Project Bioshield

Issue | Obstacles | Q & A | Quick Facts | Legislation | Agreements | Talking Points | Recommendations

Back to WMD Reference Center

 

The Issue

First proposed in President George W. Bush's 2003 State of the Union Address, the Project BioShield Act of 2004 (Public Law 108-276) was signed into law on 21 July 2004. The Act was developed as part of a growing political interest in bioterrorism prevention and response in the past decade, particularly since the September 11th attacks on the World Trade Centers and the Pentagon, and the dissemination of anthrax through the US postal service one month later.

While countermeasures (vaccines and other therapeutics to prevent or treat bioterrorist pathogens) exist for a few of the most deadly agents identified by the Centers for Disease Control and Prevention (CDC), they are far from universal. Because of a traditionally flat and uncertain market for these products, pharmaceutical companies have been unwilling to invest the substantial upfront costs associated with research, development and clinical trials. "Because these diseases occur infrequently, there has been little economic incentive for the investment of the millions of dollars required to bring a new treatment to market."[1] An interagency effort overseen by the Secretary of Health and Human Services and the Secretary of Homeland Security, Project BioShield is designed to incentivize the private sector to develop and make available modern, effective drugs and vaccines, or "medical countermeasures," in order to protect the American public against the effects of a chemical, biological, radiological or nuclear (CBRN) attack.[2] It is an interagency effort, overseen by the Secretary of Health and Human Services and the Secretary of Homeland Security.

The goals of Bioshield are to:

  1. Expedite the procurement of existing countermeasures and the conduct of research and development on new countermeasures. This includes an expedited peer review and award process by the Secretary of Health and Human Services for grants, contracts, and cooperative agreements related to countermeasure research and development.
  1. Give the Food and Drug Administration (FDA) the ability to make promising treatments quickly available in emergency situations. This authority should provide access to the best available treatments in the event of a crisis. Importantly, Bioshield allows the Secretary of Health and Human Services to authorize emergency use of countermeasures unapproved and unlicensed by the FDA. This provision would be exercised only in extreme circumstances, due to issues of public safety involved in administering prophylactics or treatments that have not been sufficiently tested.
  1. Ensure that resources are available to pay for "next-generation" medical countermeasures. Project BioShield will allow the government to buy improved vaccines or drugs for inclusion in the Strategic National Stockpile. This market guarantee is an attempt to incentivize and reassure biotechnology and pharmaceutical companies that investments in the countermeasures market will be profitable.

The fiscal year 2004 appropriation for the Department of Homeland Security included $5.6 billion over 10 years for the purchase of next generation countermeasures against anthrax and smallpox as well as other CBRN agents.

But the lure of billions did little to attract private investment by pharmaceutical firms. The prospect of liability suits and uncertain profits were two main factors in the lack of interest. In response, multiple bills were introduced during the 109th Congress to address the problem. There were two tracks which were taken. The first track was led by Senator Burr who introduced S.3678, the Pandemic and All-Hazards Preparedness Act. This bill was designed to be "a comprehensive reauthorization of health preparedness and response programs" that were contained in the "Public Health Security and Bioterrorism Preparedness and Response Act of 2002.[3] Simultaneously, a series of bills were introduced to address issues specific to Project BioShield. These bills included S.3 (Gregg), S.975 (Lieberman), S.1873 (Burr), S.1880 (Kennedy), S.2564 (Burr), and H.R.5533 (Rogers). Ultimately, S.3678 was amended to encompass provisions to address shortfalls in the original Project Bioshield legislation; the bill became PL 109-417 when it was signed into law by the President in December of 2006.

The Pandemic and All-Hazards Preparedness Act created a number of new initiatives to alleviate the issues with the original Project BioShield and gain increased involvement from the pharmaceutical industry. First, the Act established the Biomedical Advanced Research and Development Authority (BARDA) at HHS. BARDA is designed to act in a manner similar to the Defense Advanced Research Projects Agency (DARPA), which allows the government to fund development projects with high-risk implications. In exchange for funding industry research, the government is able to gain lower procurement costs on the finished project. This effort was allocated $1.07 billion from FY2006-FY2008. The efforts of BARDA are technically distinct from those of BioShield. For Project BioShield, however, the Act does permit HHS to pay vendors at milestones in drug production provided that those payments are not more than 50% of the overall contract. Finally, HHS is granted authorization to sign a contract with the producer making them the sole manufacturer of a specific product for the US government.

