Dyncorp, Vaccinations and Me

The anthrax vaccine scandal

Why did the Pentagon allow BioPort Corp. to remain the sole U.S. supplier of a crucial weapon against bioterror, despite years of failure to deliver the vaccine?

By LAURA ROZEN

PUBLISHED OCTOBER 15, 2001 12:22AM (EDT)

With each new confirmed anthrax infection raising fears of a wider bioterror attack in the U.S., pressure is mounting on the Defense Department and the Food and Drug Administration (FDA) to give the green light to Michigan-based BioPort Corporation, the nation's lone anthrax-vaccine manufacturer, to ship new lots of the vaccine to the Pentagon.

aAnthrax vaccine shipments from BioPort have been suspended by the FDA since 1998 because of questions about the facility's quality control, forcing the Pentagon to dramatically reduce its program to vaccinate all 2.4 million U.S. soldiers and reservists against anthrax. Now the lack of the vaccine threatens to become a scandal, as the U.S. is sending thousands of soldiers overseas and calling up reserves, and as the public is clamoring for access to protection from the deadly bacterium.

After three years of getting bailed out by the Defense Department, BioPort could be poised to make a fortune -- as its CEO Fuad El-Hibri did working with the British seller of anthrax vaccine, Porton International, during the Gulf War a decade ago. But only if the FDA approves the company's renovated plant, as expected, sometime in the next week. The decision could open the door for BioPort to market the drug to a worried public, as new anthrax scares are reported daily.

The story of the troubled U.S. anthrax-vaccine program is a tangled saga of science, politics, private-sector deal-making and national security. There have been persistent questions about the vaccine's safety and effectiveness. Critics say Defense Department studies have never proven the vaccine works against the more dangerous inhaled form of anthrax, only against cutaneous, or skin anthrax. Some military personnel have complained of mysterious illnesses after taking the vaccine, and at least 400 have been disciplined for refusing the mandatory inoculation. But the Pentagon insists the vaccine is both effective and safe. Even now, some researchers say the vaccine is seriously outdated, as BioPort gears up to ship more.

Then there are questions about BioPort's role as the nation's only anthrax-vaccine maker. How did Fuad El-Hibri, 43, a German-born entrepreneur and former director of British vaccine-maker Porton Products, come to have so much control over the West's supply of anthrax vaccine? Why didn't the Pentagon turn to a larger, more established drug maker for the crucial anti-biowarfare weapon? And how could it let BioPort remain the sole maker of the vaccine after it failed repeatedly to gain FDA approval for its renovated facility?

"It speaks to DoD culture more than anything else," says a congressional staff aide who asked not to be named. "The Pentagon just does not have a corporate culture. Once they decided to go with this program (BioPort), they stuck with it, even though oversight indicated they had built their biodefense program on a foundation of sand, and they had an unreliable producer. The DoD is simply incapable of admitting a mistake. They genetically just can't back out."

The Pentagon and BioPort deny they made a mistake, of course, and they believe their problems will be solved, perhaps next week. Government sources close to the process say as early as Monday, the FDA will approve BioPort's renovated facility, and enable it to resume shipments of the vaccine it has been stockpiling since 1999.

A government official who asked not to be named says while BioPort is "70 percent on the way there" in terms of improvements in quality control demanded by the FDA, political pressure due to the terrorism scare is playing more of a role than quality control in expediting FDA approval. But BioPort officials say FDA approval for their renovated facility is long overdue.

"We have heard the process will be speeded up, and it has taken an incredibly long time," said Jay Coupe, a longtime aide to Adm. William Crowe, who with Fuad El-Hibri serves as one of BioPort's owners, and who served as chairman of the Joints Chiefs of Staff during the Reagan administration. (Fuad's father, Ibrahim El-Hibri, also well-connected to the defense establishment, is a third partner in the venture.) "While BioPort certainly supports the FDA, and doesn't want any special consideration and wants a safe and effective vaccine, the approval process has gone on for a very long time for most vaccine manufacturers. This is one of the reasons people are getting out of the vaccine business."

"We have been manufacturing vaccine," BioPort spokeswoman Kim Brennan Root said. "As we submit final documentation for approval from the FDA, we have been manufacturing vaccine and contributing it to the stockpile so when approval comes we can be in a position to release the vaccine."

But critics of BioPort say that repeated FDA inspections have shown the company has failed to prove it can produce the same dose of vaccine twice.

"The most fundamental problem has to do with the quality of the process of vaccine manufacture," a congressional aide, who asked not to be named, told Salon. "They cannot show they can produce the same vaccine of the same potency and consistency twice in a row. The quality of the process is not validated. That means they don't have the data to show that, within this process, within this heat range, this process produces this vaccine. They are trying to retrofit a modern inspection and validation process on an old system."

"BioPort has tried to say it didn't know how much it would cost to bring the company to 2001 FDA standards," another congressional staffer told Salon. "But that is kind of a hard pill to swallow. They consistently showed deviations from good manufacturing practices. Some of the FDA complaints are substantive. There were contaminants in the lot. There were some deficiencies in packaging. There were problems with paperwork and record keeping. There was an inability to show consistency from one lot to the next."

"They have come a long way," he added, "at significant taxpayer support."

Even if BioPort gets FDA approval to resume vaccine sales, anthrax vaccine will be available only to the military, not to the general public. That is, unless BioPort can step up production, and get the Defense Department to agree to sales to federal health agencies. If the current anthrax scare in New York and Florida grows, some members of the public are certain to pressure their political leaders for access to the vaccine.

"I will tell you right now, I wish I had access to the vaccine myself, I can tell you," says Dr. Zsolt Harsyani, a former business partner of Fuad and Ibrahim El-Hibri who is president of the Washington office of Porton International.

BioPort's Kim Brennan Root would not disclose how much vaccine the company had stockpiled while awaiting FDA approval for their renovated facility since renovation was completed in 1999. But a congressional aide who has researched the matter estimates that approximately 5 million doses are stockpiled. Vaccination requires six doses over 18 months, and a yearly booster shot.

In testimony to congressional committees, BioPort CEO Fuad El-Hibri has indicated BioPort's viability depends on being able to sell anthrax vaccine to a much larger market than to just the Defense Department, which he said is getting "rock-bottom prices."

"It has become clear to us that the prices paid by the Department of Defense for anthrax vaccine are significantly below BioPort's costs for producing anthrax vaccine," El-Hibri told the House Government Reform Committee in June 1999, a year after he purchased the Defense Department's former anthrax vaccine supplier. "Traditionally vaccine manufacturers have been able to offer lower prices to the government by recovering a substantial portion of their costs through commercial sales. Because of the current unavailability of product, the commercial sales market has not materialized as anticipated. Without a second market, the government cannot expect the rock-bottom pricing it enjoys with some of the other vaccines it purchases."

"As a commercial entity," el-Hibri added, "BioPort cannot continue to subsidize the DoD."

Critics of BioPort are outraged at El-Hibri's contention that BioPort has subsidized the Defense Department. Chief among them is U.S. Rep. Walter Jones, R-N.C., who sits on the House Armed Services Committee. Jones estimates that the Pentagon has paid BioPort almost $150 million since BioPort purchased the state-owned Michigan Biologics Products Institute (MBPI) in 1998, giving it the exclusive U.S. license to make anthrax vaccine -- with no new shipped vaccine to show for the money.

"My whole concern has been that this company cannot meet FDA requirements to produce the product," Jones told Salon Thursday. "So how long does the government continue to put taxpayers' money into a company that cannot produce the product?"

"Since former Secretary of Defense Bill Cohen raised the concern about the possibility of anthrax being used on the military or civilians," Jones added, "the Clinton administration made the decision to go with BioPort."

As his comment suggests, partisan politics may at least initially have played a part in Jones' troubles with BioPort, and its co-founder, Adm. Crowe. Alone among top military brass, particularly those who served Republican administrations, Adm. Crowe endorsed the election of "draft-dodger" Bill Clinton, who was widely despised by the Republican-leaning military establishment. Clinton rewarded Crowe for his endorsement, Jones suggests, with a plumb ambassadorship to England from 1994 to 1997.

