Project Bioshield: Actions Needed to Avoid Repeating Past Problems with Procuring New Anthrax Vaccine and Managing the Stockpile of Licensed Vaccine
Published: 2007-10-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The anthrax attacks in September and October 2001 highlighted the need to develop medical countermeasures. The Project BioShield Act of 2004 authorized the Department of Health and Human Services (HHS) to procure countermeasures for a Strategic National Stockpile. However, in December 2006, HHS terminated the contract for a recombinant protective antigen (rPA) anthrax vaccine because VaxGen failed to meet a critical contractual milestone. Also, supplies of the licensed BioThrax anthrax vaccine already in the stockpile will start expiring in 2008. GAO was asked to identify (1) factors contributing to the failure of the rPA vaccine contract and (2) issues associated with using the BioThrax in the stockpile. GAO interviewed agency and industry officials, reviewed documents, and consulted with biodefense experts.
section_title: What GAO Found
paragraphs: Three major factors contributed to the failure of the first Project BioShield procurement effort for an rPA anthrax vaccine. First, HHS's Office of the Assistant Secretary for Preparedness and Response (ASPR) awarded the procurement contract to VaxGen, a small biotechnology firm, while VaxGen was still in the early stages of developing a vaccine and had not addressed many critical manufacturing issues. This award preempted critical development work on the vaccine. Also, the contract required VaxGen to deliver 25 million doses of the vaccine in 2 years, which would have been unrealistic even for a larger manufacturer. Second, VaxGen took unrealistic risks in accepting the contract terms. VaxGen officials told GAO that they accepted the contract despite significant risks due to (1) the aggressive delivery time line for the vaccine, (2) VaxGen's lack of in-house technical expertise--a condition exacerbated by the attrition of key company staff as the contract progressed--and (3) VaxGen's limited options for securing any additional funding needed. Third, important Food and Drug Administration (FDA) requirements regarding the type of data and testing required for the rPA anthrax vaccine to be eligible for use in an emergency were not known at the outset of the procurement contract. In addition, ASPR's anticipated use of the rPA anthrax vaccine was not articulated to all parties clearly enough and evolved over time. Finally, according to VaxGen, the purchase of BioThrax for the stockpile as a stopgap measure raised the bar for the VaxGen vaccine. All these factors created confusion over the acceptance criteria for VaxGen's product and significantly diminished VaxGen's ability to meet contract time lines. ASPR has announced its intention to issue another request for proposal for an rPA anthrax vaccine procurement but, along with other HHS components, has not analyzed lessons learned from the first contract's failure and may repeat earlier mistakes. According to industry experts, the lack of specific requirements is a cause of concern to the biotechnology companies that have invested significant resources in trying to meet government needs and now question whether the government can clearly define future procurement contract requirements. GAO identified two issues related with the use of the BioThrax in the Strategic National Stockpile. First, ASPR lacks an effective strategy to minimize the waste of BioThrax. Starting in 2008, several lots of BioThrax in the Strategic National Stockpile will begin to expire. As a result, over $100 million per year could be lost for the life of the vaccine currently in the stockpile. ASPR could minimize such potential waste by developing a single inventory system with Department of Defense (DOD)--a high-volume user of BioThrax--with rotation based on a first-in, first-out principle. DOD and ASPR officials identified a number of obstacles to this type of rotation which may require legislative action. Second, ASPR planned to use three lots of expired BioThrax vaccine in the stockpile in the event of an emergency. This would violate FDA rules, which prohibit using an expired vaccine, and could also undermine public confidence because the vaccine's potency could not be guaranteed.

section_title: Letter
paragraphs: The anthrax attacks in September and October 2001 highlighted major  gaps in our civilian preparedness to respond to health emergencies that  threaten national security. These incidents also led the Congress and the  federal government to focus attention on the importance of developing  new drugs, vaccines, and therapeutics to protect U.S. citizens.
In 2002, in response to the anthrax attacks, the National Institute of  Allergy and Infectious Diseases (NIAID) within the National Institutes of  Health (NIH) launched an effort to rapidly develop a second generation  recombinant protective antigen (rPA) anthrax vaccine. While there is  already a licensed anthrax vaccine (BioThrax), it is given in six doses over  18 months followed by an annual booster. NIAID wanted to have a vaccine  that could be administered in an immunization series of not more than  three doses.
In the late 1980s, Department of Defense (DOD) research identified an rPA  anthrax vaccine, created with a process that (1) is fully defined, quantified,  and controlled in terms of protective antigens; (2) showed development  potential; and (3) required fewer doses. DOD researchers developed a fully  defined manufacturing process to produce highly purified rPA. The  researchers found that they could protect animals using this rPA with  fewer doses than the existing licensed vaccine. In 2002, the Institute of  Medicine (IOM) stated that although AVA—Anthrax Vaccine Adsorbed,  now called BioThrax—is safe and effective for use, “it is far from  optimal.” The IOM supported the development of a new anthrax vaccine.  According to the Department of Health and Human Services (HHS), when  an rPA vaccine is fully developed, it will address the shortcomings of the  AVA vaccine identified in the IOM report.