The Pandemic and All-Hazards Preparedness Act attempts to provide for many of the cost and risk concerns in developing the pharmaceutical; the liability question was not addressed in this bill. Rather, it was addressed in the "Public Readiness and Emergency Preparedness (PREP) Act", part of the 2006 Defense Appropriations Act (P.L. 109-148). This bill provides immunity from both suit and liability for companies whose medicines are used on an emergency basis under the authorization of the Secretary of HHS. The act provides one exception to this liability by permitting prosecution in the event of "willful misconduct." Given that no cases to date have necessitated the use of the emergency powers, it is unclear what impact these provisions will have.

BACK TO TOP

Obstacles

  • It has tended to be smaller pharmaceutical manufacturers who have gotten involved in Project BioShield. While this is beneficial in increasing overall US capacity, it has also been problematic as these companies need far greater technical assistance. Additionally, many smaller companies have not been able to operate under the financial conditions of BioShield which does not permit payment until the final product is provided. Many of the smaller companies may not have the financial means to accept the research risk even with a market guarantee.[4]
  • The challenge of getting drug makers involved in the countermeasures effort is to convince them that this is not necessarily a money-losing venture. Companies need to foresee significant demand for these products during the limited period of the patent in order to make a sufficient return on their investment. The US Government has attempted to provide an assured market by permitting companies that are willing to do work on these countermeasures to enjoy sole-supplier contracts with the government for the relevant products.
  • The liability waiver could potentially protect companies that act negligently and irresponsibly and deprive injured persons of a legal remedy.

BACK TO TOP

Q & A

Q: How much has the US spent on biodefense preparedness since 2001?
A: Since Fiscal Year 2001, the US Government has allocated over $36 billion on biodefense and preparedness. Eleven different government agencies have received biodefense funding:

Agency

Funding (Millions of US Dollars)[5]

Department of Health and Human Services

$23,536

Department of Defense

$10,659

Department of Homeland Security

$5,588

US Postal Service

$1,265

Department of Agriculture

$1,237

Environmental Protection Agency

$870

Department of State

$460

Department of Energy

$179

National Science Foundation

$152

Department of Veterans Affairs

$78

Department of Commerce

$36


Q: Where has the $5.6 billion appropriated in BioShield I gone?
A: While Congress authorized $5.6 billion for Bioshield, the money was to be appropriated and allocated over the course of 10 years. Additionally, there were restrictions on when HHS could spend the money. For FY2004, no more than $890 million was permitted for obligation, and only $3.418 billion could be obligated through FY2008. According to HHS, it obligated approximately $1.831 billion; however, in December of 2006 it cancelled its largest contract ($878 million for an anthrax vaccine) for company failure to meet a contract milestone. Of the money that remains obligated $551.7 million is going into anthrax vaccines and treatments, $362.6 million is dedicated to botulinum antitoxin, and $39.4 million is dedicated to treatments for radiological/nuclear exposure.[6]

Q: Why have more pharmaceutical firms not taken advantage of BioShield?
A: There are multiple reasons why the pharmaceutical firms have not all come on board and started working to develop new treatments. First, while BioShield does provide a market for the drugs, there are still financial and research risks which the pharmaceutical company must assume. For instance, under BioShield I, drug manufacturers would only receive the obligated funds if they were able to deliver a finished product. Consequently, if a drug in development under the BioShield program failed to pass clinical trials, the manufacturer would earn nothing. To address this concern, the Pandemic and All-Hazards Preparedness Act established the Biodefense Advanced Research and Development Authority (BARDA), to assist in the research and development phase of these drugs using a contracting mechanism similar to that employed by DARPA. Second, drug makers are still unconvinced about the prospects of the market for these drugs beyond the US government. For example, HHS has recommended against the prescribing of anthrax except when needed; barring another attack, there will be limited demand.[7] This is a problem because the potential financial gains do not mitigate the development risks. Third, until late in 2005, there were concerns among the drug makers regarding their liability, especially in cases where HHS is forced to use drugs which have not completed the usual approval process. While modifications have been made, it is still too soon to determine what effect, if any, it will have on industry participation in the program.

Q: What are the prospects for revising Project BioShield in the 110th Congress?
A: Barring a significant incident, there are minimal prospects for changes in the current Congress. Congress appears to be keen to let the changes it has instituted in the Pandemic and All-Hazards Preparedness Act and other legislation it has already passed take effect. Additionally, the renewed actions in the Executive, as indicated by Homeland Security Presidential Directive 18 and the PHEMCE Strategy (see Agreements section) appear to be a sufficiently layered strategy for Congress for the time being.