And England in the years during and after the Gulf War is key to understanding the close links between the half dozen people who have come to dominate the sale of vaccines against deadly bioweapons in the U.S. and the U.K. Only two countries, the U.S. and Britain, make anthrax vaccine, and El-Hibri has been involved in both, first at Porton International in Britain during the Gulf War, and now with BioPort in the U.S., as the world faces a new terrorism scare. Sources say El-Hibri remained involved with Porton International up until the firm partnered with defense contractor DynCorps in 1997 to get a new Defense Department contract to make a second generation of vaccines against bioweapons. The new company is named DynPort Vaccine Company, and its license to make second generation vaccines to protect against small pox, anthrax and other bioweapons was publicly announced Thursday, although the contract appears to date from 1997.

It was in Britain that Ambassador Crowe resumed his acquaintance with an old family friend, Ibrahim El-Hibri, a wealthy Venezuelan citizen of Sunni Lebanese descent, and his son Fuad. Ibrahim El Hibri had made a fortune in the telecom business with Phillips Company, working in the Gulf states.

Crowe and Ibrahim el-Hibri were first introduced decades ago by a U.S. Naval Academy classmate of the admiral who, like Ibrahim El-Hibri, lived in Venezuela. They had stayed in close contact during the 1970s when Adm. Crowe was posted to head the U.S. Central Command in Qatar, in the Middle East, where Ibrahim El-Hibri was active in his businesses. And in England during his ambassadorship, they met again.

The mania for privatization in Margaret Thatcher's England made it a great place for entrepreneurs like El-Hibri. In the 1980s, an El-Hibri acquaintance named Zsolt Harsyani, an American Ph.D. in genetics who had spearheaded an early report on biotechnology for the U.S. Office of Technology Assessment, became involved in what would become in its time the largest private biotechnology firm in the world, Porton International. Porton got the rights to sell vaccines and other products developed by the U.K.-government run laboratory, the Centre for Applied Microbiology and Research (CAMR), on commercial markets. CAMR had done the early research into products like botulinum toxin, or botox, a bacterium that can be injected to stop spasms (as well as prevent wrinkles, its most popular use in the U.S., at least until now) and anthrax vaccine.

The marketing relationship between Porton and CAMR ended in the 1990s, Dr. Harsyani said, and CAMR now markets its own products.

"At the time of Mrs. Thatcher, there was a philosophy in the U.K. supporting taking public works to the private sector," Harsyani told Salon. The spirit of public-private partnership that existed in Thatcher's England in the 1980s then moved to the States, Harsyani explained. "A lot of U.S. government and military research was not commercialized because there was no mechanism for it. One of the things that has changed in the United States in the last 20 years is that intellectual property that came out could in fact be owned by the institution where the researchers worked. The U.S. has now taken steps towards that kind of privatization."

In 1989-1990, with Persian Gulf tensions heating up and the U.S. and Britain preparing to lead a war against Saddam Hussein's invasion of Kuwait, El-Hibri became a principal silent investor in Porton, while his Yale and Stanford-educated son Fuad was installed as director of a Porton subsidiary, Porton Products. Their Middle East connections were put to use, as Porton sold tens of millions of dollars worth of anthrax vaccine to Saudi Arabia and other countries -- deals all approved by the British Ministry of Defense.

(A U.S. government investigator says Porton sold vaccine to Saudi Arabia at the insanely high price of $300-$500 per dose -- some 30 to 50 times what the U.S. Defense Department agreed to pay BioPort per dose.)

The Gulf War was a boon to businesses like Porton, as well as its officers, the el Hibris and Dr. Harsyani. Increasingly, they started to look for similar business opportunities in the U.S., particularly in areas that revolved around biodefense. They gravitated to opportunities where the government-run defense industry meets the private sector.

After the Gulf War, with concerns mounting in the U.S. about reports of Iraq's production of anthrax, Adm. Crowe was posted as ambassador to England. There, he resumed his friendship with the El-Hibris. About the same time, the El-Hibri family was hearing that the U.S.'s lone anthrax vaccine manufacturer, the state-owned Michigan Biologics Products Institute (MBPI), was financially troubled and looking for a buyer.

In 1970, the Michigan lab had received the only U.S. license to make anthrax vaccine, but its facility was antiquated. By the late 1980s, according to Judith Miller's "Germs," Michigan's Biologic Products Institute was making small batches of the vaccine -- 15,000 to 17,000 doses -- every four years, and selling them mostly commercially, to people in the animal hides business who came into contact with anthrax. But in 1988, the U.S. Army went to the lab and signed a contract to buy 300,000 doses in five years. The order was ambitious. By the time Gulf War troops assembled in early 1991, there was only enough vaccine to protect 150,000 of the half million troops assembled there, and none for civilians or allies, though the Saudis were able to buy some from the U.K.'s Porton International.

After the war, as worry increased over Iraq's biowarfare capacity, some in the Pentagon proposed that the military build its own vaccine factory, but officials thought it best left to the private sector. By 1996, however, concerns were mounting that the Michigan facility, already inadequate to the challenge of producing enough vaccine for the entire military, was having new problems. After several years of troubling inspections, the FDA threatened to close the lab in 1997, citing problems with sterility and equipment maintenance as well as scientific procedure. The only other facility producing a vaccine, Britain's CAMR, which at one time had a marketing relationship with Porton, now terminated, was using a different anthrax strain, and wasn't licensed for U.S. use anyway.

The el-Hibris and Crowe came up with the idea for BioPort, which they thought could do in the U.S. what Porton had done in Britain: bring private-sector methods (and profits) to a public research lab. As Fuad el-Hibri testified to Congress in 1999, "When BioPort was originally conceived, we believed that Admiral Crowe's background would be important in ensuring that we did everything correctly in establishing a company that would best serve DoD's needs."

El-Hibri and Crowe also partnered with two former managers of the state-owned facility, Robert Myers, who serves as BioPort's COO, and Rob van Ravenswaay -- a deal former Michigan state Sen. Linng Brewer, a Lansing Democrat, has long charged was ethically suspect, because Myers and Ravenswaay as employees of MBPI "knew the identities of at least two bidders (El-Hibri and Crowe) and the substance of their bids, information not made available to the general public. It appears they used information not available to others to enhance their financial position relative to the other bidders, a clear violation." The BioPort partners have long denied the charges.

In June 1998, BioPort's $24 million bid for MBPI -- $17 million upfront and the rest in loans to be paid over five years -- beat out competitors, including a $16.6 million bid endorsed by the Defense Department by Gruppo Marcucci, that involved no debt. Some expressed concern about selling the sensitive national security facility to a foreign company. (Brewer says the Marcucci bid lost out because it had failed to partner with managers of the Institute, but he has been unable to bring his ethical violations against Myers and Ravenswaay to court.)

A former Porton employee who asked not to be named says the company was looking to make a fortune on the Pentagon contract. "When El-Hibri bought the Michigan plant, he thought they would make a killing. The lab was already knocking out this product. The vaccine was already FDA approved. It's an essential business but no one wanted to talk about bioweapons back then, even though they knew Iraq and other countries had anthrax."

But it didn't turn out to be so easy.

Despite El-Hibri's experience marketing anthrax vaccine at Porton, Crowe's strong ties with the defense establishment, and growing interest from the Pentagon in protecting troops from anthrax, BioPort's problems quickly mounted after it acquired the MBPI facility.

Troubles seemed unlikely, because in May 1998, shortly before BioPort's bid for MBPI was finalized, Defense Secretary William Cohen announced plans to require all 2.4 million U.S. soldiers and reservists to be inoculated against anthrax, which looked like a windfall for the new venture.

In testimony to Congress, Adm. Crowe has adamantly denied that he had any insider knowledge that led to his purchase of the anthrax vaccine facility. "It has on occasion been rumored that the decision to inoculate all service personnel was made to benefit BioPort Corporation and indirectly me, presumably because of my past associations with the military and the administration," Crowe told the House Committee on Government Reform in October 1999. "If this charge were not so ridiculous, it would be offensive. It outrageously exaggerates my influence. Let me be completely clear. I never, repeat never, solicited any official of this administration to install or promote a mandatory inoculation program."