In 2002 and 2003, NIAID awarded development contracts for rPA vaccines  to two companies—VaxGen and Avecia. VaxGen was a small U.S.  biotechnology company. According to NIAID, one of the objectives was to  demonstrate how manufacturing efforts might be increased to support  creation of a national stockpile of medical countermeasures.
The Project BioShield Act of 2004 formalized this initiative and authorized  the Secretary of HHS, who in turn entrusted the Office of the Assistant  Secretary for Preparedness and Response (ASPR) with responsibility for  acquiring and ensuring the management of and accounting for a Strategic  National Stockpile of medical countermeasures. It is designed to  supplement and resupply state and local public health agencies in the  event of a national emergency anywhere and anytime within the United  States or its territories. Among other medical countermeasures, this  stockpile contained, as of June 2007, about 10 million doses of BioThrax,  the licensed anthrax vaccine. Since doses of BioThrax, like other  vaccines, have an expiration date, these doses will be disposed of if they  are not used before their expiration date.
The only other large user of BioThrax vaccine is DOD, which has procured  its own inventory of the vaccine. DOD has a mandatory Anthrax Vaccine  Immunization Program (AVIP) for military personnel, emergency-essential  DOD civilians, and contractors, based on defined geographic areas or  roles. The policy also allows personnel previously immunized against  anthrax, who are no longer deployed to high-threat areas, to receive  follow-up vaccine doses and booster shots on a voluntary basis.
In November 2004, ASPR awarded VaxGen a procurement contract for  $877.5 million for the manufacture and delivery of 75 million doses of its  rPA anthrax vaccine to the Strategic National Stockpile. Two years later,  in December 2006, ASPR terminated VaxGen’s contract for failure to meet  a critical contractual milestone.  The failure of this procurement effort  raised larger questions regarding the country’s ability to develop a new  anthrax vaccine and a robust and sustainable biodefense medical  countermeasure industry by building a partnership between  pharmaceutical and biotechnology firms and the government. The biotech  industry has raised concerns whether the government can clearly define  its requirements for future procurement contracts.
In our May 2006 testimony, we concluded that ASPR’s procurement  strategy for rPA anthrax vaccine had been very aggressive. We stated that  “it is important to understand the unique issues at stake in this early phase  of implementation of the biodefense strategy. The rest of the  biotechnology sector will be watching to see whether the industry and the  U.S. government can make this partnership work. Issues with this contract  might have an effect beyond just this individual vaccine procurement.  They could have an impact on how the biotechnology industry responds to  government overtures in the future for the development and procurement  of medical countermeasures for the many biothreat agents still to be  addressed.”
To assist in ongoing efforts to address these concerns, you asked that we  identify (1) factors that contributed to the failure of ASPR’s first Project  BioShield procurement effort with VaxGen for an rPA anthrax vaccine and  (2) issues associated with using the licensed anthrax vaccine, BioThrax, in  the Strategic National Stockpile.
subsections: section_title: Scope and Methodology
paragraphs: To determine what factors contributed to the failure of ASPR’s  procurement effort with VaxGen, we interviewed officials from HHS’s  components—ASPR, NIAID, the Food and Drug Administration (FDA),  and the Centers for Disease Control and Prevention (CDC). In addition, we  reviewed documents these agencies provided. We visited and interviewed  the officials of the two companies—Avecia and VaxGen—that NIAID  contracted with to develop the new rPA anthrax vaccine. We also talked to  officials of several biotech companies that are currently working on  biodefense medical countermeasures. We consulted with a small group of  experts in the manufacturing of biodefense vaccines to ensure that our  assessments were accurate. Finally, we reviewed scientific literature on  vaccine development, manufacturing, and safety and efficacy, including  regulatory requirements for licensing.
To identify issues associated with using the licensed anthrax vaccine  (BioThrax) in the stockpile, we interviewed officials from ASPR, CDC, and  DOD. In addition, we reviewed documents these agencies provided and  analyzed data on stockpile inventory of the licensed anthrax vaccine. We  visited and interviewed officials from Emergent Biosolutions, the company  that manufactures the licensed anthrax vaccine. We also talked to officials  of several biotech companies that are currently working on biodefense  medical countermeasures to obtain their views on ways to minimize waste  in the stockpile. We conducted our review from June 2007 through August  2007 in accordance with generally accepted government auditing  standards.
section_title: Background
paragraphs: Following the anthrax attacks of 2001, the federal government determined  that it would need additional medical countermeasures (for example,  pharmaceuticals, vaccines, diagnostics, and other treatments) to respond  to an attack involving chemical, biological, radiological, or nuclear  (CBRN) agents.
subsections: section_title: Project BioShield
paragraphs: The Project BioShield Act of 2004 (Public Law 108-276) was designed to  encourage private companies to develop civilian medical countermeasures  by guaranteeing a market for successfully developed countermeasures.
