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[Senate Hearing 109-148]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-148
 
       CROSSING THE VALLEY OF DEATH: BRINGING PROMISING MEDICAL 
                      COUNTERMEASURES TO BIOSHIELD

=======================================================================

                                HEARING

                               BEFORE THE

                SUBCOMMITTEE ON BIOTERRORISM AND PUBLIC
                          HEALTH PREPAREDNESS

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

 EXAMINING PROMISING MEDICAL COUNTERMEASURES TO BIOSHIELD, FOCUSING ON 
THE PROJECT BIOSHIELD ACT OF 2004, AND THE ADMINISTRATION'S PRIORITY TO 
   HAVE AN APPROPRIATE ARMAMENTARIUM OF MEDICAL COUNTERMEASURES AS A 
     CRITICAL ASPECT OF THE RESPONSE AND RECOVERY COMPONENT OF THE 
          PRESIDENT'S STRATEGY BIODEFENSE FOR THE 21ST CENTURY

                               __________

                              JUNE 9, 2005

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

                    U.S. GOVERNMENT PRINTING OFFICE
21-847                      WASHINGTON : 2005
_____________________________________________________________________________
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                   MICHAEL B. ENZI, Wyoming, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
RICHARD BURR, North Carolina         BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia              JAMES M. JEFFORDS (I), Vermont
MIKE DeWINE, Ohio                    JEFF BINGAMAN, New Mexico
JOHN ENSIGN, Nevada                  PATTY MURRAY, Washington
ORRIN G. HATCH, Utah                 JACK REED, Rhode Island
JEFF SESSIONS, Alabama               HILLARY RODHAM CLINTON, New York
PAT ROBERTS, Kansas

               Katherine Brunett McGuire, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                 ______

      Subcommittee on Bioterrorism and Public Health Preparedness

                 RICHARD BURR, North Carolina, Chairman

JUDD GREGG, New Hampshire            EDWARD M. KENNEDY, Massachusetts
BILL FRIST, Tennessee                CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
MIKE DeWine, Ohio                    BARBARA A. MIKULSKI, Maryland
JOHN ENSIGN, Nevada                  JEFF BINGAMAN, New Mexico
ORRIN G. HATCH, Utah                 PATTY MURRAY, Washington
PAT ROBERTS, Kansas                  JACK REED, Rhode Island
MICHAEL B. ENZI, Wyoming (ex 
officio)

                     Robert Kadlec, Staff Director

                David C. Bowen, Minority Staff Director

                                  (ii)

  

                            C O N T E N T S

                               __________

                               STATEMENTS

                         Thursday, June 9, 2005

                                                                   Page
Burr, Hon. Richard, Chairman, Subcommittee on Bioterrorism and 
  Public Health Preparedness, opening statement..................     1
Vitko, John Jr., Director, Biological Countermeasures Portfolio, 
  Science and Technology Directorate, U.S. Department of Homeland 
  Security; William F. Raub, Deputy Assistant Secretary, Office 
  of Public Health Emergency Preparedness, U.S. Department of 
  Health and Human Services, accompanied by Carole Heilman, M.D., 
  Director, Division of Microbiology and Infectious Diseases, 
  National Institute of Allergy and Infectious Diseases, National 
  Institutes of Health; and Colonel Joseph M. Palma, M.D., 
  Medical Director, Office of the Deputy Assistant to the 
  Secretary of Defense for Chemical and Biological Defense, U.S. 
  Department of Defense..........................................     4
    Prepared sttatements of:
        Mr. Vitko................................................     6
        Mr. Raub.................................................    10
        Dr. Palma................................................    18
Timmins, Alan P., president and chief operating officer, AVI 
  Biopharma, Inc., Portland, OR; Richard Frothingham, M.D., 
  associateb professor of medicine, Duke University Medical 
  Center, and staff physcian, Veterans Affairs Medical Center, 
  Durham, NC; David P. Wright, president and chief executive 
  officer, PharmAthene, Inc., Annapolis, MD; Phillip K. Russell, 
  M.D., U.S. Army Major General, retired; and Scott Magids, 
  director, technology advancement program, University of 
  Maryland.......................................................    31
    Prepared statemwents of:
        Mr. Timmins..............................................    33
        Dr. Frothingham..........................................    36
        Mr. Wright...............................................    43
        Dr. Russell..............................................    45
        Mr. Magids...............................................    49

                                 (iii)

  

       CROSSING THE VALLEY OF DEATH: BRINGING PROMISING MEDICAL 
                      COUNTERMEASURES TO BIOSHIELD

                              ----------                              

                         THURSDAY, JUNE 9, 2005

                                       U.S. Senate,
            Subcommittee on Bioterrorism and Public Health 
  Preparedness, Committee on Health, Education, Labor, and 
                                                  Pensions,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:02 p.m., in 
room 430, Dirksen Senate Office Building, Senator Burr 
[chairman of the subcommittee] presiding.
    Present: Senators Burr and Hatch.

                   Opening Statement of Senator Burr

    Senator Burr. The hearing will come to order. We will be 
joined periodically by other members of the subcommittee. It is 
indeed a good afternoon. I thank you for coming to our third 
hearing of the Health, Education, Labor, and Pensions 
Subcommittee on Bioterrorism and Public Health Preparedness.
    I would like to call this hearing to order and welcome my 
colleagues, witnesses, and the interested parties to today's 
hearing, where we will examine the challenges our Nation faces 
in developing medical countermeasures for biodefense.
    A little less than a month ago, I chaired a hearing of this 
subcommittee and during that, we examined the nature of the 
deliberate, accidental, and natural threat of biological 
agents. Since that time, we have had a very informative 
classified briefing by Porter Goss, Director of the CIA. His 
briefing served as an important reminder of al Qaeda's intent 
to use chemical and biologic weapons and the urgency of our 
efforts here today.
    The insights gained from these sessions help give all of us 
a sense of what kinds of countermeasures we need to address the 
complex and diverse threat that we are faced with. It is 
apparent that in the future, we will need more broad spectrum 
countermeasures, like antivirals, and we need to create a 
capability to develop vaccines and other therapeutics faster.
    The BioShield Act of 2004 has already done much to address 
our Nation's needs. For example, it has provided a guaranteed 
market for countermeasures and expedited NIH peer review 
practices to grant contracts and cooperative agreements. Both 
of these provisions have been used to purchase needed anthrax 
and smallpox vaccines and treatments, as well as funded 
additional research into priority pathogens.
    It is my assessment that so far, BioShield is meeting the 
needs of the near term threats from anthrax, smallpox, and 
botulism. What is not clear is how BioShield is positioned to 
address future threats and how we ensure that we can develop 
more and better medical countermeasures to address the 
contingencies of the future where surprise is likely to be the 
norm.
    It is also not clear if the implementation of the BioShield 
Act has resulted in a predictable procurement process that 
ensures that companies and others know what kind of 
countermeasures the government and Nation needs and how much.
    The subject of today's hearing is looking at the 
impediments to bring new countermeasures to the stockpile, or 
as a CEO of a biotech firm in Senator Kennedy's home State of 
Massachusetts called it potholes in the road to BioShield.
    In Congress, we all take great satisfaction in the fact 
that we have ensured adequate funds are authorized and 
appropriated for basic research and development and that we 
have appropriated $5.6 billion for purchasing medical 
countermeasures for the Strategic National Stockpile. But I 
think there are potential gaps in our current approach that may 
need additional legislation, incentives, and possible 
resources.
    What demands further examination is whether small and 
medium biotech companies are securing the resources to conduct 
the later stages of development and meet the necessary studies 
for safety and animal efficacy to be considered for BioShield.
    I know in my home State of North Carolina, there are 
several companies like HemoCellular, EMD, and AlphaVax, and 
academic institutions like Duke University with promising 
approaches in technologies for biologic, chemical, and 
radiological countermeasures who have received NIH grants and/
or DOD moneys who are now confronted by the valley of death of 
investment. I have heard informally from companies that their 
investors perceive biodefense research and development neutral 
or negative from an investment. It is my intent and that of the 
subcommittee to understand why that perspective exists and what 
we can do to change it.
    I want to thank Senator Warner and his staff for 
facilitating the appearance of the Department of Defense today. 
It is not usual to have a DOD official come to the HELP 
Committee hearing, but for those who know DOD's history and 
current role in medical countermeasures research and 
development fully understand why there is a DOD witness. DOD's 
appearance today also highlights the important contribution 
that they have made and continue to make to homeland security. 
It is not always obvious, but DOD is always there.
    Finally, I am also appreciative of the contributions made 
by my fellow committee members and their staff and Senator Enzi 
for his support and confidence.
    I would like at this time to introduce both panels, if I 
may, and then we will proceed.
    Dr. John Vitko is currently the director of Biological and 
Chemical Countermeasures for the Science and Technology 
Directorate at the Department of Homeland Security. He is 
responsible for all DHS S&T activities to deter, detect, or 
mitigate a biological and chemical attack on people, 
infrastructure, or agriculture of this Nation.
    Following Dr. Vitko, Dr. William Raub, who is the principal 
Deputy Assistant Secretary in the Office of Public Health 
Emergency Preparedness, Office of the Secretary of Health and 
Human Services. He will be presenting testimony representative 
of both HHS and NIH.
    Dr. Raub is accompanied today by Dr. Carole Heilman, who is 
the current Director, Division of Microbiology and Infectious 
Diseases, National Institute of Allergy and Infectious Diseases 
at the National Institutes of Health. Both of you have 
extremely long titles. [Laughter.]
    Finally, Dr. Joseph Palma is currently Medical Director, 
Office of the Deputy Assistant to the Secretary of Defense, 
Chemical/Biological Defense Programs, Office of the Secretary 
of Defense at the Pentagon--also a long title--responsible for 
research and development of medical countermeasures for the 
chemical/biological defense.
    The second panel is composed of company, academic, and 
private experts who will provide their experience with medical 
countermeasure research and development and the challenges of 
getting products considered for BioShield procurement. From the 
company AVI BioPharma, we have the president and chief 
operating officer, Dr. Alan Timmins.
    Dr. Richard Frothingham, who is an associate professor of 
medicine at Duke University with a dual appointment in the 
Department of Molecular Genetics and Microbiology.
    Mr. David Wright is the president and chief executive 
officer of PharmAthene.
    Major General Dr. Phillip Russell, Retired, U.S. Army, 
former senior advisor on BioShield issues in the Office of the 
Assistant Secretary for Public Health Emergency Preparedness at 
HHS.
    And last but not least, Mr. Scott Magids, director of 
technology advancement programs from the University of 
Maryland.
    Ladies and gentlemen, I want to thank you for your 
participation today. Without objection, all of my colleagues' 
opening statements will be a part of the record, so we won't 
have to stop and listen to any more of us talk up here.
    It is indeed my honor to welcome all of you here, and with 
our first panel, I would recognize Dr. Vitko for his opening 
statement.

      STATEMENTS OF JOHN VITKO, JR., DIRECTOR, BIOLOGICAL 
COUNTERMEASURES PORTFOLIO, SCIENCE AND TECHNOLOGY DIRECTORATE, 
 U.S. DEPARTMENT OF HOMELAND SECURITY; WILLIAM F. RAUB, DEPUTY 
    ASSISTANT SECRETARY, OFFICE OF PUBLIC HEALTH EMERGENCY 
  PREPAREDNESS, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, 
  ACCOMPANIED BY CAROLE HEILMAN, M.D., DIRECTOR, DIVISION OF 
  MICROBIOLOGY AND INFECTIOUS DISEASES, NATIONAL INSTITUTE OF 
ALLERGY AND INFECTIOUS DISEASES, NATIONAL INSTITUTES OF HEALTH; 
AND COLONEL JOSEPH M. PALMA, M.D., MEDICAL DIRECTOR, OFFICE OF 
 THE DEPUTY ASSISTANT TO THE SECRETARY OF DEFENSE FOR CHEMICAL 
       AND BIOLOGICAL DEFENSE, U.S. DEPARTMENT OF DEFENSE

    Mr. Vitko. Thank you, Chairman Burr. I am, in fact, very 
pleased to appear before you today to discuss the role the 
Department of Homeland Security's threat and risk assessments 
play in informing and prioritizing research and development of 
new medical countermeasures.
    My oral comments will briefly discuss four key activities: 
Threat assessments and determinations conducted specifically to 
guide Project BioShield; a broader set of risk assessments to 
inform prioritization of all national biodefense activities; a 
strategy for addressing engineered threats, in partnership with 
and led by the Department of Health and Human Services; and 
scientific studies to better inform these assessments.
    As you know, the Project BioShield Act of 2004 charges the 
Secretary of Homeland Security with the responsibility to 
determine which biological, chemical, radiological, or nuclear 
threats constitute a material threat to the security of our 
Nation. To fulfill this responsibility, DHS Science and 
Technology, in partnership with our Information Analysis and 
Infrastructure Protection Directorate, has been conducting 
formal threat assessments of the agents of greatest concern to 
establish plausible high-consequence scenarios. These 
assessments are then used by the Secretary of DHS in 
determining whether to issue a material threat determination or 
not, and by HHS and the Interagency Weapons of Mass Destruction 
Medical Countermeasures Subcommittee in determining the need 
for and requirements of any new medical countermeasures.
    To date, the Secretary of DHS has issued material threat 
determinations for four agents, for anthrax, smallpox, 
botulinum toxin, and radiological nuclear devices. Additional 
assessments are currently underway for plague, tularemia, 
biohemorrhagic fevers, and chemical nerve agents. These will be 
completed later this fiscal year.
    DHS has an even broader responsibility in the President's 
strategy for biodefense for the 21st century. In this strategy, 
we are charged with conducting formal periodic risk assessments 
in coordination with other departments and agencies to guide 
the prioritization of the Nation's ongoing biodefense 
activities, not just medical, but also including such areas as 
surveillance and detection, decontamination and restoration, 
and forensics. These risk assessments factor in technical 
feasibility of producing a broad range of biological threats, 
the vulnerability of different portions of our society to those 
threats, and the resulting consequences of any attacks.
    The first such formal risk assessment is due in the winter 
of 2006 and will address all Category A and B agents from the 
Centers for Disease Control and Prevention threat list, some 
Category C agents, and a number of potential engineered 
threats.
    Recognizing that rapid advances in biotechnology demand 
that we also consider the possibility of engineered threats, we 
have partnered with HHS and others in formulating and 
implementing a strategy for anticipating and responding to such 
threats. Together, we have developed an informed estimate of 
the types of emerging threats that might be within the ability 
of a terrorist organization to develop over the near-, mid-, 
and longer-terms, and have laid out a strategy for addressing 
them. This strategy emphasizes ongoing technology watch and 
risk assessments, rapid surveillance and detection capabilities 
for engineered threats, an expanded range of medical 
countermeasures and the infrastructure to support them, and an 
integrated concept of operations for identifying and responding 
to emerging or engineered threats.
    The threat and risk assessments that I have just described 
are performed with the best available information. However, I 
must tell you there are large uncertainties, sometimes factors 
of ten to 100, in some of the key parameters and, hence, in the 
associated risks. In one case, it can be the minimum amount of 
agent needed to affect a person. In another case, it can be the 
time that such an agent remains viable, that it is capable of 
causing an infection in the air, food, or water. And in a 
third, it can be the effect of food processing or water 
treatment on the agent's viability.
    DHS has established a National Biodefense Analysis and 
Countermeasures Center, NBACC, to conduct the laboratory 
experiments needed to close these knowledge gaps. To support 
this, a new facility is being designed and constructed on a 
national interagency biodefense campus at Fort Detrick, 
Maryland. Pending the completion of this facility in fiscal 
year 2008, we have established an interim capability with other 
government and private laboratories to begin this line of work.
    In summary, the Department of Homeland Security's Science 
and Technology Directorate, in coordination with its Federal 
partners, is conducting the threat and risk assessments that 
are critical to prioritizing the Nation's biodefense 
activities, including both near and longer-term medical 
countermeasures, research, and development.
    This concludes my prepared statement. With the committee's 
permission, I request my formal statement be submitted for the 
record.
    Mr. Chairman, I thank you for the opportunity to appear 
before you and I will be happy to answer any questions that you 
have.
    Senator Burr. Thank you, Dr. Vitko, and without objection, 
everybody's entire statements will be part of the record.
    Mr. Vitko. Thank you.
    [The prepared statement of Mr. Vitko follows:]

                 Prepared Statement of John Vitko, Jr.

Introduction

    Good afternoon, Chairman Burr, Senator Kennedy and distinguished 
members of the subcommittee. I am pleased to appear before you today to 
discuss the role that the Department of Homeland Security's (DHS) 
threat and risk assessments play in informing and prioritizing research 
and development of new medical countermeasures.
    Before focusing on the Department's specific activities in the area 
of threat and risk assessments, I would like to put these activities in 
the broader context of the overall responsibilities and activities of 
the DHS Biological Countermeasures Portfolio (Bio Portfolio). The 
mission of this Portfolio is to provide the understanding, 
technologies, and systems needed to anticipate, deter, protect against, 
detect, mitigate, and recover from possible biological attacks on this 
Nation's population, agriculture or infrastructure.
    In addressing this mission, DHS has a leadership role in several 
key areas and partners with lead agencies in others. Those areas in 
which the Science and Technology (S&T) Directorate provides significant 
leadership are:
     Providing an overall end-to-end understanding of an 
integrated biodefense strategy, so as to guide the Secretary and the 
rest of the Department in its responsibility to coordinate the Nation's 
efforts to deter, detect, and respond to acts of biological terrorism.
     Providing scientific support to better understand both 
current and future biological threats and their potential impacts so as 
to guide the research and development of biodefense countermeasures 
such as vaccines, drugs, detection systems, and decontamination 
technologies.
     Developing early warning, detection, and characterization 
systems to permit timely response to mitigate the consequence of a 
biological attack.
     Conducting technical forensics to analyze and interpret 
materials recovered from an attack to support attribution.
     Operation of the Plum Island Animal Disease Center to 
support both research and development (R&D) and operational response to 
foreign animal diseases such as foot and mouth disease.
    DHS also supports our partnering departments and agencies with 
their leads in other key areas of an integrated biodefense: the 
Department of Health and Human Services (HHS) on medical 
countermeasures and mass casualty response; the Department of Defense 
(DOD) on broad range of homeland security/homeland defense issues; the 
U.S. Department of Agriculture (USDA) on agriculture biosecurity; USDA 
and HHS on food security; the Environmental Protection Agency (EPA) on 
decontamination and on water security; the Department of Justice on 
bio-terrorism investigations; and the Intelligence Community on threat 
warnings.

Threat and Risk Assessments

    As noted above, providing threat and risk assessments of both 
current and future threats and the scientific understanding to improve 
and refine these assessments is a major responsibility for DHS. These 
responsibilities are further defined in the BioShield Act of 2004, 
which charges the Secretary of DHS with the responsibility for 
determining which threats constitute a Material Threat to the national 
security or public health of the Nation and in the President's 
Biodefense for the 21st Century strategy, which charges DHS with the 
lead in ``conducting routine capabilities assessments to guide 
prioritization of our ongoing investments in biodefense-related 
research, development, planning and preparedness''.
    Today, I would like to focus on four major activities that we have 
undertaken to fulfill these responsibilities:
    1. Material Threat Assessments and Determinations in support of 
Project BioShield;
    2. Risk Assessments to guide prioritization of the Nation's ongoing 
biodefense-related activities;
    3. A Strategy for Addressing Emerging Threats (in partnership with 
the Department of Health and Human Services (DHHS) and others);
    4. Scientific research to better inform these threat and risk 
assessments.

Material Threat Assessments and Determinations for Project BioShield

    Working with the DHS Directorate for Information Analysis and 
Infrastructure Protection (IAIP), DHS S&T has been conducting 
assessments and determinations of biological, chemical, radiological 
and nuclear agents of greatest concern so as to guide near-term 
BioShield requirements and acquisitions. In this process, IAIP, in 
concert with other members of the intelligence community, provides 
information on the capabilities, plans and intentions of terrorists and 
other non-state actors. However, since lack of intelligence on a threat 
does not mean lack of a threat, S&T, in concert with appropriate 
members of the technical community, also assesses the technical 
feasibility of a terrorist being able to obtain, produce and 
disseminate the agent in question. This information is used to 
establish a plausible high consequence scenario that provides an 
indication of the number of exposed individuals, the geographical 
extent of the exposure, and other collateral effects. If these 
consequences are of such a magnitude to be of significant concern to 
our national security, the Secretary of DHS then issues a formal 
Material Threat Determination to the Secretary of HHS, which initiates 
the BioShield process.
    To date, the Secretary of DHS has issued Material Threat 
Determinations for four ``agents'': anthrax, smallpox, botulinum toxin, 
and radiological/nuclear devices. Additional threat assessments are 
underway for the remainder of the biological agents (plague, tularemia, 
viral hemorrhagic fevers) identified by the Centers for Disease Control 
and Prevention as Category A agents and for chemical nerve agents. 
These assessments will be completed this fiscal year.
    Once a Material Threat Determination (MTD) has been issued, the HHS 
then assesses the potential public health consequences of the 
identified agent and determines the need for countermeasures. After 
notifying Congress of its determination, HHS evaluates the availability 
and appropriateness of current countermeasures and the possibility of 
development of new countermeasures. They are assisted in this by the 
interagency Weapons of Mass Destruction Medical Countermeasures (WMD-
MC) subcommittee of the Office of Science and Technology Policy's 
National Science and Technology Council (NSTC). The WMD-MC further 
explores the medical consequences associated with the particular threat 
and the availability of appropriate countermeasures so as to develop a 
recommendation for the acquisition of a specific countermeasure. These 
recommendations then form the basis of the U.S. Government 
requirements. After approval of these requirements by the Office of 
Management and Budget, the HHS issues a Request for Proposals and 
implements and manages the subsequent acquisition process through 
delivery of the countermeasures to the Strategic National Stockpile.

