The agreement between the Government of Canada and MCG recovers a $40 million payment owed to Canada in relation to the construction of the biomanufacturing facility. The $40 million repayment is not related to the COVID-19 advance purchase agreement.

Notes:

• All questions regarding the regulatory review of vaccines should be directed to Health Canada
• All vaccine and therapeutic health-related questions and questions about allocation and distribution should be directed to Public Health Agency of Canada
• All questions regarding the domestic manufacturing of vaccines and Strategic Innovation Funding investments should be directed to Innovation, Science and Economic Development Canada
• All questions regarding the regulatory review of vaccines should be directed to Health Canada and Public Health Agency of Canada
• All questions regarding Medicago’s organization and the decision to cease Medicago operations in Canada should be directed to the Mitsubishi Chemical Group
• All questions regarding vaccine expiration should be directed to the Public Health Agency of Canada

• The Government of Canada is committed to transparency and accountability, and we strive to publicly disclose contracting information to the fullest extent possible that is permitted by contract and law
  • As a common service provider, Public Services and Procurement Canada respects all contract confidentiality and realizes the importance of confidentiality in terms of business relationships and Canada’s reputation in future contracting with trusted partners
  • In December 2022, the Auditor General noted that Canada’s vaccine procurement strategy was undertaken with the goal of protecting the health and safety of Canadians at a time of a competitive global race to obtain COVID-19 vaccines in 2020-21 and considerable uncertainty as to which, if any, vaccine candidates, including new technologies, would ultimately be safe, effective or available, and when

If pressed on Medicago contract:

• To ensure transparency, we have consulted the company and we can confirm this payment is related to the COVID-19 vaccine Advance Purchase Agreement with Medicago
• The Advance Purchase Agreement was terminated by mutual consent and, with the exception of confidentiality provisions, Medicago was released of its obligations
• Medicago met all the terms for the payment permitted by contract and law
• The Government can confirm that the advance payment was spent appropriately and therefore could not be recovered after the termination of the contract

If pressed on the details of advance purchase agreements:

• We continue to seek opportunities to be as transparent as possible about our procurements in support of Canada’s COVID-19 response, while respecting confidentiality agreements and protecting our negotiating position
• Officials from my department participated in 2 in camera sessions with the House Standing Committee on Public Accounts in May 2023 and I appreciate the measures that that committee put in place to ensure that we continue to respect our obligations to the companies and protect their commercial confidential information
• Every contract is different as they reflect specific requests and requirements put forth by the supplier
• Public Services and Procurement Canada has worked with its vaccine suppliers to secure their agreement on publicly releasable versions of Canada’s vaccine contracts
• These documents fully respect the Access to Information Act, therefore information that is commercially confidential or that could impact Canada’s ability to negotiate future contracts has been protected
• Public Services and Procurement Canada will continue to openly communicate with Canadians about the work we are doing to support Canada’s pandemic response

If pressed on advance payments:

• The advance purchase agreements with the COVID-19 vaccine manufacturers required initial investments to support vaccine research and development, testing and at risk-manufacturing
• These were novel vaccines and companies needed advance funding for research, development and clinical trials
• While not fully recoverable, these payments facilitated Canada’s earliest possible place in production runs

If pressed on the details related to the strategic innovation fund agreement with Medicago:

• Canada is proud to continue supporting our domestic manufacturers and strengthening the domestic job market, including through Aramis, the new Canadian company based in Québec City under the leadership of former Medicago employees

The Auditor General published an audit report in December 2022 on COVID-19 vaccines.

The audit highlighted that actions performed by Public Services and Procurement Canada and the Public Health Agency ensured efficient procurement and sufficient COVID-19 doses obtained to support Canada’s COVID-19 pandemic response.

Moreover, in April 2023, the Government of Canada shared unredacted copies of COVID-19 vaccine contracts, with the Parliamentary Standing Committee on Public Accounts on its study of the Auditor General’s report. Officials from Public Services and Procurement Canada appeared before the committee numerous times to respond to questions. To respect confidentiality terms in the contracts, this information was kept confidential by the committee.

In October 2020, the government announced an investment of up to $173 million in Quebec City-based Medicago through the Strategic Innovation Fund managed by Innovation, Science and Economic Development Canada to support Canada’s response to COVID-19 and future preparedness. This contribution complemented private sector investment, primarily from Mitsubishi Tanabe, for a total project of $428 million.

The project was to advance Medicago’s virus-like particle vaccine, developed on the company’s unique plant-based production platform, through clinical trials. It was also to establish a large-scale vaccine and antibody production facility to increase Canada’s domestic biomanufacturing capacity.

The agreement reported on December 8, 2023 includes a $40 million payment as well as the transfer of key Medicago research and development assets, intellectual property and equipment from Medicago to Aramis Biotechnologies (“Aramis”). A separate agreement has been reached between the two companies to secure Aramis’s ownership of the assets.

• Public Services and Procurement Canada signed an advance purchase agreement with Medicago for the supply of 20 million firm doses, with options for up to an additional 56 million doses of its COVID-19 vaccine
  • Medicago’s COVIFENZ® was approved in Canada in February 2022
  • The contract was terminated by mutual consent on June 28, 2023
  • No doses were delivered to Canada