Signed into law by President George W. Bush in July, Project BioShield allows the federal government to spend $5.6 billion over 10 years to purchase vaccines and drugs for smallpox, anthrax, botulinum toxin, Ebola virus, plague, and other pathogens and infections. While biotechnology and pharmaceutical companies praised the initiative at the time, most are still sitting on the sidelines, waiting for additional legislation that would make biodefense a more attractive business prospect.
Part of the reason is fear of litigation and huge damage awards. "Large pharmaceutical companies have so far not been interested in BioShield because of fear of being sued" if they make a vaccine or drug that has adverse health effects, says Frank Rapoport, managing partner at McKenna Long & Aldridge in Devon, Pa., which represents drug companies seeking government contracts.
Unlike traditional defense spending by the Pentagon, BioShield neither funds basic research nor mitigates the...
BENEFITS OF THE SHIELD
Project BioShield does give the National Institutes of Health new authority to bypass traditional procedures when awarding urgently needed R&D grants and contracts, and will allow the Food and Drug Administration (FDA) to sidestep usual approval processes to distribute experimental drugs in case of a bioterrorist attack or other emergency.
On the BioShield procurement side, the administration wants to acquire 75 million doses of a second-generation recombinant protective antigen (rPA) vaccine against inhalation anthrax, a polyvalent botulinum antitoxin, a safer second-generation smallpox vaccine, and a pediatric treatment for radiation. Potential future funding candidates include vaccines for Ebola-Marburg and Rift Valley fever, novel antibiotics and anti-infective agents, and a third-generation anthrax vaccine.
About 100 or so biotechnology companies are working on biodefense products, and many of these hope to cash in later this year when the government finally begins spending BioShield funds. The first $890 million is earmarked to acquire anthrax vaccine, botulinum antitoxin, and pediatric doses of potassium iodide to counter radiation exposure, says Jerome Donlon, acting director of R&D coordination at the Department of Health and Human Services. Front-runners for these include BioPort in Lansing, Mich., which is developing anthrax vaccine for the Pentagon, and Acambis in Cambridge, Mass., which is developing smallpox vaccine for the Centers for Disease Control and Prevention in Atlanta. In September, Acambis and Denmark's Bavarian Nordic won additional government contracts worth more than $200 million to produce safer smallpox vaccines.
However, most of the larger companies are on standby. Following the September 11 attacks and anthrax-laden letters in 2001, Human Genome Sciences in Rockville, Md., and Hollis-Eden Pharmaceuticals in San Diego invested millions to research bioterror countermeasures, anticipating government interest and eventual procurement. Both companies have made significant discoveries, but both are still awaiting government action.
Human Genome Sciences spent about $10 million to create a human monoclonal antibody capable of neutralizing anthrax protective antigen, rendering the bacterium significantly less lethal in animal models. Despite winning fast-track development status from the FDA last year, the company has put the product, called ABthrax, on hold. "To develop ABthrax further is dependent on the government's willingness to commit to its purchase," says Jerry Parrott, vice president for corporate communications and public policy.
Hollis-Eden spent $100 million developing an antidote to radiation exposure. Its drug candidate, called HE2100 or Neumune, boosts the body's ability to recover quickly from radiation-induced bone marrow injury. But like Human Genome Sciences, the company needs a commitment from the government before spending more money. "Our Wall Street shareholders are clearly getting restless," chairman and chief executive Richard Hollis told a House Armed Forces subcommittee in July.
The large pharmaceutical companies, which spend up to $1 billion to bring a new drug to market, watched with dismay during the 2001 anthrax attacks as the US government threatened to override Bayer's patent on the antibiotic Cipro (ciprofloxacin) if the company refused to slash its prices. Bayer complied, but now few of the Big Pharma companies are pursuing government biodefense contracts.
Senators Joseph Lieberman (D-Conn.) and Orrin Hatch (R-Utah) are pushing legislation to address these concerns. The Biological, Chemical, and Radiological Weapons Countermeasures Research Act (S. 666), dubbed BioShield II, includes tax credits, intellectual property incentives, and liability protection. BioShield II also would offer companies developing bioterror countermeasures a two-year "wild-card" extension on an unrelated patent. So, if Pfizer successfully developed and sold a BioShield vaccine to the government, it could receive a two-year patent extension on an unrelated drug such as Viagra, a reward potentially worth billions.
"America is woefully unprepared with diagnostics and medicines to respond to a bioterror attack," Lieberman said in July after Bush signed BioShield into law. "We need to provide additional incentives to create a biodefense industry with the talent and capital necessary to give us the bioterror medicines."
Prospects for BioShield II remain uncertain, at best. A Senate hearing on the bill in early October was only sparsely attended. Even if the legislation should advance, it is unlikely lawmakers would grant liability protections or other incentives to pharmaceutical companies before the November elections. The Generic Pharmaceutical Association and the Coalition for a Competitive Pharmaceutical Market, a group of large corporations and other drug purchasers and generic manufacturers, said the proposed patent extensions in BioShield II would cost consumers billions. "This is Washington at its worst," said Sen. Charles Schumer (D-NY) at the hearing, and called the patent extensions a gift to the pharmaceutical industry.
However, even traditional critics of government spending see some value in offering incentives. "Research and development is costly," says Thomas Schatz, president of Citizens Against Government Waste, a public policy group in Washington, DC. "I don't think it's unfair or outrageous to provide for some incentives. The question is how much to provide."
So far, none of BioShield's $5.6 billion has received a green light for spending, but that may change soon. As much as $2.5 billion may be apportioned over the next three fiscal years for specific products, depending on bioterror threat assessments, Donlon says. If so, it will certainly be welcome news to companies eager to find a buyer for their products.
The other good news is that biodefense research has not ground to a halt owing to government inaction and industry reluctance. The NIH is seeking $1.7 billion for bioterrorism research for fiscal year 2005, which began Oct. 1. Most of this would be carried out by the National Institute of Allergy and Infectious Diseases (NIAID), which last year funded $739 million in vaccine development, $541 million in basic biodefense research, $276 million to support drug development to treat infections and complications from potential bioterror attacks, and $64 million to develop diagnostic tools.
In addition to a variety of biodefense research opportunities, NIAID in July announced its first two research project grants under BioShield's accelerated development provision. While still peer reviewed, these grants will be awarded in six months compared with the usual 12–18 months. The grants will total as much as $1.5 million each for 18 months, and will be awarded to scientists in both academia and industry.
The first grant will allocate $10 million to develop therapeutics for Category A pathogens, such as
A more motivated industry, however, could add the necessary muscle to speed products from R&D into a patient-ready form. "We need to build a biodefense industry in America. Otherwise, it's like trying to fight the war in Afghanistan but not using any products from Northrop Grumman or Boeing, but only from Joe's garage in Toledo," Rapoport says.
"It's not unreasonable that in five years we'll see 10 to 15% of the defense budget dedicated to public health and bioweapons," Rapoport predicts. "We're not talking about just $5.6 billion from BioShield. If the defense budget is $400 billion, we're talking $40 to $60 billion and the creation of a new industry."