Washington Editor

WASHINGTON - By most measures, the federal government has had more success with drawing the drug industry to the pandemic flu issue than to biodefense. The question is, Why?

Some observers point to a learning curve. The Department of Health and Human Services, the principal government agency in charge of dispersing dollars to address both of the threats, has learned lessons from Project BioShield and applied them to better handle pandemic flu-related programs.

For example, HHS decided not to put all its eggs in one basket, and instead recently doled out more than $1 billion worth of contracts to five companies for cell-based production of seasonal and pandemic flu vaccines: Solvay Pharmaceuticals Inc., GlaxoSmithKline plc, Novartis AG, MedImmune Inc. and DynPort Vaccine Co. LLC. (See BioWorld Today, May 5, 2006.)

"Everyone's at the table," said John Clerici, a lawyer whose firm, McKenna, Long & Aldridge LLP, has been active in highlighting drug industry concerns around pandemic flu and biodefense planning. After a Senate subcommittee hearing on homeland security last week, he told BioWorld Today that it was encouraging to see some "new faces" and "old faces" involved in the cell-based vaccine contracts.

Investors are watching the space, too, as evidenced by last week's stock surge in several companies working in the space on news that an Indonesian family had been stricken with bird flu.

Perhaps pandemic-related programs have benefited from the timing of a liability shield recently offered to the drug industry when President Bush signed the Public Readiness and Emergency Preparedness (PREP) Act into law at the end of last year as part of a large defense spending bill. A buffer from lawsuits had been long sought by drug and vaccine makers - the nation's litigious environment had "eviscerated" vaccine companies' presence in the U.S. in particular, Clerici said - and it came less than two months after the president proposed more than $7 billion in funding as the centerpiece of the administration's plans to combat the pandemic threat.

Supporting those plans was a congressional response for $3.8 billion, and since then HHS has been quick to mete out significant awards for pandemic-related programs, certainly more efficiently than its biodefense efforts. The HHS response to pandemic flu, Clerici said, "has been phenomenal."

Skeptics contend that the bird flu threat has been exaggerated. But policy-makers are dismissing such contentions, countering that any preparations will benefit the U.S. public well beyond the current pandemic fears.

In contrast, HHS has had problems with a single biodefense-related contract for developing 75 million doses of an anthrax vaccine, an issue that has become emblematic of difficulties underlying the entire program. That $877.5 million arrangement, with VaxGen Inc., has been delayed by adjuvant issues that recently led some observers to believe that the contract could come undone. At the very least, the government's unilateral decision to rework the contract and mandate more testing has worried other companies looking to do similar business with HHS. (See BioWorld Today, May 11, 2006.)

That trouble led Clerici to call BioShield's implementation "less than phenomenal," later adding that "there is no real reason why BioShield should be stalled" because the legislation provides "broad flexibility to HHS," but it is not being used.

Among problems, critics have charged that biodefense grants ignore the so-called funding "valley of death" - the period between basic research and acquisition of final products. Instead, the government has focused on basic research investments and on Bioshield funding for acquiring advanced countermeasures that are eligible for investigational new drug status.

Also, critics have leveled charges of mismanagement at HHS when it comes to identifying threats, hampering the drug industry's ability to gauge R&D opportunities and develop countermeasures for the only buyer for these products, the federal government. Also of note has been a lack of clear oversight for BioShield programs and opportunities, with multiple departments and agencies having a hard time working collectively toward this single effort.

To be fair, other government-industry collaborations on Project BioShield have gone smoother, but none possess the staggering price of the VaxGen deal, so they haven't garnered equal attention, and it doesn't help that little of the $5.6 billion measure has been handed out.

Still, some fixes are on the horizon.

New biodefense legislation, introduced earlier this spring by Sen. Richard Burr (R-N.C.), is aimed at better attracting the drug industry. Principally, the measure would better organize HHS' BioShield efforts under the Biomedical Advanced Research and Development Authority (BARDA), a single entity within HHS for R&D on countermeasures such as drugs and vaccines to respond to bioterrorism and natural disease outbreaks.

"There are hopeful signs they are getting their house in order," Clerici said, noting that nearly $200 million for countermeasure development is included in the president's budget for next year to support BARDA, which will aid valley of death development issues, but "more needs to done, and soon."

Other remedies include fully implementing the PREP Act. HHS must declare a public health emergency, such as the flu pandemic, to trigger the bill's liability shield provisions. Clerici expects two H5N1 vaccines under development by GlaxoSmithKline, of London, and Chiron Corp., now a unit of Novartis, of Basel, Switzerland, to receive initial protections from the law.