First Came Bonuses, Then Layoffs; No Early Vax for Santa; Inside Oxford U’s Vax Deal

Welcome to the latest edition of Investigative Roundup, highlighting some of the best investigative reporting on healthcare each week.

Hospital Execs Get Bonuses Amid Layoffs

Executives at hospitals in southeast Michigan received bonuses in March, right before their health systems laid off thousands of workers and took millions in federal COVID-19 bailout funds, according to the Detroit Free Press.

Both Beaumont Health and Henry Ford Health System paid out the bonuses in early and mid-March, then in April pulled in more than $750 million in federal dollars combined: $377 million for Beaumont and $375 million for Henry Ford.

While the bonus amounts were not disclosed, they will be available in tax documents later this year, the news outlet reported. In 2018, Beaumont paid out more than $12 million in bonuses and Henry Ford spent more than $14 million.

Beaumont laid off about 2,700 employees during the pandemic; about 2,100 are back at work and 300 remain furloughed. The rest don’t want to return to work during the pandemic, a hospital representative said.

Henry Ford furloughed 2,800 employees, and says it has brought back 92% of them.

“It’s just reprehensible if they’re giving themselves bonuses with the knowledge they’re going to ask for a bailout from the taxpayers and relief from taxpayers and have to lay off people,” Rep. Andy Levin (D) told the Free Press. “If they gave themselves big bonuses before asking for federal aid and furloughing lots of people, it’s not acceptable.”

One Beaumont lab worker who got just $500 in hazard pay during the pandemic said that, if the executives had not taken their bonuses, “a few people would still have their jobs.”

Beaumont recently had been under fire for a proposed merger with Advocate Aurora, which was called off earlier this month.

No Early Vaccine for Santa

Actors who play Santa Claus won’t get early access to a COVID-19 vaccine, which had been promised as part of a $250-million ad campaign from the Department of Health and Human Services that’s now scrapped, the Wall Street Journal reports.

As part of the campaign — which was run by Michael Caputo, the HHS communications director who has since taken medical leave — Santa performers were going to promote the benefits of a COVID-19 vaccine in exchange for priority in getting vaccinated themselves, alongside healthcare workers and first responders.

Ric Erwin, chairman of the Fraternal Order of Real Bearded Santas, called the news “extremely disappointing,” adding that it “was our greatest hope for Christmas 2020, and now it looks like it won’t happen.”

Erwin gave the Journal audio recordings of calls between him and Caputo: “If you and your colleagues are not essential workers, I don’t know what is,” Caputo told Erwin.

“I cannot wait to tell the president,” Caputo said. “He’s going to love this.”

Caputo said he wanted the Santas to appear at rollout events in 35 cities.

The rest of the $250-million ad campaign is under review by HHS officials. The plan has been losing steam as celebrities who were initially targeted for participation are now declining or withdrawing.

Inside the Oxford Vaccine Deal

The Wall Street Journal has an inside look at how AstraZeneca came to be the chosen partner for Oxford University’s COVID-19 vaccine.

Back in the early 2000s, Merck started working on vaccine technology using a chimpanzee adenovirus, but dropped it figuring such vaccines would struggle to win FDA approval. Two scientists at Oxford’s Jenner Institute, Sarah Gilbert and Adrian Hill, continued the work, developing their own version of the technology, patenting it, and founding a company with Oxford’s support, called Vaccitech Ltd.

Together, Gilbert and Hill own 10% of Vaccitech, but the company’s biggest shareholder is Oxford Sciences Innovation Plc, a venture firm started by the university in 2015. OSI has pulled in nearly $800 million from investors ranging from hedge funds to Chinese conglomerates, according to the Journal.

When the pandemic hit, the Jenner Institute worked collaboratively with Vaccitech to boost their chances of building a successful vaccine. However, they knew they couldn’t produce or distribute a final product, so the university tapped geneticist Sir John Bell to negotiate the various interests and find an industry partner. Bell had served on Roche’s board for 18 years, making him an ideal candidate.

In late March, Bell started crafting a deal with Merck that gave Oxford a 1% royalty. Gilbert and Hill opposed the deal, in part because it wasn’t clear that Merck would supply poor countries, according to the Journal. There were also concerns that U.K. citizens wouldn’t get easy access to a vaccine developed by their own country if they were relying on a U.S. company.

Gilbert and Hill then called a London banker to explore more partnership options. In mid-April, they spoke with AstraZeneca executives, and Bell followed up with a call. While AstraZeneca wasn’t a key vaccine player, it was a global company, it was British, and it was willing to move quickly, according to the Journal.

AstraZeneca agreed to give Oxford $10 million up front and another $80 million in milestone payments, as well as a 6% royalty. It also promised to distribute the vaccine globally, and to provide vaccine at cost during the pandemic.

“The university didn’t enter this discussion with the idea of making a ton of money,” Bell told the Journal. But it didn’t want to be naive, either: “Let’s say [the vaccine] becomes a seasonal coronavirus vaccine, and it sells a billion dollars a year. For us to be sitting there and making no money looks pretty dumb.”