Despite the Pentagon's decision to require anthrax vaccination for all troops, which clearly could have been lucrative for the new firm, BioPort was struggling. Only three months after their acquisition of MBPI, El-Hibri and Crowe were prevented from shipping any new vaccine, by a scathing FDA inspection that found over 40 items wrong with the plant, the vaccine, its consistency, the firm's accounting, and other problems. Indeed, by September 1999, BioPort was already appealing to the DoD for relief from a contract requesting BioPort's delivery of some 8 million doses of anthrax vaccine. It simply could not deliver, and certainly not at that price.

A Defense Department audit from July 12, 2000, shows that shortly after BioPort bought MBPI, the DoD awarded it a $29.4 million contract to supply 8.7 million doses of anthrax vaccine at the price of $4.36 a dose. But a year later, unable to ship product, BioPort requested and the DoD granted $24.1 million in relief to BioPort, reduced the number of doses demanded from 7.9 million to 4.6 million, and agreed to raise the price per dose from $4.36 to $10.36.

Even after a full-scale yearlong renovation of its manufacturing facilities, and significant efforts to meet FDA requirements to get its new facility reapproved, BioPort continues to wait for FDA approval to ship doses of the vaccine it has been manufacturing all this time. Problems have been found not simply with BioPort's process, but with the doses of the anthrax vaccine already produced. FDA tests found a lack of consistency in dosage and other problems with the finished product.

The delay has prevented the Pentagon from vaccinating all but the troops it is currently sending abroad, and has forced some soldiers to actually suspend vaccination mid-process.

"Now we're in a situation with the terrorist attack that we still have this company that has still not met FDA approval," Rep. Walter Jones says, "and we're spending almost $3 million per month on this company that is still months away from having FDA approval."

So why did the DoD stick with BioPort all these years of their failing to get final FDA approval -- until now, when the U.S. faces a real anthrax crisis?

"I blame everybody," says a congressional staffer well versed in the BioPort controversy. "The buyer -- the Pentagon -- kept BioPort alive. The DoD should have pulled the plug on this outfit a long time ago."

To be fair to the Pentagon and BioPort, however, it's not as if major pharmaceutical companies have been clamoring for the contract. A reliable anthrax vaccine has proven hard to make, and questions about its safety have likely scared off other manufacturers (although the Defense Department agreed to protect BioPort against lawsuits by military personnel.)

Even now, just as BioPort seems set to perhaps overcome its long regulatory and financial difficulties, many in the industry and government are coming to consensus that the anthrax vaccine BioPort produces is outdated.

Increasingly, the government is also supporting research into a second generation of vaccines that can protect against multiple bacteria -- perhaps all in one shot. The government has also turned to the well-connected defense contractor, DynCorps, known for its involvement in the drug war in Colombia, and sending retired U.S. cops to Bosnia and Kosovo to serve as U.N. police, to subcontract vaccine research. (DynCorps was implicated in the accidental killing of an American Baptist missionary and her infant daughter by the Peruvian military earlier this year.) In 1997, DynCorps partnered with the El-Hibris' old company Porton International, to form DynPort Vaccine Company (DVC), just in time to beat out four other bids for a $322 million, 10-year contract.

Under the award, "DVC acts as a prime system contractor for the management of the existing stockpile of biological defense vaccines (except anthrax vaccine) and the advanced development, testing, production, FDA licensure, and storage of up to 18 new biological defense vaccines, including new vaccines against anthrax, small pox, plague, botulism and tularemia," according to Pentagon spokesman Jim Turner.

Why did the Pentagon turn to the unknown DynPort over more established companies? Some in the industry say not a whole lot of pharmaceutical companies want to get into bioweapons vaccine research, because the capital costs to build a dedicated lab safe from airborne toxins are so high, and the market -- at least until now -- has been so small, primarily just the Pentagon.

"No one else wants these contracts," insists Ron Rader, who leads an industry research firm called BioPharm.com. "Spore-forming microorganisms, because of FDA regulations, require totally separate facilities. Botulinim toxin, anthrax -- the facilities have to be dedicated. No one wants to have a dedicated, one-product facility. The trend now is to have multiple suites, and/or large manufacturing facilities. That way, you can switch from product to product every few months. No one wants to deal with spore-forming organisms.

"Also back then, anthrax vaccine was just not an attractive product. It's associated with biological warfare -- and that's not a positive thing. It's not the kind of thing you want to put in your brochure. Mainstream pharmaceutical companies had no interest. And you're also talking about being absolutely dependent on one customer. Very few companies are willing to take that risk. Any day, the Defense Department could just walk away." But P.W. Singer, a scholar at the Brookings Institution who has studied private military companies such as DynCorps and Military Professional Resources Inc., says the Pentagon seems to be treating bioweapons vaccines as just another weapons system they want to outsource to a trusted private-sector insider.

"The Pentagon is in search of two things: efficiency, and expediency," Singer said. "They either think they can get a better product in terms of quality or price or rapidity, or for expedient reasons. DynCorps provides a disconnection, when they would rather not have the government involved in some activity."

"My concern," he added, "is that the company in Michigan [BioPort] is actually a government lab that was privatized. It strikes me that for something so important for societal security, that you don't want to leave it in private hands. There are just some things that are too important."

And indeed, for BioPort CEO Fuad El-Hibri, BioPort is not an exclusive priority. El-Hibri, who became a U.S. citizen around the time of the BioPort purchase of MBPI, does not work out of the Michigan company, but out of the Rockville, Md., offices of his company East West Resources Management. His secretary there, Sheila Glick, says BioPort is one of 15 different companies El-Hibri runs, including some mobile phone operators in El Salvador, Venezuela and Jamaica. El-Hibri did not respond to numerous requests by Salon for an interview, and his secretary later referred questions to back to BioPort.

Dr. Zsolt Harsyani, president of Porton International, which has now been bought by the French pharmaceutical company Ipsen, and who is now involved in the DynPort vaccine contract with the Defense Department, said there is nothing sinister about the way the El-Hibris have approached the business of anthrax vaccine -- as a business opportunity.

"Mr. Ibrahim El-Hibri is a wonderful gentleman," Harsyani said Friday. "He started a charity for orphans." A scan of the Internet shows Mr. El-Hibri on the board of a Beirut-based Sunni charity, Dar Al Aytam Al Islamyah, that provides relief to orphans and widows, and espouses "commitment to the humanitarian principles of Islam such as justice, tolerance, and abhorrence of confessionalism or sectarianism."

Harsyani said he had not spoken with Ibrahim El-Hibri in over a year, but that the two parted on good terms. The El-Hibris divested from Porton International about three years ago, about the time when DynPort got the Pentagon contract to begin work on a second generation of bioweapon vaccines.

The former Porton employee, who asked not to be named, says the El-Hibris should be viewed as defense contractors, and their relationship with the Pentagon is not unique. "You have to realize: BioPort and now DynPort, these are arms dealers. They are part absolutely of the military industrial complex. This is their business. They are selling to a captive audience: the Defense Department. That's all-American. All these defense contracts -- they are boondoggles -- and that's the American way, to make as much money as possible. There's not that much unique about BioPort."

LAURA ROZEN

Laura Rozen writes about U.S. foreign policy and the Balkans crisis for Salon News.

MORE FROM LAURA ROZEN

Protection against biological and chemical attack was never very high on lists of national priorities -- until the days after Sept. 11, when it collectively occurred to Americans how vulnerable they were.

An envelope that might (or might not) be filled with ominous powder, the possibility that someone might slip across a border with a jar of viruses, the impossibility of guarding every subway entrance and roof ventilator against a terrorist with a spray can: ''In these times,'' said Dr. Frank Bia, an expert on infectious diseases and microbiology at Yale, ''the unthinkable has become thinkable.''

Here are assessments of the nation's ability to defend itself against germ warfare from a variety of perspectives, covering what has been done, what is being done, where gaps remain, what might be done to fill them -- and how quickly.

Seeking a Better Vaccine

While drugs are useful in treating infections by some potential germ agents like anthrax, vaccines are prized by medical experts because they can prevent infections altogether or, in the case of anthrax, work with antibiotics to combat an infection.