Risk Assessments to Guide Prioritization of the Nation's Biodefense 
                    Activities

    The preceding discussion dealt with threat assessments to guide 
BioShield acquisition processes. DHS has an even broader responsibility 
in the President's National Biodefense Strategy and that is to conduct 
formal, periodic risk assessments, in coordination with other 
Departments and agencies, to guide the prioritization of the Nation's 
ongoing biodefense activities--not just medical, but also including 
such areas as surveillance and detection, decontamination, and 
restoration, and forensics. These risk assessments provide a systematic 
look at the technical feasibility of a broad range of biological 
threats, the vulnerability of different portions of our society to 
those threats, and the resulting consequences of any such attacks.
    The first such formal risk assessment is due in the winter of 2006, 
with subsequent assessments due every 2 years. The scope, process and 
timescale for this first assessment have been presented to and agreed 
to by the interagency Biodefense Policy Coordinating Committee co-
chaired by the Homeland Security Council and the National Security 
Council. This assessment is addressing:
     All six category A agents from the Centers for Disease 
Control and Prevention (CDC) threat list;
     All 12 category B agents;
     Five representative category C agents; and
     A number of candidate drug-resistant and emerging agents.
    Key outputs will include:
     A list of bio-threats prioritized by risk;
     A prioritized list of critical knowledge gaps that if 
closed should reduce risk assessment uncertainty and guide bio-defense 
research and development; and
     A list of biodefense vulnerabilities that could be reduced 
by countermeasure development and acquisition.
    This risk assessment is being conducted in partnership with the 
Intelligence Community, the HHS, the Department of Defense, the U.S. 
Department of Agriculture, the Environmental Protection Agency, and 
others. Two advisory boards, one a Government Stakeholders Advisory 
Board and the other an Independent Risk Assessment Expert Review Board 
(academia, industry and government) have been established to provide 
input and advice.
    This and subsequent risk assessments will play a critical role in 
informing future biodefense programs across all agencies, including 
BioShield acquisitions and the longer-term medical R&D leading up to 
such acquisitions.

A Strategy for Addressing Emerging Threats

    Much of the biodefense efforts to date have focused on protecting 
against attacks with bioterrorism agents that can be (or used to be) 
found in nature. However, rapid advances in biotechnology demand that 
we also consider the possibility and impact of emerging or engineered 
agents. e.g. modifications to organisms that increase their resistance 
to medical countermeasure or make them more difficult to detect. The 
President's Biodefense for the 21st Century strategy assigns the HHS 
the lead in anticipating such future threats. We, DHS S&T, are 
partnering with HHS and others in formulating and implementing a 
strategy for anticipating and responding to such threats.
    Based on intelligence information, available literature and expert 
judgment, we have developed an informed estimate of the types of 
emerging threats that might be within the ability of a terrorist 
organization to develop over the near (1-3 years), mid (4-10 years), 
and longer-terms (10 years). We have also examined the impact of these 
threats on the four pillars of the National Biodefense Policy: Threat 
Awareness, Prevention and Protection, Surveillance and Detection, and 
Response and Recovery.
    In this analysis, four elements stand out as essential to an 
effective defense against emerging threats:
     Threat, vulnerability and risk assessments to prioritize 
these threats in terms of the difficulty of their development and 
deployment, as well as their potential consequences;
     Surveillance and detection capabilities to rapidly detect 
and characterize engineered agents in environmental and clinical 
samples so as to provide timely guidance in the selection of the 
appropriate medical countermeasure;
     An expanded range of safe and effective medical 
countermeasures and an infrastructure to support rapid research, 
development, test and evaluation (RDT&E) of new medical 
countermeasures; and
     integrated concepts of operation (CONOPS) for the 
identification and response to emerging threats. In addition to 
conducting these assessments, DHS will continue to collaborate with HHS 
as it leads efforts to anticipate emerging agents and to facilitate the 
availability of medical countermeasures.

Scientific Research to Better Inform These Threat and Risk Assessments

    The threat and risk assessments described above are performed with 
the best available information. However, there are large uncertainties, 
sometimes factors of ten to a hundred, in some of the key parameters 
and hence in the associated risks. One of the major functions of the 
threat and risk assessments is to identify these critical knowledge 
gaps, which can differ for different threat scenarios--in one case it 
can be the minimum amount of agent needed to infect a person; in 
another case it can be the time that such an agent remains viable 
(capable of causing an infection) in the air, food or water; and in a 
third it can be the effect of food processing or water treatment on the 
agent's viability. Conducting the laboratory experiments to close the 
critical knowledge gaps is a primary function of DHS's National 
Biodefense Analysis and Countermeasures Center (NBACC).
    Congress has appropriated a total of $128M for design and 
construction of NBACC with the necessary biocontainment laboratory 
space and support infrastructure to conduct these and other 
experiments. NBACC will be built on the National Interagency Biodefense 
Campus (NIBC) at Ft. Detrick MD, where its close physical proximity to 
the DOD's U.S. Army Medical Research Institute for Infectious Diseases 
(USAMRIID), the NIH's Integrated Research Facility and the USDA's 
Foreign Disease-Weed Science Research Unit. NBACC is also collaborating 
with the Centers for Disease Control and Prevention to further address 
the critical knowledge gaps. The Record of Decision for NBACC's Final 
Environmental Impact Statement was signed in January 2005. Design of 
the facility began in March 2005, with construction scheduled to begin 
in fiscal year 2006 and be complete by the fourth quarter of fiscal 
year 2008.
    Currently, interim capabilities for both NBACC's biological threat 
awareness and bioforensic analysis functions have been established with 
other government and private laboratories to allow vital work in these 
areas to occur during the NBACC facility's construction.

Conclusion

    The DHS Science and Technology Directorate's programs in threat and 
risk assessment, and in the supporting science, play a critical role in 
prioritizing the Nation's biodefense activities, including both near 
and long-term medical countermeasures research and development. These 
threat and risk assessments are conducted in active collaboration with 
other Federal departments and agencies and with the appropriate 
technical experts in the government, academia, and the private sector 
as we collectively seek to reduce the threat of a biological attack 
against this Nation's population, its agriculture and its food supply.
    This concludes my prepared statement. With the committee's 
permission, I request my formal statement be submitted for the record. 
Mr. Chairman, Senator Kennedy, and members of the subcommittee, I thank 
you for the opportunity to appear before you and I will be happy to 
answer any questions that you may have.

    Senator Burr. Dr. Raub.
    Mr. Raub. Thank you, Mr. Chairman. Dr. Heilman and I 
appreciate the opportunity to share with you information on our 
progress in implementing the Project BioShield Act of 2004 as 
we approach the first anniversary of its enactment. With your 
permission, I will submit my full statement for the record.
    HHS shares the subcommittee's desire to foster the 
emergence of new or improved medical countermeasures against 
terrorism, and we share the subcommittee's concern about the 
obstacles that can retard the maturation of promising concepts 
into licensed or approved products. In particular, we are eager 
to ensure that funding is available for meritorious, high-
priority countermeasure candidates at every stage of the 
research, development, acquisition spectrum.
    HHS has two funding mechanisms with which to pursue this 
objective. The National Institute of Allergy and Infectious 
Diseases of the NIH funds countermeasure-related activities as 
needs and opportunities dictate, from basic research to 
advanced development, including scale-up from benchtop to 
commercial production methods and clinical trials of 
investigational products for safety and efficacy. The HHS 
Office of the Assistant Secretary for Public Health Emergency 
Preparedness, using the BioShield Special Reserve Fund, 
sponsors, as appropriate, the final stages of advanced 
development, attainment of licensure or approval, and 
acquisition of completed product for addition to the Strategic 
National Stockpile.
    Used together in a carefully coordinated way, these two 
mechanisms can do much to ensure that meritorious candidate 
products, whether still at the laboratory stage or already into 
clinical trials, can find the support necessary to reveal and 
assess their full potential.
    The quest for a second generation anthrax vaccine based on 
a recombinant version of the protective antigen of the anthrax 
organism, Bacillus anthraces, illustrates the utility of this 
concept. Building upon the pioneering work of the United States 
Army Medical Research Institute of Infectious Diseases, the NIH 
contracted for the early and advanced development of a 
recombinant protective antigen, or RPA, vaccine in September 
2002 and 2003, respectively. These milestone-driven contracts 
contained well-defined deliverables, including the manufacture 
of clinical-grade vaccine, the conduct of Phase I and Phase II 
clinical trials, and consistency lot manufacturing of vaccine.
    In March 2004, the HHS Office of Public Health Emergency 
Preparedness employed the BioShield Special Reserve Fund to 
launch a competitive acquisition of 75 million doses of the 
vaccine. This contract features a milestone and deliverables 
approach, which includes a requirement for the delivery of the 
first 25 million vaccine doses in single-dose, ready-to-use 
syringes to the Strategic National Stockpile within 2 years of 
contract awards. A noteworthy aspect of this contract is the 
fact that no payment will be made until usable product is 
delivered to the stockpile.
    A similar scenario is in mid-course with respect to 
development and acquisition of a second generation smallpox 
vaccine. Modified Vaccinia Ankara, or MVA, is based on a strain 
of the Vaccinia virus that, in contrast to the current smallpox 
vaccines, such as Dryvax, does not replicate effectively in 
human cells and, thus, may cause fewer side effects. The NIH 
supported the development of MVA vaccine with milestone-driven 
contract awards in 2003 and 2004. Early clinical trials have 
demonstrated that MVA vaccine is safe and immunogenic in human 
volunteers, and animal studies by the developers are confirming 
earlier studies by NIH and DOD scientists showing that MVA 
vaccine protects monkeys and mice from smallpox-like viruses.
    Based on these results and the demonstration of the 
feasibility of large-scale manufacturing capability, the Office 
of Public Health Emergency Preparedness is moving forward with 
an MVA vaccine acquisition program using the Bioshield Special 
Reserve Fund. Last month, HHS released a draft request for 
proposals for industry comments. Formal solicitation of 
competitive contract proposals is slated for this summer.
    Future countermeasure development efforts undoubtedly will 
present their own special challenges and may not follow the 
path being used for the RPA and RVA vaccine.
    We remain committed to working closely with our colleagues 
within HHS, across the Federal Government, and within academia 
and industry toward acquiring needed countermeasures as rapidly 
as possible, and we remain committed to making the best use of 
the authorities and resources available to us and to refining 
our mechanisms based on lessons learned.
    I will be pleased to respond to your questions as best I 
can.
    Senator Burr. Dr. Raub, thank you so much.
    [The prepared statement of Mr. Raub follows:]

              Prepared Statement of William F. Raub, Ph.D.

    Good afternoon, Mr. Chairman, Senator Kennedy and subcommittee 
members. I am William Raub, Deputy Assistant Secretary for Public 
Health Emergency Preparedness, Department of Health and Human Services 
(HHS). I am here with my colleague, Dr. Carole Heilman, Director of the 
Division of Microbiology and Infectious Diseases at the National 
Institute of Allergy and Infectious Diseases (NIAID), a component of 
the National Institutes of Health (NIH). We appreciate the opportunity 
to share with you information on our progress in implementing the 
Project BioShield Act of 2004, which was enacted in July 2004. 
Biodefense is a top priority for the Bush administration and having an 
appropriate armamentarium of medical countermeasures is a critical 
aspect of the response and recovery component of the President's 
strategy ``Biodefense for the 21st Century.'' The acquisition and ready 
availability of medical countermeasures, such as antibiotics, 
antivirals, monoclonal and polyclonal antibodies against infectious 
threats; therapies for chemical and radiation-induced illnesses; and 
vaccines to protect against biological agents and toxins will have a 
substantial impact on our preparedness and response capabilities.

Protecting Americans

    The events of September and October 2001, made it very clear that 
terrorism--indeed bioterrorism--is a serious threat to our Nation and 
the world. The Bush administration and Congress responded forcefully to 
this threat by seeking to strengthen our medical and public health 
capacities to protect our citizens from future attacks. The Public 
Health Security and Bioterrorism Preparedness and Response Act of 2002 
substantially increased funding authorization for the Centers for 
Disease Control and Prevention's (CDC's) Strategic National Stockpile. 
To encourage the development of new medical countermeasures against 
biological, chemical, radiological and nuclear agents and to speed 
their delivery and use in the time of an attack, President Bush, in his 
2003 State of the Union address, proposed, and Congress subsequently 
enacted, the Project BioShield Act of 2004. Project BioShield 
authorized the use of the Special Reserve Fund created in the first 
Department of Homeland Security (DHS) appropriation bill (P.L. 108-90) 
in October 2003. This $5.6 billion appropriation is designed to assure 
developers that funds will be available to purchase critical medical 
countermeasures to protect our citizens. In addition, over $5 billion 
in biodefense funding was appropriated to NIH between fiscal year 2002 
and fiscal year 2005. These funds have provided significant support of 
research and development of safe and effective medical countermeasures.

The Strategic National Stockpile Today

    The wake-up call that we received in the fall of 2001 brought 
clarity to the gaps in our medical countermeasure armamentarium and we 
immediately sought to address these gaps. Although much remains to be 
done, we have made significant progress in building our Strategic 
National Stockpile (SNS). For example, our smallpox vaccine stockpile 
has grown from 90,000 ready-to-use doses in 2001 to enough vaccine to 
protect every man, woman, and child in America. Major strides have been 
made in building our medical countermeasure antibiotic reserve against 
anthrax, plague, and tularemia. The SNS now contains countermeasures to 
protect and treat millions of Americans in the event of an attack with 
one of these agents. We have also built our stockpile of 
countermeasures to address the effects of radiation exposure with 
products such as Prussian Blue and diethylenetriaminepentaacetate 
(DTPA). These countermeasures act to block uptake or remove radioactive 
elements such as cesium, thallium, or americium from the body. 
Potassium iodide, a drug that can protect the thyroid from the harmful 
effects of radioactive iodine, is also stockpiled in formulations that 
will protect both adults and children. Furthermore, under Project 
BioShield, HHS is acquiring licensed and next-generation anthrax 
vaccines as well as anthrax antitoxins to further enhance our 
capabilities to respond to that threat. We have taken the botulinum 
antitoxin research program started by the Department of Defense (DOD) 
in the early 1990s to completion and we are now in the process of 
adding to our stockpile of botulinum antitoxins.

Ongoing Project BioShield Activities at NIH and HHS

    The Project BioShield Act of 2004 created several mechanisms to 
help the U.S. Government (USG) address gaps in the medical 
countermeasures development pipeline. These mechanisms include new 
authorities for the NIH to expedite the research and development of 
promising medical countermeasures in advance of the acquisition of 
these countermeasures through the Project BioShield.
    Last month, the NIAID announced the first awards made using its new 
BioShield authorities. These awards included 10 grants and two 
contracts totaling approximately $27 million to support the development 
of new therapeutics and vaccines against some of the most deadly 
diseases that could be caused by bioterrorism, including anthrax, 
botulism, Ebola hemorrhagic fever, pneumonic plague, smallpox, and 
tularemia. These grants and contracts, which range in duration from 12 
to 18 months, respond to a key objective of the NIAID biodefense 
research agenda that emphasizes the development of new and improved 
medical products against agents identified by the CDC as Category A 
agents, those deemed to pose the gravest threat.
    In addition to these medical countermeasures development contracts, 
several BioShield procurement activities are underway at HHS. The 
Office of Public Health Emergency Preparedness (OPHEP) is reviewing the 
responses to Requests for Proposals (RFPs) for anthrax therapies, and 
is continuing to move forward on the acquisition of an antitoxin 
treatment for botulism. Furthermore, OPHEP has signaled its intent to 
acquire a next generation smallpox vaccine by releasing a draft RFP for 
industry comment. The smallpox vaccine development and acquisition 
program exemplifies the strong partnership between NIAID and OPHEP for 
this medical countermeasure. This development program has been closely 
monitored within HHS, and the requirements and options for acquisition 
were developed by the interagency Weapons of Mass Destruction (WMD) 
Medical Countermeasures subcommittee.
    Finally, in anticipation of yet-to-be-determined requirements, 
OPHEP, in coordination with colleagues throughout the USG, actively 
monitors the state of the medical countermeasure pipeline--both within 
and outside the government--by evaluating USG research and development 
portfolios and engaging industry through the publication of Requests 
for Information (RFIs). For example, OPHEP has released three RFIs to 
assess the timeline to maturity of medical countermeasures to treat 
nerve agent exposure, acute radiation syndrome, and additional products 
that might be available to treat anthrax. These RFIs are a key tool for 
HHS to dialogue with industry partners and to inform the development of 
sound USG acquisition strategies.

Development of Medical Countermeasures

    These accomplishments in acquiring needed countermeasures for the 
Strategic National Stockpile were possible in large part because of 
substantial existing research and development of countermeasures in 
these key areas. The development of medical products--whether for 
cancer, influenza, or anthrax--is a complex, lengthy, and expensive 
process. An overview of the key features and challenges of the medical 
countermeasure pipeline from concept to regulatory approval may be 
helpful to understand the complexity of the process.
Steps in Medical Product Development
    The initial stage in the medical countermeasure pipeline is a 
robust basic research program. The milestones at this stage include a 
fundamental understanding at the molecular level of host-pathogen 
interactions, the pathogenicity of the threat agent, identification of 
targets of opportunity for preventing or mitigating the consequences of 
the threat agent, and determining the mechanism of action of potential 
medical countermeasure candidates. The following stage is described as 
applied research; here, candidate products are identified and screened 
for activity against a threat agent, and animal models are developed. 
In the development stage, processes are established to manufacture the 
product using current Good Manufacturing Practices (cGMP) and human 
clinical Phase I and Phase II trials are conducted. These clinical 
trials and additional animal efficacy studies enable the determination 
of optimal formulation and dosage schedules. In addition, the stability 
profile is evaluated and a large-scale, validated manufacturing 
processes with requisite quality control/quality assurances is 
established. In the final development stage, production and licensure, 
Phase III trials and pivotal animal studies are completed. Ultimate 
licensure, approval or clearance from the U.S. Food and Drug 
Administration (FDA) requires the rigorous accumulation of sufficient 
data in humans and animals to establish the safety and efficacy of the 
product and the ability to consistently manufacture the product to meet 
the standards of cGMP. It is important to note that a unique aspect of 
the pathway for medical countermeasures is the need to establish 
efficacy either using surrogate markers (such as the human immune 
response) or, using appropriate animal models, under the ``Animal 
Rule'' because demonstration of efficacy against the actual diseases in 
humans is most often not feasible either because the disease does not 
occur naturally or for the obvious ethical reasons that prevent 
exposing humans to the threat agent.

Challenges to Product Development
    The pathway from medical product concept to a safe, effective, and 
reliably manufactured product suitable for regulatory approval can be a 
long and expensive one. Studies indicate that each new product brought 
to market can take up to a decade of development and up to a billion 
dollars of investment; the overwhelming number of candidates will fail 
before one is found that demonstrates sufficient evidence of safety and 
efficacy to justify approval, licensure or clearance by the FDA. For 
example, a new drug compound entering Phase I testing, often 
representing the culmination of upwards of a decade of preclinical 
evaluation, is estimated to have only an eight percent chance of 
reaching the market.

The Strategic Approach to Addressing Medical Countermeasure Gaps

    With the critical path for medical countermeasures in mind, the USG 
has taken a strategic approach to the development and acquisition of 
these countermeasures. The initial focus of our efforts to protect the 
Nation was aimed largely at those threats that could do the greatest 
harm to the greatest number of our citizens, namely, smallpox and 
anthrax. Our national security environment demands accelerated product 
development timelines and new paradigms of interactions between 
industry and government with increased risk-sharing and enhanced intra-
governmental collaboration. Using a robust interagency process that 
mined intra- and extra-governmental expertise, requirements for medical 
countermeasures were identified, and options elaborated for addressing 
immediate and long-term needs. In addition, there have been substantial 
interagency efforts within HHS to examine and address gaps in the 
pipeline. Experts from throughout HHS and USG continue to define the 
most expeditious way to traverse the critical pathway to develop and 
acquire safe and effective medical countermeasures for the Strategic 
National Stockpile. This approach is focused on identifying and 
addressing gaps in this critical pathway.

Addressing Critical Countermeasure Gaps for Anthrax and Smallpox

    The USG actions taken to fill gaps in our anthrax and smallpox 
armamentarium best illustrate the outcome of our strategic approach in 
the development medical countermeasures and the implementation of the 
Project BioShield Act of 2004.

Anthrax
    Although anthrax is not transmissible from person-to-person, an 
attack involving the aerosol dissemination of anthrax spores, 
particularly in an urban setting, is considered by public health 
experts to have the potential for catastrophic effects. The potential 
for large-scale population exposure following aerosol release of 
anthrax spores, the reality of the threat demonstrated by the anthrax 
letters of October 2001, and our knowledge that anthrax has been 
weaponized by state-actors, highlight the nature of the threat. 
Following the process established by Project BioShield, the Secretary 
of the Department of Homeland Security (DHS) determined that anthrax 
posed a material threat to the Nation, and, because untreated 
inhalation anthrax is usually fatal, the Secretary of HHS identified 
anthrax as a significant threat to public health. It is for these 
reasons that three of the first six acquisition programs under Project 
BioShield have been targeted to address this pathogen.
    The approach to protect citizens against this threat demanded 
immediate, intermediate and long-term strategies and requirements. The 
NIH and HHS are working aggressively to address the requirements, many 
of which are defined by the interagency WMD Medical Countermeasures 
Subcommittee. These requirements are informed by material threat 
assessments provided by the DHS. First, the existing stockpile of 
antibiotics against anthrax in the Strategic National Stockpile was 
increased. Second, there is a need for an anthrax vaccine to be used 
not only for pre-exposure protection for laboratory and other workers 
at known risk for anthrax, but also for use concurrently with 
antibiotics after an exposure. Anthrax spores are stable in the 
environment and would have a profound impact if released in an urban 
population. Availability of an anthrax vaccine is a critical 
requirement for restoring the functionality of any exposed area. 
Finally, an anthrax vaccine and anthrax therapeutics such as antitoxins 
would provide for protection and treatment of individuals exposed to an 
engineered strain of anthrax that may be resistant to antibiotics.
    In a 2002 report, ``Anthrax Vaccine: Is It Safe? Does it Work'', 
the Institute of Medicine recommended that a new vaccine be developed 
according to more modern principles of vaccinology. To address this 
gap, NIH convened experts in the fall of 2001 to assess developing 
technologies. Based on their review, HHS decided that there was a 
sufficient scientific foundation to support the aggressive development 
of a next generation anthrax vaccine consisting of recombinant 
protective antigen (rPA). The research on rPA, spanning more than a 
decade, was conducted in large part by the U.S. Army Medical Research 
Institute of Infectious Diseases (USAMRIID) at Fort Detrick, MD.
    HHS defined a three-stage development and acquisition strategy to 
address the gaps in anthrax countermeasures through a public-private 
partnership model using open competition for awards at each stage. The 
early and advanced development programs for rPA were supported by the 
NIAID with contract awards in September 2002 and 2003, respectively. 
These were milestone-driven contracts with well-defined deliverables 
including the manufacture of clinical-grade vaccine, the conduct of 
Phase I and Phase II clinical trials, and consistency lot manufacturing 
of vaccine. Demonstrated large-scale manufacturing capability would be 
required to support the initial civilian acquisition target for rPA, 
which was defined through an interagency process to be the protection 
of 25 million persons. Senior officials from several Departments of the 
USG evaluated acquisition options to fulfill this target and, in the 
fall of 2003, agreed to pursue this acquisition of rPA anthrax vaccine.
    An evaluation of the NIAID rPA anthrax vaccine development program 
indicated that it was robust enough to suggest that rPA vaccine could 
potentially become a licensed product within eight years. In March 
2004, the acquisition program for this vaccine, under the direction of 
the OPHEP, was launched, relying on the Special Reserve Fund. Utilizing 
a robust technical and business evaluation process, OPHEP reviewed 
multiple proposals and negotiated a contract for 75 million doses of 
the vaccine. This contract uses a milestone and deliverables approach 
to lay out an ambitious program which includes the delivery of the 
first 25 million vaccine doses to the Strategic National Stockpile 
within 2 years of contract award. A unique and critical aspect of the 
rPA vaccine BioShield acquisition contract is the fact that no payment 
will be made until a usable product is delivered to the Stockpile. 
While awaiting delivery of this new vaccine to the Stockpile, OPHEP 
negotiated a contract for five million doses of the currently licensed 
anthrax vaccine to support immediate requirements. Delivery of that 
product to the Stockpile has already begun. Over one million doses of 
the licensed anthrax vaccine are now in the Stockpile.