The Project BioShield Act (1) relaxes some procedures for bioterrorism- related procurement, hiring, and research grant awarding; (2) allows for  the emergency use of countermeasures not approved by FDA; and (3)  authorizes 10-year funding (available through fiscal year 2013) to  encourage the development and production of new countermeasures for  CBRN agents. The act also authorizes HHS to procure these  countermeasures for the Strategic National Stockpile.
Project BioShield is a procurement program that allows the government to  enter into contracts to procure countermeasures while they still are in  development, up to 8 years before product licensure is expected. Under  this program, the government agrees to buy a certain quantity of  successfully developed countermeasures for the Strategic National  Stockpile at a specified price once the countermeasure meets specific  requirements. The government pays the agreed-upon amount only after  these requirements are met and the product is delivered to the Strategic  National Stockpile. If the product does not meet the requirements within  the specified time frame, the contract can be terminated without any  payment to the contractor. Thus, while Project BioShield reduces the  producer’s market risk—that is, the possibility that no customer will buy  the successfully developed product—it does not reduce the development  risk to the producer—that is, the possibility that the countermeasure will  fail during development.
In December 2006, the Pandemic and All-Hazards Preparedness Act  (Public Law 109-417) modified the Project BioShield Act to allow for  milestone-based payments before countermeasure delivery for up to half  of the total award. Within HHS, the Biomedical Advanced Research and  Development Authority (BARDA) has the authority to directly fund the  advanced development of countermeasures that are not eligible for Project  BioShield contracts.
section_title: Agency Roles in Developing, Procuring, and Stockpiling Medical Countermeasures
paragraphs: Project BioShield procurement involves actions by the Department of  Homeland Security (DHS), HHS (including ASPR, NIAID, FDA, and CDC),  and an interagency working group.
subsections: section_title: DHS’s Role
paragraphs: The first step in the Project BioShield acquisition process is to determine  whether a particular CBRN agent poses a material threat to national  security. DHS performs this analysis, which is generally referred to as a  population threat assessment (PTA). On the basis of this assessment, the  DHS Secretary determines whether that agent poses a material threat to  national security. The Project BioShield Act of 2004 requires such a  written PTA for procurements using BioShield funds and authorities. This  declaration neither addresses the relative risk posed by an agent nor  determines the priority for acquisition, which is solely determined by  ASPR. Furthermore, the issuance of a PTA does not guarantee that the  government will pursue countermeasures against that agent. DHS has  issued PTAs for 13 agents, including the biological agents that cause  anthrax; multi-drug-resistant anthrax; botulism; glanders; meliodosis;  tularemia; typhus; smallpox; plague; and the hemorrhagic fevers Ebola,  Marburg, and Junin.
section_title: HHS’s Role
paragraphs: Various offices within HHS (ASPR, NIAID, FDA, and CDC) fund the  development research, procurement, and storage of medical  countermeasures, including vaccines, for the Strategic National Stockpile.
ASPR’s role: ASPR is responsible for the entire Project BioShield  contracting process, including issuing requests for information and  requests for proposals, awarding contracts, managing awarded contracts,  and determining whether contractors have met the minimum requirements  for payment. ASPR maintains a Web site detailing all Project BioShield  solicitations and awards.
ASPR has the primary responsibility for engaging with the industry and  awarding contracts for large-scale manufacturing of licensable products,  including vaccines, for delivery into the Strategic National Stockpile. With  authorities recently granted, BARDA will be able to use a variety of  funding mechanisms to support the advanced development of medical  countermeasures and to award up to 50 percent of the contract as  milestone payments before purchased products are delivered.
NIAID’s role: NIAID is the lead agency in NIH for early candidate  research and development of medical countermeasures for biodefense.  NIAID issues grants and awards contracts for research on medical  countermeasures exploration and early development, but it has no  responsibility for taking research forward into marketable products.
FDA’s role: Through its Center for Biologics Evaluation and Research  (CBER), FDA licenses many biological products, including vaccines, and  the facilities that produce them. Manufacturers are required to comply  with current Good Manufacturing Practices regulations, which regulate  personnel, buildings, equipment, production controls, records, and other  aspects of the vaccine manufacturing process. FDA has also established  the Office of Counterterrorism Policy and Planning in the Office of the  Commissioner, which issued the draft Guidance on the Emergency Use  Authorization of Medical Products in June 2005. This EUA guidance  describes in general terms the data that should be submitted to FDA, when  available, for unapproved products or unapproved uses of approved  products that HHS or another entity wishes FDA to consider for use in the  event of a declared emergency.  The final EUA guidance was issued in July  2007.