The present anthrax vaccine is not ideal -- it requires six separate injections with an annual booster -- and is in any case reserved for military use.

Only one company, BioPort of Lansing, Mich., is licensed to make anthrax vaccine. But BioPort inherited an antiquated plant that has had trouble meeting Food and Drug Administration standards. Because of these problems, BioPort has been unable to make any vaccine since 1998.

A new anthrax vaccine is being developed by the DynPort Vaccine Company under contract to the Department of Defense.

Last week the Centers for Disease Control and Prevention applied for permission from the F.D.A. to use the stockpiled military vaccine for anyone allergic to antibiotics or who failed to respond to them in the event of anthrax exposure.

''Not only would some people be given just the vaccine but it might be something used in combination with antibiotics,'' said a spokesman for the C.D.C.

Military doctors who have considered the threat of deliberately spread anthrax concluded several years ago that people who may have been exposed to the spores should both take antibiotics and be vaccinated.

In a 1999 article, two military medical experts at the Army Medical Research Institute of Infectious Diseases, Dr. Theodore J. Cieslak and Col. Edward M. Eitzen, recommended that everyone exposed to anthrax in a bioterrorism attack should be given the antibiotics ciprofloxacin or doxycycline and that in addition, ''exposed persons should be immunized.'' At least three doses of vaccine should be given, they wrote, before stopping the antibiotics.

But the Advisory Committee on Immunization Practices, a group of outside experts that advises the C.D.C. on vaccine use, concluded in December that a sustained course of antibiotics was the best protection for people who might have inhaled spores, and that vaccination was not necessary.

''You can do pretty darn well with antibiotics alone,'' said Dr. Charles M. Helms of the University of Iowa, a panel member. ''Particularly if you have limited doses of vaccine to offer, there is no reason to get hung up on the issue of using both.''

But Dr. Helms said there was always the risk that bioterrorists ''would recognize the usual antibiotic and may create an antibiotic-resistant strain.'' He added, ''I think we should clearly have more vaccine available.''

Health experts also worry that large-scale use of antibiotics will hasten the rise of antibiotic-resistant diseases.

Another advantage of a vaccine is that it would allow people to quit the 60-day course of antibiotics much sooner than otherwise.

Three small vaccine manufacturers that lost out in the first round of bidding for a government contract for smallpox vaccines complained today that they could supply the vaccines for a price that large drug makers still in the running say they cannot meet.

The dispute over vaccine pricing reflects a split in the pharmaceutical industry. Some small biological research companies that have done considerable work on smallpox vaccines over the last two years say that they have the viral seed stock to produce the vaccines and could do so quickly and cheaply by renting space at larger laboratories.

Two of the three finalists in the bidding for the vaccine contract, Merck and GlaxoSmithKline, have done little work in recent decades on smallpox vaccines, but have their own big laboratories. The third finalist is a partnership between Acambis, a small British biological research company, and Baxter International, a large pharmaceutical company with many labs.

Tommy G. Thompson, the secretary of health and human services, told reporters on Tuesday evening that the three finalists' bids were ''much higher than I had anticipated.'' He added that he had just warned the Office of Management and Budget that the contract could cost more than the $509 million he had previously predicted.

Mr. Thompson said this evening that the government was not just looking for the lowest bidder, but for the company or companies that could provide the safest, most effective vaccine earliest. ''As far as the price is going, I hope it's going to go down,'' he said.

Louis Potash, the director of vaccine technologies at Novavax, one of seven companies that sought the vaccine contract and were eliminated in a first round of bidding a week ago, said his company could have met the government's target price of about $2 a dose for 250 million doses. ''Our price was around $2 a dose, and when I look at this, I'm sick,'' he said.

An official at Dynport, a company developing a smallpox vaccine under an Army contract, was equally critical. ''We've already produced some, so we know how to do it, we can do it under the budget, under the $509 million,'' said the official, who insisted on anonymity.

The big drug companies ''are going to have to spend a couple months figuring out what to do,'' the official said, adding that Dynport had just been told by the Army to hand over to Merck the viral seed stock it had developed.

Bavarian Nordic, based in Copenhagen, said that it could have provided a different, European kind of smallpox vaccine for $2 or less a dose. But Peter Wulff, the company's chief executive, said that he thought it was ''reasonable that the U.S. would like to take one of the larger pharmaceutical companies.''

The controversy over the price coincides with a partisan rift in Congress over drug makers' liability for the smallpox vaccines. The vaccines had a high rate of side effects before their civilian use ended in 1972. Doctors predict that inoculating every American now would kill hundreds of people and leave another 1,000 or more with brain damage. Drug makers want complete immunity from liability, with any lawsuits directed at the federal government instead.

Representative Billy Tauzin, the Louisiana Republican who is the chairman of the Energy and Commerce Committee, endorsed the drug makers' position in an interview today. Shifting any and all liability to the federal government is the fastest and simplest approach, at least in the short term, he said.

Two Congressional Democrats who have played a leading role for decades in vaccine legislation, Senator Edward M. Kennedy of Massachusetts and Representative Henry A. Waxman of California, are drafting bills to create a federal fund to compensate victims of bioterrorism vaccines. The fund would be modeled on an existing fund to help children hurt by childhood vaccines. As is the case with the childhood vaccines fund, people harmed by bioterrorism vaccines could still sue vaccine makers, but only in cases of gross negligence or fraud.

But Mr. Tauzin said he doubted ''whether in the middle of a bioterrorism crisis we can have a tort reform debate.''

Six months after last fall's deadly anthrax attacks, the Pentagon is scrambling to develop a new generation of vaccines to protect troops and perhaps the American populace from biological weapons.

But it will be years before any new vaccines are ready. And many experts inside and outside the armed forces say the rush could have been avoided if military planners had not ignored repeated warnings that the vaccine program was woefully inadequate, had not allowed the program to deteriorate for lack of funding and had avoided missteps in the few attempts that were made to develop, test and win approval for vaccines.

"There seemed to be no mechanism so that a good vaccine idea could be manufactured and clinically tested with all the assurances we associate with that," said Franklin H. Top Jr., executive vice president of Medimmune Inc., a Gaithersburg biotech firm. Top chaired a Pentagon-funded panel that produced a highly critical report on the vaccine program just two

months before Sept. 11. "You needed to set up some sort of management structure," he said. "It was incoherent."

The result is that the nation has only two vaccines licensed for use: a smallpox vaccine that was used to immunize every American until the naturally occurring disease began to disappear in the 1970s and a cumbersome anthrax vaccine that even supporters agree should be replaced.

Supplies of an imperfect plague vaccine have all but disappeared and there are no approved vaccines for a host of other "threat agents," including botulism, tularemia, and many encephalitis viruses and hemorrhagic fevers. The failure to develop vaccines, experts say, has left the nation unnecessarily vulnerable to bioterrorists.

"Vaccines should be your bedrock; they give you solid protection against solid threats," said Donald S. Burke, director for the Center for Immunization Research at Johns Hopkins University. "The decisions for management for this were badly run and could have been much better. Our vaccine vulnerability is much higher than it needs to be."

The Pentagon declined comment, although Col. Edward M. Eitzen Jr., chief of the U.S. Army Medical Research Institute of Infectious Diseases at Fort Detrick, the Pentagon's research arm for biodefense vaccines, acknowledged, "There's a new environment post-Sept. 11."

The anthrax attacks that killed five people last fall imposed new urgency on military efforts to develop and test vaccines, win approval for vaccines that have languished for years as experimental remedies and explore ways to produce vaccines reliably and in large amounts.

It was not that planners were unaware of biological warfare. Worries that Iraq would use biological agents during Operation Desert Storm prompted the Pentagon in 1991 to distribute 300,000 doses of anthrax vaccine and 8,000 doses of botulism toxoid to U.S. forces in the Persian Gulf.

The Pentagon also had a civilian company under contract to produce limited supplies of vaccines classified as "investigational new drugs" -- remedies that had not obtained FDA approval.

