Smallpox And SIGA

-Submitted by David Drumm (Nal), Guest Blogger

In 2004 President Bush signed the Project Bioshield Act that authorized $5.6 billion over ten years for “the government to purchase and stockpile vaccines and drugs to fight anthrax, smallpox and other potential agents of bioterror.” The potential use of anthrax as a bioterror weapon is well documented, but smallpox has been eliminated and exists only in ultra-secure labs in Russia and the U.S.

The idea that terrorists are going to break into one of these labs and steal the smallpox virus is absurd. The best defense against this absurd idea is to destroy the remaining stockpiles. However, U.S. Health and Human Services Secretary Kathleen Sibelius said the U.S. and Russian stockpiles would remain in place for at least another five years. There is a reasonable explanation for the U.S. to keep smallpox virus around: to develop a smallpox vaccine against the possibility that Russia weaponizes its stockpile.

Smallpox is caused by the variola virus. According to the FDA, “During the smallpox era, the only known reservoir for the virus was humans; no known animal or insect reservoirs or vectors existed.” That is, any potential threat has to come from the virus in the stockpiles. According to the CDC, “the last naturally occurring case in the world was in Somalia in 1977.”

In 2007, the Bush administration issued a $505 million contract to a Danish company, Bavarian Nordic, to provide twenty million doses of smallpox vaccine for those whose immune system has been compromised. Vaccination is effective within three days of exposure and will remain effective for three to five years with decreasing effectiveness thereafter.

The Obama administration has been pushing a $433 million “sole source” contract to New York based SIGA Technologies Inc who bought the rights to an antiviral drug, ST-246. After complaints from SIGA that negotiations weren’t going to their satisfaction, senior HHS officials replaced the government’s lead contract negotiator, and SIGA was awarded the deal in May. The contract calls for the delivery of 1.7 million doses of the drug to the nation’s biodefense stockpile. The price per dose is $255, yielding a profit of 180%, well above what government specialists consider reasonable.

SIGA’s  controlling shareholder is billionaire Ronald O. Perelman. Perelman has made political contributions totaling $620,870, with 40% going to Democrats, 14% going to Republicans, and the balance of 46% going to special interest groups. Perelman donated an additional $50,000 to President Obama’s inauguration.

The effectiveness of this drug on humans is unknown and, for ethical reasons, cannot be tested by exposing humans to the smallpox virus. Dr. Thomas M. Mack, an epidemiologist at USC’s Keck School of Medicine, has called the plan to stockpile SIGA’s drug “a waste of time and a waste of money.”

In addition to the dubious requirement of an untested, short shelf-life, smallpox drug, there’s the problem of getting approval from the FDA. Robert G. Kosko Jr., a manager in the FDA’s antiviral-products division, wrote that there was “no clear regulatory path” for approving antiviral drugs for smallpox — again because of the uncertainty surrounding evidence of effectiveness.

The Animal Efficacy Rule was adopted by the FDA in 2002 to address the problem of testing drugs on humans, when exposing humans to the disease presents ethical problems. However, guidance from the FDA, dated November 2007, on animal models for smallpox states:

Currently, available data do not establish specific preferred, well-characterized animal models for smallpox, and no animal models have been shown to replicate or to predict human responses to therapy for smallpox.

An FDA antiviral drug advisory committee will meet on December 14-15, 2011, to discuss “pathways for the development of drugs intended to treat variola virus infection (smallpox) in the event of an outbreak, including the use of animal models of other orthopoxviruses (the group of viruses that includes smallpox) as potential evidence of efficacy.”

The contract with requires SIGA to develop its drug “for ultimate approval by the FDA.” FDA approval will help determine whether the government exercises its options to buy more of the drug in the future, turning a $433 million contract into a $2.8 billion windfall.

From a SIGA webpage: “The FDA has designated ST-246 for “fast-track” status, creating a path for expedited FDA review and anticipated regulatory approval.” What would justify the anticipation of said FDA approval when the use of animal models has yet to be decided?

While ST-246 may be an effective antiviral drug against orthopoxviruses, the way this contract was negotiated stinks to high heaven.

H/T: David Willman (LA Times), CDC, FDA.

121 thoughts on “Smallpox And SIGA”

  1. mark, yep, I did my homework. I know that what looks like a duck, walks like a duck and quacks like a duck is most likely a duck. Gene provides the numbers above, so no need for me to repeat them.

    Now crawl back off to your handlers, mark, you made your comment. Gene, we really do need to solicit a better quality troll around here. The ones we are getting are so unoriginal.

  2. If it looks like graft and smells like graft, it’s more likely than not graft.

    Siga paying $620,870 to turn a $433 million contract into a $2.8 billion no-bid contract is the very appearance of graft. Those are the relevant facts for leveling the accusation. Get over your bad investment, but don’t try to tell me shit is shinola. You’d be the fool if you think me or anyone with contracts and political experience are going to buy the perpetual weak apologist defenses offered here.

