Schneier on Security

somecare • November 19, 2006 9:02 PM

Bioterrorism defense program stalls in U.S.

The last of the anthrax-laced letters was still making its way through the mail in late 2001 when top Bush administration officials reached an obvious conclusion: The nation desperately needed to expand its medical stockpile to prepare for another biological attack.

The result was Project BioShield, a $5.6 billion effort to exploit the country's top medical and scientific brains and fill an emergency medical cabinet with new drugs and vaccines for a host of threats.

"We will rally the great promise of American science and innovation to confront the greatest danger of our time," President George W. Bush said in starting the program.

But the project, critics say, has largely failed to deliver.

So far, only a fraction of the anticipated remedies are available.

Drug companies have waited months, if not years, for government agencies to decide which treatments they want and in what quantities.

Unable to attract large pharmaceutical corporations to join the endeavor, the government is instead relying on small start-up companies that often have no proven track record.

The troubles have been most acute with the highest priority of all: a $900 million push to add a new anthrax vaccine to the stockpile.

What had begun as an effort to test and manufacture a safer, faster-acting vaccine has turned into an ugly battle between two biotech businesses.

Each has hired Washington lobbyists to attack its rival's product and try to win over lawmakers and administration officials. Delivery of the new vaccine is far behind schedule, and a dispute between the Department of Health and Human Services and VaxGen, the company chosen to make the vaccine, could even end the deal. The only doses that have been added to the stockpile are of a decades-old vaccine that has generated complaints of serious side effects.

From the start, officials in Washington knew that Project BioShield would be a risky venture - for the government, the companies involved and even ordinary Americans, who might be asked to take relatively untested treatments in an emergency.

Officials hoped $5.6 billion in federal money would entice companies to develop new drugs and vaccines for anthrax, smallpox, botulism, Ebola and other deadly diseases.

Because of the perceived urgency of the threat, the project suspends some traditional standards. It allows new vaccines or drugs to be used in emergencies before completing the lengthy Food and Drug Administration approval process. Full testing on humans is also not required because it is too dangerous.

For their part, the companies have to take all the risks of developing and manufacturing new products; they get paid only upon delivery.

At the top of the government's threat list was anthrax, which killed five people and created panic after letters filled with the powder were sent through the mail. Despite an intense FBI investigation, no one has been charged in the attacks, which affected a tabloid publication in Florida, a New York television network and several lawmakers' offices on Capitol Hill.

After the letter attacks, the health agency bought enough antibiotics for 41 million Americans, but the recommended treatment augments those drugs with a vaccine. The government already had an anthrax vaccine to inoculate military personnel, but it involved six shots over 18 months, an unusually long course of treatment. While the FDA says it is safe and effective, it can have nasty side effects.

There have been reports of six deaths and serious complications, including lymphoma and multiple sclerosis. The military stopped mandatory vaccinations in 2004 after some soldiers balked and filed lawsuits.

The first disappointment with the new anthrax vaccine occurred in early 2004 when bids to test and manufacture it came in. None were from big pharmaceutical companies; they considered the effort unappealing because the potential market was relatively small and profits limited. They were also concerned about liability if someone became ill or died after being inoculated. Project BioShield did not offer immunity from lawsuits.

That left a handful of companies in the running, relatively small outfits with limited experience. VaxGen, for example, had never taken a drug to market. Its first major product, an AIDS vaccine, flopped in 2003. The company also had financial troubles; it was barred from Nasdaq in 2004 after managers uncovered accounting errors.

The situation was hardly ideal, federal health officials acknowledged.

Instead of hedging its bets by dividing the work among several vendors, the Department of Health and Human Services awarded the entire $887 million order to VaxGen. It was to produce 75 million doses, enough to inoculate 25 million Americans.

That decision fed doubts about Project BioShield in Congress and drew loud complaints that would grow into bitter opposition from Emergent BioSolutions, the maker of the old vaccine.

The company did not submit a bid for the new vaccine. Instead, it had been trying for months to persuade the federal government to buy hundreds of millions of dollars of the existing vaccine, its only major product. When executives learned that one competitor was getting all the work, they knew the company's future was in peril.

Soon, though, they found an important weapon for a campaign to recapture business.

VaxGen's vaccine was based on a modified version of the old one; Army scientists had genetically engineered it in hopes of making it safer and faster, with three shots instead of six. But VaxGen tests in early 2005 showed that an ingredient the company added to the vaccine caused it to decompose. It would not survive long in the emergency stockpile.

VaxGen officials played down the setback, which delayed delivery to 2007 from 2006, but Emergent officials capitalized on VaxGen's stumble. They had already gotten health agency officials to agree to buy 5 million doses of their vaccine to add to the stockpile. Now they began pushing for a much larger deal and hired lobbyists.

Fearful of losing the public relations battle, VaxGen ramped up its own lobbying effort, but it was outmanned and put on the defensive by Emergent.

Under pressure from Congress, Health and Human Services agreed in May to double its order of the vaccine to 10 million doses, worth $243 million. The next day, health officials demanded what VaxGen says are additional safety and efficacy tests that will further delay delivery by a year or two. Threatening to sue, VaxGen is seeking upfront payments from the health department or other concessions. If no agreement is reached, company officials say, the entire deal could collapse.

Health officials said they are determined to see the anthrax contract - and other BioShield endeavors - through. In two weeks, agency officials will meet with industry representatives to discuss a new strategy for the program