Most of the experimental vaccines, however, were doomed never to win FDA license because the human trials required by law were impossible. Injecting people with experimental vaccines and then challenging them with lethal biological warfare agents is an ethical taboo. Still, experimental vaccines can be administered in emergencies as long as the patient gives written informed consentand accurate records are kept. The Pentagon relied on this regulatory loophole for years and used it during the Gulf War.

"The attitude was, 'We'll never use these vaccines, and if we have to use them, the risk would be so high, the benefit would far outweigh the risk,' " said Army Col. David L. Danley, project manager of the Pentagon's Joint Vaccine Acquisition Program.

But that changed soon after the war, when some veterans complained of unusual illnesses they attributed to their Gulf service and suggested vaccines may have caused them. Investigators found the Pentagon had neither obtained informed consent from all of those injected nor kept accurate records.

By 1992, the Defense Department had all but abandoned the experimental drugs. Henceforth it would seek FDA approval for all its vaccines. This new policy, however, was not accompanied by adjusted regulatory requirements. As a result, the human trial ban became a Catch-22 that curtailed, and, in some cases, halted Pentagon-contracted vaccine research for years.

Nevertheless, in 1994, Pentagon biodefense researchers at Fort Detrick asked the civilian contractors at a now-defunct division of the Salk Institute for Biological Studies to seek FDA approval of experimental vaccine for tularemia, which causes flu-like symptoms and sometimes pneumonia.

"We had terrible misgivings," said Ron Arndt, a former Salk scientist. Researchers hadn't done enough trials or testing of the vaccine and "we never got to first base," Arndt said.

In the mid-1990s, Fort Detrick scientist Michael Langford thought he had devised a way to circumvent the restriction on human trials by demonstrating that botulism toxin could be neutralized in mice using human antibodies. The experiment foundered, however, because Langford could not demonstrate measurable levels of immunity in the mice after one year.

"People may well have been protected," said Langford, now chief scientific officer at Frederick-based DynPort Vaccine Co. "But we couldn't show it." The research was abandoned.

Similarly, a new generation anthrax vaccine has never been approved because of the FDA's arduous and time-consuming requirements for testing and data collection. People "didn't consider that to license [a new vaccine] you would have to to do a number of things, and there was no strong data," said Michael Gilbreath, former medical project officer at the Pentagon's Joint Program Office for Biological Defense who is now a vaccine specialist at the National Institutes of Health. "There was also a lot of evidence of a safety profile with the old vaccine, something that would have taken years to get for a new one."

The old vaccine is impractical because it requires a six-shot injection regime. Pentagon scientists suspected they could get by with fewer shots but they had not done the research "because the attention was always on the new vaccine," said one scientist with direct knowledge of the program.

Closer attention to licensing over the past decade also led the FDA to look more carefully at existing vaccine facilities to see whether they were complying with guidelines. Often they weren't.

BioPort Corp., of Lansing, Mich., nearly went bankrupt and needed a four-year renovation before the FDA allowed it to resume making anthrax vaccine in January.

Other vaccines disappeared altogether. In 1995, the FDA demanded that Greer Labs Inc., of Lenoir, N.C., retest its plague vaccine, a remedy licensed as a treatment for infectious disease but also used by the armed forces in biodefense. Greer closed the facility after the Defense Department refused to help with funding.

"They lost plague . . . because of really shortsighted decisions," said Alexandria-based consultant James G. Kenimer, a vaccine specialist.

To avoid these problems, Defense planners after the Gulf War proposed that the Pentagon build its own vaccine factory. It would take five to seven years to complete and would cost nearly $400 million, but it would guarantee vaccine supplies.

The idea was approved but then discarded in late 1993 when Congress and the Pentagon decided it was "not cost-effective," said Anna Johnson-Winegar, deputy assistant to the secretary of defense and a leading advocate of the plan.

Instead, the Pentagon in 1997 hired DynPort as an outside contractor for $322 million, giving the company the task of moving as many as 17 different vaccines to licensing. Four years later, after staggering in its initial stages, DynPort has seven vaccines in research. The closest to being licensed is a new smallpox remedy, projected for 2005.

But Top's committee report damned the DynPort approach as "insufficient," and Top called it "a high-risk strategy."

"If you want a vaccine in five to seven years, you go with the big guys," Top said. "If you have 15 years, then you can do it small."

Meanwhile, Johnson-Winegar is chairing an interagency panel examining the desirability of a government-owned facility, but Defense Secretary Donald H. Rumsfeld told Congress in January "I don't know of a time frame" on the panel's making a decision.

In the meantime, anthrax vaccine research appears finally on track. New generation vaccines are in development again, although FDA licensing is years away, and government scientists are testing the old vaccine with the aim of reducing the shot regime, perhaps beginning in 2004. Studies have also resumed on tularemia and botulism vaccines in hopes that both will be licensed -- tularemia in 2009 and botulism in 2012.

And finally, the FDA is readying a new regulation that will describe how researchers might substitute animal test data for human trials, thus circumventing the regulatory bottleneck that discouraged biodefense vaccine licensing. The first draft of this "animal rule" was written five years ago.

© 2002 The Washington Post Company

AFTER anthrax spread through the mail in October 2001, the government began a crash program to develop drugs, vaccines and diagnostic tests to protect the nation from biological terrorism. The pharmaceutical industry pledged support. It seemed to be the dawn of a new defense industry, based on genes instead of jets.

But with the nation now at war in Iraq, which is presumed to have biological weapons, the efforts to create a vibrant biodefense sector have had only partial success.

The United States is certainly better prepared now than it was when the anthrax attacks traumatized the nation. And about 100 biotechnology companies are trying to develop technology for detecting or fighting pathogens that may be used by terrorists or rogue nations.

But the companies that have enlisted tend to be small, lured not only by the call of duty but also by government research money at a time when raising money from investors is extremely difficult. While small companies are often innovative, most have never brought a product to market successfully. The effect has been to leave national security against bioterrorism largely in the hands of untested companies.

For the most part, the big pharmaceutical and biotechnology companies have stayed on the sidelines, turned off by the perceived small sales of products that people hope never have to be used and by the bureaucracy and low profit margins that come with government contracts.

''Government is not going to get new miracle drugs for cost plus 10 percent,'' Sidney Taurel, the chairman and chief executive of Eli Lilly, said in a speech on Capitol Hill last spring.

Many drugs on the market for diseases like cancer or AIDS stem from basic research sponsored by the government. But in trying to spur development of drugs for bioterrorism, the government is finding that just financing basic research is not enough..

''We need to have a little more pull toward getting the product made,'' said Dr. Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases.

So the Bush administration is proposing to go a step further by spending an estimated $6 billion over 10 years to buy and stockpile medicines to counter biological, chemical and radiological weapons, creating a guaranteed market for some of these drugs. ''There's been a lot of uncertainty about what the market is here,'' said Dr. Mark B. McClellan, the commissioner of the Food and Drug Administration. With the new system, he said, ''We will be able to offer a contract for payment on delivery.''

But some biotechnology executives, while welcoming the program known as Project BioShield, say it may be too limited, with much of the spending going to vaccines and drugs that are already fairly close to production. Gillian R. Woollett, the vice president for scientific and regulatory affairs at the Biotechnology Industry Organization, said BioShield does not deal with some important issues like protecting companies from liability if products developed under government contract have side effects.

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GOVERNMENT officials cite many areas of progress. ''Where we are right now, in March 2003, is enormously ahead of where we were just a year and a half ago,'' said Dr. Fauci at the infectious-diseases institute. Back then, he said, the government had only 15 million doses of smallpox vaccine. But it found through testing that the vaccine would remain effective if diluted to provide 75 million or even 150 million doses.

Millions of doses of a new version of the vaccine are now being produced each month by Acambis, a British company, and Baxter International. Contracts to develop yet another smallpox vaccine, expected to cause fewer side effects than the existing one, were given to two companies -- Acambis and Bavarian Nordic of Denmark. The first doses will be available next year, Dr. Fauci said.

An anthrax vaccine is back in production at the Lansing, Mich., factory of BioPort. The factory had shut down for failure to satisfy F.D.A. manufacturing regulations. Contracts to develop an improved vaccine have gone to two companies, VaxGen of Brisbane, Calif., and the Avecia Group of Britain.