  3. Otteray Scribe – Did you do any homework to see how far behind you are on the process SIGA went through? Did you see how stupid Anderson Cooper’s investigative reporter looked when they had one of their own come on who is on the SIGA board? Do you still think this was a contract awarded to a company based upon politics and back-door, secrete operatives? What a complete fool you are. You sat in front of your computer arguing about how bad “these types of contracts are” without doing ONE SECOND of research. You are a fool.

  4. Mark, most of the regular commenters here have quite a bit of experience with contracts, both public and private. I wrote my first proposal for a Federal contract back in 1968, and have written a number since. This is old news to those of us who are in the business. It all goes full circle. Product is neither needed or wanted by the public but millions of taxpayer money gets spent. It is called politics and payoffs for “services rendered”, also known as political contributions. Recall the “bridge to nowhere?”

    This is more of the global war on terror strawman stuff. See the Rand Corporation study.

  5. Everyone here arguing that the sole-source contract stinks keeps ignoring that it didn’t start out that way. That Chimerix has protested the “competitive” bid awards numerous times, which due to govt rules, kept SIGA from getting the award, doesnt seem to faze anyone here that is posting in the “bad siga” camp. To get around the protest, they HAD to do a sole source. There is nothing wrong about a sole source contract when there is NO ONE ELSE THAT CAN DELIVER. This is what makes me laugh when reading these comments, and also, if you ever did work with govt procurement procedures, you are lieing, as, there are instances of awarding contracts when there is no competition. This is not for bed pans, or laundry services, this is for a drug that only one company makes. As for the profit margins, someone posted a paragraph that shows that the profit level for this drug is within the range of other drugs. What is there to argue? The amount purchased by the govt is also a variable that the manufacturer must try and estimate. Spend years researching this stuff, with the possibility of a large order, then have the possibility of only a fraction of the drug being ordered? Where do you set the price point? When there is only one producer of a drug both administrations want, what do you do? Keep the bidding process open forever? You can’t. SIGA won the contract twice when it was open competiion, and Chimerix kept f*&Ung up the deal. So it went sole source. If anyone has any real info to the contrary please speak up. If not, please sit down.

  6. “If you believe it is unnecessary then objections should have been raised at the time this decision was made and before $10s and $100s of millions were spent on research and development.”

    Actually, that’s what’s known as sunk costs. There is no reason now not to lobby to ask again to re-evaluate if the physical vaccine needs to be produced, or just a prototyped, or even if computer simulations would not be sufficient for our needs at this time.

    “I suppose it is the nature of government procurement to be endlessly second-guessed, but you can’t blame Siga for following the path laid out and financed by the federal government. I’m sure we can all agree that no company would undertake the development of this drug without federal financing and the expectation of federal purchases.

    Yes, that is EXACTLY the issue at hand. Duh.

  7. trampdad22,

    OS poses the question of the dire necessity of manufacturing this vaccine well. I think it would be nice to have many doses of an effective smallpox vaccine on hand and I can accept that Siga might have the answer. That is not what people here are questioning. For instance only about 2% of cargo containers coming into US ports are inspected. I would worry much more about a nuclear bomb than smallpox. That is merely one instance, the point is where do you put your money first and I think smallpox is low on the list.

    “As to whether or not we need a smallpox cure, that decision was made almost a decade ago by the federal government under George Bush. It certainly wasn’t an idea cooked up by Siga. If you believe it is unnecessary then objections should have been raised at the time this decision was made and before $10s and $100s of millions were spent on research and development.”

    I objected at the time to the whole “War on Terror” meme and its use in pursuit of empire and payoffs to defense contractors. However, my objections and/or votes seem to have little effect upon the actions of this country. Many other expenditures were made in this silly war and no-bid contracts proliferated. All of it reflected payoffs to the Bush base and supporters. Much of it is/was wasted. I’m sure Siga wanted a piece of the pie, but that doesn’t mean their entitled to it.

  8. trampdad22, you seem to “get it” at least in part. My beef is with the whole notion of these kinds of contracts and none of the primary players appear to come out with clean hands. This is, IMHO, a boondoggle from the gitgo. This is not a product we need, but then there is a lot of stuff the government is contracting out which is not needed.

    Bio-terror aside, here is another example: They do not need to be selling military grade riot control equipment and unmanned aerial drones to police departments, so they can be used in the nonexistent Global War on Terror. This is a strawman. It really should be labeled the Global War on the Constitution.

    Recall how there was an uprated color coded terror alert every time George Bush The Lesser’s poll numbers dropped? This is just more of the same.

