Contributing Writer

Washington - The first day of the Biodefense Vaccines, Therapeutics and Diagnostics meeting, hosted by Infocast, ended as it began, with discussion of an uncertain partnership between the government and industry.

While the federal BioShield program has potential with a current proposal of $5.6 billion over eight years, there are areas in which the project falls short - and it has yet to be passed by the Senate. Under BioShield, the Department of Health and Human Services (HHS) would be the procuring authority, although priorities and actions would be set by multi-agency committees at various levels.

According to the meeting's keynote speaker, Philip Russell of HHS, the department was not an acquisition agency just two years ago but today has the goal of acquiring and stockpiling medical countermeasures to protect the U.S. population against bioterrorism.

Frank Rapoport, of McKenna, Long & Aldridge LLP, provided an estimate of the potential spending of the $5.6 billion. He suggested it would buy 75 million doses of a new recombinant vaccine at $30 to $40 per dose (enough to treat only 25 million people at three doses per person, a two city scenario), it would treat a few hundred thousand people with monoclonal antibodies at $5,000 each, and it would treat a few hundred thousand others with intravenous antibiotics at $2,000 to $5,000 apiece.

"This doesn't start to cover the countermeasure needs," Rapoport said. That sentiment was echoed by others, including John Vitko, of the Department of Homeland Security.

Project BioShield was announced Jan. 28, 2003, and includes $890 million in discretionary funds for HHS in fiscal year 2004 and $5.6 billion through 2013. That does not include additional funding given directly to the Department of Defense.

Projects under consideration for BioShield are a recombinant Protective Antigen (rPA) anthrax vaccine, development of anthrax therapeutics, a next-generation smallpox vaccine, antitoxins to botulinum neurotoxins, a plague vaccine and a botulism vaccine. Potential future candidates include Ebola-Marburg vaccine, Rift Valley fever vaccine, novel antibiotics and anti-infectives, polyclonal human anthrax and botulism antibodies, and a third-generation anthrax vaccine.

The National Institute of Allergy and Infectious Diseases (NIAID), a division of the National Institutes of Health (NIH), already has issued a request for proposals for large-scale manufacturing of the rPA anthrax vaccine, with a deadline of May 1.

HHS's Monique Mansoura said BioShield has three components in its current form: funding, new authorities for the NIH/NIAID and emergency-use authorization for vaccines and therapies in acts of terrorism, even if they have not been fully approved by the FDA.

All of that should be music to the ears of the biotechnology industry. Since Sept. 11, 2001, tenders to the vaccine industry have exceeded $1 billion, said Kim Bush, president of Baxter Healthcare Corp.'s Vaccine unit. Some companies, such as Acambis plc, Baxter, AlphaVax Inc., Cangene Corp., Avant Immunotherapeutics Inc. and others, have had research, development and/or supply contracts with the U.S. government.

But there are significant issues that make it a less-than-perfect union.

First, the "industry needs to be reassured that the market will be there for the long run," Bush said. "It takes a lot of capital to set up large-scale vaccine manufacture. We need to see acceptable returns - these projects are competing with others we are considering."

A few speakers cited distrust of the government stemming from the treatment of Bayer AG by HSS in its procurement of Cipro following the October 2001 anthrax attacks - some believe the government strong-armed the price down 75 percent, to below production costs. Bayer was left with the government-negotiated selling price of Cipro for all subsequent transactions.

"Why would a company want to be forced into losing money with each dose sold?" asked one speaker.

Nancy Saucier, of the National Venture Capital Association, put it another way. "Why do you invest in a black hole when you can invest in something with a much better return?" she said. "If we get more examples like Cipro, [venture capital] will walk away from this industry."

A second issue is liability. While protection from liability is afforded to vaccines and therapeutics used in a terrorist attack, the industry is being asked to develop countermeasures, including prophylactic treatment, which are not protected. For example, since the anthrax attacks in 2001 were not deemed a terrorist attack, there is no protection from lawsuits of Cipro users.

Also, it is difficult and costly for companies to work within government contracting and accounting rules - possibly prohibitively so. Steven Irizarry, a staff member for Sen. Judd Gregg (R-N.H.), said that has meant some biotech companies - which might not need the money - simply don't bother, while "smaller biotech firms who need to keep the lights on are more prone to work with government."

Where does BioShield stand today? The House passed BioShield in July 2003, but it is still in the Senate. Irizarry said the final issues are being worked out and he feels that BioShield I could be passed within the next few months.

BioShield II already is being considered. Key components would be liability and antitrust protection, tax incentives (such as research and development tax credits) and extended patent protection. At least three Senate and four House committees would need to be involved, and there could be objections, likely holding it up until the next session, which led Irizarry to say Congress likely would not pass BioShield II in the current session.

The conference ended Thursday.