-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.
Cantthinkof19246,
I do not care what the Feds have asked for, no competition means the taxpayer is getting screwed.
Gene,
About those Kruggerands, if it could do that I am all for it.
Dr. Eric A. Rose, CEO of SIGA, used political influence to obtain a contract negotiator that gave SIGA more favorable terms. That’s the textbook definition of crony capitalism. Dr. Rose’s decision shows a complete lack of judgement that should cost him his job.
The extremely low probability of a smallpox attack, as cited in the RAND report of a previous comment, indicates that ST-246 is not needed.
That the contract, requiring FDA approval, was granted when no pathway to FDA approval exists, is also troubling.
Yo’ Mr. Gene H The Ignorant One
https://www.fbo.gov/index?s=opportunity&mode=form&id=b655c001d75069b1e245ec2d69f60690&tab=core&_cview=1
Take a gander and look at the accompanying pdf files and justification.
I welcome your response back.
Until then, your ignorance continues to shine through.
cantthink,
My. How appropriate.
“’Whether ST-246 works or not is irrelevant to the discussion.’
You guys who have no clue about ST-246 or the path that Siga has taken over the last 7 years… are clueless. Your comments show ignorance because you are uninformed and refuse to dig into the situation.”
The one without a clue here is the one who thinks this is about anything other than quid pro quo no-bid contracting practices. The drug could make you piss Krugerrands and look like a movie star in addition to being an effective anti-viral and I still wouldn’t want Siga to get the benefits of 180% profit on the back of what essentially appears to be bribes. Bribery is a crime and this transaction? Stinks of bribery. Just as criminals deserve to go to prison, criminal companies deserve to go out or be put out of business.
I thought investments were a gamble, unless of course you are a bankster.
Only one. And your ignorance continue to shine through.
I see the Siga investors are back. It must be tough to lose your shirt on a bad call.
Again, this is not about effectiveness or not, although I have some serious questions about the testing. This is about no-bid contracts. You cannot convince me there is only one outfit in the whole wide world that can produce this product. Smell test, it does not pass.
Gene H. Said,
“Whether ST-246 works or not is irrelevant to the discussion.”
You guys who have no clue about ST-246 or the path that Siga has taken over the last 7 years… are clueless. Your comments show ignorance because you are uninformed and refuse to dig into the situation. ST-246 IS THE ONLY ANTIVIRAL (NOT VACCINE>>DO YOU KNOW THE DIFFERENCE?) which has been proven effective AND SAFE ON ALL POX VIRUSES. THE MONKEYS LIVED. NOBODY ELSE HAS A AN ANTIVIRAL THAT WORKS! Are you starting to understand? As for the price for the COURSE (not per pill!) you failed to address the post which showed it is an average price for similar type products. 180% profit? Are you aware of profit margins in the bio-tech industry where companies toil away for years making nothing? You folks, the uninformed and ignorant who are crying about a sole source no -bid contract are uninformed and refuse to educate yourselves on what is happening here. If you can read (doubtful at this juncture) take some time become informed instead of taking a LA Times reporter’s hack job.
cantthinkof19246@aol.com,
Fess up. How much do you have invested?
Mister we could use a man like Jonas Salk again.
When he was asked in a televised interview who owned the patent to the polio vaccine, Salk replied: “There is no patent. Could you patent the sun?”
Gene,
Interesting article on Siga. The food pyramid guys seem to be very involved in what appears to be a dispute on who gets business from the government without any competition.
Blouise,
The NYTimes article should have mentioned NY Attorney General Eric Schneiderman and Delaware Attorney General Beau Biden, who have led the fight against these kinds of settlements despite heavy pressure.
Siga Technologies, Center Of Smallpox Contract Dispute, Threatened HuffPost With Lawsuit
Along those same lines:
http://www.nytimes.com/2011/11/29/business/judge-rejects-sec-accord-with-citi.html?hp
Bron,
As I wrote that I was thinking you’d agree and that is the point. Why would wanting the government not to waste money be a political issue? The politics enters in the discussion of what is waste. Can anyone defend using lobbyists to get no-bid contracts, no matter how valid the need? For those who would argue emergency I know as a former Director of Contracts how quickly a government can act in an emergency and still ensure they are not being victimized by money hungry contractors. Admittedly though, control of illegitimate expenses is many times a rarity, but when I did that work it seemed the rightthing to do, no matter who I pissed off. It is by the way one of the reasons I won’t donate to the Red Cross, but the story is too long to tell, save for the fact they are anything but an altruistic organization, eventhoughtheir workers are quite dedicated and mostly under paid.
The food products seemed determined to fight a corporate battle and in their zeal appear to completely miss the point which I suppose is understandable in that as Board Room warriors they are simply following orders.
What I find interesting about this is the deflection. The OWS mindset has started to seep into elected officials’ conscience thought and the underlying fear I sense here is the loss of “sole source” contracting.
In short, they get the point of Nal’s article … big time.
Mike S:
“3. Given what I said in 2. above, my interest as a citizen is not having my tax money used to line the pockets of those who see government as an ATM.”
I would say that is a very good argument, at least in my mind.
I was busy last night so I didn’t reply to the inherently silly arguments put forth by our three joined at the hip commenters.
1. As I, Nal and Gene stated the argument is about
the possible corruption indicated by a single source (a more artful term for no-bid) contract and the apparently huge profit margin. None of these writers responded to that except to say but look at what Cerebix did. trMy response to that is a plague on both their houses and Issa’s also.
2. Ken and Mike both implied they bet the ranceh on Siga’s stock as if to imply that they were owed some sympathy for their apparently incorrect investment choice. Any investment entails risk and one invests at their own peril. Businesses main interest is making profit via overcoming its competition. That the game gets dirty at times is a fact of life, which I may not approve of, but which any investor must understand, or choose not to invest. Siva and Cerebix both used campaign funds to game the system and neither comes to this with clean hands.
3. Given what I said in 2. above, my interest as a citizen is not having my tax money used to line the pockets of those who see government as an ATM.
As I stated from professional experience single source contracts are overwhelmingly the result of corruption and must all be examined closely. Siga’s. product may well be the best, but that is not the issue presented. No amount of whining by those with vested interests will change that.
4. General will you please explain to me why my arguments above are liberal? I would think conservatives would also take the same position. By the way I loathe Issac, so it isn’t about my taking his side.
Nal:
“there are considerable technical and logistical barriers to the production and dissemination of smallpox virus as a weapon.”
If I remember correctly, Indians [native Americans] were given blankets with smallpox virus on them. I am not sure how there are very many technical barriers to dissemination. In regards to production? I am pretty sure a terrorist would have no compunction about infecting people with the virus to harvest it.
Um, Gene, the smallpox vaccine works very well also, and there is a secure stockpile of the stuff from which more can be made on a moments notice. And researchers are continually working on other herpes antivirals, some looking very promising.
I seem to recall there is a drug called Cipro which works well on on other infectious vectors as well.
But as you said, that is irrelevant to the point that obscene profits are to be made for a paltry 0.6 million that went to purchase a few politicians.
Come on back when you figure out a way to rationalize a 180% profit that has the appearance of being purchased with $620,870 in “contributions” to politicians, political parties and lobbyists.
It’ll surely be funnier than your defense of “the drug works”.