Anthrax Dispute Suggests Bioshield Woes
Pastor Dale Morgan
Oct 2, 1:20 AM EDT
*Anthrax Dispute Suggests Bioshield Woes
*
By PAUL ELIAS
AP Biotechnology Writer
SAN FRANCISCO (AP) -- By now, millions of anthrax vaccine shots
developed through cutting-edge genetic engineering were supposed to be
filling a new national stockpile of biodefense drugs. Instead, five
years after anthrax attacks left five dead, sickened 17 and panicked the
country, the nearly $1 billion contract awarded by the U.S. Department
of Health and Human Services to a tiny and struggling San Francisco Bay
Area biotechnology company is plagued with misfortune and delays.
Delivery has been put off until at least 2008 - and maybe later - while
the government and VaxGen Inc. trade barbs over who is at fault. The
dispute has further tarnished Project Bioshield, a government program
that has alienated many potential biodefense contractors.
"We have all come to understand that there is more complexity than it
originally appeared," said Thomas Inglesby, deputy director of the
University of Pittsburgh's Center for Biosecurity.
The anthrax attacks of 2001 prompted passage of Project Bioshield, which
promised to build national drug stockpiles to be used in case of a
bioterror attack.
The project was supposed to jump start a national security renaissance
among drug makers by guaranteeing contracts to develop drugs for
combatting potential bioweapons. But it has been greeted with skepticism
by many in the industry.
The anthrax project, the first and largest Bioshield contract, was to be
the crown jewel.
In November 2004, the $877.5 million contract was awarded to VaxGen to
genetically engineer a replacement for the current anthrax vaccine,
which requires six shots to be administered over 18 months. VaxGen's is
expected to require no more than three shots.
Since winning the contract, however, VaxGen has repeatedly stumbled,
starting with its disclosure it would miss the original deadline of
November 2005 by a year.
Even before winning the contract, the Brisbane-based company had a
checkered past highlighted by the 2003 flop of its experimental AIDS
vaccine, which failed to protect inoculated volunteers from getting
infected.
Since then, it was dropped from the Nasdaq Stock Market for failing to
file financial reports, its chief scientific officer left the company in
July, and its stock price hovers near $4.40 - at the low end of its
52-week range - as VaxGen and the government try to work out their
differences.
Then, in March, the government said it wouldn't pay VaxGen until the
company completed a costly and time-consuming human test to ensure the
vaccine was safe. The new requirement forced the company to sell its
stake in another biotechnology company for $79 million to stay afloat
and finance the new test.
"We don't get paid until we deliver product and we have to shoulder the
carrying cost," said VaxGen spokesman Lance Ignon. "The burden it puts
on our company is abundantly clear to Wall Street as shown by our stock
price."
For its part, VaxGen blames the government for the latest delays.
"The heart of the problem right now is the government's willingness to
change the goal line," Ignon said. "The government unilaterally, and
without compensation to VaxGen, changed the contract."
The government counters that the safety data was always required and
that it made minor changes that allowed VaxGen to deliver the vaccine
later than it had initially promised.
Last month, Sens. Joe Lieberman and Susan Collins called for a
congressional investigation of the VaxGen contract.
VaxGen's difficulties underscore the industry's disappointment with
Bioshield, which has done little but generate indifference among the big
pharmaceutical companies the government hoped to woo. Instead, drug
makers are snubbing the program because of liability and intellectual
property issues and confusion over what the government wants.
New legislation that would address many of the critics' concerns - such
as protecting drug makers from liability lawsuits - has been bottled up
in Congress for months and the prospect of a bill passing this year are
dimming.
Big pharmaceutical companies, which can spend upward of $1 billion
developing a single drug that can earn billions annually, are also
turned off by the relatively paltry $5.6 billion available under
Bioshield, analysts said.
Pharmaceutical Research and Manufacturers of America, the
Washington-based trade group that represents drug makers, wouldn't
comment on why its members have shunned Project Bioshield but said it
supports the program.
"PhRMA continues to work closely with the Congress and the
Administration to help ensure that America has the necessary tools to
help prepare for and respond to a possible bioterror attack," Ken
Johnson, the group's senior vice president, said in a statement.
Producing defensive measures has been largely left to small, financially
struggling companies such as the oft-troubled VaxGen.
Despite its laundry list of failures, HHS has defended VaxGen's
qualifications.
"The incentive is not there for the large pharmaceutical companies,"
said Noreen Hynes, director of research and development coordination in
the HHS office responsible for biodefense. "Biotech companies, for the
most part, are more inexperienced."
Since awarding the contract to VaxGen, HHS has doled out another $1
billion in contracts, including two this year worth a combined $505
million to the Canadian company Cangene Corp. for another anthrax
treatment, as well as a drug to treat botulism.
None of the other drug developers have stumbled as spectacularly as VaxGen.
"The fact that a company doesn't deliver is always disappointing," Hynes
said. But in vaccine and biological development, "delays are more the
rule than the exception."