Washington Editor

WASHINGTON - Two key elements of President Bush's proposed Project BioShield likely to encourage drug markers to develop biomedical countermeasures were eliminated from legislation unanimously approved by a House committee last week.

The issues at hand are money and liability.

When Bush first mentioned Project BioShield in his State of the Union address in January, he estimated the cost at $6 billion over 10 years. But in a series of committee meetings on Capitol Hill, senior administration officials have amended the estimate, saying unlimited mandatory funding would be necessary to keep BioShield afloat.

Project BioShield 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. (See BioWorld Today, April 7, 2003, and March 28, 2003.)

The House Energy and Commerce Committee on Thursday approved a version of BioShield that would make its funding subject to the annual appropriations process - something Bush had wanted to avoid. Several members, including Rep. Henry Waxman (D-Calif.), have opposed the "blank check" approach Bush sought.

Also, the legislation does not provide federal indemnity to private entities engaging in research, development and production of biomedical countermeasures.

But it's not over yet.

As pointed out by Frank Rapoport, a partner with McKenna Long & Aldridge LLP in Philadelphia, two other House committees are working on the same legislation, not to mention the Senate version that passed the Senate Health, Education, Labor and Pensions Committee. Rapoport represents biotechnology and pharmaceutical companies in their dealings with the federal government.

Over the next few days, the Homeland Security and Government Reform committees are expected to take up the issue. And regarding the Senate, BioShield hasn't passed a full vote because enough members believe the funding issue is worrisome.

Clearly, the funding will be a central issue for drug and biologics companies, Rapoport told BioWorld Today.

"We don't have any major companies working on smallpox or anthrax," he said. "For you to turn the heads of the CEOs of the big pharmaceutical companies away from looking for the next Viagra or anti-depressant, you have to say there's 10 or 15 years of funding in place - not two years of funding. That doesn't do it."

The liability issue could be settled by way of an amendment to the safety act of the Homeland Security Act. Under that law, government contractors who produce goods or services used in response to a terrorist attack are protected from lawsuits. The only downside, Rapoport said, is that vaccines likely would be used in advance of an attack rather than in response to it.

U.S., Others Dispute Moratorium Issued In Europe

A coalition of countries including the U.S. will pursue a case within the World Trade Organization (WTO) against the European Union over the EU's five-year moratorium on approving agricultural biotechnology products.

The EU implemented the moratorium because of health and environmental concerns, Lisa Dry, spokeswoman for the Biotechnology Industry Organization, told BioWorld Today. "They may not like the American way of business, they may think it's too industrialized. Part of this is emotional and cultural, but it is not based on science."

Indeed, a prepared statement released by Bob Stallman, president of the Washington-based American Farm Bureau Federation (AFBF), said all facts, even from European research, firmly support the safety of biotech products. "It's simply a failure of the EU political leadership to adhere to the terms of a world trade agreement. That failure hurts the U.S. farmers, and that's unacceptable."

The Bush administration's decision to pursue a formal dispute settlement on this matter comes on the heels of pressure from key members of Congress, such as House Speaker Dennis Hassert (R-Ill.) and Sen. Charles Grassley (R-Iowa).

Lobbying groups, as well as the U.S. Department of Agriculture (USDA), say the moratorium is illegal. Aside from the U.S., other countries signing on in the case against the Europeans are Argentina, Canada and Egypt. A statement released by the USDA said other countries expressing support are Australia, Chile, Colombia, El Salvador, Honduras, Mexico, New Zealand, Peru and Uruguay.

In a prepared statement, U.S. Trade Representative Robert Zoellick said the moratorium violates WTO rules. "People around the world have been eating biotech food for years. We've waited patiently for five years for the EU to follow the WTO rules and the recommendations of the European Commission, so as to respect safety findings based on careful science. The EU's persistent resistance to abiding by its WTO obligations has perpetuated a trade barrier unwarranted by the EC's own scientific analysis, which impeded the global use of a technology that could be of great benefit to farmers and consumers around the world."

Ideally, Dry said, the issue would have been resolved diplomatically. "But that wasn't working. We want to support members' customers, who are farmers, to make sure they have the market they need."

Since its implementation in October 1998, the moratorium has cost the U.S. about $300 million a year in corn exports to EU countries. About one-third of the U.S. corn crop is genetically modified, as is about 70 percent of the cotton crop and three-quarters of the soybean crop, according to AFBF.

As part of the WTO dispute process, the U.S. and like-minded countries will meet with EU officials over the next 60 days in an attempt to resolve the issues. If at the end of 60 days no resolution has been achieved, the U.S. and cooperating countries may request a panel to hear the arguments. Generally speaking, the USDA said settlement procedures, including appeals, commonly take 18 months.