BACK TO TOP

Quick Facts

  • Mortality rates from anthrax, the agent used in the most recent terrorist attacks on the US, depend on the type of exposure. Cutaneous anthrax, which occurs when anthrax spores touch the skin, is fatal in approximately 20 percent of untreated cases. Gastrointestinal anthrax, in which spores are ingested, is fatal in 25 to 75 percent of untreated cases. Inhalational anthrax, in which spores are taken into the lungs, is the most deadly, as it kills 80 percent of all cases.[8]
  • The global market for just one cholesterol-lowering agent exceeds the global market for all vaccines together, not just those that comprise a security countermeasure.[9]
  • It is estimated that the cost of developing and bringing to market a new drug is between $800 million and $1.7 billion. This is compared to an average of around $136.25 million per project under BioShield.[10]
  • One top pharmaceutical company made $22 billion in total sales in 2005 alone, in comparison to the $5.6 billion the government is offering industry-wide over 10 years through BioShield. The average expenditures per annum of Project BioShield ($560 million) constitute just 2.5% of the sales of just this one company.

BACK TO TOP

Recent Legislation

  • Pandemic and All-Hazards Preparedness Act (PL 109-417), enacted 19 December 2006 This Act provided a reauthorization of the federal programs dealing with public health threat readiness. The Act combined this reauthorization with provisions relating to procurement for the Strategic National Stockpile, especially Project BioShield. The BioShield provisions in the Act permit HHS to pay vendors at milestones in drug production provided that those payments are not more than 50% of the overall contract. HHS is also granted authorization to sign a contract with the producer making them the sole manufacturer of a specific product for the US government. Distinct from, but related to BioShield I, Congress established BARDA to help HHS fund countermeasures research and development in a manner similar to the contracting mechanism DoD utilizes with DARPA.
  • "Public Readiness and Emergency Preparedness (PREP) Act" part of the 2006 Defense Appropriations Act (PL 109-148), enacted 31 December 2005 This bill is significant in that it established immunity from liability claims for drug producers involved in the Strategic National Stockpile, with the exception of cases where willful misconduct is found. The willful misconduct provision is to be interpreted to provide the most restrictive definition possible.
  • Biodefense and Pandemic Vaccine and Drug Development Act of 2006 (H.R. 5533 and Senate Bill S. 2564)-Not enacted.
  • Project Bioshield Material Threats Act of 2006 (H.R. 5028)-Not enacted. This bill, with only superficial modifications, was reintroduced as Project BioShield Material Threats Act of 2007 (H.R. 1089) on 15 February 2007 and is still pending.
  • National Biodefense and Pandemic Preparedness Act of 2005 (S. 1880), Introduced 17 October 2005-Not enacted.
  • Project Bioshield II Act of 2005 (S. 975), Introduced 28 April 2005-Not enacted.
  • Biodefense and Pandemic Vaccine and Drug Development Act of 2005 (S.1873). Introduced 17 October 2005-Not Enacted

BACK TO TOP

Applicable Treaties, Legislation, and Other International Agreements

  • Public Health Medical Countermeasures Enterprise (PHEMCE) Strategy, 14 March 2007PHEMCE is an interagency working group whose purpose is to determine the requirements for countermeasures, handling product development and procurement (including BioShield), and establishing the use and deployment strategies for the Strategic National Stockpile. The Public Health Medical Countermeasures Enterprise Strategy explores all aspects of the processes relating to the Strategic National Stockpile including research, development, acquisition, storage and maintenance, deployment, and utilization.
  • Medical Countermeasures against Weapons of Mass Destruction, Homeland Security Presidential Directive (HSPD-18), 31 January 2007 HSPD-18 is an attempt to create a "government-wide strategy for developing and acquiring civilian WMD countermeasures." The Directive calls for the establishment of an interagency group for strategic planning very similar to PHEMCE. It is unclear if the directive is simply reaffirming the work of PHEMCE or whether the Directive is indicating that it finds their work insufficient.[11]
  • Project BioShield Act of 2004 (PL 108-276), enacted 21 July 2004. This bill established Project BioShield after the concept was first proposed in George Bush's 2003 State of the Union. The project was designed to provide a market guarantee for producers to develop medical countermeasures in the event of a WMD attack. The project was given a 10 year appropriation (?) of $5.6 billion which it can guarantee to give (give what?) to producers upon delivery of finished drugs. No money can be provided until the drugs were delivered. The program also provides the HHS Secretary with the authority to call for the use of medicines which are not yet fully approved in the event of a national emergency.
  • Biodefense for the 21st Century, Homeland Security Presidential Directive (HSPD-10), 28 April 2004; or National Security Presidential Directive (NSPD-33). This Directive called upon the US to work to develop a biodefense system commensurate with the current situation. To accomplish this, President Bush outlined four pillars of the strategy: 1) threat awareness; 2) prevention and protection; 3) surveillance and detection; and 4) response and recovery. The BioShield program falls squarely in the realm of response and recovery which calls specifically for countermeasures defense and response planning.
  • Public Health Security and Bioterrorism Preparedness Response Act of 2002 (Public Law 107-188), enacted 12 June 2002. The Act authorizes funds for all levels of government (federal, state, and local) to evaluate and plan for public health emergencies. The act also contains provisions addressing the control of biological agents and toxins, and the development of countermeasures against bioterrorism.