The Defense Department is separately developing several vaccines through a contract given to the DynPort Vaccine Company of Frederick, Md.; DynPort's majority owner is the Computer Sciences Corporation of El Segundo, Calif.

Even government officials concede that the situation is not ideal. Col. Erik A. Henchal, head of the Army's biological defense laboratory, said in January that there were serious holes in defenses against biowarfare because of inadequate government money and a lack of interest on the part of the drug companies before the Sept. 11 attacks. The existing smallpox vaccine has enough side effects -- including one or two deaths per million people vaccinated -- that health care workers are balking at it. The anthrax vaccine requires six shots over 18 months.

Moreover, much of what is available consists of vaccines. But it is impractical to vaccinate all civilians for every conceivable threat, so there is a need for drugs that can treat people after they are infected.

For now, no such drug is available for smallpox, though the vaccine can work if given soon after exposure. Some antibiotics, like Cipro, from Bayer, work against anthrax, but only if given promptly. Existing antibiotics also can work for tularemia and plague, Dr. Fauci said. For botulinum toxin there is an antitoxin, but it is made from horse blood and is in short supply. No drugs exist for the Ebola virus.

Moreover, some experts say, many pathogens can be used in an attack, some genetically engineered to be resistant to antibiotics. So there is a need, they say, for medicines that can work against a broad array of germs, as well as for techniques for quickly devising countermeasures when a new threat arises.

Since 2001, the government budget for biological countermeasures has soared. At the National Institutes for Health, for instance, the biodefense research budget rose to $1.5 billion in 2003 from about $274 million in 2002.

The Food and Drug Administration has hired 100 people to review drug applications related to bioterrorism and to provide guidance to companies developing them. A rule was put into effect last year to expedite approval of drugs aimed at countering biological, chemical or radioactive weapons. The rule allows approval based largely on tests in animals.

So far, the agency has approved one drug under this rule -- pyridostigmine bromide, a protection against soman, a nerve gas. Dr. McClellan, the food and drug commissioner, said that ''more than a few'' other drugs are in line to be approved using animal tests.

Pyridostigmine bromide has long been approved for myasthenia gravis, a neuromuscular disease. ''A lot of the work up till now has been on finding new uses for existing drugs with respect to agents of bioterror,'' Dr. McClellan said. But he added that more novel drugs were also in the works.

ANTIBODIES, one area of interest, can be made to neutralize particular pathogens and toxins. They would provide protection in advance of exposure, effective for about a month, and could also be useful after exposure.

Human Genome Sciences, a biotechnology company in Rockville, Md., and Avanir Pharmaceuticals of San Diego separately announced recently that they had developed antibodies against anthrax. Abgenix, of Fremont, Calif., is working on antibodies to treat smallpox, plague and Ebola and Marburg viruses. EluSys Therapeutics of Pine Brook, N.J., is developing antibodies that stick not only to a pathogen but also to red blood cells, to quickly remove the pathogen or toxin from the body.

Antibodies must be injected or given intravenously, which could be time-consuming in an emergency or on the battlefield. So some companies are working on pills.

Chimerix, a San Diego company with five employees, is developing one to treat smallpox or the side effects from the vaccine, although the company is still at least 18 months away from testing the pill's safety in people, an executive said.

For some small biotechnology companies, the research financing from the National Institutes of Health or the Defense Department has been a godsend at a time when investors are shunning biotechnology and the companies are running out of cash. VaxGen, whose main product, an AIDS vaccine, failed in a large clinical trial recently, remains afloat largely on revenue from its government anthrax vaccine contract.

For many of the companies, the biodefense work is just another application of their main technology, allowing them to improve it at government expense. Getting a contract from the government is also regarded as a validation of a company's approach, helping it attract other investors and sometimes leading to higher stock price.

''Anything you do in biotech that moves products forward builds credibility, builds perception of the quality of the science,'' said Edward O. Lanphier II, the chief executive of Sangamo BioSciences of Richmond, Calif., which is seeking a $5 million government grant to apply its gene regulating technology to pathogens.

Still, the fact that some companies are going into biodefense at least in part for the government contract money raises questions about how dedicated they will be once the investor climate improves. These companies also face the risk that their products, even if developed, may not be procured by the government because of competitive bidding. ''It may be an all-or-nothing for these companies,'' said John T. McCamant, the editor of the Medical Technology Stock Letter in Berkeley, Calif.

A rare example of a company that has clearly built a profitable business from bioterror countermeasures is Acambis of Britain. It was awarded contracts for smallpox vaccines worth more than $770 million, very meaningful for a small start-up. Because of the contracts, it reported its first profit last year.

For most companies, biodefense work is a small part of their business, compared with work on drugs for infectious diseases or other ailments. But there are exceptions. Anacor Pharmaceuticals of Palo Alto, Calif., has received $22.6 million from the Pentagon and only $7 million from venture capitalists. The company was formed two years ago largely because the Pentagon wanted to commercialize research by two university scientists.

Many executives say that because of the small size of the market, they would not be involved in biodefense work if they had to spend their own money on it. Even if drugs are stockpiled, that is a one-time sale, not a continuing revenue stream.

''This is not something investors are after,'' said Kevin P. Anderson, vice president for business development at Chimerix. ''They are looking at commercial targets like AIDS or cancer.''

Government grants also come slowly and in small increments. Human Genome Sciences was able to leapfrog several competitors in developing its anthrax treatment because it did not need to rely on government grants. And the grants also come with a lot of paperwork.

''The rules were designed for whoever it is that builds the stealth bomber at a couple of billion dollars a clip,'' said David B. Singer, the chairman and chief executive of GeneSoft Pharmaceuticals, a company in South San Francisco, Calif., that is trying to develop smallpox and anthrax drugs with Pentagon financing. ''These rules were not designed for companies like ours that have two and a half people in our accounting department.''

These factors help explain why the big drug companies have largely stayed on the sidelines. They do not need small research grants, and their profit margins are typically much higher than those of military contractors like Boeing or Raytheon. Moreover, two types of drugs of most interest in biodefense -- vaccines and antibiotics -- have been of declining interest to many drug companies even for natural infectious diseases. The companies are focusing more on drugs for chronic diseases.

Merck, GlaxoSmithKline, Aventis and Wyeth bid on the smallpox vaccine contract, worth more than $400 million, that was won by Acambis and Baxter. And Aventis did bid jointly with DynPort Vaccine, though unsuccessfully, for a contract to develop a next-generation anthrax vaccine. Other than that, many of the big companies have confined themselves to working with the government to see whether their existing antibiotics could be used against anthrax or other threats.

ELI LILLY is now working with government officials to test whether Xigris, its drug for sepsis, can fight Ebola hemorrhagic fever.

''These studies do take time,'' said Dr. Gail H. Cassell, the vice president for scientific affairs at Lilly. ''The public needs to appreciate the difficulty of working with these highly dangerous pathogens.''

Senators Joseph I. Lieberman, Democrat of Connecticut, and Orrin G. Hatch, Republican of Utah, have introduced a bill that they say would go beyond Project BioShield's incentives by providing tax breaks, patent extensions and liability protection to companies for work on countermeasures to biological, chemical and radiological weapons.

Instead of forcing drug companies into the system of military contractors, the bill would encourage companies to develop such countermeasures ''at their own risk, at their own expense and for their own good business reasons'' -- but with the prospect of the profit levels to which they are accustomed.

The bill is expected to face tough resistance, because giving subsidies to pharmaceutical companies may be unpopular amid the public outcry over rising drug prices. The Bush administration has not announced support of it, emphasizing Project BioShield. The BioShield legislation should pass easily. A Senate committee on Wednesday approved it unanimously.

FREDERICK Success stories like DynPort Vaccine Co. LLC (DVC) become a part of Maryland Gov. Robert Ehrlich's stump speeches, he said during a recent visit to the biopharmaceutical company on Thomas Johnson Drive.