CDC’s role: Since 1999, CDC has had the major responsibility for  managing and deploying the medical countermeasures stored in the  Strategic National Stockpile. The Omnibus Consolidated and Emergency  Supplemental Appropriations Act (Public Law 105-277) first provided the  stockpile with a fund specially appropriated for purchases. Since then,  CDC has maintained this civilian repository of medical countermeasures,  such as antibiotics and vaccines.
section_title: DOD’s Role
paragraphs: DOD is not currently a part of Project BioShield. Beginning in 1998, DOD  had a program to vaccinate all military service members with BioThrax.  DOD’s program prevaccinates personnel for deployment to Iraq,  Afghanistan, and the Korean peninsula with BioThrax. For other  deployments, this vaccination is voluntary. DOD also has a program to  order, stockpile, and use the licensed anthrax vaccine. DOD estimates its  needs for BioThrax doses and bases its purchases on that estimate.
section_title: Interagency Working Group
paragraphs: Multiple agencies, including HHS and DHS, provide input on priority- setting and requirements activities.  For BioShield purchases, the  Secretaries of HHS and DHS prepare a joint recommendation, which  requires presidential approval before HHS enters into a procurement  contract.  The Secretary of HHS currently coordinates the interagency  process; the National Science and Technology Council previously handled  the coordination.
section_title: The Nature of Anthrax and the Anthrax Vaccine
subsections: section_title: The Nature of Anthrax
paragraphs: Anthrax is a rare but serious acute infectious disease that must be treated  quickly with antibiotics. Anthrax is caused by the spore-forming bacterium  Bacillus anthracis. It occurs most commonly in herbivores in agricultural  regions that have less effective veterinary and public health programs.  Anthrax can infect humans who have been exposed to infected animals or  products from infected animals such as hide, hair, or meat.  Human  anthrax occurs rarely in the United States from these natural causes.  However, the anthrax exposures in September and October 2001 through  mail intentionally contaminated with anthrax spores resulted in illness in  22 persons and the death of 5.
section_title: The Licensed Vaccine for Anthrax
paragraphs: An FDA-licensed anthrax vaccine, BioThrax, has been available since  1970. The vaccine has been recommended for laboratory workers who are  involved in the production of cultures of anthrax or who risk repeated  exposure to anthrax by, for example, conducting confirmatory or  environmental testing for anthrax in the U.S. Laboratory Response  Network for Bioterrorism laboratories; persons who may be required to  make repeated entries into known Bacillus anthracis contaminated areas  after a terrorist attack, such as remediation workers; and persons who  work with imported animal hides, furs, or similar materials, if the industry  standards and restrictions that help to control the disease are insufficient  to prevent exposure to anthrax spores.
Preventive anthrax vaccine is not recommended for civilians who do not  have an occupational risk. However, in 1998, DOD began a mandatory  program to administer the vaccine to all military personnel for protection  against possible exposure to anthrax-based biological weapons. By late  2001, roughly 2 million doses of the vaccine had been administered, most  of them to U.S. military personnel. As the vaccination program proceeded,  some military personnel raised concerns about the safety and efficacy of  the vaccine.
The BioShield program stockpiled BioThrax for the Strategic National  Stockpile for postexposure use in the event of a large number of U.S.  civilians being exposed to anthrax. ASPR officials characterized the  acquisition of the licensed vaccine as a “stopgap” measure as they also  have been engaged in the development and purchase of a new rPA anthrax  vaccine. ASPR had already acquired 10 million doses of BioThrax from  Emergent BioSolutions by 2006 and recently purchased an additional 10  million doses.
section_title: The Vaccine Development Process
paragraphs: Vaccine research and development leading to FDA approval for use is a  long and complex process. It may take 15 years and, according to FDA,  cost from $500 million to $1.2 billion and require specialized expertise.
Vaccines are complex biological products given to a person or animal to  stimulate an immune reaction the body can “remember” if it is exposed to  the same pathogen later.  In contrast to most drugs, they have no simple  chemical characterization. As a result, evaluating them involves measuring  their effects on living organisms, and their quality can be guaranteed only  through a combination of in-process tests, end-product tests, and strict  controls of the entire manufacturing process.
Vaccines are highly perishable and typically require cold storage to retain  potency. Even if they are stored at the recommended temperature, most  vaccines have expiration dates beyond which they are considered  outdated and should not be used. A great deal of attention is directed to  using the vaccine before its expiration date. For example, a recent CDC  manual advises users: “Check expiration date on container” and “rotate  stock so that the earliest dated material is used first.” After the storage vial  has been opened, the vaccine begins to deteriorate quickly in many cases,  often necessitating the opened or reconstituted vaccine to be used within  minutes to hours or discarded.”  Since human challenge studies cannot  be conducted for CBRN medical countermeasures, FDA requires animal  efficacy data instead.
The FDA process for approving a biologic for use in the United States  begins with an investigational new drug (IND) application.  A sponsor  that has developed a candidate vaccine applies to start the FDA oversight  process of formal studies, regulated by CBER within FDA. Phase 1 trials  involve safety and immunogenicity studies in a small number of healthy  volunteer subjects. phase 2 and phase 3 trials gather evidence of the  vaccine’s effectiveness in ever larger groups of subjects, providing the  documentation of effectiveness and important additional safety data  required for licensing. If the data raise safety or effectiveness concerns at  any stage of clinical or animal studies, FDA may request additional  information or halt ongoing clinical studies.