BACK TO TOP

Talking Points

  • The attacks of September 11th and the subsequent anthrax letter scare that October demonstrated the limitations of the existing countermeasures system for biodefense.
  • While countermeasures exist for a few of the most potentially deadly agents, they are far from universal in scope, quantity, and coverage.
  • Unfortunately, there is a perspective among the drug companies that the risks of attempting to develop a vaccine or countermeasure for diseases, such as smallpox, which occur very infrequently, are not balanced by the limited markets and likely low profit margins.
  • Project BioShield was an attempt to use government funds to create an incentive for companies to develop countermeasures. It permitted the government to create an obligation to purchase a drug long before it would ever reach the market. This was an attempt to create a market for the manufacturers. But it does not mitigate R&D costs as the government is only obligated to pay if the product gains FDA approval and is ultimately delivered.
  • Project BioShield created a means for the HHS Secretary to call for the use of a drug before it had gained approval in the case of a national emergency. This has raised significant concerns about public safety.
  • While Project BioShield is designed to incentivize industry to produce medical countermeasures to protect against the effects of a chemical, biological, radiological or nuclear attack, it appears that most of the emphasis and financial resources (99.3%) has been on biological/biotoxin countermeasures.
  • BioShield has failed to rally the pharmaceutical and biotech industry to produce countermeasures, for which there is a fairly small market. Congress attempted to alleviate these concerns through the creation of BARDA and amending the law to permit sole-supplier contracts. Unfortunately it is still unclear as to what impact these measures will have on drawing companies into these projects.
  • The companies that have been involved in the project have tended to be smaller biotech firms. This complicates the process as these companies often need the most risk protection and technical assistance.

BACK TO TOP

Recommendations

  • The US Congress should establish a bi-cameral congressional task force to receive regular briefings from an array of government and private industry stakeholders on developments related to Project Bioshield and how it could be leveraged to ensure effective implementation. [See Book Recommendation #7 ]
  • The bioweapons-related scientific and technical talent resident in the WMD complexes in the states of the FSU could be effectively engaged in Project Bioshield Initiatives. This would not only support US biodefense priorities, but also its cooperative nonproliferation and global development objectives. Existing NNSA (and other US Government) programs to redirect scientists from weapons-related work to commercial sectors, especially those with industry already involved, could be exploited to foster the necessary countermeasure supply. [See Book Recommendations #8 and #17]
  • Industry Partners within the Initiatives for Proliferation Prevention should be seen as potential employers for former weapons scientists. Pharmaceutical companies could be brought in to employ bioweaponeers in vaccine research. [See Book Recommendation #18 ]

BACK TO TOP     Back to WMD Reference Center

 

 

Endnotes

[1] Frank Gottron, Project BioShield, CRS Report for Congress, 23 July 2003.

[2] Project BioShield Homepage, http://www.whitehouse.gov/infocus/bioshield

[3] Sarah A. Lister and Frank Gottron, The Pandemic and All-Hazards Preparedness Act (P.L. 109-417): Provisions and Changes to Preexisting Law, CRS Report for Congress, 12 March 2007.

[4] Alex M. Azar, II, Testimony before The Subcommittee on Health of the House Committee on Energy and Commerce, 6 April 2006, accessed at http://www.hhs.gov/asl/testify/t060406.html.

[5] Figures include Fiscal Year 2007 Presidential Request. Taken from: Center for Arms Control and Nonproliferation, "Federal Funding for Biological Weapons Prevention and Defense, Fiscal Years 2001 to 2007," accessed at: http://www.armscontrolcenter.org/resources/fy2007_bw_budget.pdf.

[6] Frank Gottron, Project BioShield: Appropriations, Acquisitions, and Policy Implementation, CRS Report for Congress, 8 March 2007.

[7] HHS, "Questions And Answers About Anthrax Prevention And Treatment," 10 October 2001, accessed at:  http://www.hhs.gov/news/press/2001pres/20011010a.html.

[8] Food and Drug Administration, "Anthrax," 21 December 2005, accessed at: http://www.fda.gov/Cber/vaccine/anthrax.htm.

[9] Alex M. Azar, II, Testimony before The Subcommittee on Health of the House Committee on Energy and Commerce, 6 April 2006, accessed at http://www.hhs.gov/asl/testify/t060406.html.

[10] Ibid.

[11] Frank Gottron, Project BioShield: Appropriations, Acquisitions, and Policy Implementation, CRS Report for Congress, 8 March 2007.

BACK TO TOP | Back to WMD Reference Center 

 

Last Updated on May 30, 2007