Smallpox
    A similar three-stage development and acquisition strategy was 
utilized to address the gap regarding a next generation smallpox 
vaccine. The interagency WMD Medical Countermeasures Subcommittee 
defined a requirement for this product that addressed the millions of 
U.S. citizens who have contraindications for the existing smallpox 
vaccines in the absence of exposure to smallpox. One candidate next-
generation smallpox vaccine, modified vaccinia Ankara (MVA), is based 
on a strain of the smallpox vaccine virus that, in contrast to current 
smallpox vaccines such as Dryvax, does not replicate effectively in 
human cells and may cause fewer side effects. The development programs 
for MVA were supported by the NIAID with milestone-driven contract 
awards in 2003 and 2004. Early clinical trials in limited numbers of 
human volunteers have demonstrated the MVA vaccine to be safe and 
immunogenic, and animal studies by the developers are confirming 
earlier studies by NIAID and DOD scientists showing that MVA protects 
monkeys and mice from smallpox-like viruses. Based on these results and 
the demonstration of the feasibility of large-scale manufacturing 
capacity, HHS has moved forward with the initial stages of an MVA 
acquisition program. A draft RFP was released last month; the final RFP 
will be released following review of industry comments.

Priority Setting Beyond Smallpox and Anthrax

    The approach taken to rapidly expand our Nation's response capacity 
to meet the medical and public health impact of either a smallpox or 
anthrax attack demonstrate our national resolve to address these high 
priority threats. However, in many ways, anthrax and smallpox vaccines 
represent the ``low hanging fruit'' for medical countermeasure 
research; development and acquisition were enabled by a substantial 
research base developed by USAMRIID and NIH. There was consensus that 
these were our highest priorities and there were countermeasures 
available or relatively far along in the development pipeline to permit 
acquisition for the SNS. Given an almost endless list of potential 
threats and with finite resources to address them, prioritization of 
these threats and appropriate countermeasures is essential to focus our 
efforts. We rely heavily upon our interagency partner, the DHS, to 
provide us with a prioritized list of threats along with material 
threat assessments that will provide reasonable estimates of population 
exposure. This information is critical for future strategic decision 
making regarding how best to focus our National efforts in 
countermeasure development and acquisition, including whether in the 
short-term, the so-called ``one-bug, one-drug'' approach should 
continue while simultaneously investing in more broad-spectrum 
prevention and treatment approaches for the longer term. These issues 
are actively being addressed by the interagency WMD Medical 
Countermeasures Subcommittee.

Coordinating Efforts to Fill Gaps in the Critical Path to Needed 
        Countermeasures
    HHS is strengthening existing intra and interagency partnerships 
and creating new ones that are needed to address identified gaps in the 
Nation's medical countermeasure research, development, and acquisition 
pipeline. A key collaboration is between OPHEP and NIAID, with 
contributions from FDA in high priority areas. Senior scientific and 
policy staffs from these organizations meet regularly to discuss 
identified gaps and outline strategies to address these gaps using 
existing institutional structures and resources.

Addressing Medical Countermeasure Gaps for Chemical and Radiological/
                    Nuclear Threats

    For the development of medical countermeasures to address chemical, 
radiological and nuclear threats, OPHEP, NIH and FDA have established a 
unique partnership in which experts from these organizations meet on a 
regular basis to identify appropriate targets and conduct joint 
planning that ensures the alignment of development and acquisition 
priorities.
    In 2004, HHS tasked NIAID with developing a research program to 
accelerate the development and deployment of new medical 
countermeasures against ionizing radiation for the civilian population. 
NIAID worked to build upon prior experience and ongoing research 
efforts as it gathered input from across the USG as well as from 
experts in industry and academia to inform the development of a 
planning document, entitled The NIH Strategic Plan and Research Agenda 
for Medical Countermeasures against Radiological and Nuclear Threats. 
This document is in the final stages of production and will be made 
available shortly.
    This Strategic Research Plan and Agenda is organized into four 
sections: (1) basic and translational research on the mechanisms of 
radiation injury, repair, and restoration that can lead to the 
identification and characterization of new therapeutics; (2) bioassays 
and tools for biodosimetry, which will aid in diagnosis; (3) immediate 
product development of promising therapies; and (4) infrastructure to 
support the necessary research. The document is intended to unify and 
strengthen the research community focused on these areas, promote 
increased collaboration, and facilitate transition from research to 
product development. NIH will work closely with OPHEP to prioritize the 
research and development activities to align with the priorities for 
acquisition under Project BioShield.
    The fiscal year 2005 funding for NIH radiation countermeasures 
research is $47 million; these funds are provided through an 
appropriation to OPHEP. A proposal for specific project commitments was 
submitted by NIH and reviewed and approved by OPHEP. Proposed projects 
include:
     a network of research facilities called the Centers for 
Medical Countermeasures for Radiation;
     contracts to support the development of orally-available 
forms of calcium and zinc DTPA, which enhance the excretion of certain 
radionuclides that would be released by a nuclear device or as a result 
of an attack on a nuclear reactor;
     a contract to support a broad range of product development 
activities;
     an interagency partnership with the Armed Forces 
Radiobiology Research Institute of the DOD; and
     an initiative to support projects that explore ways to 
protect the immune system from radiation damage.
    This program will be guided by a Program Management Team comprised 
of representatives from NIH and OPHEP. The projects will be directed by 
staff in NIAID's Division of Allergy, Immunology, and Transplantation.
    Similarly, NIH was tasked by HHS to draft a strategic plan and 
research agenda to guide the development of medical countermeasures 
against chemical threats. In fiscal year 2006, $50M from the Public 
Health Social Services Emergency Fund is requested for this purpose. 
Following the oversight and planning model established for radiological 
and nuclear medical countermeasures, a Program Management Team with 
representatives from NIH and OPHEP will be established and a spending 
plan will be developed prior to the allocation of funds. Some of the 
objectives targeted for development will include anti-seizure 
medications, rapid diagnostics, animal models and decontaminants. A 
Strategic Plan and Research Agenda from NIH is expected to be completed 
by the end of this calendar year.

Novel and Emerging Threats
    The initial efforts for medical countermeasure development and 
acquisition have been rightfully focused on those threat agents known 
to have the potential to cause catastrophic effects on our Nation and 
its citizens. In addition, HHS and NIH are keenly aware of, and invest 
efforts to address threat agents that we might face in the future, 
including engineered threats.
    As is also the case for the known threat agents, we are dependent 
upon our colleagues at DHS to identify and prioritize these threats. 
One of the most recognized potential engineered threats is antibiotic-
resistant anthrax, and the HHS, NIH and FDA accomplishments to date in 
facilitating the development and acquisition of anthrax vaccines and 
therapeutic antitoxins have an important beneficial impact on reducing 
our vulnerabilities. In addition, NIH has a robust investment in the 
development of novel antimicrobial agents and in addressing all aspects 
of antibiotic resistance, including the development of antibacterial 
agents that could potentially be useful against a broad spectrum of 
species and a wide range of drug resistance mechanisms and is working 
with the DOD, to leverage medical countermeasure programs and resources 
of mutual interest. Several medical countermeasures now being developed 
through NIAID for civilians have their technology basis in programs 
which originated in DOD.
    One major NIAID basic biodefense research initiative is focused on 
the human innate immune system, which is comprised of broadly active 
``first responder'' cells and other non-specific mechanisms that are 
the first line of defense against infection. The development of methods 
to boost innate immune responses could lead to the development of a 
relatively small set of fast-acting countermeasures that would be 
effective against a wide variety of pathogens, including engineered 
threat agents.

Conclusion

    In closing, I must emphasize that the number of threat agents 
against which we could guard ourselves is endless. New and emerging 
threats introduced by nature or by design will present continuing 
challenges. Although we cannot be prepared for every threat, we have 
the ability to create a strategic approach to identifying and combating 
the greatest threats through the development and availability of safe 
and effective medical countermeasures. HHS and its agencies, including 
NIH, CDC, and FDA, have a clear mandate from President Bush and 
Congress to lead the charge in this arena and in the implementation of 
Project BioShield. The tightly orchestrated development, acquisition, 
and review programs for next generation anthrax and smallpox vaccines 
outlined here are outstanding demonstrations of the USG support and 
management of a medical countermeasure program throughout the 
development pipeline.
    We have already made important strides and will continue to work to 
address the obstacles identified. Mr. Chairman, I look forward to 
working with you and members of the subcommittee to address the 
challenges of bioterrorism preparedness and its impact on public 
health.
    We will be happy to answer any questions you may have.

    Senator Burr. Dr. Heilman, do you have any opening 
statements to make?
    Dr. Heilman. No, I don't.
    Senator Burr. Great. Dr. Palma.
    Dr. Palma. Chairman Burr, members of the subcommittee, and 
fellow colleagues, I am honored to appear before your 
subcommittee. I am Colonel Joseph Palma. I am Medical Director 
within the Office of the Assistant Secretary of Defense for 
Chemical and Biological Defense and I would like to provide 
information on three particular issues.
    The Department of Defense is involved in biodefense, and 
those are the efforts to develop promising new medical 
countermeasures to biological threats, concerns related to the 
transition of candidate technologies to the point where 
BioShield authorities can be used to fund procurement, and I 
would like to share some thoughts on the perceived ``Valley of 
Death'' issues that we have been grappling with for some time.
    The role of our program is to oversee all of the Department 
of Defense's chemical and biological defense programs, not just 
the medical ones, but I recognize that today's hearing is only 
about the medical countermeasure for biodefense. In accordance 
with Congressional authority, Dr. Kline, the Assistant to the 
Secretary, is the single point of contact for the Department to 
which we report on these efforts.
    To support biodefense and WMD defense against weapons of 
mass destruction, the Secretary provided direction to us 
earlier this year to do an analysis of the requirements that 
were needed for the Department of Defense to have novel medical 
countermeasures, and novel countermeasures, in general. Senior 
leaders agreed after that to plus-up our program by $2.1 
billion additional for the fiscal years 2006-2011, bringing the 
budget up to about $10 billion.
    In addition to the study, the Director of Program Analysis 
and Evaluation identified an additional $100 million in fiscal 
year 2006 uniquely to start addressing as a downpayment 
biological warfare medical countermeasures that address 
bioengineered threats. These medical countermeasures 
initiatives will apply transformational approaches leveraging 
genomics, proteonomics, systems biology, immunology, and 
bioinformatics for the purpose of creating a more responsive 
and agile set of countermeasures that leverage these maturing 
technologies.
    The chemical biodefense program has made progress in the 
last several years in biodefense, and I will just mention a few 
of the more recent examples. In February of this year, the FDA 
approved the DOD vaccine immunoglobulin to treat adverse 
effects of smallpox immunization. In early 2005, clinical 
trials began for both multivalent Botulinum vaccine for 
serotypes A and B and a plague vaccine. In July, clinical 
trials will begin for Venezuelan equine encephalitis vaccine. 
We have been working diligently to create a multiagent vaccine 
where we are leveraging some of the industry and biotechnology 
companies, AlphaVax being one of them.
    On top of this long history of biodefense, we have a very 
long history of successes that do stop at the Valley of Death 
because of the funding constraints and the capitalization 
shortfalls.
    The DOD Chemical and Biological Defense Program activities 
are coordinated, however, with the Department of Health and 
Human Services and the National Institutes of Health as well as 
the Centers for Disease Control and Prevention. We are on the 
verge of actually finalizing formal interagency agreements 
regarding cooperation in medical countermeasure development.
    It is important to note that some of those medical 
countermeasures currently being developed through the National 
Stockpile have their technology bases on programs originated in 
DOD, such as the next-generation anthrax vaccine and the 
smallpox vaccine currently being developed, as well as the 
science that currently informs Botulinum antitoxin development.
    A critical aspect of interagency coordination is support of 
BioShield. Dr. Kline testified in April of 2003 that the 
Department supported BioShield. It is important that military 
and civilian capabilities and concept of use and medical 
countermeasures, it is important to understand these 
requirements don't always coincide. The medical capability 
requirements generally focus on pre-exposure, prophylaxis for a 
smaller and more defined population. Civilian requirements tend 
to focus on postexposure prophylaxis and treatment for a larger 
and more diverse population, such as geriatrics and pediatrics. 
The route of administration sometimes also differs.
    Since this is a hearing on the Valley of Death, I would 
like to give you a little bit of our perspective in this area. 
As a preamble, we would like to define the Valley of Death as a 
step between R&D and commercialization. It applies to all 
products, of which biologics is only one, and has some unique 
challenges. Fewer than one in 100 candidates will receive 
approval by the FDA, and once a product receives FDA approval, 
it can take, in our estimation, between eight and 10 years and 
$500 to $800 million to bring it to market.
    We are looking--and the issues there, the challenges are 
candidate exploration, which is the discovery phase, efficacy 
and toxicity studies, whether they work out or not, scale-up 
production sorts of issues, lack of infrastructure, process 
development and definitization so that it works.
    We are looking at ways to speed up overall development 
process for licensure of potential medical countermeasures, 
which can take quite a long time. We believe the most promising 
savings will probably occur in the initial phases, the 2- to 5-
year period of candidate discovery, because the more candidates 
you have, the more likely you are to find the successful ones. 
With adequate funding, manufacturing capabilities, and required 
biocontainment facilities, especially for the animals tested 
that needs to be done, the safety and toxicology testing may 
also be accelerated.
    Within DOD, our medical countermeasure development process 
is requirement driven, so we tend to fund those issues that are 
successful for us and we try and put all the efforts against 
it, but we do have to prioritize. We don't believe, however, 
fast-track authority at the FDA will necessarily shorten our 
ability to do that.
    Thank you for the opportunity to address these issues, sir. 
I will try to address any additional concerns or questions the 
subcommittee may have.
    Senator Burr. Dr. Palma, thank you very much.
    [The prepared statement of Dr. Palma follows:]

         Prepared Statement of Colonel Joseph Palma, M.D., USAF

    Chairman Burr, Senator Kennedy and members of the subcommittee: I 
am honored to appear before your subcommittee. I am Colonel Joseph 
Palma, the Medical Director within the Office of the Deputy Assistant 
to the Secretary of Defense for Chemical and Biological Defense. I will 
provide information on Department of Defense efforts to develop 
promising new medical countermeasures to chemical, biological, 
radiological, and nuclear (CBRN) threats. I will also address concerns 
related to the transition of candidate technologies to the point where 
BioShield Act authorities can be used to fund the procurement. I will 
also share my thoughts on the perceived ``Valley of Death'' related to 
drug development. Following my comments, I welcome any questions the 
subcommittee may have and I will do my best to answer them.

DOD Chemical and Biological Defense Program--From Strategy to Programs

    In accordance with congressional authority, the Assistant to the 
Secretary of Defense for Nuclear, Chemical and Biological Defense 
Programs serves as focal point overseeing the Department's chemical and 
biological defense research, development, and acquisition. In 
preparation of the Fiscal Year 2006 President's Budget Submission for 
the Department's Chemical and Biological Defense Program, we used a new 
process based on the program reorganization that occurred in 2003. This 
improved process ensures that the Department's efforts in CBRN defense 
are closely aligned with strategic guidance and are driven by 
operational requirements, rather than being driven by technological 
approaches.
    The planning process for the budget begins with the National 
Security Strategy, which establishes the position of the United States 
and outlines the defense strategy. Drawing from the direction and goals 
in NSS, the Joint Chiefs of Staff prepare and present the National 
Military Strategy. The National Military Strategy recommends military 
objectives and strategy, fiscally constrained force levels, and force 
options; and provides a risk assessment for programs.
    A major aspect of the planning phase is the Joint Capabilities 
Development process. The Joint Capabilities Development approach to 
defense planning serves to focus attention on required capabilities 
while providing guidance to fit programs within the resources available 
and meet the defense goals. As stated in the guidance, a key Strategic 
Objective for the Department is to Secure the United States from Direct 
Attack--We will give top priority to dissuading, deterring, and 
defeating those who seek to harm the United States directly, including 
those extremist individuals or organizations that may possess and 
employ weapons of mass destruction.
    The current CBRN Defense strategy emphasizes a capabilities-based 
approach rather than the previous approach, which provided greater 
emphasis on prioritizing threat agents and targeting budgetary 
resources based on validated intelligence. Capabilities-based planning 
focuses more on how adversaries may challenge us than on whom those 
adversaries might be or where we might face them. It reduces the 
dependence on intelligence data and recognizes the impossibility of 
predicting complex events with precision. This strategy drives a top-
down, competitive process that enables the Secretary to balance risk 
across the range of complex threats facing military personnel, to 
balance risk between current and future challenges, and to balance risk 
within fiscal constraints.
    I appreciate the Congress' support of the Fisal Year 2005 National 
Defense Authorization. I believe it is worth quoting from the 
congressional report language since the rationale coincides with the 
Department's approach:
    The current law [10 USC 2370a] defines biological warfare threats 
primarily in intelligence terms. This is overly restrictive because 
intelligence on biological warfare threats is inherently limited due to 
the ease with which biological warfare programs can be concealed and 
dangerous pathogens and toxins can be acquired. The situation is 
further exacerbated by the rapid advancements in bio-technology that 
are widely available throughout the world. Additionally, the current 
law categorizes biological warfare agents by the time period in which 
they may become threats: near-, mid-, and far-term. For the same 
reasons that make it difficult to define biological warfare agents in 
terms of available intelligence, it is difficult to project the time 
periods during which such agents might become threats. In responding to 
such threats, more flexibility is needed in the medical components of 
the biological defense research program.
    Key capabilities within the Chemical and Biological Defense Program 
are structured within the operational elements of Sense, Shape, Shield, 
and Sustain.
     Sense includes advanced remote sensing, standoff detection 
and identification systems.
     Shape includes battlespace management, including modeling 
and simulation and the communication and decision systems to make 
appropriate responses and plans.
     Shield includes collective and individual protection and 
preventive medicines, such as vaccines.
     Sustain includes capabilities for decontamination and 
medical diagnostics and therapeutics.
    This approach focuses on optimizing materiel solutions for CBRN 
defense by building a portfolio of capabilities that is robust and 
agile across the spectrum of requirements, including requirements to 
support homeland security.

Enhancing Countermeasures

    As a supplement to the Joint Capabilities Development process, the 
Secretary of Defense provided direction to enhance the chemical and 
biological defense posture. The Joint Requirements Office for CBRN 
Defense and the Office of the Deputy Assistant to the Secretary of 
Defense for Chemical and Biological Defense led a comprehensive study 
that generated several options for increased investment based on the 
new requirements and accompanying risk. The study used an analytical 
methodology to define requirements for each Service and for the total 
Joint force.
    Based on the study findings, senior leaders agreed to increase the 
investment for WMD countermeasures by $2.1 billion in Fiscal Years 
2006-11. This increase includes $800 million in military construction 
funding included in the Defense Health Program for a recapitalization 
of the facilities at the U.S. Army Medical Research Institute of 
Infectious Diseases (USAMRIID). The increase also included $1.3 billion 
for the Chemical and Biological Defense Program, bringing the total 
chemical and biological defense investment to $9.9 billion over that 
period. This investment strategy begins with the $1.5 billion Fiscal 
Year 2006 President's Budget Request. The Chemical and Biological 
Defense Program increase includes activities to enhance warfighter 
defense capabilities to include building a new test chamber for non-
traditional agents; upgrading test and evaluation facilities; enhancing 
research and development efforts in areas of agent detection, early 
warning and battle management, decontamination, collective protection, 
and medical countermeasures.
    The Fiscal Year 2006 President's Budget Submission for the DOD 
Chemical and Biological Defense Program builds on the strategy and the 
existing capabilities fielded to protect U.S. forces against CBRN 
threats and includes the results of the study and biological warfare 
medical countermeasure initiatives. The Chemical and Biological Defense 
Program budget provides a balanced investment strategy that includes 
the procurement of capabilities to protect U.S. forces in the near-term 
(fiscal year 2006), investment in advanced development to protect U.S. 
forces in the mid-term (fiscal year 2007-11), and investment in the 
science and technology base to protect U.S. forces through the far term 
(fiscal year 20012-19) and beyond. The two primary areas of increased 
emphasis in this year's budget are the CB Defense Program's test and 
evaluation infrastructure and novel biodefense initiatives.
    This budget is based on technology needs and directions, 
restructured acquisition programs, and integrated Test & Evaluation 
(T&E) capabilities to execute these programs. The programs are time and 
funding sequenced to be executable in terms of having the technologies 
demonstrated and transitioned in synchronization with the T&E 
capabilities. Thus, the milestones of the acquisition programs are 
based on the availability of not only the financial resources, but the 
technology and T&E resources needed to execute the programs. The full 
effect of this integrated, executable program structure will begin to 
be realized in fiscal year 2006.