In vaccine development, clinical trials typically last up to 6 years. After  they have been successfully completed, the sponsor applies for FDA’s  approval to market the product. FDA’s review of the license application  includes review of the manufacturing facility and process. According to  FDA, this process is typically completed within 10 months for a standard  review and 6 months for a priority review.  According to industry sources,  the challenge in scaling up vaccine production from a research laboratory  to a large manufacturing environment while still maintaining quality  requires much skill, sophisticated facilities, and a great deal of experience.
section_title: Several Factors Contributed to the Failure of ASPR’s First Project BioShield Effort for the Production of an rPA Anthrax Vaccine
paragraphs: Three major factors contributed to the failure of the first Project BioShield  procurement effort. First, ASPR awarded the first BioShield procurement  contract to VaxGen when its product was at a very early stage of  development and many critical manufacturing issues had not been  addressed. Second, VaxGen took unrealistic risks in accepting the contract  terms. Third, key parties did not clearly articulate and understand critical  requirements at the outset.
subsections: section_title: HHS Awarded the Procurement Contract Before Development Had Reached an Appropriate Level of Maturity
paragraphs: ASPR’s decision to launch the VaxGen procurement contract for the rPA  anthrax vaccine at an early stage of development, combined with the  delivery requirement for 25 million doses within 2 years, did not take the  complexity of vaccine development into consideration and was overly  aggressive. Citing the urgency involved, ASPR awarded the procurement  contract to VaxGen several years before the planned completion of earlier  and uncompleted NIAID development contracts with VaxGen and thus  preempted critical development work.  (For a time line of events for the  first rPA anthrax vaccine development and procurement effort, see  appendix I).
In response to the anthrax attacks of 2001, NIAID was assigned  responsibility for developing candidate vaccines leading up to licensure,  purchase, and storage in the stockpile. NIAID envisioned a strategy of  minimizing risk by awarding contracts to multiple companies to help  ensure that at least one development effort would be successful. NIAID’s  strategy was appropriate since failure is not uncommon in vaccine  development. Toward this end, NIAID designed a sequence of two  contracts—one to follow the other—to advance pilot lots of rPA anthrax  vaccine through early characterization work, phase 1 and phase 2 clinical  trials, accelerated and real-time (long-term) stability testing, and tasks to  evaluate the contractor’s ability to manufacture the vaccine in large  quantities according to current Good Manufacturing Practices (cGMP).  Additionally, these contracts were cost reimbursable, an appropriate  contracting mechanism when uncertainties involved in contract  performance do not permit cost to be estimated with sufficient accuracy  to use a fixed-price contract. VaxGen was one of the awardees. The other  awardee was Avecia, Ltd., of Manchester, United Kingdom. NIAID’s  development effort with Avecia to prepare a candidate rPA anthrax  vaccine for potential purchase for the stockpile is ongoing.
VaxGen’s first development contract, awarded in September 2002, had  three major requirements: characterize the chemical composition of the  pilot lot; conduct phase 1 clinical trials to determine the basic safety  profile of the vaccine; and produce a feasibility plan to manufacture,  formulate, fill and finish, test, and deliver up to 25 million doses of cGMP  vaccine. The initial period of performance for this first contract was 15  months, to be completed in September 2003. However, NIAID twice  extended the period of performance to accommodate problems, including  stability testing. The final completion date of the contract was December  2006.
The second development contract was awarded to VaxGen in September  2003 to continue development of its vaccine. This contract covered 36  months and was scheduled to end in October 2006. Three of the major  requirements were to (1) manufacture, formulate, fill, finish, release, and  deliver 3 million to 5 million doses of vaccine from at least three different  lots that met cGMP requirements; (2) develop, implement, and execute  accelerated and real-time stability testing programs to ensure the safety,  sterility, potency, and integrity of the vaccine; and (3) conduct phase 2  clinical trials.
This second development contract covered especially critical steps in the  development cycle. For example, only during the phase 2 trials is the  vaccine given to a large enough number of human subjects to further  project its safety. Under the contract, phase 2 clinical trials, which were to  determine the optimum dose and dosing regimen, were expected to take 2  years to complete. This second contract also covered accelerated and  real-time stability testing programs to ensure the safety, sterility, potency,  and integrity of the vaccine. Vaccines, especially those intended to be  stockpiled, need to exhibit the necessary stability to ensure they will  remain safe and potent for the required storage period.
In early 2004, VaxGen’s product entered particularly critical stages of  development and scale-up production. According to industry officials we  talked to, the challenge in scaling up vaccine production from a research  pilot lot to a large manufacturing environment while still maintaining  quality is not trivial. It requires a great deal of skill, sophisticated facilities,  and experience. The officials also stated that work on the vaccine at this  point would have been expected to take multiple years to complete, during  which time the contractor would work back and forth with FDA in  evaluating, testing, and then reworking both its product and  manufacturing capability against criteria for eventual licensure.