  9. The original contract to purchase ST-246 was NOT awarded on a no-bid/sole-source basis. The original RFP was fully open. Of the 2 companies that responded, only Siga had a product that was safe and effective. So they were awarded a ($1.2 billion) contract, fair and square under an open and transparent process.

    That’s when the real bribery and political influence peddling began. NOT on the part of Siga, but by the unsuccessful bidder Chimerix. If y’all are worried about money, purchased influence and political thuggery, THIS is where you should turn your attention. Chimerix has used (and is continuing to use) every trick in the book to reverse the result of an OPEN and HONEST procurement process.

    The sole-source contract was a result of the exasperation of BARDA at the successful political tricks pulled by Chimerix. BARDA wanted to fulfill their mission to stockpile the only safe and effective smallpox antiviral. Please note the contract was reduced by 2/3 and Chimerix was paid a hefty amount (hush money as it were) to continue their research. It obviously hasn’t hushed them up as they continue to do everything (including the LA Times article and subsequent fallout) to stall and delay the process. Now it appears someone (wonder who?) is using influence with the FDA in an attempt to change the (customary and previously unchallenged) requirement for primate testing.

    As to whether or not we need a smallpox cure, that decision was made almost a decade ago by the federal government under George Bush. It certainly wasn’t an idea cooked up by Siga. If you believe it is unnecessary then objections should have been raised at the time this decision was made and before $10s and $100s of millions were spent on research and development. I suppose it is the nature of government procurement to be endlessly second-guessed, but you can’t blame Siga for following the path laid out and financed by the federal government. I’m sure we can all agree that no company would undertake the development of this drug without federal financing and the expectation of federal purchases.

    Yes I have a (laughably small) investment in Siga stock.

    I will not engage in name-calling and insult, and I ask for the same in return.

    Thanks for your attention.

  10. Correction, should read, “The problem has been that ordinary taxpayers are not paying enough attention….”

  11. Has anyone noticed the forgetful basic food groups are awfully passionate about a virtually nonexistent threat? I have yet to see a compelling argument on behalf of Siga’s little political excursion into no-bid contracting. I kind of doubt they are paid shills, because most paid shills spell better and write complete sentences. My guess is blue-sky investors who bet the farm and their kid’s inheritance on this company. Just too much passion for it to be out of simple conviction by an ordinary taxpayer.

    The problem has been that not enough ordinary taxpayers are not paying enough attention to no-bid contracts and voting the scoundrels and thieves out of office who propagate them. And a failure of the prosecutor class for not going after them.

  12. “You folks must have also missed the part about the government, starting with the Bush administration, funding different bio-tech companies, including Siga ($110 million+), to find such an antiviral to cure small pox. They are still funding other companies (Chimerix, $35 million in 2011) in hopes of having a second, effective antiviral against smallpox. BUT, you “smart lawyers and scientists” here think you are smarter than the government that is trying to protect you. My bad.”

    You must have missed the part about Siga paying $620,870 to turn a $433 million contract into a $2.8 billion no-bid contract.

    How they got their initial funding and from whom is still irrelevant to the issue of bribery to secure an anti-competitive and ridiculously gouging profit for a drug that will likely never be used. You don’t get to set the topic of debate here in the name of your PR spin job. You’re way out gunned here in this arena if that’s your best tactic. Your bad “of” you want to debate here, slick.

    Also, we all pretty much assume you understand fluent gibberish since that’s what you seem to speak.

  13. Nal said,

    “There’s plenty of real threats to spend tax dollars on, we don’t imaginary ones.”

    Please speak English of you wish to debate here.

    Assuming I understand your gibberish, please see my previous post. You really should educate yourself before cutting and pasting an article from the LA Times and inserting a tidbit of your thoughts in an ATTEMPT to make your self look good as a wannabe reporter.

    1. Le,
      Before casting aspersions perhaps you should examine your own ignorance in making a bad investment in a company using political layoffs to get to the head of the national security ripoff line. Smallpox is a minor terrorist threat, but being you are in it for the money you want to use fear to make it a bonanza bogeyman. let Siga lower it’s ppeofit margin.

  14. “and as Gene says, the hue and cry is all about a bit of political chicanery and not about true science.” Sure thing. No science here at all. Nope.

    You folks must have also missed the part about the government, starting with the Bush administration, funding different bio-tech companies, including Siga ($110 million+), to find such an antiviral to cure small pox. They are still funding other companies (Chimerix, $35 million in 2011) in hopes of having a second, effective antiviral against smallpox. BUT, you “smart lawyers and scientists” here think you are smarter than the government that is trying to protect you. My bad.

  15. cantthinkof19246:

    You must have also missed the part that national security is the goal here. Security from terrorism.

    The RAND report, cited above, puts this act of terrorism in the “extremely low probability” category. There’s plenty of real threats to spend tax dollars on, we don’t imaginary ones.

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