Medical Countermeasures

    In addition to the increase mentioned before, the Fiscal Year 2006 
President's Budget submission included an additional $100 million for 
the CBDP to address biological warfare medical countermeasure 
initiatives. Of this funding, approximately 76 percent is applied to 
science and technology (S&T) efforts and approximately 24 percent is 
applied to advanced development efforts. These medical countermeasure 
initiatives will apply transformational approaches which leverage 
genomics, proteomics and systems biology data exploitation. The focus 
of these biodefense initiatives is on interrupting the disease cycle 
before and after exposure, as well as countering bioengineered threats.
    The Chemical and Biological Defense Program has made progress in 
several areas of medical defense. I will briefly describe some recent 
successes. In 2003, the first successful application of the new 
``animal efficacy rule'' occurred with Food & Drug Administration (FDA) 
approval of pyridostigmine bromide to increase survival after exposure 
to soman nerve agent poisoning. Evidence shows that administration of 
the drug before exposure to soman, together with atropine and 
pralidoxime given after exposure, increases survival. The FDA agreed 
that, based on the animal evidence of effectiveness, pyridostigmine 
bromide is likely to benefit humans exposed to soman. The safety of 
pyridostigmine bromide has been documented over years of clinical use 
in the treatment of the neuromuscular disease, myasthenia gravis.
    In March 2005, a contract award was made for development of a 
chemical agent bioscavenger for a pre- or post-exposure treatment of 
nerve agent exposure. This bioscavenger is being developed as a 
prophylactic regimen to protect the warfighter from incapacitation and 
death caused by organophosphorus nerve agents.
    On the biological side, in early 2005, clinical trails began for a 
multivalent botulinum vaccine for serotypes A and B, and a plague 
vaccine; while in July, clinical trials will begin for Venezuelan 
Equine Encephalitis Vaccine.

Joint Vaccine Acquisition Program

    The Joint Project Manager for Chemical Biological Medical Systems 
is responsible for systems acquisition, production, and deployment of 
FDA-approved medical countermeasures against chemical and biological 
agents for the Department of Defense, including the Joint Vaccine 
Acquisition Program (JVAP).
    Near-term (fisacl year 2006-07) biological medical countermeasure 
goals include transition to advanced development of bacterial (plague), 
and viral (Venezuelan Equine Encephalitis (VEE)) vaccines.
    Mid-term (fiscal year 2008-11) opportunities include advanced 
development of filovirus and ricin toxin vaccines, potential FDA 
approval of a reduced dosing schedule for the current anthrax vaccine) 
and a Botulinum A/B neurotoxin vaccine.
    Long-term (fiscal year 2012-20) targets include licensure of all 
near-term and mid-term vaccine candidates in advanced development to 
include Eastern and Western Equine Encephalitis (EEE and WEE) and 
combined filovirus vaccines. Furthermore, the program is investigating 
several alternatives to hypodermic needles for administration of 
vaccines, which will greatly reduce the medical logistics burden and 
cost associated with vaccination, and improve user compliance. Another 
thrust is to identify effective adjuvants to reduce the time and 
vaccine dose required for development of effective protective immunity. 
A strategic thrust is to develop innovative multi-agent vaccines that 
simultaneously target multiple pathogens through a single immunization 
series. This effort is supported by the investment the program is 
making in science and technology.
    Major technical challenges in the medical pretreatments capability 
area are being addressed both within the JVAP as well as in the science 
and technology base supporting the development and transition of 
vaccines and related medical countermeasures. These challenges include:
     defining appropriate in vitro and in vivo model systems 
for investigative purposes,
     determining mechanisms of action of the threat agents as 
well as their countermeasures,
     identifying appropriate immunogenic protective antigens 
for vaccine targets,
     stimulating immune responses to small molecules,
     selecting vector systems for recombinant protein vaccines,
     evaluating preliminary safety and efficacy data, 
determining dose and route of administration, and evaluating process-
scale up potential. The development of acceptable surrogate markers of 
effectiveness is essential to obtain FDA licensure of medical CBD 
pretreatments, because challenging humans with chemical and biological 
threat agents to establish vaccine protective efficacy is unethical and 
prohibited.
    Products currently licensed and procured under the JVAP are Anthrax 
Vaccine Adsorbed (AVA) and Vaccinia Immune Globulin IV, and Dryvax 
smallpox vaccine. More specifically, JVAP is developing the following 
vaccines for eventual FDA licensure, listed along with significant 
program milestones and events. The status of each follows:
     Plague vaccine: Phase 1 clinical trial is being conducted 
at the University of Kentucky, Lexington, KY. The Phase 1 clinical 
trial started on January 25, 2005.
     Recombinant Botulinum (rBOT) A/B vaccine: Phase 1 clinical 
trial is being conducted at the University of Kentucky, Lexington, KY. 
The Phase 1 clinical trial started on August 30, 2004.
     Venezuelan Equine Encephalitis (VEE) vaccine: A Phase 1 
clinical trial will be conducted at Radiant Research, Austin, TX. The 
Phase 1 clinical trial is scheduled to start in July 2005.
     Vaccinia Immune Globulin Intravenous (VIG-IV): VIG-IV was 
licensed by the FDA. The FDA issued an approval letter to DVC on 
February 18, 2005 to market Vaccinia Immune Globulin Intravenous 
(human) (VIG-IV).

Interagency Program Coordination

    The DOD Chemical and Biological Defense Program activities are 
informally coordinated with the Department of Health and Human 
Services, including the National Institute of Allergy and Infectious 
Diseases (NIAID), and the Centers for Disease and Control and 
Prevention. This coordination is evident by the DOD's active 
participation in the monthly DHHS Risk Management meetings for anthrax, 
smallpox, and botulinum toxin.
    The DynPort Vaccine Company (DVC) is the DOD prime systems 
contractor for vaccine development. In addition to serving the needs of 
DOD, NIAID also funds DVC for some collaborative vaccine efforts. These 
awards included two grants to support the development of a vaccine 
candidate for botulinum toxin, a grant to support a Phase II trial of a 
Venezuelan Equine Encephalitis vaccine, and a contract to fund research 
on a vaccine candidate for tularemia.
    It is important to note that some of the medical countermeasures 
currently being developed through CDC for the national stockpile have 
their technology basis in programs which originated in DOD. Examples 
are the next generation anthrax vaccine and cell culture derived 
smallpox vaccine. As such, DOD and CDC work cooperatively to leverage 
medical countermeasure programs of mutual interest including the role 
played by the DVC for such development. Both DOD and CDC have reviewed 
their programs to ensure there is no funding redundancy.
    Management of the development and implementation of national 
security policies related to CBRN defense activities by multiple 
agencies of the U.S. Government are coordinated by the joint Homeland 
Security Council/National Security Council's Policy Coordination 
Committee for Biodefense. The DOD is represented on this Coordinating 
Committee.

Medical Countermeasures and Technology Transition--Bridging the 
                    ``Valley of Death''

    There are two rules of thumb that are based in some degree on the 
historical efforts with the pharmaceutical industry. First, fewer than 
one in one hundred candidate drugs will receive approval by the FDA for 
Investigational New Drug (IND) status, and of those, only about one in 
four will receive approval by the FDA. Second, once a product receives 
IND approval, it may take 8-10 years and $500-$800 million or more to 
support the clinical trials and development manufacturing processes to 
bring a product to market. This does not include the research 
investment to develop candidate products.
    The so-called ``Valley Of Death'' (VOD) is the time and investment 
gap between the identification of candidate medical products from the 
science and technology base and before they are ready for clinical 
trails.
    We are looking at ways to speed up the overall development process 
for licensure of potential medical countermeasures, which can take 10-
20 years. The most promising time savings will probably occur in the 
initial 2-5 year period during the drug or vaccine candidate discovery 
phase and prior to the start of clinical trials, the so called VOD. 
With adequate funding, Good Manufacturing Practices (GMP) manufacturing 
capabilities, and required biocontainment facilities, the pre-clinical 
animal safety and toxicology testing might also be accelerated.
    FDA has a ``fast track'' status for review of clinical trials data, 
but the required structure and time lines for clinical trials, and for 
product approval are not promising areas where significant shortening 
of the licensure process can occur.
    The Department of Defense's approach is a multi-pronged approach 
that includes a multi-disciplinary scientific and technical approach, 
potential changes or improvements in acquisition regulations, 
cooperative with industry and academia to facilitate venture 
investments, and continued investment in the medical countermeasures 
within the DOD Chemical and Biological Defense Program. Ultimately, 
some of the solution may lie outside the scope of the authorities of 
our Department and will require interagency cooperation.

BioShield Act

    A critical aspect of interagency coordination is DOD support for 
Project BioShield. As Dr. Klein testified before the House Government 
Reform Committee in April 2003, it was the intention of the Department 
of Defense to support this effort. Our intentions have been put into 
action since that time. The first product that DOD may be able to 
transition to the Department of Health and Human Services (DHHS) under 
Project BioShield is the plasma derived bioscavenger. The DOD has 
awarded an initial contract through Phase I clinical trials, and upon 
completion, it may be eligible for procurement by the Department of 
Health and Human Services under Project BioShield. It is important to 
note that military and civilian capabilities and concept of use for 
medical countermeasures do not always coincide. Military capabilities 
requirements generally focus on pre-exposure prophylaxis for a smaller, 
more defined population, while civilian requirements focus on post-
exposure prophylaxis or treatment for a larger, more diverse 
population. The route of administration requirement for a product may 
be very different.
    DOD's role in BioShield provides potential authorities and tools to 
streamline the acquisition of needed WMD medical countermeasures for 
the government. DOD's role in BioShield allows it to: a) leverage its 
military requirements for medical countermeasures with Department of 
Homeland Security and the Department of Health and Human Services 
resources for research, development, and procurement activities; b) 
continue to produce viable medical product candidates from the DOD 
research tech base; c) and maintain the unique DOD intramural medical 
biodefense program.
    Thank you for the opportunity to address these issues. I will try 
to address any additional concerns or questions the subcommittee may 
have.

        Summary of Testimony of Colonel Joseph Palma, M.D., USAF
    Chairman Burr, Senator Kennedy and members of the subcommittee: I 
am honored to appear before your subcommittee. I am Colonel Joseph 
Palma, the Medical Director within the Office of the Deputy Assistant 
to the Secretary of Defense for Chemical and Biological Defense. I will 
provide information on Department of Defense efforts to develop 
promising new medical countermeasures to chemical, biological, 
radiological, and nuclear (CBRN) threats. I will also address concerns 
related to the transition of candidate technologies to the point where 
BioShield Act authorities may be used to fund the procurement. I will 
also share my thoughts on the perceived ``Valley of Death'' related to 
drug development. Following my comments, I welcome any questions the 
subcommittee may have and I will do my best to answer them.
    The major topic areas that I will discuss are:
    1. DOD Chemical and Biological Defense Program--From Strategy to 
Programs.
    2. Enhancing Countermeasures.
    3. Medical Countermeasures.
    4. Interagency Program Coordination.
    5. BioShield Act.
    6. Medical Countermeasures and Technology Transition--Bridging the 
``Valley of Death.''

    Senator Burr. You all did a great job of summing up what we 
currently do. I am going to ask a different question. I am 
going to come to you, Dr. Raub. Would you consider the 
participation in the efforts to create these countermeasures by 
companies is robust?
    Mr. Raub. I believe it is robust, but needs to be much more 
so in terms of the challenges that are ahead of us.
    Senator Burr. What percentage of those companies that are 
out there today are actively pursuing countermeasures that 
might be beneficial to us as a percentage of the overall work?
    Mr. Raub. I don't have that figure, sir.
    Senator Burr. I guess my question is, we lack an obvious 
participation by big pharma. Now, that is for you to tell me 
whether it is important and for me to listen to you. But as one 
charged with putting together the plan, but question is, why 
aren't they involved? What is it in the system that is not 
enticing to them? Do you have any feel for that?
    Mr. Raub. From my perspective, Senator, many factors play 
into that. I can't say in every instance which are the 
principal determinant ones. But again, by definition, we are 
dealing with current or potential products for which there is 
little or no commercial market beyond the interest of the 
Federal Government in the acquisition for biodefense. 
Therefore, for many companies, certainly the larger companies, 
they have many alternative business opportunities to pursue and 
initiatives in this area must be weighed against them.
    One of the early concerns that leaders of industry 
expressed to us has been addressed by the BioShield 
legislation, and that is many of the companies told us years 
ago they were concerned about the vagaries of annual 
appropriation processes and were concerned that upon making 
commitments for a multiyear endeavor but being dependent on the 
year-by-year decisions on appropriations, that was more 
uncertainty than they were comfortable addressing. The special 
reserve fund for BioShield addresses that question head-on by 
providing that large up-front appropriation and enabling us to 
enter into acquisitions when we have the sufficient threshold 
of knowledge and technology to be able to say with assurance 
the funds are here, and to the extent that the company can 
deliver on it, it knows those funds will be available.
    I think those are just two of what I am sure are many other 
considerations.
    Senator Burr. Dr. Palma, can you describe for all of us the 
requirements that DOD uses to determine the kind of 
countermeasures that you invest in?
    Dr. Palma. Yes, sir. We have a very structured requirements 
process that is driven by the combatant commander's 
understanding of what their vulnerabilities are. They look at 
the threats, but not in the context of, I have anthrax to worry 
about, but what the context of the war is. And with that, they 
come up with a requirement to have protective countermeasures 
against A, B, C, D, whatever the issues are.
    We then subsequently incorporate that into the operational 
process and the operational planning through the Joint Staff 
analysis process and out of that comes a series of requirements 
that then our office has to find a way to source, resource, and 
create countermeasures, again. That is done not just by our 
office alone. It is obviously done with the entire community as 
we develop the most promising sort of--we characterize the most 
promising answers to the shortfalls that the Joint Staff 
identifies or the requirements that the Joint Staff identifies.
    Senator Burr. You spend--the DOD spends a good chunk of 
money on countermeasures and the research and development that 
goes into it. In your estimation, how much of that is directed 
toward the latter stages of development--animal efficacy 
studies, human safety studies, that is vitally needed for the 
FDA licensure?
    Dr. Palma. It depends on how you actually frame that. We do 
some of that--we do all of the FDA stuff starting at the very 
beginning, so some of the resources that are expended in basic 
science, for example, the basic science and the exploratory 
sciences, actually, once we start thinking about having a 
candidate, we start having conversations with the FDA early. So 
how much funding specifically is expended in that from the 
overall budget, I can tell you how much we spend in the 
research, development, testing, and evaluation, which includes 
all of that. In fiscal year 2006, we spent about $250 million--
in fiscal year 2005, rather. In fiscal year 2006, we plan to 
spend about $338 million.
    But that doesn't tell the whole story because a lot of that 
includes the actual testing, the actual lab bench, the actual 
salaries, the actual infrastructure cost that we need to 
support, and with that money, we have to do a lot of 
countermeasure development.
    Senator Burr. Dr. Heilman, I noticed as I read through 
testimony that your division is where the action in terms of 
conducting the research on bioterrorism pathogens of concern 
and emerging diseases. Can you describe to me how your division 
is addressing the threat that most believe exists from 
genetically engineered pathogens?
    Dr. Heilman. Yes. There are three general approaches that 
we are taking that are corresponding to our near, intermediate, 
and far-term concerns. The near-term issue we are focusing on 
are engineered threats that are natural threats, and what I 
mean by that are antimicrobial resistants. We know those things 
are out there and we know that they present a threat, an 
important near-term threat. In that particular case, we are 
spending about over $170, $180 million per year in research in 
those areas.
    The research includes the discovery of new drugs, the 
better diagnostics of antimicrobial resistant specimens, but 
also understanding how we can enlarge upon existing drugs that 
we have in our armamentaria to perhaps counteract drugs--these 
pathogens, as well. For example, certain drugs are not licensed 
for a particular bacteria, but they may indeed be valuable for 
that bacteria when they are in an antimicrobial resistant form. 
So we are looking at that possibility.
    The second kind of area that we are focusing attention on 
are things that we do know actually have potential threats. One 
example that I can give you is that--I am sure you have all 
heard about the IL-4 insertion in ectromelia. That was a study 
done in Australia, and raised a concern about perhaps the 
potential of developing a super-smallpox virus. In that 
particular case, we have been looking at both the vaccines and 
some of the new drugs that we have been working with companies 
on in terms of their abilities to counteract that, and 
actually, brand new data that occurred actually last week has 
shown that a combination of two drugs that we had been working 
on actually completely cured ectromelia IL-4 insertions in 
mice. So we are very pleased about that.
    I think the long-term issue is really trying to figure out 
if there are other approaches that we could be taking to figure 
out how to address unknown threats, and one of the approaches 
that we are taking, instead of thinking of the pathogen, we are 
thinking of how to really harness what we know about the body 
and the immune response to the body.
    For example, the innate immune response is one of the first 
ports of defense. It immediately is triggered when something 
unusual occurs. Can we harness the information there to be able 
to figure out how it should really focus new drugs and new 
attention on how to boost this innate immune response? So that 
is the other approach that we are trying to take at this time.
    Senator Burr. I noted that your institute recently 
announced and created a new position and hired a new person, 
Dr. Kurilla, am I----
    Dr. Heilman. He is right here.
    Senator Burr. OK--whose primary role will be to provide 
overall institute coordination for advanced product development 
of medical countermeasures against bioterror threats. Does this 
position address that Valley of Death?
    Dr. Heilman. This position is really intended to figure out 
how to harness our best approaches to try to do our part of the 
biodefense acquisition and development process, and what I mean 
by that, we really focus our attention at the very beginning, 
on basic research, on the way that basic research can be 
applied, and then advanced development as defined by Dr. Raub 
up to the point of really Phase I early to Phase II studies. So 
Michael's job is really focusing on how best to do that within 
our resources.
    Senator Burr. Does he have responsibility in this position, 
or will he, to formally coordinate efforts with DOD and DHS?
    Dr. Heilman. Absolutely. Forgive me for not adding that, 
but absolutely. He is our principal point of contact, 
especially with the DHHS and DOD. He has been on the road quite 
a bit making sure that everybody knows that.
    Senator Burr. How did that exist before this position, or 
did it?
    Dr. Heilman. Here.
    Senator Burr. OK. So you just had one more duty?
    Dr. Heilman. You have got it.
    Senator Burr. Dr. Raub, in your written testimony, you 
noted that a drug, and I would assume a vaccine entering Phase 
I trials has only an eight percent chance of reaching the 
market. At what point do you know that a particular drug is a 
winner?
    Mr. Raub. The easy answer, sir, is when it is approved or 
licensed. [Laughter.]
    In shaping the acquisitions for the BioShield Special 
Reserve Fund, in many ways, the overall determinant is do we 
have something that is licensable or approvable within an 8-
year period. Now, that is necessarily subject to scientific and 
technical expert judgment about whether the conditions are met, 
but the types of things that the FDA would consider in making 
its decisions about licensure or approval would be is it safe, 
is it effective, can it be manufactured in reproducible ways, 
is it stable, a whole other set of considerations.
    And to be able to predict whether that can be achieved, one 
has to have information about such things as the toxicology of 
the agent, how the body deals with it, the so-called 
pharmacokinetics. You need to have information about the 
efficacy in animals, because for these agents, it would be 
unethical to experiment upon humans, and especially if they are 
not naturally occurring. We don't get that information, either, 
Phase I clinical trials, as Dr. Heilman indicated, and 
manufacturing scale-up work. Something made at the benchtop 
successful may founder when one tries to produce it on a 
commercial scale. So it is all of that kind of information that 
is subject to an expert analysis that leads to this decision, 
is this licensable or approvable most likely in that period?
    So far, so good, we believe in our judgments, but these are 
judgments and only history is going to tell exactly how sure 
one can be with respect to is this a winner.
    Senator Burr. Dr. Vitko, once you provide that threat and 
risk assessment, do you actually participate in drafting the 
requirements and ultimately those requirements are issued by 
HHS?
    Mr. Vitko. We participate in the process that generates 
those requirements. HHS formalizes them. The process that 
occurs after we do a threat assessment and then a threat 
determination is there is an interagency group called the 
Weapons of Mass Destruction Medical Countermeasures 
Subcommittee, which is co-chaired by HHS, DHS, and DOD, and 
exists under the aegis of the Office of Science and Technology 
Policy.
    That committee meets and assesses the consequences of such 
a threat. That is, are there currently available medical 
countermeasures that address that threat? If not, are there 
things in the pipeline that do? And if so, it makes 
recommendations amongst the various options on what they 
consider the most prudent path to pursue, and those options 
then are forwarded to HHS and HHS finalizes those requirements 
and seeks approval from OMB to then go and issue an RFP for 
those medical countermeasures.
    Senator Burr. Can I ask you to be a little more specific on 
the level of participation that you have?
    Mr. Vitko. Yes. As I said, DHS co-chairs that committee 
with the other agencies. Typically, what we do in our role 
there is, first of all, we actually participate in the studies 
that look at the plausible scenarios. How many people might be 
exposed? Can this occur in one city or multiple cities? What 
are the other associated effects with this that might affect 
distribution of medical supplies, that is the timing and where 
they could be distributed? So we participate in that as a co-
equal and then we certainly co-chair the process to then have 
an equal vote with everybody else on the decisions of which 
options to look for.
    Senator Burr. I am going to ask one more question and then 
I am going to turn to my colleague, Senator Hatch. Are we wrong 
to be so concerned about this area we have all referred to as 
the Valley of Death? Is this something that we should not be 
focused on? Is it not a problem, or is it?
    Mr. Raub. I can start, Mr. Chairman. My colleagues, I 
expect, will want to comment, as well. I believe it is 
appropriate for the committee, as well as the agencies, to 
focus on it. In my own perspective, the Valley of Death is not 
an inevitable part of the landscape for every product, and I 
have given a couple of examples where things have passed 
smoothly from the early stages of research to acquisition.
    But some products may well encounter this, either by the 
nature of the product, some scientific and technical 
considerations, or the circumstances of the time, and what I 
mean by the circumstances of the time, it may be the 
competition for other funding, whether it is NIH funding or DOD 
funding or venture capital. There may be other more attractive 
opportunities at that point, and some individual products may 
very well encounter this dearth of means to be able to pursue 
questions, whether it is manufacturing scale-up, toxicology, 
Phase I trials, all those things that are necessary to put it 
within reach for a BioShield acquisition. So we believe the 
committee is quite properly focused on this as an important 
issue for all of us.
    Senator Burr. Anyone else?
    Dr. Palma. Yes. I would agree with that. I think it is 
essential, and I don't think I would find anyone here that 
would disagree with me. I don't think John would, either. I 
think it is essential that the Nation recognize that there is a 
risk in the development of biodefense products that is unique 
and that resourcing that risk appropriately, and by that, I 
mean people, infrastructure, intellectual capital, and 
continuous funding for those efforts that are necessary to 
fund.
    I think those decisions need to be informed by an 
understanding of what is understood to be the Valley of Death, 
and I would define that a little bit more broadly, because I 
think that all products go through that kind of challenge. But 
understanding those challenges and resourcing them 
appropriately is essential if we are going to have success in 
addressing all of the challenge of biodefense that we really 
face. It is not like a Manhattan project, because that was 
about nuclear physics. This is about the diversity of biology 
and it is a much more complicated problem.
    Senator Burr. Senator Hatch.
    Senator Hatch. Welcome to all of you. We appreciate the 
work that you do for our country and the protection of our 
citizens.
    Dr. Vitko, I want to thank you for your testimony and for 
sharing with us the DHS's efforts in this area. Now, I 
personally am pleased to hear you call for the infrastructure 
to support rapid research, development, test and evaluation of 
new medical countermeasures, as this is exactly what my 
colleagues, Senator Lieberman and others, Senator Brownback 
included, and I have attempted to do with our BioShield II 
legislation.
    In your testimony you State that the Science and Technology 
Directorate helps to provide an end to understanding of an 
integrated biodefense strategy. In contrast, there have been 
complaints by some biotech companies that the lack of cross-
agency requirements or standards for some of these products 
creates obstacles for their work in this area. Now, do you feel 
that there is currently a widely known, acceptable, and 
effective integrated biodefense strategy that spans all 
governmental agencies?
    Mr. Vitko. I think the short answer is at the top level, 
yes. The President's Biodefense for the 21st Century called out 
the key elements of such a strategy, assigned agency 
responsibility, and in the classified version of science-
specific taskings, the agencies in it.
    At the next level of specific milestones and steps along 
those, they are at various levels of development, some more 
advanced and complete than others.
    Senator Hatch. Does anybody else care to comment about 
that?
    [No response.]
    Senator Hatch. OK. Dr. Raub, thanks for your testimony. You 
mentioned that our smallpox vaccine stockpile now contains 
enough vaccine for every person in America. Do we also have the 
infrastructure necessary to distribute those doses?
    Mr. Raub. We believe we do have the basic infrastructure. 
Part of the smallpox immunization campaign over a year ago was 
involved not just in encouraging health care workers to be 
vaccinated, but to working with public health departments to 
build the basic infrastructure for delivering vaccinations.
    In addition, in a related area, namely our concern about 
the anthrax threat, we have been leading an effort called the 
Cities Readiness Initiative, which focuses on 21 major 
metropolitan areas in the country, building the local 
infrastructure for the rapid distribution of antibiotics. Now, 
vaccines are a bit more difficult to administer than giving out 
pills, but there is more similarity than difference with 
respect to the kinds of temporary clinics and logistics and 
other aspects of that dispensing.
    So we are leveraging the experience on the smallpox 
vaccination specifically with this larger effort on Cities 
Readiness and we will continue to do that. It is a major 
feature in the 2005 and 2006 budgets for HHS, and we feel 
confident that that is strong now and will get better as we 
work with our municipal and State colleagues.
    Senator Hatch. Thank you. Dr. Palma, thank you for 
providing the Department of Defense viewpoint. It was very 
interesting to hear about some of your successes in that area. 
But what aspects of the Department of Defense's approach to 
procurement are the most or least suited or suitable to 
adaptation into civilian markets?
    Dr. Palma. Senator Hatch, there are--we have an ongoing 
relationship with HHS. We meet on a monthly basis on common 
product, common interest, and we are on the verge of signing an 
interagency agreement with them to actually have a tighter 
collaboration. So from a process standpoint, we both 
participate and try to share the workload and identify those 
things where we have commonalities of interest to pursue them 
in a common sort of way.
    Several of our countermeasures, and many of the 
countermeasures that are currently in development at DHHS 
certainly have their roots in DOD work that has been going on 
at USAMRA and places like that for many, many years. So of 
which products themselves lend themselves to civilian use, many 
of them do.
    Many of those products were not developed past IND and 
really were not fully licensed at the time that HHS got them, 
so they are spending some money to do that where we don't have 
it. And where we have it, we are spending some money to do 
that.
    So I think it is fair to say that in many, many cases, the 
needs are similar, but in some cases, the operational 
imperatives are different and we then have to pursue our own 
efforts separately because it is unfair to ask the other 
agencies to pay for that.
    Senator Hatch. I appreciate all four of you and what you 
have been able to do for us and what you are trying to do and 
for the efforts that you are putting forth. These are all very, 
very difficult problems. I haven't asked you, Dr. Heilman, 
about your agency, but I know what you are doing and it is 
very, very important for the protection of all people in our 
country.
    We need advice up here as to what we should do better, so 
any time you feel like sending it up here, we would love to 
look at it and see what we can do to help you.
    I certainly appreciate our chairman here. He has been 
really working hard on this, in this area, and I think he 
deserves a lot of credit for making sure that we are up to 
speed on a lot of these issues that are so important in this 
world epic that we are going through. Thank you. I appreciate 
it, Mr. Chairman.
    Senator Burr. Thanks, Senator Hatch.
    I am going to come back to you, Dr. Raub. If I understood 
what you said, you said that the public health infrastructure 
was sufficient to be able to handle a mass inoculation were we 
to need that.
    Mr. Raub. I believe I said it was strong, sir. I don't 
think I said it was sufficient, and the reason we have that 
initiative is to work to achieve that sufficiency. We have 
strong capabilities, not strong enough for some of the 
challenges that we can envision, which is why we are making a 
special push on it.
    Senator Burr. I think I might agree with you if we were 
geographically cherry picking a map of the United States of 
America, but I think the challenge for us as we put together 
legislation is to be blind geographically as to where something 
may happen. Therefore, the plan has to have the ability to meet 
that need in any corner of a very large land mass. I commend 
you for the progress that we have made, all of the departments.
    I think that, personally, one of the areas that I see that 
may deviate from where we initially thought the scope of this 
bill would be is to focus very heavily on the public health 
infrastructure in this country, possibly to redefine the role 
of public health for the future. I look forward to working with 
HHS as we explore whether we need to go there, and if we do, 
what the changes are that we might need to make legislatively 
to enable that to happen.
    You did allude in your testimony, and Senator Hatch also 
brought it up, that we have procured enough smallpox vaccine 
for every American. I think you have committed to buy anthrax 
vaccines for the stockpile, and NIH has recently announced 
grant awards to expedite research on a number of dangerous 
pathogens.
    I want to come back to the procurement process, because I 
think it is likely that there is a process in place that we 
understand very well at HHS and the outside world doesn't 
understand one bit how it works. I have heard from several 
company executives that they don't know the specific 
requirements for countermeasures that are needed, and more 
importantly, they don't have any clue what the size of the 
intended government purchase would be. Can you comment on that 
at all?
    Mr. Raub. Yes, sir. I am actually surprised to hear that, 
because our requests for proposals are highly specific 
documents. I mentioned earlier that leaders of industry had 
encouraged us to deal with the stability of funding question. 
What they also encouraged in those same meetings were two other 
things related to this. One is when we went out with a request 
for proposals, for this to be scientifically and 
technologically well-grounded, including manufacturing 
capability, not some fancy of a bureaucrat. They wanted 
something that was evidence-based and could be done.
    Second, they wanted us to be specific as to how many doses, 
in what form, by when, and I believe our requests for proposals 
meet that.
    Where I believe some of the criticism may be emerging is 
not so much the specificity of our requirements, but whether 
various opportunities reach that threshold. We have received 
some criticism, for example, of hoping that we would issue 
requests for proposals in areas where, in our judgment, the 
underlying evidence was inadequate. We didn't see even Phase I 
clinical trial information. We didn't see information on 
manufacturing scale-up and these other elements that are part 
of that decision, is there a licensable or approvable product 
here in 8 years? And I think we have been criticized for where 
we have made that determination. But I don't believe a 
criticism based on any vagary or ambiguity of the RFP would 
hold up.
    We continue to try very hard through our website, through 
our staff's participation in conferences, for everybody to 
understand the strengths and the limitations of BioShield as 
the law defines it, and I am sure there are communication 
issues that we can do better on and we can resolve. It is very 
much in our interest to have a clear understanding and a good 
interaction with the industry, large and small, as well as our 
academic colleagues. So we will certainly take to heart what 
you have expressed, but I believe we are super-specific in 
those RFPs.
    Senator Burr. Clearly, it is in all of our interest that we 
perfect it if, in fact, it is flawed at any point.
    I want to thank this panel for your willingness to be here, 
for the expertise that you have brought. I think it is safe to 
say that Senator Hatch and Senator Lieberman, Senator Gregg, 
Senator Frist, Senator Kennedy, there are some passionate 
members of this committee on this issue, and probably more so 
than I have found on most issues that come through this fine 
institution. There are some differences and the challenge of 
the subcommittee is to sort through the proposals that might 
lead one to address liability, and if we solve liability, we 
have now a robust participation in the program, others that 
believe it is patent extension and that if we solve that, it is 
robust participation in the program, or questions that we have 
raised today about the unclarity that exists in procurement 
might, if cleared up, generate robust participation in the 
program.
    Over time, we will have the opportunity to try to figure 
out what the balance is of those and other things and we look 
forward to working with each of you on how we achieve that. 
Thank you very much.
    Senator Burr. I would call up the second panel at this 
time. Let me take this opportunity to welcome our second panel. 
I have made the introductions in my opening statement.
    At this time, let me recognize Mr. Timmins for his opening 
statement.

