Newsweek reports that VaxGen, a little-known California biotechnology company, will start its first delivery of its anthrax vaccine to the government six months later than originally slated. The company was awarded an $877.5 million contract to produce and manufacture the vaccine, which was developed by the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID). The company blames the delay on "regulatory questions and production issues" (the Newsweek article, this Wall Street Journal piece and this Forbes article from the summer delve into the problems).
Seventy five million doses of VaxGen's vaccine are to be procured for the Strategic National Stockpile under Project Bioshield, a joint Department of Homeland Security (DHS) and Department of Health and Human Services (HHS) initiative to stimulate the creation of a domestic biodefense industry. Five million doses of Vaxgen competitor Bioport's vaccine were procured earlier this year in response to Bioport's aggressive lobbying and anti-VaxGen campaign (pdf) (see this pdf for VaxGen's rebuttals to Bioport's claims). VaxGen's vaccine has not been approved by the Food and Drug Administration. Bioport's vaccine, which has been used by the Defense Department, has been controversial because of its side effects and its FDA approval has been disputed (pdf).
POGO pointed out in a recent blog that Jerome Hauer, the former head of HHS's biodefense program, is now on the Board of Emergent Biosolutions, Bioport's parent company. VaxGen's counterpart to Bioport's Hauer is Eve Slater, former Assistant Secretary for Health at HHS, who just joined VaxGen's Board. And as a Forbes article suggests, VaxGen may have had help from a well-positioned friend in the government when it obtained the Fort Detrick-based USAMRIID vaccine:
As its AIDS work was blowing up, VaxGen was working to get access to Fort Detrick's anthrax vaccine technology. It had friends. VaxGen Chief Gordon is a long-time acquaintance of Philip Russell, the former chief of Army medical research. Both sit on the board of the Albert B. Sabin Vaccine Institute in New Canaan, Conn. Fort Detrick gave VaxGen the license to its anthrax technology in October 2003. Russell, then an adviser to HHS, stepped in to settle a fight between government bureaucrats over whether VaxGen would pay royalties to the government. "He said, ‘Dammit, I don't care what you do, but settle it--don't leave this company in the lurch,'" recalls Gordon.
A year later HHS awarded VaxGen the BioShield award. Gordon and Russell adamantly deny their relationship had any influence on VaxGen's selection. "I scrupulously stayed away from talking to him, to the point where I felt terrible about it," says Gordon. The company now quotes Russell in its media kit: "We have a lot of faith in this vaccine, and we believe it's the right way to move forward to protect the country against anthrax."
In a CNN/Money piece, Jeffrey Marshall, an analyst for Fairview Capital Group, said VaxGen has the "closest ties with the government" versus competitors for other Bioshield contracts. Which given the Russell and Slater connections may be true. But examination of Vaxgen and its CEO and President Lance Gordon's history lends even more weight to Marshall's opinion.
In 1999 [VaxGen] won an $8 million government contract to test its AIDS vaccine, but the official negotiating the contract for the Centers for Disease Control got in trouble for simultaneously talking to VaxGen about a job.
And in 1998 the New York Times reported that OraVax's vice president (OraVax was then headed by Gordon) may have influenced a high-level government meeting to shape the US government's biodefense strategy to benefit Oravax financially, while not adequately disclosing his ties.
Is VaxGen capitalizing on its ties to the government in order to score hundreds of millions of dollars in government contracts?
With a reorganization and expansion of Project Bioshield being contemplated in Congress and President Bush proposing to spend $7.1 billion on avian flu preparations, including vaccines, the government should learn from what it's already doing with vaccine procurement. There may not be time to make anymore mistakes.