Deal for Smallpox Vaccine Could Jump-Start BioShield

The government has agreed to spend as much as $1.6 billion to buy millions of doses of a smallpox vaccine tailored for people with impaired immunity.

In a step toward getting the troubled Project BioShield program back on track, a Danish company, Bavarian Nordic, will begin delivering 20 million doses of the vaccine, enough for 10 million people, in 2008 under an initial contract worth $500 million. The deal could be extended to cover an additional 60 million doses as Bavarian completes clinical studies proving its safety for children, the elderly and people with HIV.

"We are on the road to having a countermeasure for smallpox" beyond the large vaccine stockpile that already exists for people with normal immunity, said Sen. Richard Burr (R-N.C.), who pushed legislation to revamp the BioShield program. "Smallpox is a top priority for the country in terms of threats."

The announcement, made Monday, followed several stumbles for the $5.6 billion BioShield program, one of President Bush's signature efforts to ensure the country's defense against terrorists. The program has been plagued by delays, scientific hurdles and management problems and has completed few of its goals, prompting sharp complaints from both parties on Capitol Hill.

Last year, the Department of Health and Human Services scuttled the largest BioShield contract, an $877.5 million deal with a small California firm, VaxGen, to develop an anthrax vaccine after the company missed a deadline to begin human testing. In March, the department withdrew plans to buy 100,000 doses of a radiation sickness treatment, saying none of the available drugs met requirements. Even the lengthy bidding process for the smallpox contract, started in 2005, has come to exemplify the program's problems.

In recent months, the department has moved to improve the program, issuing a plan outlining its priorities and taking initial steps toward contracting for a next-generation anthrax vaccine and a radiation sickness drug.

"We're applying all the lessons that we have learned in the . . . history of Project BioShield, the lessons from VaxGen," said Carol Linden, acting director of the Biomedical Advanced Research and Development Authority, the Health and Human Services unit that has assumed responsibility for BioShield.

Bavarian's contract will be the first test of a key BioShield reform. Because few large drug companies have been interested in supplying products for BioShield, which they see as a tiny market, the government has had to rely on small biotechnology firms.

Previously, participating companies were not paid until they delivered drugs for a national stockpile, creating what some termed a "valley of death" as the companies struggled to fund development on their own. Under legislation passed last year, the department can make interim payments as firms reach certain milestones. This is a standard technique in military contracting, but it hasn't been used much in biodefense.

Bavarian is eligible for as much $150 million in early payments. "We see it as a partnership," said Paul Chaplin, Bavarian's chief scientific officer. "In a partnership there has to be an investment on both sides for it to be a success."

Linden said: "We determined that it would be necessary and beneficial to the success of the project; we looked at the principle of sharing risk with company."

Smallpox, which killed 300 million to 500 million people in the 20th century and disfigured many others, was eradicated in the 1970s by a worldwide vaccination campaign using an older type of vaccine.

In the late 1990s, national security experts began to fear that the virus, against which people are no longer vaccinated, created opportunity for terrorists or rogue states to use to unleash a pandemic if they got their hands on it.

The government has stockpiled enough of the older type of vaccine for every American, but concerns about its effect on people with compromised immune systems prompted a search for an alternative.

"Some people have died from receiving the live vaccine, so there is a whole host of concerns around it," said Robert Kadlec, former director for biodefense on the White House's Homeland Security Council. All smallpox vaccine is made from a weakened virus that resembles smallpox, but Bavarian's version appears less likely than the standard vaccine to cause illness in vulnerable people.

Bavarian has already completed a study of the vaccine on healthy people and has launched a study with 400 HIV patients, Chaplin said. Enrollment in the HIV study should be completed by the end of the year with data on the immune response ready early next year, he said.