 STATEMENTS OF ALAN P. TIMMINS, PRESIDENT AND CHIEF OPERATING 
      OFFICER, AVI BIOPHARMA, INC., PORTLAND, OR; RICHARD 
   FROTHINGHAM, M.D., ASSOCIATE PROFESSOR OF MEDICINE, DUKE 
   UNIVERSITY MEDICAL CENTER, AND STAFF PHYSICIAN, VETERANS 
AFFAIRS MEDICAL CENTER, DURHAM, NC; DAVID P. WRIGHT, PRESIDENT 
AND CHIEF EXECUTIVE OFFICER, PHARMATHENE, INC., ANNAPOLIS, MD; 
PHILLIP K. RUSSELL, M.D., U.S. ARMY MAJOR GENERAL, RETIRED; AND 
    SCOTT MAGIDS, DIRECTOR, TECHNOLOGY ADVANCEMENT PROGRAM, 
                     UNIVERSITY OF MARYLAND

    Mr. Timmins. My name is Alan Timmins and I am the president 
and chief operating officer of AVI BioPharma, Inc. AVI is a 
biotechnology company that was founded in 1980 out in Oregon, 
and it was founded under the premise that the gene could be the 
target for drug intervention. Since that time, we have made a 
distinctive proprietary technology that, in fact, through 11 
clinical trials and over 300 patients treated has not had a 
single adverse event in clinical trials.
    In reference to biodefense, we are currently working on 
programs in Ebola, Marburg, influenza viruses, as well as the 
anthrax and ricin toxins.
    Our technology is particularly applicable in the rapid 
response setting, as perhaps best illustrated by an accident 
that occurred about 16 months ago at USAMRIID, where a 
researcher suffered a needle stick while working with the 
deadly virus Ebola. We got a call from the USAMRIID 
researchers, who identified Ebola targets. We synthesized 
drugs. We assisted USAMRIID in getting an emergency IND from 
the FDA and we delivered drug for use at USAMRIID all within a 
5-day period of time. That is unheard of in the world of 
pharmaceuticals.
    Happily, that researcher never became symptomatic, so after 
21 days in isolation, the researcher was released. The drug, 
however, was used later under a cooperative research and 
development agreement at USAMRIID and was useful in forwarding 
the research in mice.
    We have ongoing programs now in several infectious diseases 
and toxins and we believe that we can address fully at least 75 
percent of the agents identified on the CDC's list of bioterror 
threats. Also importantly, though, our experience over the past 
16 months puts us in a position where we believe that we could 
also address specifically engineered threats that are made to 
be used as bioterror agents.
    As you might imagine, over these 16 months, we have come 
across a number of challenges, scientific and research 
challenges we have met and will continue to meet in the future. 
What we haven't been able to meet and what we can't figure out 
are the bureaucratic confusion, or as you call them in your 
opening statement, the gaps that exist between BioShield and 
the real world. I outline for you, Senator, three of those 
gaps.
    The first is a funding gap that occurs between the time of 
proof of scientific principle and the time when a product is 
ready to be considered for BioShield. We as a small company 
look to the capital markets for our funding. Specifically, we 
raise money through sales of stock. We don't have any sales, 
and so we can't contribute revenues to government research. The 
money that we get in the capital markets is operating capital. 
It is not for government seed funding.
    Therefore, the possibility exists that a promising product, 
for example, our Ebola product, could die on the vine simply 
because, while it has been proven scientifically, it is not far 
enough along for BioShield. That is a specific example. We have 
been told by DARPA that we are too far along for funding from 
them on our Ebola product, but BioShield has said we are not 
yet far enough along for them to consider it as a product 
acquisition. I believe that the way BioShield is structured 
would, though, allow for such funding. So I think that the 
emphasis needs to be made there.
    The second gap that we have identified, I will call an 
implementation gap. Senator, I will tell you that the 
perception of the process of BioShield, of BioShield 
acquisition, is a complete black box. It is not understood by 
industry. It is not understood by the street. Companies shy 
away from participating in BioShield because it is considered 
to be too difficult or perhaps too mystery-endowed to be 
worthwhile for a company to risk its assets moving forward with 
a BioShield product.
    An example of that, HHS is thought to require an IND, or an 
Investigative New Drug filing with the FDA before they will 
allow a company to bid on a BioShield contract. In fact, if you 
read the legislation, S. 975, or you talk to the people that 
were critical in writing it, folks from Senator Lieberman's 
office, for example, they will tell you that that is not the 
case. It is not in the legislation, nor was it ever considered 
to be part of the legislation. So there is a gap in 
understanding of what it takes to be successful, a clear path 
to success in Project BioShield.
    The third gap that I will tell you about is what I call an 
incentive gap. The difference between the risks of performing 
or working to perform under BioShield and the rewards of being 
successful are too great. That is why in answer to your 
question for the first panel about why you don't see big pharma 
there, it is because of that. The risks are considered to be 
too great because the rewards are not enough.
    How do you address that? I think a good start to that would 
be to adopt a legislation called BioShield II and the related 
legislation. That way, you can provide the tax incentives, 
patent incentives, liability protection, and the intellectual 
property protection that those Acts have in place.
    So in summary, I have outlined a number of gaps that exist. 
I think that it is a large issue that needs the focus of the 
Senate, certainly of committees like this one. I think that by 
being proactive, I think that is the necessary step because I 
think what this subcommittee and all the people in here would 
agree is that you don't want to suffer the terrible potential 
consequences and costs of waiting and being reactive to a 
bioterror event.
    Thanks. I look forward to your questions.
    Senator Burr. Thank you, Mr. Timmins.
    [The prepared statement of Mr. Timmins follows:]
                 Prepared Statement of Alan P. Timmins

Introduction

    Chairman Burr, Senator Kennedy, and members of the subcommittee: My 
name is Alan Timmins and I am the president and chief operating officer 
of AVI BioPharma, Inc. AVI is a biotechnology company based in Oregon, 
which was founded in 1980 on the premise that genes could be the target 
for drug intervention. AVI has developed a proprietary third-generation 
technology, distinct from that of any of our peers, which we focus on 
unmet medical needs. We have conducted 11 human clinical trials with 
this technology in over 300 patients and shown our technology to be 
safe and efficacious in cardiovascular disease and drug metabolism.
    AVI is currently pursuing commercial applications of its technology 
in infectious disease, cardiovascular disease, and cancer. More germane 
to this hearing, AVI is currently pursuing biodefense and public health 
applications of its technology against Ebola, Marburg, and influenza 
viruses, and ricin and anthrax toxins.

Applicability of Technology

    AVI's proprietary technology is particularly well-suited to rapid 
response in biodefense and public health settings. This was perhaps 
best illustrated by an incident approximately 16 months ago at the US 
Army Medical Research Institute of Infection Disease (USAMRIID) located 
within Fort Detrick, MD. There, a researcher experienced an accidental 
needle stick from a syringe while working with Ebola Zaire virus. Ebola 
is a very lethal virus, historically fatal in more than 80 percent of 
infected individuals. Upon receiving a call from scientists at USAMRIID 
requesting our assistance, AVI found relevant genetic sequences, 
synthesized two drugs, assisted USAMRIID in securing an emergency IND 
from the FDA, and delivered those drugs to USAMRIID within 5 days of 
the original request. Fortunately, the researcher showed no Ebola 
symptoms and was released, after 21 days of isolation, without 
requiring drug intervention. The same drugs delivered to USAMRIID, 
however, were successfully put to use in ongoing research at USAMRIID 
under a Collaborative Research and Development Agreement (CRADA) 
between AVI and USAMRIID.
    AVI has ongoing programs with outside investigators in other 
infectious disease and toxin areas including efforts in Marburg, 
Dengue, Rift Valley Fever, Crimean Congo Fever, Ricin, E coli, Yellow 
Fever, influenza, Hantaan virus, and SARS. Clearly, all of these 
diseases or infectious agents are considered to be potential bioterror 
threats. Specific successes have been achieved in collaboration with 
government scientists, primarily from USAMRIID, in programs targeting 
Ebola, Marburg, ricin, anthrax, dengue, and influenza.
    In addition to efforts in these areas, we believe that we are able 
to currently effectively address more than 75 percent of the viruses on 
the CDC's list of bioterror agents. Further, the lessons learned from 
studies involving such an array of viruses to date offer the potential 
to create drugs for rapid response to engineered viruses designed as 
bioterrorism agents.

Challenges to Biodefense Implementation

    As you might imagine, we have encountered numerous challenges along 
the way as we have pressed forward with our biodefense efforts over the 
last 16 months. The most daunting challenges we have faced in this 
endeavor are not in the research or medical areas, as we have met those 
challenges in the past, and we will continue to surmount them in the 
future. The most daunting challenges that we have faced, and cannot 
solve, are those of bureaucratic confusion. There are three main areas 
of bureaucratic confusion, or gaps, that I will briefly outline.
    First, there is a funding gap for smaller companies between the 
point of reaching scientific proof of principle and the point of having 
a product ready for Project BioShield consideration. As a small company 
with limited resources, we must access the capital markets for 
operating funds. These funds are provided by our investors as risk 
capital, not as seed capital for government research. Because we do not 
yet have sales, we have no alternative funding mechanisms for 
government directed research, and, apparently such funding mechanisms 
do not readily exist within the government. As a specific example, in 
our case, we have been told that we are ``too far along'' for funding 
opportunities via DARPA or NIH, but not yet ``far enough along'' for 
BioShield. Thus, promising biodefense solutions that have no commercial 
markets, but have a high level of biodefense relevance or public health 
applicability, like our Ebola virus compounds, might simply die on the 
vine because there is no government funding mechanism to get us to the 
point where we can provide you a potential BioShield product. In our 
opinion, it would not be inconsistent with the overall approach of 
BioShield to provide a funding mechanism to span this gap between proof 
of principle and BioShield product acceptance.
    We believe a second gap exists in the understanding and 
implementation of BioShield. The award process appears to be a ``black 
box,'' with no clear pathway to success for interested companies. For 
example, it appears that HHS is requiring that companies secure an IND 
(Investigational New Drug filing with the Food and Drug Administration) 
before bidding on a BioShield contract. In fact, the original BioShield 
legislation, S. 975, makes it clear that an IND in hand is not a 
prerequisite to contract bidding, nor was it Congress? intent that it 
should be. This lack of understanding (or understandability) of the 
playing field, in our opinion, will drive qualified, yet frustrated, 
companies away from participation in the BioShield effort. Coupled with 
the funding gap described above, a significant barrier to participation 
in Project BioShield evolves. Clearly, the losers in each scenario 
taken separately, and both scenarios combined, are the American people, 
and whether that loss occurs in biodefense versus in public health is 
irrelevant.
    The third, and perhaps the greatest gap which exists with regard to 
BioShield is the incentive gap between the risks and rewards for 
companies considering participation in biodefense. Specifically, the 
potential rewards which could accrue to a company which successfully 
bids on, is awarded, and completes a BioShield contract, are not enough 
to motivate an appropriate number of large and small biotechnology and 
pharmaceutical companies to participate. The risks of participation are 
considered too great by most companies due to the gaps described above. 
These risks could be more than adequately addressed by the proposed 
BioShield II and related legislation. That legislation, as currently 
proposed, would offer tax incentives, patent incentives, and liability 
and intellectual property protection. All of these provisions would be 
seen to have admittedly different relative values, dependent upon the 
company considering them; but, in the aggregate, all would be seen as 
having significant value, and perhaps be the motivating factor which 
would encourage more companies to actively seek to participate in 
BioShield.

Conclusion

    We believe that the items addressed in the above testimony 
represent major hurdles for this country to overcome in its desire for 
a much-needed system of biodefense. Solutions are, however, available. 
To summarize: first, a system of financial support for smaller 
companies must be defined and funded to span the gap experienced by 
small companies between proof of scientific principle and contract 
consideration in BioShield, particularly for those compounds which have 
only biodefense or public health viability. Second, the BioShield 
process, as enacted by Congress, must become more transparent, 
interpretable, and understandable, thereby becoming more efficient and 
effective in achieving the goal of biodefense. Finally, BioShield II 
should be enacted to provide several important protections to companies 
providing essential biodefense tools for the best interests of the 
country. These solutions, taken together, will awaken and direct the 
entrepreneurial spirit of the biotechnology and pharmaceutical 
industries toward genuine progress in biodefense. By being proactive 
here, we as a nation can avoid the potential terrible outcomes and 
costs of merely being only reactive in a biodefense emergency.