However, on November 4, 2004, a little more than a year after NIAID  awarded VaxGen its second development contract, ASPR awarded the  procurement contract to VaxGen for 75 million doses of its rPA anthrax  vaccine. At that time, VaxGen was still at least a year away from  completing the Phase 2 clinical trials under the second NIAID  development contract. Moreover, VaxGen was still finishing up work on  the original stability testing required under the first development contract.
ASPR officials at the time of the award had no objective criteria, such as  Technology Readiness Levels (TRL), to assess product maturity.  They  were, however, optimistic the procurement contract would be successful.  One official described its chances of success at 80 percent to 90 percent.  However, a key official at VaxGen told us at the same time that VaxGen  estimated the chances of success at 10 percent to 15 percent. ASPR now  estimates that prior to award, the rPA vaccine was at a TRL rating of 8.  According to industry experts, a candidate vaccine product at such a level  is generally expected to be 5-8 years away from completion and to have  only a 30 percent chance of development into a successful vaccine.
When we asked ASPR officials why they awarded the procurement  contract when they did, they pointed to a sense of urgency at that time and  the difficulties in deciding when to launch procurement contracts.  However, November 2004 was 3 years after the anthrax attacks in 2001,  and while the sense of urgency was still important, it could have been  tempered with realistic expectations. According to industry experts,  preempting the development contract 2 years before completing work— almost half its scheduled milestones—was questionable, especially for  vaccine development work, which is known to be susceptible to technical  issues even in late stages of development. NIAID officials also told us that,  in their opinions, it was too early for a BioShield purchase. At a minimum,  the time extensions for NIAID’s first development contract with VaxGen to  accommodate stability testing should have indicated to ASPR that  development on its candidate vaccine was far from complete.
After ASPR awarded VaxGen the procurement contract, NIAID canceled  several milestones under its development contract with VaxGen to free up  funds for earlier milestones that VaxGen was having trouble meeting.  However, this undermined VaxGen’s ability to refine product development  up to the level needed to ensure delivery within the 2-year time frame  required under the procurement contract.
section_title: VaxGen Took an Unrealistic Risk in Accepting the Procurement Contract, Knowing Its Own Technical and Financial Limitations
paragraphs: VaxGen officials told us that they understood their chances for success  were limited and that the contract terms posed significant risks. These  risks arose from aggressive time lines, VaxGen’s limitations with regard to  in-house technical expertise in stability and vaccine formulation—a  condition exacerbated by the attrition of key staff from the company as  the contract progressed—and its limited options for securing additional  funding should the need arise.
Industry experts told us that a 2-year time line to deliver 75 million filled  and finished doses of a vaccine from a starting point just after phase 1  trials is a near-impossible task for any company. VaxGen officials told us  that at the time of the procurement award they knew the probability of  success was very low, but they were counting on ASPR’s willingness to be  flexible with the contract time line and work with them to achieve  success. In fact, in May 2006, ASPR did extend the contract deadlines to  initiate delivery to the stockpile an additional 2 years. However, on  November 3, 2006, FDA imposed a clinical hold on VaxGen’s forthcoming  phase 2 trial after determining that data submitted by VaxGen were  insufficient to ensure that the product would be stable enough to resume  clinical testing. By that time, ASPR had lost faith in VaxGen’s technical  ability to solve its stability problems in any reasonable time frame. When  VaxGen failed to meet a critical performance milestone of initiating the  next clinical trial, ASPR terminated the contract.
According to VaxGen’s officials, throughout the two development  contracts and the Project BioShield procurement contract, VaxGen’s staff  peaked at only 120, and the company was consistently unable to marshal  sufficient technical expertise. While it is not known how a larger  pharmaceutical company might have fared under similar time constraints,  we believe more established pharmaceutical companies have staff and  resources better able to handle the inevitable problems that arise in  vaccine development and licensure efforts. For example, according to  industry experts, a large firm might be able to leverage an entire internal  department to reformulate a vaccine or pursue solutions to a stability  issue, while a smaller biotechnology company like VaxGen would likely be  unable to use more than a few full-time scientists. In such situations, the  smaller company might have to contract out for the necessary support,  provided it can be found within a suitable time frame.
External expertise that might have helped VaxGen better understand its  stability issue was never applied. At one point during the development  contracts, NIAID—realizing VaxGen had a stability problem with its  product—convened a panel of technical experts in Washington, D.C.
NIAID officials told us that at the time of the panel meeting, they offered  to fund technical experts to work with the company, but VaxGen opted  not to accept the offer. Conversely, VaxGen officials reported to us that at  the time NIAID convened the panel of experts, NIAID declined to fund the  work recommended by the expert panel.