There's been a lot of activity at the biotechnology firm since its founding in 1997. A Computer Sciences Corp. (CSC) subsidiary that employs more than 100 people at its Frederick headquarters, DVC has often appeared in the news.

DynPort (www.dynport.com), which develops and licenses safe and effective biodefense vaccines for the Department of Defense and civilian populations, is testament that the biotech industry is thriving in Frederick.

"I'm here to congratulate you," Mr. Ehrlich said during a town hall meeting with DVC executives and employees. He said venture capitalists are always looking at Maryland because they like what the state has to offer: cutting-edge biotechnology and high-tech firms like DVC, federal labs, a highly skilled workforce, good universities and close proximity to the federal government.

A major part of his job is to leverage Maryland's assets to attract economic development -- "trying to complete the deal, showing what we have to offer, competing with other states," Mr. Ehrlich said.

"As governor, my job is to make sure your seed capital is available for you to do your job," Mr. Ehrlich said, referring to state technology funding grants that DVC has received.

The governor said Baltimore is trying to emulate the I-270 corridor, which he described as "world-class."

A few weeks ago, DVC received a grant of more than $9.9 million from the Department of Health and Human Services' National Institute of Allergy and Infectious Diseases. This subsidy from the institute's Challenge Grants and Partnership Program will fund Phase Two of three clinical test phases for a vaccine against Venezuelan equine encephalitis.

Continued research of this vaccine has been possible, in part, by the technology made available through Fort Detrick, said Terry Irgens, president of DynPort.

In August, Computer Sciences Corp. announced that the U.S. Food and Drug Administration had accepted DVC's filing of a biologics license application for vaccinia immune globulin, an intravenous immune globulin under evaluation for the treatment of adverse reactions to smallpox vaccination. A globulin is group of animal or plant proteins responsible for the transport of molecules.

The biologics license application came on the heels of other news that Computer Sciences Corp. (www.csc.com), headquartered in El Segundo, Calif., had acquired Porton International Inc.'s interest in DVC. Formerly a joint venture between Computer Sciences and Porton International, DVC has been the prime systems contractor for the Department of Defense Joint Vaccine Acquisition Program since 1997.

Since its inception in 1997, DVC has managed the existing stockpile of biodefense vaccines and the advanced development, testing, production, FDA licensure and storage of up to 18 new biological defense vaccines for the Joint Vaccine Acquisition Program.

In 2003, DVC expanded its market to include civilians by teaming with the National Institute of Allergy and Infectious Diseases in new efforts to further the development and licensure of the company's biodefense vaccines and therapeutics.

DVC's biodefense biologics development include vaccinia immune globulin, smallpox vaccine, next-generation anthrax vaccine, plague vaccine, Venezuelan equine encephalitis vaccine, tularemia vaccine, botulinum bivalent and multivalent vaccines, and botulinum polyclonal antitoxin.

DVC was named "Technology Firm of the Year" in 2003 by Frederick County and the State of Maryland, based on revenue growth and its support of other Maryland businesses.

DVC's employment has increased from 26 employees in the year 2000 to more than 100 employees today, and the company has received recent media coverage in Time magazine, Fortune magazine, The Washington Post, U.S. Medicine and Vaccine Weekly.

Company officials said DVC encourages the use of local resources where possible as part of its aggressive subcontractor and small business identification and recruiting programs. DVC takes advantage of Maryland's large concentration of biotechnology companies, with more than 250 Maryland companies participating as subcontractors and vendors.

Many of the products in advanced development at DVC were conceived and developed at the United States Army Medical Research Institute of Infectious Diseases (USAMRIID). Located at Fort Detrick, USAMRIID is the lead medical research laboratory for the U.S. Biological Defense Research Program, and plays a key role in national defense and in infectious disease research.

USAMRIID's mission is to conduct basic and applied research on biological threats resulting in medical solutions -- such as vaccines, drugs and diagnostics -- to protect the warfighter. USAMRIID is a subordinate laboratory of the U.S. Army Medical Research and Materiel Command.

April Finnen, DVC's public relations representative, said DVC addresses the complex and demanding issues of FDA licensure by engaging the expertise, experience and capabilities of subcontractors, research centers and industry leaders in the biologics development industry.

The DVC team applies new research and development technology, proven standards of scientific objectivity, successful performance-based management techniques, and current information technology standards, Ms. Finnen said.

DVC has the flexibility to bring in expertise on an as-needed basis, Ms. Finnen said, reducing the overhead burden of a major manufacturer. With access to the resources of geographically dispersed companies, DVC clients can rely on multiple resources.

All the products DVC is working on are on the national Centers for Disease Control and Prevention's Category A or B list of potential bioterrorism agents or diseases (http://www.bt.cdc.gov/agent/agentlist-category.asp).

According to the Web site:

Category A agents can be easily spread from person to person, can result in high mortality rates, might cause public panic and social disruption, and require special action for public health preparedness.

Category B agents are moderately easy to spread, result in moderate morbidity rates and low mortality rates, and require specific enhancements of CDC's diagnostic capacity and disease surveillance.

DVC is working on vaccines for Category A agents, which include anthrax, botulism, plague, smallpox and tularemia. DynPort also is working on a vaccine for Venezuelan equine encephalitis, which is a Category B agent.

In 2003, DVC completed Phase 1 clinical trials for cell-cultured smallpox vaccine and vaccinia immune globulin, which is a smallpox vaccine antiserum.

The FDA recognizes that the license submission for vaccinia immune globulin is complete and warrants full review of the data needed to assess the globulin's quality, safety and effectiveness, Ms. Finnen said.

The FDA submission "marks a major milestone in DVC's history," Mr. Irgens said. "Vaccinia immune globulin is expected to be the company's first licensed product.

"This tremendous accomplishment would not have been possible without the support of the Department of Defense Joint Vaccine Acquisition Program and our many excellent subcontractors," said Mr. Irgens. "VIGIV will provide additional reassurance that adequate treatment for complications of smallpox vaccinations is immediately available."

The globulin, which is a therapeutic, was manufactured from plasma donations of military personnel previously vaccinated with vaccinia, the virus used to vaccinate against the smallpox virus.

The globulin contains purified antibodies specific to the vaccinia virus that helps people recover from the rare complications of vaccination against smallpox. The globulin might be used in cases of generalized vaccinia, eczema vaccinatum or progressive vaccinia.

Mr. Irgens, who serves on the board of directors of the Fort Detrick Alliance, which is a Frederick Chamber of Commerce task force, said DVC has initiated a sponsorship program to support key industry and professional associations, including the Technology Council of Maryland, Biotechnology Industry Organization, Frederick Chamber of Commerce, the American Pharmacists Association and the Association of Military Surgeons of the United States.

DVC sponsors the annual Joel M. Dalrymple Award for Biodefense Vaccine Development, in memory of an internationally renowned Fort Detrick virologist and molecular biologist who made substantial contributions to the field of modern vaccine development for the DOD.

FALLS CHURCH, Va., July 14 /PRNewswire-FirstCall/ -- CSC announced today that DynPort Vaccine Company LLC (DVC), a CSC company, has received a contract from the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health, to establish and operate a Phase 1 clinical trial unit for infectious disease therapeutics.

The contract is valued at approximately $32.3 million over a seven-year period. DVC is teaming with Quintiles Transnational Corp. to complete this work.

Under the terms of the agreement, DVC and Quintiles will manage a Phase 1 clinical trial unit to assess the safety of investigational therapeutic products being studied by NIAID, and determine pharmacokinetic and pharmacodynamic properties of up to four new investigational products per year. As the prime contractor, DVC will provide overall project management, clinical operations management, quality assurance and co-development of protocols. Quintiles will provide Phase 1 clinical research and support services for the implementation and conduct of approved Phase 1 clinical trial protocols.

Trials will include therapeutic candidates for a broad range of infectious diseases. Investigational products tested could include measures to protect against viral (other than HIV), bacterial, parasitic and fungal pathogens, including NIAID priority biodefense pathogens and emerging and re-emerging infectious diseases.

"DVC and Quintiles have an established history of success -- both individually and as partners -- in clinical trial management of medical countermeasures," said Dr. Robert V. House, president of DVC. "DVC has successfully advanced eight products into clinical trials in the last 10 years. This represents an expansion of DVC's capabilities in pharmaceutical product development."

