Washington Editor

WASHINGTON - The House version of Project BioShield excludes two elements believed to be key in enticing drug makers into developing biomedical countermeasures.

Approved almost unanimously (421-2), the House act (HR 2122) would limit government spending to $5.6 billion over 10 years and fail to provide companies legal protection if their drugs cause harm.

Project BioShield is the Bush administration's plan to speed development and availability of medical countermeasures in response to current threats. It is designed to streamline government research, create incentives for companies and give the government the ability to make products widely available in a public emergency.

Bush presented the plan to the American people during his State of the Union address in late January, saying it likely would cost the government $6 billion over a decade. Within a month, the Senate Health, Education, Labor and Pensions Committee, led by Sen. Judd Gregg (R-N.H.), unanimously passed Bush's proposal (referred to as S 18), complete with a mandatory or indefinite funding provision. The full Senate has not voted on the bill.

Meanwhile, over in the House, lawmakers spent weeks picking the proposal to pieces. In particular, the administration's request for mandatory funding sparked debate.

Rep. Henry Waxman (D-Calif.), member of the House Energy and Commerce Committee and the Government Reform Committee, both of which took up the issue, was among the lawmakers who vehemently opposed giving this president or any president who comes behind Bush a blank check to buy pharmaceuticals and biologics.

Others argued that without guaranteed funding, companies would be hesitant to invest their own research and development efforts into a plan that could be dropped with future budget cuts.

Funding approved in the House version would pay for procurement, not research and development, Matthew Lyons, director of government relations at the Biotechnology Industry Organization, told BioWorld Today. Already, the House has appropriated $890 million for BioShield in fiscal year 2004. Research and development funding would be paid out of the National Institutes of Health's budget.

"Mandatory funding would be more ideal, at least for the companies," Lyons said. "At this point, though, I think a lot of the companies are saying they can probably live with this. Some companies are rarin' to go, but others are saying there's no true liability protection here."

Indeed, Frank Rapoport, an attorney with McKenna Long & Aldridge LLP in Philadelphia, told BioWorld Today that dropping the mandatory funding element likely would put a dent in the level of interest from certain drug companies.

"But this is the first bill. I would guess in the next year you are going to see the son of BioShield or the daughter of BioShield," he said. "I think many of the pharmaceutical companies would rather have mandatory funding, but I also think they are anxious to get the darn thing started."

According to a statement released by Rep. Billy Tauzin (R-La.), chairman of the House Energy and Commerce Committee, HR 2122 would include research and development of countermeasures for such dangerous threats as smallpox, anthrax, the plague, botulism, hemorrhagic fevers and tularemia.

The House's failure to include the proposed indemnity element also is of concern to Rapoport. However, he said the industry may find a safety net in the Homeland Security Act, which provides product makers protection from lawsuits if a product fails or causes harm while in use during a terrorist attack.

"If I'm a drug company and I'm just doing research in the lab and I hurt someone and there's been no terrorist attack, the safety act [of Homeland Security] doesn't apply," Rapoport said. "That's why we are saying just throw an umbrella over BioShield. We're hoping the Senate will take this up."

Lyons said BIO told the House and Senate that their bills do nothing for liability, "and that is a major hurdle for the industry."

Despite a few negatives, the House version does contain certain positive elements for the industry.

Rapoport was particularly pleased that HR 2122 would give the NIH and the Department of Health and Human Services authority to combine in one procurement both a research and development, and production, contract. "This is very important because a lot of companies don't want to just do research and development. If they are successful, they want a big, fat contract."

Also, the legislation extends the time to production from five years to eight, and would require the government to consider, in its negotiated purchase price, whether a company has had to borrow money to support research and development.