Production of Anthrax Vaccine Delayed Again

A troubled government program to produce a new anthrax vaccine has fallen at least another year behind schedule, and sources said last night that tensions between the government and its main contractor have become so severe the future of the program could be in doubt.

VaxGen Inc., the contractor producing the anthrax vaccine, has scheduled a news briefing for this afternoon. A company officer would not discuss the latest developments last night.

In testimony before a House panel yesterday, Gerald Parker, a ranking administrator at the Department of Health and Human Services, revealed that the government has approved contract changes under which the company will not begin delivering anthrax vaccine until late 2008, with final delivery in 2009.

Until the changes, the company was required to deliver the vaccine starting at the end of this year, a schedule it has acknowledged it has no hope of achieving. The company previously predicted it would begin delivering some doses in late 2007, but now even that delayed schedule appears to be out the window.

VaxGen, of Brisbane, Calif., has blamed the delay on problems with the potency of the vaccine but has said it is well on its way to fixing them. The problems have been a political embarrassment for the Bush administration, which awarded VaxGen some $1 billion in contracts to produce what was supposed to be a modern vaccine that could protect as many as 25 million people from exposure to deadly anthrax spores in the event of a terrorist attack.

In his testimony on Capitol Hill yesterday, Parker did not discuss the tensions between VaxGen management and the government. Two sources with knowledge of the situation -- who spoke on condition of anonymity because they had not been authorized to speak ahead of the company's news briefing today -- described a situation in which the company and the government seem almost certain to wind up in a legal battle over contract changes.

VaxGen is expected to seek millions of dollars in compensation for new requirements imposed by the government, a politically difficult request on a contract that has already drawn considerable fire on Capitol Hill. It was unclear last night what the new requirements are, but after VaxGen ran into problems with vaccine stability, some scientists had predicted the company would be ordered to conduct expensive, time-consuming new tests before the government would accept the product.

The new developments are merely the latest problems in a program that was supposed to showcase the Bush administration's commitment to developing a broad national defense against bioterror attacks. Congress approved more than $5 billion over 10 years for the program, Project BioShield, but lately members from both parties have criticized the government's handling of it and demanded more progress. The anthrax program is by far the biggest contract awarded under BioShield to date.

Parker, principal deputy in the HHS office overseeing Project BioShield, noted in his testimony that delays in ambitious projects of this sort "are not unexpected or unprecedented."