    Senator Burr. Dr. Frothingham.
    Dr. Frothingham. Good afternoon. I want to first thank 
Senator Burr and Dr. Cadlick for the invitation to testify 
today. I consider this to be a genuine privilege.
    Academic researchers like myself generate a lot of ideas, 
including ideas for new drugs, new vaccines. This is what we do 
best. However, we are not funded or equipped to carry out the 
developmental studies to initiate human trials and bring new 
products to market. This Valley of Death that others have 
spoken of refers to this gulf between the research lab and the 
clinical trial that a novel therapy must cross over, and as we 
have heard, most candidate drugs never make it. Dr. Palma 
estimated one in 100.
    Today, I will discuss the Regional Center of Excellence 
model as a means to overcome the Valley of Death for drug 
development and I will provide some specific examples from our 
own regional center with particular relevance to biodefense.
    In 2003, the NIH, and particularly the NIAID, funded eight 
Regional Centers of Excellence in emerging infections and 
biodefense. I will refer to these as RCEs, Regional Centers of 
Excellence. The goal of the RCEs is to bring together 
university researchers to develop new drugs, vaccines, and 
diagnostics to protect society from biological threats. These 
threats may involve natural emerging infections, such as SARS, 
or the intentional spread of germs, such as the distribution of 
anthrax spores in the U.S. mail.
    Development of new drugs and vaccines is a challenging 
mandate for the RCEs. As I mentioned, universities are not 
funded at the level of the pharmaceutical companies that 
normally bring drugs to market. Also, many of the target germs 
for biodefense research are uncommon infections and few 
companies are interested in spending money to develop a new 
treatment unless there is a clear market and a buyer. So the 
Valley of Death for biodefense can be especially deep.
    The RCEs, Regional Centers of Excellence, are working to 
overcome the Valley of Death in three ways. First, by creating 
synergy that taps the resources of multiple academic 
institutions. Second, by creating a virtual R&D company within 
the university setting. And third, by developing broadly 
applicable platform technologies.
    First, the RCEs are able to tap into multiple Academic 
Institutions of Excellence. Duke is the lead institution in the 
Southeast Regional Center, or SERCEB. The SERCEB includes six 
members institutions, Duke, our arch rival UNC-Chapel Hill, 
Emory, the University of Alabama at Birmingham, Vanderbilt, and 
the University of Florida, as well as 16 affiliate members. Our 
first job as an RCE is to create functional teams across 
institutions that will bring creativity and intellect to the 
problems of drug vaccine and diagnostic development.
    As an example, we need oral drugs to treat smallpox. 
Promising candidates have been developed by a biotech company 
in North Carolina. The SERCEB brought this company together 
with academic RCE investigators at the University of Alabama, 
again, part of the RCE, who were able to quickly test them on 
animal models. A candidate drug is now ready for human trials, 
hopefully by the fall of 2005.
    Second, the RCEs accelerate the process of drug and vaccine 
development by harnessing the resources of multiple 
universities to the structure of an RCE, forming what we call a 
virtual R&D company within the academic setting. This is a 
combination between the goal-oriented organization, the RCE, 
with the academic resources of the universities. We have 
created a new model for product development.
    Two examples of this. An investigator at Emory discovered 
that an FDA-approved cancer drug also inhibits poxviruses. This 
group of viruses includes smallpox. The SERCEB immediately 
funded animal trials to confirm this discovery, using the 
flexibility that we have in the Research Center of Excellence. 
We then brought the investigator, the NIH, and a drug company 
together to form a product development team.
    Similarly, a Duke lab discovered a new way that HIV may 
escape the human immune system. Some of the best antibodies 
against HIV turn out to also react against normal human tissue. 
This anti-self antibody response may activate defensive 
mechanisms in the human body, shutting down the very responses 
that are needed to fight HIV.
    Third, the RCEs are collaborating to evaluate broadly 
applicable technologies for vaccines and drug development. We 
call these platform technologies. The RCEs hope to speed the 
tempo of platform development by drawing together multiple 
universities and companies.
    As an example, many vaccine delivery systems have been 
described by biotech companies or academic researchers, and 
typically, each researcher or company will focus on one or two 
systems. The SERCEB is conducting a major study to compare 
side-by-side the effectiveness of many different vaccine 
delivery systems to identify the best technologies for 
biodefense vaccine. The RCE unites the efforts of multiple 
participants to generate this type of unique comparative data.
    I want to thank you for the opportunity to share my 
enthusiasm for the Research Center of Excellence model and I 
will be happy to take questions now or after the presentations.
    Senator Burr. Dr. Frothingham, thank you. As a Wake Forest 
graduate, it is an extension of my generosity to have a Duke or 
a Carolina-- [Laughter.] No, competition is alive and well in 
the ACC and Washington served as a wonderful host of our 
basketball tournament this year, as you well know. The one 
thing that was evident was that the normal Duke team was not 
there, but I am sure they will return very soon.
    Dr. Frothingham. My daughter will be entering your 
institution this fall.
    Senator Burr. Your daughter?
    Dr. Frothingham. Yes.
    Senator Burr. Good. [Laughter.] As time goes on, families 
learn. [Laughter.]
    [The prepared statement of Dr. Frothingham follows:]

            Prepared Statement of Richard Frothingham, M.D.

Introduction

    Good afternoon. I want to first thank Senator Burr for the 
invitation to testify today. I consider this a genuine privilege.

The ``Valley of Death'' for Drug Development

    Academic researchers like myself generate lots of ideas, including 
ideas for new drugs. This is what we do best. However, we are not 
funded or equipped to carry out the developmental studies needed to 
initiate human trials and bring a new product to market. The ``Valley 
of Death'' refers to this gulf between research lab and clinical 
application that a novel therapy must cross over. Most candidate drugs 
never make it.
    Today I will discuss the Regional Center of Excellence model as a 
means to overcome the Valley of Death for drug development. I will 
provide examples from our own regional center with particular relevance 
to biodefense.

Regional Centers of Excellence (RCEs)

    In 2003, the NIH funded 8 Regional Centers of Excellence in 
Emerging Infections and Biodefense. I will refer to these as RCEs. The 
goal of the RCEs is to bring together talented university researchers 
to develop new drugs, vaccines, and diagnostics to protect society from 
biological threats. These threats may include natural emerging 
infections such as SARS or avian influenza, or the intentional spread 
of germs such as the distribution of anthrax spores in the US mail.
    Development of new drugs and vaccines is a challenging mandate for 
the RCEs. Universities are not funded at the level of the 
pharmaceutical companies that normally develop these products. Also, 
many of the target germs for biodefense research are uncommon 
infections. Few companies are interested in spending money to develop a 
new treatment unless there is a market or a buyer. The Valley of Death 
for biodefense can be especially deep.

Overcoming the Valley of Death

    The RCEs are working to overcome the Valley of Death in three ways: 
(1) by creating synergy that taps the resources of multiple academic 
institutions, (2) by building a virtual R&D company within an academic 
setting, and (3) by developing broadly-applicable platform 
technologies.

1. Synergy That Taps the Resources of Multiple Academic Institutions

    First the RCEs are able to tap into multiple regional academic 
institutions. Duke is the lead institution in the Southeast Regional 
Center or SERCEB. The SERCEB includes 6 member institutions (Duke, UNC 
Chapel Hill, Emory, the University of Alabama at Birmingham, 
Vanderbilt, and the University of Florida) as well as 16 affiliate 
members. Our first job as an RCE is to create functional teams across 
institutions to bring creativity and intellect to the problems of drug, 
vaccine, and diagnostic development.
    As an example, we need oral drugs to treat smallpox. Promising 
candidates have been developed by a biotech company in North Carolina. 
The SERCEB brought this company together with RCE investigators at the 
University of Alabama, who were able to quickly test them in animal 
models. A candidate drug is now ready for human trials--hopefully by 
the fall of 2005.

2. A Virtual R&D Company Within an Academic Setting

    Second, the RCEs accelerate the process of drug and vaccine 
development by harnessing the resources of multiple universities to the 
structure of the RCE, forming what is essentially a ``virtual R&D 
company'' within the academic setting. By combining a goal-oriented 
organization (the RCE) with the extraordinary intellectual and academic 
resources of research universities, we have created a new model for 
product development.
    Two examples will illustrate the effectiveness of this approach. An 
investigator at Emory discovered that an FDA-approved cancer drug also 
inhibits poxviruses. The SERCEB immediately funded animal trials to 
confirm this discovery. We then brought the investigator, the NIH, and 
a drug company together to form a product development team.
    Similarly a Duke lab discovered a new way that HIV may escape the 
human immune system. Some of the best antibodies against HIV turn out 
to also react against normal human tissue. This anti-self antibody 
response may activate defensive mechanisms in the human body, shutting 
down the very responses needed to fight HIV.

3. Development of Broadly-Applicable Platform Technologies

    Third, the RCEs are evaluating technologies that may be broadly 
applicable to vaccine or drug development. RCEs hope to speed the tempo 
of this work by drawing on multiple universities, and by bridging 
connections with biotech companies, pharmaceutical manufacturers, and 
the Federal Government.
    As an example, many vaccine delivery systems have been described by 
biotech companies and academic researchers. Typically each researcher 
focuses on one system. The SERCEB is conducting a major study to 
compare side-by-side the effectiveness of many different vaccine 
delivery systems to identify the best technologies for biodefense 
vaccines. The RCE is uniting the efforts of multiple participants to 
generate unique comparative data.

Close

    Thank you for the opportunity to share my enthusiasm for the RCE 
model. I will be happy to take questions now or after the other 
presentations.

                          Additional Resources

What is SERCEB?

    The Southeast Regional Center of Excellence in Biodefense and 
Emerging Infections (SERCEB) is a consortium of academic institutions 
in the southeast comprised of member schools, Duke University, 
University of North Carolina-Chapel Hill, Emory University, University 
of Alabama-Birmingham, Southern Research Institute, Vanderbilt 
University, and University of Florida-Gainesville.
    The SERCEB affiliate members are East Carolina University, Georgia 
State University, Medical College of Georgia, Medical College of South 
Carolina, Meharry College, Morehouse College, North Carolina Central 
University, North Carolina State University, Tulane National Research 
Center, University of Alabama at Tuscaloosa, University of Georgia, 
University of Kentucky, University of Louisville, University of 
Mississippi, University of South Florida, University of Tennessee-
Knoxville, University of Tennessee at Memphis University of South 
Carolina , Wake Forest University, Winston Salem State University.
    The SERCEB government partners are the Centers for Communicable 
Disease Control (CDC) and the Oak Ridge National Laboratory (ORNL).
    The SERCEB is funded by the NIH from September 2003 to March 2008.
    See www.serceb.org for detailed information.
                     Immune System Surprise on HIV
  finding of unexpected antibody response could point to new vaccine 
                   approach, thursday, april 28, 2005
    Durham, N.C.--New insights by Duke medical researchers as to how 
HIV evades the human immune system may offer a new approach for 
developing HIV vaccines. The findings suggest some HIV vaccines may 
have failed because they induce a class of antibodies that a patient's 
own immune system is programmed to destroy.
    The Duke team discovered that certain broadly protective 
antibodies, which recognize and latch onto the HIV protein gp41, 
resemble antibodies made in autoimmune diseases. In most people, the 
immune system destroys these types of antibodies to prevent attacks 
against self.
    The Duke study suggests HIV vaccines may have failed in part 
because certain proteins on HIV's protective outer coat trigger only 
short-lived, self-reactive antibodies instead of long-lasting, HIV-
specific antibodies. The results also imply that during the initial 
infection stage in humans, HIV may escape destruction by the immune 
system because these seemingly vulnerable outer coat proteins activate 
self-reactive antibodies.
    ``The fundamental problem in all of HIV vaccine research has been 
that when you inject the envelope of the HIV virus into people or 
animals, no broadly neutralizing antibodies--those antibodies that kill 
most HIV strains--are made. This provides a plausible explanation for 
why broadly protective antibodies have not been made in response to 
currently tested HIV vaccines,'' said Barton Haynes, M.D., lead author 
of the study and director of the Human Vaccine Institute at Duke.
    The researchers will report their findings in a forthcoming issue 
of Science. The results were published online Thursday in Science 
Express.
    The antibody-producing portion of the human immune system is 
broadly divided into two categories. The first, innate B cell immunity, 
comprises fast acting but weak antibodies that fight a broad range of 
pathogens. These antibodies can also attack the body itself, as in 
autoimmune disorders such as systemic lupus erythematosus. When viruses 
activate innate B cells, the body destroys the B cells to protect 
against autoantibodies that could cause autoimmune disease or other 
harm.
    The second immune system category is adaptive B cell immunity, a 
slower response that creates powerful, pathogen-specific antibodies and 
provides lasting immunity. The body's normal response to infection is 
to produce adaptive antibodies that target only the invading virus or 
other pathogens. Many widely used non-HIV vaccines ``train'' adaptive 
antibodies to seek out a unique protein on the protective outer coating 
of viruses. HIV researchers have attempted to induce broadly 
neutralizing antibodies--long-lived, HIV-specific antibodies that can 
kill all or most HIV strains--with a similar vaccine design.
    Some broadly neutralizing antibodies have been isolated from HIV-
infected humans, although the antibodies are rare, with less than 5 
identified. ``We know these antibodies can exist, but we have not been 
able to give a vaccine to people or animals that stimulates the 
production of these types of antibodies,'' said Haynes, who has studied 
HIV vaccines for 15 years.
    In their experiments, Haynes and his colleagues demonstrated that 
some of these rare broadly neutralizing antibodies are actually 
polyspecific autoantibodies that react with many proteins, including 
one's own tissues, like the antibodies made by innate B cells. In 
laboratory tests, the antibodies reacted with multiple types of human 
molecules, most prominently with a fat molecule caled cardiolipin.
    ``It appears the most vulnerable spots on the outer coat protein of 
HIV, to which the most protective antibodies bind, are the target of 
autoantibodies that also react with normal human tissues and are 
normally destroyed by the immune system,'' Haynes said.
    Haynes, an AIDS researcher who has also studied autoimmune 
diseases, began to focus on possible similarities between HIV infection 
and the biology of autoimmunity after work on an experimental outer 
coat vaccine failed to produce broadly neutralizing antibodies in 
animals.
    ``Recently, we spent 2 years making an experimental outer coat 
vaccine candidate that had the correct areas on the outer coat for the 
good broadly neutralizing antibodies to bind to, and we vaccinated 
several kinds of animals. In none did we get any of the good 
antibodies. That frustrating result led me to ask if something was 
preventing these good antibodies from being made,'' Haynes said.
    ``A light went on when I saw that the rare human monoclonal 
antibodies had physical characteristics very similar to autoantibodies 
found in autoimmune disease--in other words, to the antibodies the 
normal immune system does not allow to be made,'' Haynes said.
    The results provide a new goal for future HIV research, Haynes 
said. ``We can focus on trying to redirect the response to HIV outer 
coat proteins from innate B cells to adaptive B cells. Alternatively, 
we can develop ways to induce that first line of polyspecific antibody 
defense during vaccination, if these antibodies are not harmful to 
those being vaccinated,'' Haynes said.
    ``We now have a window into how to study HIV vaccines from the host 
side of the problem,'' he said.
    Collaborators on the study include Judith Fleming, William St. 
Clair, Richard Scearce, Kelly Plonk, Herman Staats, Thomas Ortel, Hua-
Xin Liao and Munir Alam of Duke; Herman Katinger, Gabriela Stiegler and 
Renate Kunert of the Institute of Applied Microbiology, University of 
Agriculture, Vienna, Austria; and James Robinson of the Tulane 
University School of Medicine. The National Institute of Allergy and 
Infectious Diseases of the National Institutes of Health supported the 
work.
    For more information, contact: Becky Oskin, Medical Center News 
Office ( 919-684-4148 [email protected]
                    Global Health Research Building

Richard Frothingham, M.D.

    Director, Global Health Research Building
    Phone: (919) 684-5279
    E-mail: [email protected]

Barton F. Haynes, M.D.

    Director, Southeast Regional Center of Excellence for Emerging 
Infections and Biodefense
    Director, Duke Human Vaccine Institute
    Phone: (919) 684-5279 Larry Freeman

Larry Freeman

    Operations Manager, Global Health Research Building and Southeast 
Regional Center of Excellence for Emerging Infections and Biodefense
    Phone: (919) 681-1095
    E-mail: [email protected]

Media Contact

    For assistance in setting up interviews with Global Health Research 
Building researchers and administrators, please contact Becky Oskin in 
the Medical Center News Office at (919) 684-4148 or (919) 684-4966 or 
via e-mail at [email protected].

Overview

    In 2003, the National Institutes of Health (NIH) approved funding 
for construction of a regional biocontainment laboratory at Duke 
University Medical Center. The new Global Health Research Building 
(GHRB), set to open its doors in May 2006, represents the beginning of 
a new era in research on emerging infections and biodefense.
    The GHRB will serve as one of four regional laboratory facilities 
for a consortium of researchers from six universities in the Southeast, 
all charged with developing new vaccines, drugs and diagnostic tests 
designed to target infectious diseases.
    Recent events, such as the intentional distribution of anthrax 
spores through the U.S. Postal System in 2001, the worldwide spread of 
the SARS virus in 2003 and even this year's deadly flu season, have 
signaled the need for further research targeting emerging infectious 
diseases and biodefense.
    Duke University Medical Center will lead the consortium in its 
research and development efforts and will also provide a training 
center for investigators. Additionally, the GHRB will be ready to 
assist in response to any national or regional biodefense emergencies.

Program Highlights

    The Southeast Regional Center of Excellence for Emerging Infections 
and Biodefense (SERCEB) is an NIH-funded consortium of six universities 
in the Southeast (Duke, the University of North Carolina at Chapel 
Hill, Vanderbilt, the University of Alabama at Birmingham, the 
University of Florida and Emory). Duke is the lead institution of the 
consortium. Additionally, 22 other southeastern institutions are 
affiliated with SERCEB and will be collaborating with the six primary 
universities to conduct valuable research. Local affiliate institutions 
include North Carolina Central University, North Carolina State 
University and East Carolina University. These institutions will have 
access to SERCEB resources.
    The NIH has funded eight Regional Centers for Excellence 
nationwide. The GHRB will support the SERCEB as a regional laboratory 
dedicated to research, training and emergency response.
    The GHRB will provide extensive benefits both to the field of 
research into infectious diseases, as well as to the community. Some of 
these benefits include:
     Additional biocontainment space that will be made 
available to the Durham County Public Health Department in times of 
need. For example, should SARS, influenza, or another public health 
emergency overwhelm the capacity of the Durham County Public Health 
Department, the GHRB laboratories will be available to director Brian 
LeTourneau and his staff for use.
     New state-of-the-art facilities for cutting-edge research 
to develop vaccines, drugs and diagnostics against emerging infections 
such as tuberculosis, SARS and influenza. The research teams at the 
GHRB will be available to rapidly develop diagnostics and vaccines for 
any new local and regional threats. These resources will be available 
to Duke, UNC-Chapel Hill, North Carolina Central University, North 
Carolina State University and East Carolina University researchers.
     Education programs in biosafety, infectious diseases, 
immunology and public health, targeted to investigators in the Triangle 
area who would like to enter the emerging infections and biodefense 
fields, and for investigators and their staff who need training in 
biosafety. SERCEB training programs will recruit women and minorities 
in particular into career development tracks.

Facilities

    The GHRB will be housed in a 33,000-square-foot space on the 
medical center research campus. The cost of building the GHRB will be 
roughly $18 million, of which $6 million will be contributed by Duke 
with the additional $12 million coming from the NIH.
    The GHRB will conduct only BSL2 and BSL3 research. Duke researchers 
have conducted research safely at these biosafety levels for over 35 
years. BSL3 labs are currently in operation in multiple universities, 
institutions, and hospitals in the Triangle. Biosafety levels are 
described in detail in the Frequently-Asked-Questions (FAQs) below.
    The GHRB will apply the most stringent interpretation of Federal 
guidelines for the design and operation of biosafety facilities. All 
steps have been taken to ensure that the GHRB meets or exceeds every 
current standard for BSL2 and BSL3 research safety. Some examples of 
the safety features include:
     Total direct exhaust from BSL3 laboratories (no 
recirculation).
     High-efficiency filtration of exhaust air.
     One-hundred percent redundancy for mechanical, electrical 
and plumbing systems.
     ``Shower-out'' facilities in the building.
     Twenty-four hour security presence in the building.

Frequently Asked Questions (FAQs)

    Q: What type of research will be done in the GHRB, in a nutshell?
    A: The GHRB will be used to develop new treatments, diagnostic 
tests, and vaccines for infectious diseases. All GHRB research will be 
related to human health. The results of GHRB research will be published 
in peer-reviewed scientific journals available to the public. Our 
mandate from the NIH focuses on emerging infections and biodefense.
    Q: What are some examples of emerging infections?
    A: The most important emerging infection in our lifetime was HIV/
AIDS. Unrecognized before 1981, HIV has spread globally to become a top 
ten cause of death on every continent. Duke has been a leader in HIV 
research for over 20 years.
    Recent emerging infectious diseases include SARS, West Nile Virus 
and avian influenza. Modern air travel has made our world more 
connected than ever before, so emerging infections like these have the 
potential to spread more rapidly. SARS was first recognized in Asia in 
March 2003, but spread within weeks to Europe and North America. The 
first West Nile Virus cases in the western hemisphere were identified 
in New York City in 1999. Cases are now found from coast to coast. 
Avian influenza (bird flu) swept through poultry flocks in Southeast 
Asia in January 2004. A small number of humans have been infected, but 
a high proportion of the human cases have been fatal.
    The examples of HIV, SARS, West Nile Virus and avian influenza 
demonstrate the need for a global response to protect American 
populations from emerging infections. The GHRB will contribute to this 
response.
    Q: What is biodefense?
    A: Biodefense is a broad program with the goal of protecting human 
populations against people who may want to hurt us using microbes. The 
need for biodefense became clear after 22 Americans were infected by 
anthrax spores delivered through the U.S. Mail. The GHRB will be used 
to develop new treatments, diagnostic tests, and vaccines to protect 
human populations from biological agents.
    Q: What is a microbe?
    A: Microbes include bacteria, viruses and fungi. The vast majority 
of microbes are harmless. In fact, life as we know it is dependent on 
the microbes that surround us. However, microbes also include the germs 
that cause human infectious diseases. Research in the GHRB will be 
limited to BSL2 and BSL3 microbes. These levels of research are 
currently being conducted safely at Duke and many other Triangle 
institutions.
    Q: What do these Biosafety Levels mean?
    A: BSL1 is the minimal level of laboratory safety used for microbes 
that don't cause disease in healthy adults. Laboratory strains of E. 
coli are handled at this level. BSL1 work can be safely conducted in a 
high school science laboratory with no equipment beyond a sink for 
hand-washing.
    BSL2 is used for routine microbes that are present in our community 
and can cause human disease of varying severity. Examples of BSL2 
microbes include hepatitis viruses and common causes of pneumonia such 
as the pneumococcus bacterium and the influenza virus. Human blood 
samples are processed at BSL2, so this safety level is used for routine 
tests in hospital and clinic laboratories.
    BSL3 is used for microbes that can be transmitted by an aerosol, 
and that can cause serious or lethal infections in humans. The bacteria 
that cause human tuberculosis are handled at BSL3. This is the highest 
level that will be used in the GHRB. BSL3 laboratories maintain 
negative air pressure relative to the outside and to the rest of the 
building. Exhaust air from a BSL3 laboratory is not re-circulated to 
other parts of the building. Community hospitals typically have a 
single BSL3 room as part of their clinical laboratory suite.
    BSL4 is used for dangerous and exotic microbes that pose a high 
risk of serous or fatal disease to researchers. Examples include 
smallpox and Ebola virus. Workers in BSL4 laboratories are protected by 
special suits (``space suits'') with a dedicated supply of outside air. 
The GHRB will not contain BSL4 labs, and no BSL4 microbes will be 
handled at Duke.

