Project BioShield: An Update From McKenna Long's Frank Rapoport

Thursday, July 1, 2004 - 01:00

Editor: We interviewed you on Project Bioshield for our November issue. For starters, would you give us some of the background on this undertaking?

Rapoport:
Project BioShield originated in the President's State of the Union Address in January of 2003. It derives from the events of September 11 and from the concern that the pharmaceutical industry and the American government historically have not worked together to address the threat of bioterrorism. In his State of the Union message, the President announced legislation that he was sending to Congress under the name Project BioShield. Its intention was to provide for a modest allocation of funds to the pharmaceutical and medical diagnostic industries to encourage them to do business with the government in the development of vaccines, anti-virals and diagnostics in anticipation of a terrorist attack using biological agents.

The proposed bill went to the Senate Health Committee, where it passed unanimously, and then to the House where, for several months, a number of House committees held hearings on how to revise the bill so as to make it more acceptable to the pharmaceutical and biotech industries. I testified before two such committees. The bill was then sent back to the Senate, where it languished for almost a year. This was the result of having a war underway - a situation that always consumes the attention of the Senate - not a consequence of bipartisan disagreement. What certainly did get the attention of the Senate was the discovery, early in February of this year, of the deadly agent ricin in the office of Senate Majority Leader Bill Frist. The Senate leadership picked up the bill almost immediately, and on May 19th it passed the entire Senate by unanimous vote. It is now back before the House of Representatives where, but for President Reagan's death, it would have been taken up, passed and sent on for the President's signature in short order. In any event, we anticipate passage by the House and the President's signature during the month of July.

Editor: McKenna Long participated in the drafting of the Project BioShield legislation approved by the House of Representatives. Would you tell us about your role in that undertaking?

Rapoport:
McKenna Long has a long history of dealing with the public sector, particularly in the area of governmental contracting. While the pharmaceutical industry has never thought of itself as a government contractor - Boeing, Lockheed and the other giants of the defense industry are the enterprises one thinks of in this category - that is changing since the events of September 11th. Project BioShield sends a very clear signal to the pharmaceutical industry from the Administration and from Congress that its help is needed in the development of a public health system capable of meeting the bioterrorism threat, including the development of new diagnostic tools and new drugs through the governmental contracting process. Needless to say, the pharmaceutical industry cannot invest the enormous sums necessary for research and development in such an undertaking without a clear and unequivocal commitment from a customer at the other end of the process. That is what Project BioShield is meant to accomplish.

Concerning the role that the firm, and I, played in seeing that the legislation was designed to achieve that end, we were asked by Aventis Pasteur, the largest company in the world dedicated to the development of vaccines, to review the bill and to suggest language which might make it more palatable to the pharmaceutical industry. Aventis Pasteur was very interested in this process because of its already strong presence in the public health area. I was then invited to speak - as someone knowledgeable in the emerging biodefense area - before the House Select Committee on Homeland Security by its Chairman, Christopher Cox.

Editor: How did the House version of this legislation come out on governmental funding, and indemnification, for private organizations engaged in research and development and the production of biomedical countermeasures?

Rapoport:
The House version did not contain any indemnification language. That is now anticipated to appear in what we call BioShield II, which is legislation that we expect to be submitted by Senators Lieberman, Hatch and Gregg after Project BioShield is signed into law. In addition, this is expected to be sponsored by Congressmen Davis, Weldon, Dix and Andrews on the House side. Concerning Project BioShield, what it accomplishes is the erection of a bridge to connect the ability of the government to spend research and development funds under the normal National Institutes of Health budget and the government's willingness to pay for production contracts under Project BioShield. As I have indicated, going into the process the pharmaceutical industries were skittish about taking on a governmental research and development contract in the absence of some guarantee of a production contract in the event their research and development efforts turned out to be successful. The large pharmaceutical companies have a variety of opportunities, so to attract them to what is necessary for our nation's biodefense system, there must be some assurance of a return on the investment they are expected to make in the research and development phase of a given project. Project BioShield begins the process that is meant to give them that assurance.

Editor: Doesn't the process contemplated by Project BioShield serve to exclude the smaller manufacturers in favor of those with the resources to stay the course?

Rapoport:
The smaller enterprises are already, and have been, a part of the process because of the availability of research and development funding from the government. They simply lack the funding options that are available to the large international pharmaceutical houses, and they find the possibility of governmental support very attractive. The larger enterprises have access to a wide range of funding options, and it is not so much the availability of at least some governmental support for their research and development activities that gets them on board, but rather the possibility of the production contract at the end of the day. And it is crucial to have them participate in the nation's biodefense system. They have the resources - human, intellectual, technological and financial - to make that system work. Without them, I think there would have to be some question about the effectiveness of the system.

Editor: What about the connection between Public Law 85-804, the Safety Act and the legislation approved by the House for Project BioShield?

Rapoport:
All of this is work in progress, but in fact the Project BioShield legislation is not connected to the Safety Act in offering indemnification, nor to the executive authority under Public Law 85-804 to provide any indemnity. The Safety Act, which derives from the Homeland Security legislation, provides some protection for companies whose device or product fails in the event of a terrorist attack. However, it does not address what happens when the device or product fails in the absence of such an attack. PL 85-804 also affords a contractor some protection, but it appears to cover finished products rather than, say, a vaccine that is still in experimental phase, and the absence of an actual terrorist attack continues to be an issue. There are several ways in which this issue can be approached. One solution would be for Congress to amend the Safety Act to permit coverage in the situation of a possible terrorist attack. Given the political and practical realities, I am not sanguine about this coming to fruition. For one thing, the trial lawyers are vehemently opposed to the Safety Act because it has all but eliminated big product liability suits against defense contractors, and they are in a position to make their views known in Congress. Another solution is for Congress to extend to the Department of Health and Human Services the authority to indemnify suppliers of biodefense vaccines along the lines that it now indemnifies suppliers of smallpox vaccines. This might be the best solution, but there is resistance both from Congress and from the Administration's budget officials, so it may not be a viable approach. A third solution is for Tom Ridge to declare that an act of terrorism, as that term is meant to be understood under the Safety Act, has already occurred with the anthrax attacks in 2001, and that, accordingly, all vaccines are administered "in response to that act of terrorism and are able to receive Safety Act protection." We have asked the Department of Homeland Security to consider this possibility, and it is currently under consideration. At the moment, one of the major impediments that the pharmaceutical companies face in signing up for participation in Project BioShield is the vulnerability to product liability lawsuits in the event of product failure in the absence of a terrorist attack.

Editor: What has happened since House approval?

Rapoport:
The Senate version of Project BioShield is about 95% the same as the House version. I do not believe the House is going to make any substantive changes to it. Accordingly, I think this is the version that the President will sign into law in the next few weeks.

Editor: In our discussion last fall you indicated that Project BioShield has the potential to transform an industry that has been reactive into one that is proactive. Do you still hold that view?

Rapoport:
Dr. Anthony Fauci, the Director of the National Institute of Allergy and Infectious Diseases, a component of the NIH, has said that Project Bioshield may result in the creation of a biodefense industry analogous to the defense industry that came into being following World War II. I continue to think that this may be the ultimate outcome of Project BioShield, and that such a development will not only provide our people with a viable means to address bioterrorism, but very possibly constitute a major step forward in addressing scourges such as HIV/AIDS, SARS, West Nile Virus, smallpox and the like. That would be a very positive development for America and for the world.

Please contact the interviewee at frapoport@mckennalong.com with questions about this interview.