"Quintiles is pleased to expand our existing government contracting relationship with DVC," said Oren Cohen, M.D., senior vice president and managing director of Quintiles' Public Health and Government Services business. "Quintiles' portion of the work on this contract will take place in our new, state-of-the-art, 150-bed Phase 1 clinical research unit in Overland Park, Kan. The facility was dedicated in May 2007 and provides an ideal setting to perform multiple, concurrent clinical trials."

Work will be performed by DVC at its headquarters in Frederick, Md.

About Quintiles

Quintiles Transnational Corp. is powering the next generation of healthcare by providing a broad range of professional services in drug development, commercialization and strategic partnering for the pharmaceutical, biotechnology and medical device industries. With more than 21,000 employees and offices in more than 50 countries, it is focused on providing customer-centric solutions that are the gold standard of the industry. For more information, please visit the company's Web site at http://www.qtrn.com.

About DVC

DynPort Vaccine Company LLC (DVC) manages product development programs and provides consulting, technical and program management services to U.S. government agencies and companies in the biotechnology and pharmaceutical industries. For more information, visit http://www.csc.com/dvc. DVC is part of CSC's North American Public Sector business unit's Government Health Services Division. CSC's expertise in providing health services to government agencies has grown over the last five decades to offer commercial best practices integrated to meet federal, state and local healthcare requirements. Services range from optimizing claims processing to operating disease surveillance systems to vaccine development and management. CSC's ideas and solutions are improving the quality of healthcare with better information for better decisions to save lives and money.

About CSC

CSC is a leading information technology (IT) services company. CSC's mission is to be a global leader in providing technology-enabled business solutions and services.

With approximately 90,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC's own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in Falls Church, Va., CSC reported revenue of $16.5 billion for the 12 months ended March 28, 2008. For more information, visit the company's Web site at http://www.csc.com.

This project has been funded in whole or in part with Federal (United States Government) funds from the National Institute of Allergy and Infectious Diseases (NIAID), Division of Microbiology and Infectious Diseases (DMID), under contract number HHSN272200800024C. Pursuant to section 507 of P.L. 104-208 and Section 508 of P.L. 105-78, 100% of the total of this project's costs are financed with Federal funds. The content of this publication does not necessarily reflect the views or policies of the United States Department of Health and Human Services, nor does mention of trade names, commercial products, or organizations imply endorsement by the U.S. Government.

CONTACT: April Finnen, Senior Manager, Communications of DynPort Vaccine

Company LLC, +1-301-607-5004, afinnen@csc.com, or Bill Lackey, Director,

Investor Relations, Corporate of CSC, +1-310-615-1700, blackey3@csc.com

A flu vaccine made by a new, faster method works just as well as existing products, researchers reported Tuesday.

The finding clears a hurdle in the government’s effort to move toward a manufacturing process that could allow for a more reliable supply of seasonal flu shots and quicker responses to pandemics.

The new vaccine, which could become available in the United States in the next few years, is made by growing the influenza virus in cultures of animal cells rather than in the chicken eggs that have been used for more than half a century.

Using animal cells could shave weeks off the six months or so that is now required to produce a vaccine for a pandemic. In the 2009 swine flu pandemic, large quantities of vaccine were not ready until after the wave of disease appeared to have crested.

Using animal cells, which are grown in enclosed steel tanks, also reduces the risk of bacterial contamination, which has led to shortages of seasonal vaccines in some years.

“I just think it’s an improvement in vaccine production that has been warranted for a long time,” said Dr. W. Paul Glezen, an influenza expert at the Baylor College of Medicine who wrote a commentary to accompany the report, which was published online Tuesday by The Lancet. “I just feel we’ve been sort of slow in implementing it.”

Dr. Glezen said shorter production times would allow health officials to wait longer before deciding which strains to include in the next winter’s flu vaccine, a decision that now has to be made around February. That would increase the chance that the strains in the vaccine match the strains in circulation.

In addition, Dr. Glezen said, when the virus grows in chicken eggs, it undergoes some changes. “It may not match the circulating virus as much as a vaccine made in mammalian cells,” he said.

In a large clinical trial involving 7,250 healthy adults, the new vaccine was more than 70 percent effective in preventing the seasonal flu, according to researchers from Baxter International, the developer of the new vaccine. That rate is similar to what egg-based vaccines have demonstrated in past studies, the researchers wrote.

The clinical trial was paid for by the Department of Health and Human Services, which awarded $1.3 billion to six companies in 2006 to develop cell-culture flu vaccines, including $242 million to Baxter and its partner, the DynPort Vaccine Company.

The trial is the second to show a cell-culture influenza vaccine to be as effective as conventional ones. In November, a study involving a Novartis vaccine was published in Clinical Infectious Diseases.

Experts say it is no surprise that the vaccines work. Still, proof is needed for them to win regulatory approval.

Baxter began selling the vaccine in parts of Europe last October. The company, which is based in Deerfield, Ill., would not say when it would apply for approval in the United States.

P. Noel Barrett, vice president for research and development in Baxter’s bioscience division, said the company was in discussions with the Food and Drug Administration about what kind of data would be needed for approval.

The main issue, Dr. Barrett said, was that the clinical trial involved healthy volunteers ages 18 to 49 and compared the vaccine with a placebo. Yet children and the elderly are more vulnerable to severe problems from the flu, so for those populations it might be unethical to conduct trials using a placebo.

Baxter therefore wants to show that the vaccine produces antibodies in children and the elderly at levels that correlate with those in the adults.

“We are certainly committed to moving this forward into the U.S. as fast as possible,” Dr. Barrett said.

Novartis won approval for its cell-culture vaccine in Europe in 2007 and plans to start the process leading to F.D.A. approval this year. With help from a nearly $500 million federal contract, the company has built a cell-culture vaccine factory in Holly Springs, N.C.

Robin Robinson, the director of the Biomedical Advanced Research and Development Authority in the Department of Health and Human Services, said cell cultures would never completely supplant egg-based production. Two of the six companies that received the federal cell-culture awards in 2006 have dropped their efforts and given back the money, he said.

Dr. Robinson said cell culture was an “interim solution” until even faster techniques come along that do not require growing the virus at all.

Baxter’s flu vaccine is made in so-called Vero cells, derived from the kidneys of African green monkeys. The cells are already used to make other vaccines, including those for polio and rabies.

The clinical trial was conducted in the United States during the flu season of 2008-9. Only 13 people, or 0.4 percent, of those getting the vaccine became infected with a flu virus matching one of the three strains in the vaccine, compared with 60 people, or 1.7 percent, of those getting the placebo. That translates to an effectiveness of 78.5 percent.

Counting all strains of flu, even those not in the vaccine, the infection rates were 0.6 percent with the vaccine and 2.2 percent with the placebo, making the vaccine 71.5 percent effective. Side effects were similar to those of conventional vaccines, the researchers said.

1. Introduction Certain highly pathogenic microorganisms and their products have the potential to be used as weapons against either military or civilian populations. The Centers for Disease Control and Prevention (CDC) classifies these agents into one of three categories (A, B, or C) according to seriousness of consequences following exposure (http://emer gency.cdc.gov/agent/agentlist-category.asp; accessed April 7, 2011). The US Department of Defense (DoD) has a long history of developing therapeutics and prophylactics (vaccines) to protect the warfighter against offensive use of these agents. Until relatively recently, these countermeasures could be used under an investigational new drug application (IND) mechanism. Now, the DoD mandates that any such products administered to the US warfighters be licensed by the US Food and Drug Administration (FDA). Currently, DVC is developing two vaccines for DoD’s Joint Vaccine Acquisition Program (JVAP); these include a recombinant vaccine to protect against fatal botulism following inhalational exposure to the A1 and B1 serotypes of botulinum neurotoxin (rBV A/B), as well as a recombinant vaccine to protect against pneumonic plague following inhalational exposure to Yersinia pestis (Y. pestis) (rF1V). The specific performance and regulatory requirements, progress, challenges, and successes in each program are reviewed below.

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