The lack of available technical expertise was exacerbated when key staff  at the company began leaving. A senior VaxGen official described the  attrition problem as “massive.” Of special significance, VaxGen’s Senior  Vice President for Research and Development and Chief Scientific Officer  left during critical phase 2 trials. An official at VaxGen described this  person’s role as key in both development of the assays and reformulation  of the vaccine.
Finally, VaxGen accepted the procurement contract terms even though the  financial constraints imposed by the BioShield Act limited its options for  securing any additional funding needed. In accordance with this act,  payment was conditional on delivery of a product to the stockpile, and  little provision could be made, contractually, to support any unanticipated  or additional development needed—for example, to work through issues  of stability or reformulation. Both problems are frequently encountered  throughout the developmental life of a vaccine. This meant that the  contractor would pay for any development work needed on the vaccine.  VaxGen, as a small biotechnology company, had limited internal financial  resources and was dependent on being able to attract investor capital for  any major influx of funds.
In such a firm, fixed-price contractual arrangement, the contractor  assumes most of the risk because the price is not subject to any  adjustment based on the contractor’s cost experience. Thus, even if the  contractor costs go up, the delivery price does not. We believe these  contracts are appropriate in situations where there are no performance  uncertainties or the uncertainties can be identified and reasonable  estimates of their cost impact can be made, but this was not the situation  in the VaxGen procurement contract. VaxGen had to be willing to accept  the firm, fixed-price contract and assume the risks involved. VaxGen did  so even though it understood that development on its rPA vaccine was far  from complete when the procurement contract was awarded and that the  contract posed significant inherent risks.
section_title: Key Parties Did Not Clearly Articulate and Understand Critical Requirements
paragraphs: Important requirements regarding the data and testing required for the rPA  anthrax vaccine to be eligible for use in an emergency were not known at  the outset of the procurement contract. They were defined in 2005 when  FDA introduced new general guidance on EUA. In addition, ASPR’s  anticipated use of the rPA anthrax vaccine was not articulated to all  parties clearly enough and evolved over time. Finally, purchase of  BioThrax raised the requirement for use of the VaxGen rPA vaccine.  All of  these factors created confusion over the acceptance criteria for VaxGen’s  product and significantly diminished VaxGen’s ability to meet contract  time lines.
subsections: section_title: Guidance on Emergency Use Authorization Appeared Midcontract and Created Confusion
paragraphs: Criteria for product acceptance need to be clearly articulated and  understood by all parties before committing to a major procurement.  Terms of art that leave critical requirements unclear are problematic in  contract language. After VaxGen received its procurement contract, draft  guidance was issued that addressed the eventual use of any unlicensed  product in the stockpile. This created confusion over the criteria against  which VaxGen’s product would be evaluated, strained relations between  the company and the government, and caused a considerable amount of  turmoil within the company as it scrambled for additional resources to  cover unplanned testing.
In June 2005, FDA issued draft EUA guidance, which described for the first  time the general criteria that FDA would use to determine the suitability of  a product for use in an emergency. This was 7 months after the award of  the procurement contract to VaxGen and 14 months after the due date for  bids on that contract.
Since the request for proposal for the procurement contract was issued  and the award itself was made before the EUA guidance was issued,  neither could take the EUA requirements into consideration. The  procurement contract wording stated that in an emergency, the rPA  anthrax vaccine was to be “administered under a ‘Contingency Use’  Investigational New Drug (IND) protocol” and that vaccine acceptance  into the stockpile is dependent on the accumulation and submission of the  appropriate data to support the “use of the product (under IND) in a  postexposure situation.” FDA officials told us they do not use the phrase  “contingency use” under IND protocols.
When we asked ASPR officials about the requirements for use defined in  the contract, they said that the contract specifications were consistent  with the statute and the needs of the stockpile. They said their contract  used “a term of art” for BioShield products. That is, the contractor had to  deliver a “usable product” under FDA guidelines. The product could be  delivered to the stockpile only if sufficient data were available to support  emergency use.  ASPR officials told us that FDA would define “sufficient  data” and the testing hurdles a product needed to overcome to be  considered a “usable product.”
While VaxGen and FDA had monthly communication, according to FDA,  data requirements for emergency use were not discussed until December  2005, when VaxGen asked FDA what data would be needed for emergency  use.  In January 2006, FDA informed VaxGen, under its recently issued  draft EUA guidance, of the data FDA would require from VaxGen for its  product to be eligible for consideration for use in an emergency. The draft  guidance described in general FDA’s current thinking concerning what  FDA considered sufficient data and the testing needed for a product to be  considered for authorization in certain emergencies.
Because the EUA guidance is intended to create a more feasible protocol  for using an unapproved product in a mass emergency than the term  “contingency use under an IND protocol” that ASPR used in the  procurement contract, it may require more stringent data for safety and  efficacy. Under an IND protocol, written, informed consent must be  received before administering the vaccine to any person, and reporting  requirements identical to those in a human clinical trial are required. The  EUA guidance—as directed by the BioShield law—eased both informed  consent and reporting requirements. This makes sense in terms of the  logistics of administering vaccine to millions of people in the large-scale,  postexposure scenarios envisioned. Because EUA guidance defines a less  stringent requirement for the government to use the product, it  correspondingly may require more testing and clinical trial work than was  anticipated under contingency use.
