Government Cancels Vaccine Contract

In a setback to the Bush Administration's efforts to counter bioterrorism, the government has terminated an $877.5 million contract for a new anthrax vaccine after the manufacturer missed a key deadline to begin human clinical trials.

The Department of Health & Human Services (HHS) informed Brisbane, Calif.-based VaxGen on Dec. 19, 2006, that it was canceling the company's contract to provide 75 million doses of a modern anthrax vaccine for civilian biodefense.

"VaxGen's failure to perform is not excusable," HHS said in a letter to the company. "The government is terminating the contract for default."

HHS based the decision on its determination that VaxGen failed to resolve problems with the vaccine's performance and missed a milestone that required the company to initiate human testing of the vaccine by Dec. 18, 2006.

The Food & Drug Administration had put the clinical trial on hold due to continuing concerns about the vaccine's stability. The agency refused to allow human testing, saying VaxGen had not demonstrated that the vaccine would maintain its potency.

The contract was by far the largest component of Project BioShield, a $5.6 billion government program to build a national stockpile of modern vaccines and drugs to counter a chemical or biological attack.

Created in the wake of the Sept. 11, 2001, terrorist attacks, Project Bioshield has been marked by delays and operational problems. The drug industry has been reluctant to join the venture, and the government has been slow to decide which diseases it should defend against.

HHS officials have acknowledged that the lack of a strategic plan has left pharmaceutical and biotechnology companies guessing about what kind of research to launch.

In response, Congress passed a law last month reorganizing management of the program and increasing incentives for private-sector participation. Sen. Richard M. Burr (R-N.C.) says the measure should help prevent the kind of problems that led to the cancellation of the VaxGen contract.

"This law takes important steps to increase our preparedness and response capabilities for public health emergencies, and it improves our ability to create new drugs and vaccines," Burr remarks.