    Senator Burr. Mr. Wright.
    Mr. Wright. Mr. Chairman, thank you. First, I would like to 
commend this committee for its focus on the vital legislation 
which brings us here today.
    PharmAthene was founded to develop countermeasures for 
bioterrorism. It has made significant progress in developing 
products which prevent and treat anthrax and agents of chemical 
warfare. In two short years, we have brought two products 
forward to a stage where they soon could be acquired by the 
Strategic National Stockpile. In bringing these two products 
forward, PharmAthene has had experience with BioShield I, the 
NIH, DARPA, and other DOD agencies.
    There are many critical issues that need to be resolved for 
Project BioShield to be as effective as possible. Today, I am 
here to address the issue commonly referred to as the Valley of 
Death. This abrupt funding gap after proof of concept and 
before the procurement poses three serious problems. One, it 
prevents promising technologies from ever being developed. Two, 
it keeps large pharmaceutical companies and biotech companies 
from entering this field. And three, it dramatically slows the 
development of products our Nation urgently needs.
    Now, our firm has had experience with this issue, as I will 
illustrate with two products in PharmAthene's portfolio. The 
contrast between our experience with BioShield and the DOD 
process, I submit, could be helpful to this committee in 
drafting legislation for BioShield II.
    PharmAthene's lead product, Valortim, has demonstrated 
significant efficacy in preventing and treating anthrax and 
will become an important part of the U.S. arsenal to combat 
this devastating terrorist threat. Some background here on 
ValortimTM should be helpful.
    ValortimTM was originally discovered in Medarex's 
laboratories, and despite its promising potential, it 
languished unfunded in their labs due to the funding gap known 
as the Valley of Death. Despite BioShield, products such as 
this do not receive adequate funding because there are no 
clear-cut coordinated provisions for the funding gap between 
proof of concept and the stockpile. While PharmAthene in this 
instance was able to step in with necessary funding to pull 
ValortimTM out of the Valley of Death, there was invaluable 
time lost. This product could be in the National Stockpile 
today. However, even with all PharmAthene's best efforts, it 
will take us nearly 18 more months to deliver ValortimTM to the 
National Strategic Stockpile.
    In contrast to our experience with ValortimTM, we at 
PharmAthene have developed a product called ProtexiaTM, an 
effective countermeasure to chemical and nerve gas threats 
which has gained critical support from the DOD. The DOD has 
been looking for a better way to protect its warfighters from 
chemical threats on the battlefield. They announced their 
interest through what is referred to as a Broad Area 
Announcement. The DOD process includes a step called Milestone 
A, whereby qualified companies are provided financing through 
proof of concept. This is very similar to the BioShield 
mechanism as provided by the NIH.
    The critical difference that I am here to highlight is that 
the DOD has a Milestone B process that kicks in upon successful 
completion of Milestone A. The DOD through this Milestone B 
process provides funding to fill the gap. This facilitates the 
development of a company's product through manufacturing, human 
safety, and further animal efficacy studies. Therefore, it 
totally precludes the Valley of Death from entering into the 
process. As a consequence of Milestone B, ProtexiaTM will 
experience an uninterrupted flow in development and funding 
from proof of concept all the way to procurement.
    I strongly recommend that as the committee considers 
legislation for BioShield II, that you support programs to 
provide funding for promising products from proof of concept 
through procurement, thereby eliminating the Valley of Death. I 
am confident that in your doing so, you will provide both 
incentives to companies to focus their resources on the 
critical needs spawned by bioterrorism as well as increase the 
likelihood that those who do will be successful in their 
endeavors. Thank you.
    Senator Burr. Thank you, Mr. Wright.
    [The prepared statement of Mr. Wright follows:]

                 Prepared Statement of David P. Wright

    Mr. Chairman, members of the committee: I commend this committee 
for its focus on the vital legislation which brings us together today.
    I am David Wright, President and CEO of PharmAthene.
    PharmAthene was founded to develop countermeasures for bioterrorism 
and has made significant progress in developing products which prevent 
and treat anthrax and agents of chemical warfare. In 2 short years, we 
have brought two products forward to a stage where they could soon be 
acquired for the Strategic National Stockpile.
    In bringing these two products forward, PharmAthene has had 
experience with BioShield I, NIH, DARPA, and other DOD agencies.
    There are many critical issues that need to be resolved for Project 
BioShield to be as effective as possible.
    Today, I am here to address the issue commonly referred to as the 
Valley of Death. This abrupt funding gap--after proof of concept and 
before procurement poses three serious problems:
    1) It prevents promising technologies from being developed.
    2) It keeps large pharmaceutical and biotech companies from 
entering this field; and
    3) It slows the development of products our Nation urgently needs.
    Our firm has had experience with this issue as I will illustrate 
from two products in PharmAthene's portfolio. The contrast between our 
experience with BioShield and the DOD process, I submit, could be 
helpful to this committee in drafting legislation for BioShield II.
    PharmAthene's lead product, ValortimTM has demonstrated significant 
efficacy in preventing and treating anthrax and will become an 
important part of the U.S. arsenal to combat this devastating terrorist 
threat. Some background regarding ValortimTM should be helpful here: 
ValortimTM was originally discovered in Medarex's laboratories and 
despite its promising potential, it languished unfunded in their labs 
due to the funding gap known as the Valley of Death. Despite BioShield, 
products such as this do not receive adequate funding because there are 
no clear cut coordinated provisions for the funding gap--the Valley of 
Death--between proof of concept and the Strategic National Stockpile.
    While PharmAthene, in this instance, was able to step in with the 
necessary funding to pull ValortimTM out of Valley of Death, there was 
invaluable time lost. This product could have been in the Stockpile 
TODAY. However, even with all of our best efforts it will take us 
nearly 18 more months to deliver ValortimTM to the Strategic National 
Stockpile.
    In contrast to our experience with ValortimTM, we at PharmAthene 
have developed a product called ProtexiaTM, an effective countermeasure 
to chemical and nerve gas threats which has gained critical support 
from the DOD. The DOD had been looking for a better way to protect its 
warfighters from chemical threats on the battlefield. They announced 
their interest through what is referred to as a Broad Area 
Announcement. The DOD process includes a step called Milestone A 
whereby qualified companies are provided financing through proof of 
concept. This is similar to the BioShield mechanism as provided by the 
NIH.
    The critical difference, that I am here to highlight, is that the 
DOD has a Milestone B process that kicks in upon successful completion 
of Milestone A. The DOD through this Milestone B provides funding to 
fill the gap. This facilitates the development of a company's product 
through manufacturing, human safety and further animal efficacy 
studies. Therefore, it totally precludes the Valley of Death from 
entering into their process. As a consequence of Milestone B, 
ProtexiaTM will experience an uninterrupted flow in development and 
funding from proof of concept all the way to procurement.
    I strongly recommend that as the committee considers legislation 
for BioShield II, that you support programs to provide funding for 
promising products from proof of concept through procurement--thereby 
eliminating the Valley of Death. I am confident that your doing so will 
both provide incentives to companies to focus their resources on the 
critical needs spawned by bioterrorism as well as increase the 
likelihood that those who do will be successful in serving our Nation's 
interest. Thank you.

    Senator Burr. Dr. Russell.
    Dr. Russell. Thank you, Mr. Chairman. Good afternoon. I am 
Phillip Russell, a retired U.S. Army Major General. Up until 
recently, I served as a special advisor to the Department of 
Health and Human Services on the acquisition of medical 
countermeasures for biodefense. I appreciate the opportunity to 
appear here this afternoon to provide my personal views on the 
challenges involved in the research, development, and 
acquisition of medical countermeasures.
    Based on my many years' experience in the research, 
development, and acquisition of vaccines and drugs for the Army 
and for the Department of Defense and my more recent experience 
in HHS, including the procurement of smallpox vaccines and the 
initial BioShield contracts, I have done an analysis of the 
major factors that determine the success or failure of 
acquisition efforts.
    Eight major factors that in the past have been critical to 
the success of the major acquisition of a medical product 
include, first, a credible threat determination and threat 
analysis. That is the primary basis for procurement of 
countermeasures, and as was said earlier, it is a DHS 
responsibility and it is yet incomplete for all of the threat 
agents except the initial big three, anthrax, smallpox, and 
botulism.
    Second, a defined deployment and utilization for the 
product is needed. This is Health and Human Services 
responsibilities.
    Both of these above factors provide the basis for the third 
factor that is essential for a BioShield acquisition, and that 
is governmentwide agreement on the requirement, including the 
amount of purchase. This consensus is needed under the current 
system for approval and release of BioShield funds by the White 
House. It will be increasingly difficult to achieve that in the 
future because of the differing views of the level of threat 
for agents past the big three.
    A fourth requirement is a mature science base demonstrating 
proof of principle and evidence for the ability to manufacture 
the product. This is needed to provide assurance that the 
product can eventually be licensed, which is, of course, a 
BioShield requirement. The Regional Centers of Excellence are 
providing a superior opportunity to fulfill the needs for a 
science base and move products up through the early stages of 
development, up to the point where, as was said, there is a 
problem in transition.
    The fifth factor are funds and a funding mechanism for 
early and mid-stage industrial development. This, I understand, 
is a focus of this hearing and has been proven to be absolutely 
essential.
    Sixth, sufficient acquisition funds or obligation authority 
to provide the incentive for industry. The BioShield Special 
Reserve Fund, I believe, fulfills this requirement very well 
for the present, but may need additional funds in the future. I 
don't believe that there are sufficient funds in there to go 
for the full 10 years that it is expected to.
    Seventh, we found that consultation and support for the 
manufacturer from the acquisition agency and from the FDA to 
assist in meeting regulatory requirements has proven to be 
essential in all major acquisitions. This support needed 
especially for the small and medium-size companies has a very 
high personnel cost for the FDA. It is a major burden on the 
acquisition agency.
    Finally, indemnification of the manufacturer has been 
proven to be necessary for the purchase of vaccines for use by 
the government.
    There is room for improvement in all of the above critical 
elements of the BioShield acquisition process, but two areas 
stand out in my view as the most needing improvement. Bridging 
the gap from laboratory-based research to the initial stages of 
industrial development is a difficult process. It is an 
expensive process and entails a high degree of risk. For 
products needed for biodefense, the government usually has to 
subsidize the process and share the risk with industry. This is 
especially true for the small biotechnology companies that 
control many of the innovative new products. The present 
process does not fully meet the needs, as evidenced by slow 
development of several anthrax therapeutic products to the 
point where they would be eligible for BioShield procurement.
    The government needs a well-funded, aggressive program 
based on a complete thorough threat analysis and well-defined 
priorities that conducts a thorough technology watch for needed 
countermeasures and uses a rapid contracting process to support 
early development. A mechanism to provide indemnification for 
manufacturers early in the contracting process would serve to 
remove a major disincentive for industry and would simplify the 
acquisition process for the contracting agency.
    Thank you for the opportunity to be here today and I will 
be happy to answer any questions.
    Senator Burr. Dr. Russell, thank you very much.
    [The prepared statement of Dr. Russell follows:]

             Prepared Statement of Philip K. Russell, M.D.

    Mr. Chairman, members of the subcommittee, thank you for the 
opportunity to appear here today and provide my views on ways to 
improve the capability of the U.S. Government to develop and acquire 
medical countermeasures urgently needed to protect our citizens against 
the bioterrorism. I am Dr. Philip Russell, a retired Army Medical Corps 
Major General. From November 2001 until August 2004, I served as a 
senior advisor to the Department of Health and Human Services. In that 
capacity I was deeply involved in the acquisition of several medical 
countermeasures including the ACAM 2000 smallpox vaccine, Intravenous 
Vaccinia Immune Globulin, Equine antitoxin for Botulism, the rPA 
(recombinant protective antigen) anthrax vaccine, anthrax treatment 
products as well as the H5N1 influenza vaccine. As acting Director of 
the Office of Research and Development Coordination within the Office 
of the Assistant Secretary for Public Health Emergency Preparedness I 
was responsible for coordination of the initial purchases made under 
Project BioShield.
    Drawing on my recent experience with some successful and some less-
than-successful acquisitions under project BioShield and earlier HHS 
acquisitions, as well as my previous experience with research 
development and acquisition in the Department of Defense, I have done 
an analysis of critical factors that determine the outcome of major 
medical countermeasure acquisition programs. That analysis is the basis 
of my testimony today. I am providing this perspective with the intent 
to inform future legislative efforts intended to improve the capability 
of the government to obtain the medical countermeasures essential to 
national security.
    I have identified eight critical elements that are major 
determinants of success or failure of a major acquisition under the 
current process and rules governing BioShield acquisitions.
     A credible threat determination and threat analysis.
     A defined deployment and utilization policy for the 
product.
     Governmentwide agreement on the requirement.
     A mature science base demonstrating proof of principal and 
ability to manufacture.
     Funds and funding mechanism for early and mid-stage 
industrial development.
     Sufficient acquisition funds (obligation authority) to 
provide the incentive for industry.
     Consultation and support for the manufacturer from the 
acquisition agency and the FDA to assist in meeting regulatory 
requirements.
     Ability to indemnify the manufacturer.
    A generally accepted understanding of the threat and broad 
consensus on the policy for emergency use of the products was the basis 
for the successful acquisition of smallpox vaccine and enabled the 
botulism antitoxin and the rPA anthrax vaccine programs to proceed 
rapidly. Threat analyses and agreement on utilization policies are 
necessary to support and properly size product requirements and are 
lacking for the other agents on the CDC ``A'' list. Threat 
determination and threat analysis is the responsibility of the 
Department of Homeland Security. Utilization policy is the 
responsibility of HHS.
    A consensus among the three major departments, HHS, DHS, DOD and 
White House offices on the proposed utilization policy and the size of 
the requirement is necessary to initiate a purchase under the BioShield 
program. This requires a process of interagency consultation which may 
go as high as the Deputies Committee. It was possible, albeit not easy, 
to obtain such a consensus for the botulism antitoxin and anthrax 
countermeasures where the threat was very clear. For future products 
against other threat agents, such as plague, tularemia and hemorrhagic 
fever vaccines, where both the threat analysis, and the size of the 
requirement and utilization policy will be much more challenging, this 
process may fail.
    The existing NIAID program is creating solid scientific bases for 
future potential products. The investments in the Regional Centers of 
Excellence will provide the research basis for the potential 
development of a large number of new vaccines and therapeutics. Whether 
the potential products are eventually developed depends on whether 
funding is available for industrial product development to the point 
where they are considered viable candidates for a BioShield 
acquisition.
    Most of the biologic products now in advanced development and under 
contract for purchase required major investments by the government 
during the early and mid stages of development prior to the purchase 
contract. This includes the ACAM2000 smallpox vaccine and botulism 
antitoxin developed under CDC contracts, and rPA anthrax vaccine and 
the next generation MVA smallpox vaccine developed under NIAID 
cost?reimbursement contracts. When adequate government support of early 
and mid level development is lacking, products will not progress to the 
point where they can be purchased under BioShield. The present process 
does not fully meet the needs of the government as evidenced by the 
slow development of anthrax treatment products to the point where they 
are eligible for BioShield procurement. Most small biotech companies 
with promising products need government support in the preclinical and 
early clinical phases of the R&D. Many large companies need government 
funding to share the risk of initial development for products where the 
government is the only market. This transition between laboratory 
research and early industrial development is one of the more serious 
and controversial problem areas in the current Federal program for 
developing and acquiring medical countermeasures.
    The special reserve fund for purchases under BioShield is 
sufficient for the currently approved products but, looking to the 
future, it will certainly be insufficient for full 10 years. The high 
cost of bringing new products through the development and licensing 
process plus the cost of maintaining or renewing stockpiles and surge 
capacity will deplete the fund before the end of the decade. The 
permanent definite nature of the appropriation does provide confidence 
that the government acquisition agency will be able to honor the terms 
of contracts.
    Differences in policy regarding buying products prior to FDA 
licensure, in addition to Economy Act requirements and issues of 
indemnification will make it difficult and may make it impossible to 
make joint HHS-DOD acquisitions of future important products such as 
botulism, plague and tularemia vaccines. The high cost of product 
development and economies of scale in production make joint acquisition 
highly desirable for certain products but experience indicates it 
probably cannot be done under existing policies for acquisition and 
indemnification.
    Small and medium sized companies that are attempting to develop and 
license a new vaccine or therapeutic product need substantial 
consultation and support from the acquisition agency and from the FDA 
to succeed in meeting regulatory requirements. The requirements of the 
``Animal Rule'' are a special challenge for small companies. Providing 
effective support and guidance requires a large commitment of qualified 
technical personnel especially from the FDA.
    Indemnification of the manufacturer when products such as vaccines 
are used in a government program is essential. It is a major issue with 
every acquisition and manufacturers cannot be expected to deliver 
products to the stockpile without reasonable protection from liability. 
Inability of the acquisition agency to provide assurance of 
indemnification at the initiation of a contract is a very strong 
disincentive to large corporate manufacturers.
    In summary, there are many improvements that should be made in the 
processes used to develop and stockpile medical countermeasures. 
Probably the most important is the need to address the gap between 
laboratory-based research and advanced industrial development under 
BioShield. A program based on prioritized requirements that carries out 
a systematic technology watch and provides adequate funds for early and 
mid stage development of promising new products would greatly enhance 
the effectiveness of the BioShield program.
    Perhaps equally important is a solution to the indemnification 
issue that would greatly simplify the contracting process for both the 
acquisition agency and the manufacturer. The current processes are 
cumbersome, expensive, and slow, a very strong disincentive to large 
corporations and a burden to the small companies.
    A simplified process for determining requirements for products may 
be needed to address the very complex problem of obtaining the 
necessary government wide agreement on the need and utilization policy 
for such products as botulism, plague and viral hemorrhagic fever 
vaccines.
    Thank you very much for the opportunity to provide this testimony. 
I will be happy to answer any questions.

                                Summary

    I am Dr. Philip Russell, a retired Army Medical Corps Major 
General. From November 2001 until August 2004, I served as a senior 
advisor to the Department of Health and Human Services. In that 
capacity I was involved in the acquisition of several medical 
countermeasures including the ACAM 2000 smallpox vaccine, Intravenous 
Vaccinia Immune Globulin, Equine antitoxin for Botulism, the rPA 
(recombinant protective antigen) anthrax vaccine, anthrax treatment 
products as well as the experimental H5N1 influenza vaccine. I was 
responsible for coordination of the initial purchases made under 
Project BioShield.
    Drawing on my recent experience with some successful and some less-
than-successful acquisitions under project BioShield and earlier HHS 
acquisitions, as well as my previous experience with research 
development and acquisition in the Department of Defense, I have 
analyzed the factors that determined the outcome of major medical 
countermeasure acquisition programs and have identified eight critical 
elements that are major determinants of success or failure of a major 
acquisition under the current processes and rules governing BioShield 
acquisitions.
     A credible threat determination and threat analysis.
     A defined deployment and utilization policy for the 
product.
     A mature science base demonstrating proof of principal and 
ability to manufacture.
     Governmentwide agreement on the requirement.
     Funds and funding mechanism for early and mid-stage 
industrial development.
     Sufficient acquisition funds (obligation authority) to 
provide the incentive for industry.
     Consultation and support for the manufacturer from the 
acquisition agency and the FDA to assist in meeting regulatory 
requirements.
     Ability to indemnify the manufacturer.
    There is room for improvement in all of the above elements of the 
acquisition process but two elements stand out as needing legislative 
action. A critical deficiency has become apparent in the funds and 
mechanism to support early and mid stage development of products to the 
point where they are considered eligible for a BioShield procurement. 
The current process for indemnifying manufacturers of vaccines for 
government use in biodefense is a disincentive to both large and small 
companies and should be changed.

    Senator Burr. Mr. Scott, is it Magids?
    Mr. Magids. Magids, hard ``G''.
    Senator Burr. Mr. Magids.
    Mr. Magids. Mr. Chairman, my name is Scott Magids. Thank 
you for the opportunity to appear here today to provide my 
views on ways to enhance the development and commercialization 
of countermeasure technologies needed to protect our country.
    I direct the University of Maryland's Technology 
Advancement Programs, referred to as TAP. By way of background, 
I have been an entrepreneur and venture capital investor in 
various technical markets. At the University of Maryland, I 
have served as an architect of a plan to increase technology 
commercialization at our institution and throughout the 
Washington region, including in the area of biodefense. 
Technology entrepreneurship activities at our university, 
including TAP, are centralized within the Maryland Technology 
Enterprise Institute, referred to as MTECH, a unit of the Clark 
School of Engineering.
    We recognize that the commercialization of innovations is a 
catalyst for economic growth and advancements in areas like 
health care and national security. A significant gap exists 
between technology creators and viable commercial enterprises. 
Three principal factors cause this gap.
    Professional management talent is not readily available to 
most technology creators, and an adequate amount of C-stage 
funding currently exists and many technology creators are not 
sufficiently motivated or educated in business-related topics 
to commercialize their inventions. The Clark School has 
developed and implemented a plan to increase technology 
commercialization. This plan encompasses education, hands-on 
support and access to funding, communications initiatives, 
operating initiatives, and entrepreneurial culture building. I 
will briefly describe each of these elements and share some of 
our results.
    We educate technology creators at our institution and 
throughout our region about the commercialization process, 
marketability of research, and benefits of bringing innovations 
to customer markets. We selectively admit two to four new high-
potential technology start-ups into our TAP program each year. 
We regularly work with innovators in the homeland security, 
medical device, pharmaceutical, and biosensor markets. We apply 
a rigorous company-building process to these ventures 
encompassing planning, team building, product road maps, and IP 
protection.
    In addition, we help bridge the seed funding gap by 
building a thorough investment process and relationships with 
angel and venture capital investors, assisting our companies in 
preparing for, negotiating, and closing funding transactions, 
coaching our companies in applying for Federal grants, and 
acting as a liaison to our State's venture fund and the Clark 
School's MIPS program, which provides value-add R&D funding to 
start-ups, particularly in the biodefense area.
    Communications play an important role in our 
commercialization plan. Communications energize our local 
business community to support commercialization, and 
communications depicting success stories motivate other 
innovators to follow suit, as success breeds success. These 
communications initiatives spread the message within our 
institution and throughout our region that commercialization is 
beneficial and feasible.
    As an example, several of our TAP companies have been 
started by NIH scientists. We have also taken steps internally 
to support commercialization. We have recruited individuals 
with deep entrepreneurial and venturing experience. We have 
developed a compensation policy for TAP, which includes current 
revenue, deferred revenue, and equity interest, and we have 
become sensitive to the often competing goals of technology 
creators--continue to advance in their fields of research or 
pursue commercialization. And we have created unique approaches 
to navigate these issues.
    The final element of our plan is an entrepreneurial 
culture. Senior leadership within our institution encourage 
entrepreneurial activity among technology creators and provide 
positive recognition for such efforts.
    I will conclude by highlighting some of our results. TAP 
companies have created over 1,700 jobs and raised $260 million 
in private funding. Two of our biotechnology firms have gone 
public and have generated meaningful revenues, and these firms 
currently have a combined market value of over $1.6 billion. 
Roughly 70 percent of companies graduating our program continue 
material operations after 5 years. Approximately one new 
faculty company is being started each quarter at our 
institution, and our programs have received regional and 
national recognition as we regularly advise other institutions 
regarding innovative technology commercialization approaches.
    I will look forward to your questions.
    [The prepared statement of Mr. Magids follows:]

                   Prepared Statement of Scott Magids

Introduction

    My name is Scott Magids. I am the director of the University of 
Maryland's Technology Advancement Program (``TAP''), a unique program 
designed to stimulate the commercialization of innovations through new 
venture creation. I am honored to submit written and verbal testimony 
to this esteemed subcommittee. By way of background, I have worked as 
an entrepreneur in the technology and market research industries, and 
as a venture capital investor and management consultant in various 
high-technology markets. I also teach college courses in technology 
entrepreneurship. I have served as a principal architect and executor 
of a strategic plan to increase technology commercialization at the 
University of Maryland as well as in the surrounding region.
    The TAP Program resides within the Maryland Technology Enterprise 
Institute (``MTECH''). MTECH is the vehicle for entrepreneurship and 
outreach for the University of Maryland's Clark School of Engineering 
(``Clark School''), a nationally-recognized engineering college.
    TAP helps bridge the gap between technical inventor and viable 
early-stage company by providing extensive hands-on business support; 
access to seed and early-stage funding; technical expertise, namely to 
support product development; and low-cost infrastructure. TAP supports 
firms in a range of markets, including biosensors, software, homeland 
security, pharmaceuticals, medical devices, and information technology. 
TAP is a key part of a comprehensive effort within the Clark School to 
increase technology commercialization at the University of Maryland and 
in the surrounding region, and this effort also includes other 
initiatives described below.
    TAP has enjoyed significant success since its creation in 1985. As 
examples of our success, TAP-supported companies have created 1,790 
jobs and raised $260 million in angel and venture capital funding, 
including $15 million between 2004-present.

Rationale for the University of Maryland's Technology Entrepreneurship 
                                Programs
    Effectively commercialized technical innovations are a key catalyst 
for economic growth, productivity enhancements, and advancements in 
healthcare, public safety, and national security. In most parts of the 
country, including the Washington, DC region, a significant gap exists 
between an individual technology creator and a viable early-stage 
company capable of bringing technology-based products to the 
marketplace. This gap exists for three principal reasons:
     Professional management talent, with expertise in 
fundraising, business planning, and team-building, is not readily 
available to most technology creators;
     An inadequate amount of seed-stage (pre-prototype) funding 
exists for product development and startup working capital; and
     Many technology creators are not sufficiently motivated or 
educated in business-related topics to comfortably commercialize their 
inventions.
    Unfortunately, this gap stymies the advancement of potentially 
high-impact technologies from the laboratory to the customer 
marketplace.
    The University of Maryland's Clark School of Engineering has 
closely examined these obstacles, and has attempted to develop a 
comprehensive plan to accelerate technology commercialization, through 
venture creation, at the university and in the surrounding region. This 
plan encompasses five components: (1) education; (2) hands-on support 
and funding access; (3) internal and external communications; (4) 
operating initiatives; and (5) entrepreneurship culture-building.

    University of Maryland's Technology Entrepreneurship Initiatives

                               Education

    Technology commercialization begins with education. The goals of 
education include helping technology creators understand the 
commercialization process; allaying fears regarding commercial 
endeavors; and encouraging technologists to pursue commercialization. 
MTECH, the Clark School's entrepreneurship unit, offers four types of 
education: (1) Seminars and symposiums for faculty and students, with 
topics including IP protection and marketability of research; (2) 
Entrepreneurship courses for technical students; (3) An annual 
Technology Startup Boot Camp, open to technology creators throughout 
the region; and (4) An annual Business Plan Competition in which 
technical teams, from the University of Maryland, compete for cash 
prizes and receive intense mentoring from successful entrepreneurs.

                 Hands-On Support and Access to Funding

    Hands-on support and access to seed-stage funding are critical to 
crossing the bridge between innovator and viable enterprise. The TAP 
Program selectively admits two-to-four new startups each year pursuant 
to a thorough analytical process similar to professional investors' due 
diligence. During a typical 4-year incubation period, TAP applies a 
rigorous company-building process to help create well-managed, well-
planned, properly-funded commercial ventures. Acting as a coach, 
mentor, and marshal of resources, TAP assists its companies with (1) 
business planning and market analyses; (2) product development support; 
(3) corporate structure and IP protection; (4) team-building, namely 
executive recruiting; (5) and capital formation. TAP helps keep its 
portfolio companies on track to commercialization through weekly status 
meetings and consistent, hands-on participation.
    TAP has developed a number of initiatives to overcome the funding 
gap its seed-stage companies encounter: (1) TAP has designed an 
investment process and built close relationships with angel investors 
and venture capital investors; (2) TAP closely supports the angel and 
venture fundraising process for its companies, including preparation, 
structure development, and terms negotiation; (3) TAP closely coaches 
its companies in applying for Federal and regional grants, namely for 
technology development; and (4) TAP acts as a liaison to other State of 
Maryland and MTECH funding programs, including the State of Maryland 
Venture Fund and the highly successful Maryland Industrial Partnerships 
(MIPS) Program, an R&D funding program also run by MTECH. The MIPS 
Program provides grants to Maryland startups, up to $150,000, to 
support technology and product development at a University of Maryland 
campus.
    In addition to helping its companies aggregate capital, TAP also 
provides its firms valuable money-saving resources, including low-cost 
physical infrastructure; special lab facilities; access to bio 
equipment; and access to technical expertise through the university.

                             Communications

    Communications play two important roles in increasing the level of 
technology commercialization: (1) Communications encourage the business 
community and other technical institutions to support technology 
commercialization; and (2) Communications, depicting the success of 
inventors who commercialize their technologies, motivate other 
technology creators to consider commercial endeavors. MTECH and TAP 
proactively build relationships with service providers, senior 
personnel at other technical institutions, and investors. These persons 
play valuable roles as mentors, guest educators, sponsors, seed-stage 
capital providers, and/or referrals of technology creators seeking 
commercialization help. Furthermore, these persons help disseminate a 
key message in the regional technology and business communities: 
Technology commercialization is extremely important, beneficial, and 
feasible. As an example of the benefit of communications, several TAP 
companies have been started by NIH scientists.

                         Operating Initiatives

    MTECH and TAP have implemented operating initiatives designed to 
support technology commercialization. First, MTECH has recruited 
persons with significant venture capital and company operating 
experience to manage TAP and other MTECH programs. Likewise, TAP 
receives equity interests, deferred revenues, and current revenues from 
its portfolio companies, and this compensation approach helps to align 
the interests of all parties involved in technology commercialization. 
Generally, TAP receives 1-4 percent of the fully-diluted equity 
interests of its firms per year of participation in TAP, and most 
startups remain in TAP an average of three years. Likewise, deferred 
revenues generally accrue at a rate of $1,000-$3,000 per month and are 
payable at the earlier of (1) a qualifying event such as material 
revenues, a significant equity financing, or a sale of the company; or 
(2) two years following completion of the TAP Program. MTECH reinvests 
these proceeds into TAP and its other entrepreneurship initiatives. 
Finally, MTECH and TAP have become sensitive to the competing goals of 
many technology creators seeking commercialization--continue to advance 
within their technical fields and pursue commercial ventures. 
Approaches have been designed to help navigate these issues.

                        Entrepreneurship Culture

    The final component requisite for technology commercialization is 
an entrepreneurial culture. At the Clark School, several factors have 
contributed to the development of an entrepreneurial culture in which 
technologists are motivated to pursue commercialization: (1) Senior 
leadership within the Clark School encourage entrepreneurial activity 
and positively recognize such effort; (2) Communications efforts led by 
MTECH widely promote success stories (e.g. of TAP companies) internally 
and to other members of the technology community, as ``success breeds 
success;'' and (3) Most importantly, consistently exposing 
technologists to experienced businesspersons; commercialization 
education; and company-building processes inspires inventors to pursue 
commercialization.

                                Results

    The TAP Program has enjoyed significant success during the past 20 
years: (1) 1,790 jobs have been created; (2) $260 million in angel and 
venture funding has flowed into TAP firms; (3) Approximately 70 percent 
of TAP firms ``graduating'' from the program continue material 
operations 5 years post-graduation; (4) TAP firms have received over 
$70 million in Federal grants; and (5) Two TAP biotech firms have gone 
public on the NASDAQ, and these firms have a combined current market 
capitalization of $1.6 billion. TAP has been well received at the 
University of Maryland and in the regional marketplace, as 396 firms 
have sought admission into TAP, and 68 firms have been accepted into 
the program. In addition, the level of entrepreneurship activity within 
the Clark School has increased significantly, as approximately one new 
faculty or student firm is formed each quarter, and a number of 
successful technology firms have been formed by faculty in recent 
years. TAP and other MTECH entrepreneurship initiatives have received 
local and national recognition, and numerous universities and research 
institutions have solicited MTECH's assistance in creating similar 
programs.

    Senator Burr. Dr. Frothingham, I truly am thankful that you 
would come up, impressed with the work that is done by you and 
specifically Duke University and, quite honestly, all of the 
academic points in North Carolina that are on the front line of 
a lot of the research. I am encouraged at the approach that you 
outlined in your testimony.
    Beyond the moneys that NIH specifically provides, what are 
the other sources of money to support the ongoing and proposed 
work within this regional effort?
    Dr. Frothingham. I think you put your finger on the problem 
right there. We are most familiar, as academic researchers, 
with the NIH and that is where we get most of our funding. We 
have some ideas about funding mechanisms that NIH might employ.
    We certainly do attempt to work with companies, and there 
is an Office of Science and Technology at Duke that has been 
quite successful. We do spawn off biotech companies all over 
the Triangle, so those things do occur. Venture capital enters 
into these things.
    But I think the current system under which I function as an 
academic researcher, I guess you could call it the traditional 
NIH grant structure, the RO1 format, the grants are reviewed 
based on their scientific merit and productivity is measured by 
publications in journals. So as an academic researcher, if I 
publish--if I discover, generate an important proof of 
principle and I get it published in a prestigious journal, then 
I have succeeded. That is my definition of success in my 
system. And this system has produced a lot of scientific 
knowledge. But we do need a different system, I think, an 
additional maybe supplementary system that is based more on 
milestones and deliverables.
    Senator Burr. Currently, are there companies that have 
invested in your effort?
    Dr. Frothingham. Yes, there certainly are. I don't have the 
names in front of me. In fact, some of these investments are 
not yet relationships that I am able to talk about. But 
certainly there has been success in that area. I alluded to 
some of the products without giving names or details in my 
testimony.
    Senator Burr. Dr. Russell, again, we are appreciative that 
you would come. We are thankful of the many years of dedicated 
service that you have provided to the Nation in both uniform 
and out of uniform.
    You gave us a powerful testimony to the specific things 
that are necessary to bring countermeasures to BioShield. You 
argued convincingly, I think, on the need to focus on the mid 
to latter stages of medical countermeasure development. In your 
opinion, who should be in charge of that?
    Dr. Russell. The National Institutes of Health have the 
greatest concentration of managerial and scientific talent and 
probably that organization is best suited to carrying out the 
mid and later stage medical countermeasure development. They 
did a very good job, for example, with the recombinant 
protective antigen and the MVA vaccine.
    However, I would argue that we should look at the DOD model 
that separates the funding stream for early and mid-stage 
development from the funding stream that goes into the RO1 
program and the Centers for Excellence and probably separate 
the management in a clear manner. The latter stages have to be 
very carefully coordinated with the HHS BioShield effort.
    Senator Burr. You also mentioned indemnification. I guess I 
would ask you, what type of liability provisions do you believe 
we should have?
    Dr. Russell. I believe that is a legal question that I have 
no confidence in answering. But I would----
    Senator Burr. No, but it is my job to goad everybody to try 
to answer it that I can. [Laughter.]
    Dr. Russell. I would mention that the Children's Vaccine 
Fund, the process that indemnifies companies for children's 
vaccines, I think is a model that should be looked at seriously 
in this regard.
    Senator Burr. Thank you. Thank you.
    Mr. Wright, I note from your background that you have held 
several positions in large pharma companies. Given that you 
have been on both sides of the fence, what, in your opinion, is 
keeping big companies out of biodefense?
    Mr. Wright. I don't think there is any one thing. I think 
it is a combination of some of the factors we have described 
this morning. Liability is certainly an issue. Incentives are a 
huge issue. Large pharmaceutical companies have shareholders 
and they have to make profits.
    Senator Burr. In your opinion, can a company who 
participates in the research of biodefense products turn around 
and explain to a board and shareholders of a publicly-traded 
company successfully why they want to make an investment, why 
they want to research in that and put in that link that says, 
and here is what is on the back end? Is the system that 
predictable?
    Mr. Wright. I believe it is, especially if the back end is 
there, because----
    Senator Burr. And I guess my question is, is it there now?
    Mr. Wright. No. It does not exist now. I mean, they cannot 
make the type of profits--it is not only profits, it is 
opportunity loss, because they are going to have to take 
resources from developing the products which provide their 
profits in order to do this. So there is an opportunity cost 
loss as well as a liability issue and there is really nothing 
in it for them.
    Senator Burr. I don't want to downplay the potential out of 
academia or from the smaller biotech companies or anybody, but 
what do we lose, if anything, but not having big pharma engaged 
in this battle?
    Mr. Wright. One of the other key issues that small 
companies have in developing these products is manufacturing. 
They don't have--small companies like myself, we have no 
manufacturing facilities. We have to go look for contract 
manufacturers. The desire of the government is to have these 
products made in the United States. There is simply not 
available facilities to make these products in the quantities 
and in the time frames in the United States. Large 
manufacturers, large pharma has manufacturing. They have 
capabilities. They can make this stuff. They have got plants 
they can put online and many of them have capacity, but that 
capacity is not for sale.
    Senator Burr. If you were forced to prioritize tax 
incentives, patent incentives, liability, intellectual property 
protection, how would you prioritize those in importance of us 
addressing to begin to pull more people in?
    Mr. Wright. I think if you want to pull the large pharma 
company in, that patent wildcard is critical. That is one thing 
that would do it. Now, Dr. Russell and I would probably 
disagree on the way to do this. In fact, I know we will because 
we have talked about it because there is a feeling that that is 
robbing from Peter to pay Paul, that the government should just 
up front pay people to do this.
    But if we are looking for a way to interest a lot of people 
in coming into this area, patent wildcard will do it--critical. 
It is a way that these people can show their shareholders and 
their boards that there is a reason for doing this and there is 
a reason for taking the resources and the risk, because the 
risk, as you heard, is huge to go down this line.
    The other thing that really would help would be a little 
bit more transparency, and while I totally agree that the RFP 
process is specific, the RFP process comes way too late, all 
right. By the time an RFP is issued, there may be one company 
that could qualify for it, whereas if companies today knew that 
in 5 years, the government would buy 500 doses of this, 3,000 
doses of this, and 4,000 doses of this, or that they want this 
product to be a therapy, a vaccine, or whatever, then companies 
can say, can we get there? Can we put the resources? There is a 
market. There is a reason to do this.
    Senator Burr. When the RFP is issued, is that the first 
point that a manufacturer knows what the potential volume is?
    Mr. Wright. There may be a hint in the RFI, which comes out 
traditionally 3 to 6 months before an RFP, but the first 
specific information is the RFP, yes, sir.
    Senator Burr. Is a hint sufficient for venture capital to 
come?
    Mr. Wright. No, sir.
    Senator Burr. Dr. Russell, am I wrong in believing--and I 
said in a speech this morning that our progress has to send us 
to a point where these countermeasures are developed in days, 
weeks, and months versus years based upon how the threat might 
evolve in the future. Am I off base on that?
    Dr. Russell. The development process for biologics and for 
drugs is a process that is very, very difficult to compress. 
The recent experience in trying to accelerate the development 
has managed to compress it from an average of 10 years down to 
a few years. But compressing it much shorter time than that is 
going to be very difficult, if not impossible, because of the 
time it takes to do the toxicology, all of the safety issues, 
the proof. It is a real time problem and it can't be compressed 
much more than it already is.
    Senator Burr. But in your estimation, the future threats 
may challenge us to try to do that.
    Dr. Russell. It certainly will, sir.
    Senator Burr. OK. Mr. Timmins, from your testimony, you 
described a fair bit of support from DOD in the development of 
your approach and specific countermeasures. What has been the 
interest from NIH in your products?
    Mr. Timmins. We, like many small companies, go through the 
NIH granting process. We began doing that in earnest 
approximately 2 years ago. The NIH process is one where it is a 
little bit of a relationship-oriented process, so in our first 
attempts at grants there, we didn't have a high level of 
success, mainly because we were told we weren't a known entity 
within the granting process. Since that time, we have done a 
little better. We have hopes to do better going forward.
    Certainly, though, in comparison, DOD has been quite 
proactive in expressing their wants, needs, and desires and 
support for what we are doing. So it is a little bit of a 
contrasting process.
    Senator Burr. Given that list of potential incentives that 
I talked to Mr. Wright about, would you have picked a different 
incentive to be number one, other than patent?
    Mr. Timmins. Sure.
    Senator Burr. What would it be?
    Mr. Timmins. Absolutely. I would have picked intellectual 
property protection, because the only assets that our company 
has are the people that walk up and down the stairs every day 
and our intellectual property. I am not worried about the 
people going away as much as I am worried about the 
intellectual property going away. So protection there for me is 
critical.
    Second to that, but it is a far drop second, is liability 
protection. I talked a little bit about our clinical trial 
attributes, so I am not as worried about a safety issue as 
maybe a company dealing with more toxic technologies might be.
    Third for me would be the patent incentives. Again, we have 
a platform technology, so nobody can do the same things we do 
using our patents. We have a pretty specific and narrowly-
defined technology that we have carved out for ourselves.
    And then fourth would be the tax incentives, simply because 
we don't pay any taxes yet, but we want to in the future--a 
lot. [Laughter.]
    Senator Burr. I can't wait for the next opportunity that 
you are up sharing with me that you made a mistake on that. 
[Laughter.]
    Scott, let me just ask you, what participation, if any, do 
large pharma companies have in the TAP program?
    Mr. Magids. They act as corporate investors in our 
companies and they are increasingly acting as seed investors in 
our companies and we initiate those relationships and structure 
those relationships on behalf of inventors, so we more or less 
end up acting as an intermediary, in one example, between an 
NIH scientist pursuing a new pharmaceutical business and a 
source of funding.
    Senator Burr. Good. I want to thank this opportunity to 
thank all of our witnesses today, not just panel two but panel 
one again, too.
    We started with a very interesting morning with a fire in 
the Rayburn House Office Building, as they shut down 
Independence Avenue and we stymied all the rush hour traffic to 
all be converted to the front of the Senate side. I should have 
known this was going to be a difficult day for us to maneuver 
through and I think that is indicative of the fact that we have 
got people who have not made it here who have been sending 
messages that they were coming, they were coming, they were 
coming--Chairman Enzi, Senator Kennedy, Senator Mikulski--and 
they haven't made it. That is indicative of how the day 
changes, and I know that we have got a vote that is coming up 
in the Senate in the next 20 minutes.
    I want to thank you for the valuable information that you 
have been able to share with us. My hope was that at one time, 
mid-summer, we would be in a position where we could actually 
take all the stakeholders, members, companies, agencies of the 
Federal Government, begin to look at language. I am not 
convinced that we are there yet and I believe that this process 
deserves us to be as thorough and as comprehensive as we feel 
we need to be.
    So I think it begs that we will run into the month of July 
with additional hearings as we begin to try to refine some of 
the answers that we have gotten where maybe it hadn't 
completely sunk in for those of us that are asked to make the 
decisions.
    It is also challenging to try to establish that this is a 
process that does not create winners and losers. Everybody has 
to be a winner, and most importantly, it is the public that has 
to win from this. Through what you have been able to share with 
us and what we can put in the form of legislation, we, in fact 
meet the challenge of having an effective biodefense program in 
this country. And I am confident that we have made tremendous 
progress in the first 5 months, but it will take several more 
months for us to get to a point that we can refine that into 
legislative language.
    Again, I thank you for your willingness. I thank my 
colleagues for their interest, and this hearing is now 
adjourned.
    [Whereupon, at 3:43 p.m., the subcommittee was adjourned.]

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