Several of the agencies and companies involved in BioShield-related work  have told us the EUA guidance appears to require a product to be further  along the development path to licensure than the previous contingency  use protocols would indicate. VaxGen officials told us that if the draft EUA  guidance was the measure of success, then VaxGen estimated significant  additional resources would be needed to complete testing to  accommodate the expectations under this new guidance. NIAID told us  that the EUA guidance described a product considerably further along the  path to licensure (85 percent to 90 percent) than it had assumed for a  Project BioShield medical countermeasure (30 percent) when it initially  awarded the development contracts.
section_title: The Concept of Use for the rPA Vaccine Was Not Clearly Articulated to All Parties
paragraphs: FDA considers a vaccine’s concept of use important information to gauge  the data and testing needed to ensure the product’s safety and efficacy.   Under the EUA statute, FDA must determine on the basis of the specific  facts presented whether it is necessary and appropriate to authorize use of  a specific product in an emergency. According to FDA, data and testing  requirements to support a product’s use in an emergency context may vary  depending on many factors, including the number of people to whom the  product is expected to be administered. The current use of an unlicensed  product involves the assessment of potential risks and benefits from use of  an unapproved drug in a very small number of people who are in a  potentially life-threatening situation. In such situations, because of the  very significant potential for benefit, safety and efficacy data needed to  make the risk benefit assessment might be lower than in an emergency  situation where an unlicensed vaccine might be offered to millions of  healthy people. This distinction is critical for any manufacturer of a  product intended for use in such scenarios—it defines the level of data  and testing required. Product development plans and schedules rest on  these requirements.
In late 2005, as VaxGen was preparing for the second phase 2 trial and well  into its period of performance under the procurement contract, its officials  participated in meetings, primarily with FDA but also with ASPR and  NIAID representatives, to receive FDA comments on its product  development plans and responses to specific requests for regulatory  advice. VaxGen needed to have a clear understanding of FDA’s data and  testing requirements for the rPA vaccine for the upcoming phase 2 trial to  be able to plan for and implement the necessary clinical and nonclinical  work to generate that data. Without it, VaxGen did not have adequate  means to determine how far along it was toward meeting FDA’s  requirements.
However, in these meetings, it became clear that FDA and the other  parties had different expectations for the next phase 2 trial. FDA officials  concluded from the discussion that VaxGen, ASPR, and CDC anticipated  the next phase 2 trial to produce meaningful safety and efficacy data to  support use of the vaccine in a contingency protocol under IND. However,  FDA officials stated that this was a new idea to the agency. From FDA’s  perspective, the purpose of phase 2 trials was to place the product and  sponsor (VaxGen) in the best position possible to design and conduct a  pivotal phase 3 trial in support of licensure. The lack of a definition of  concept of use caused FDA to delay replying to VaxGen until it could  confer with ASPR and CDC to clarify this issue. Thus, we conclude that  neither VaxGen nor FDA understood the rPA anthrax vaccine concept of  use until this meeting.
section_title: Purchase of BioThrax for the Stockpile Raised Requirements for Use of rPA Vaccine
paragraphs: The introduction of BioThrax into the stockpile undermined the criticality  of getting an rPA vaccine into the stockpile and, at least in VaxGen’s  opinion, forced FDA to hold it to a higher standard that the company had  neither the plans nor the resources to achieve. ASPR purchased 10 million  doses of BioThrax in 2005 and 2006 as a stopgap measure for post- exposure situations. After discussions between VaxGen and FDA, VaxGen  concluded that this raised the bar for its rPA vaccine. Although BioThrax  is currently licensed for use in pre-exposure, and not postexposure,  scenarios, the draft EUA guidance states that FDA will evaluate each EUA  candidate’s safety and efficacy profile. The EUA guidance states that FDA  will “authorize” an unapproved or unlicensed product—such as the rPA  anthrax vaccine candidate—only if “there is no adequate, approved and  available alternative.” According to the minutes of the meeting between  FDA and VaxGen, in January 2006, FDA reported that the unlicensed rPA  anthrax vaccine would be used in an emergency after the stockpiled  BioThrax, that is, “when all of the currently licensed  had been  deployed.” This diminished the likelihood of a scenario where the rPA  vaccine might be expected to be used out of the stockpile.
section_title: ASPR Lacks an Effective Strategy to Minimize Waste in the Strategic National Stockpile and Plans to Use Expired Anthrax Vaccine
paragraphs: We identified two issues related to using the BioThrax in the Strategic  National Stockpile. First, ASPR lacks an effective strategy to minimize  waste. As a consequence, based on current inventory, over $100 million is  likely to be wasted annually, beginning in 2008. Three lots of BioThrax  vaccine in the stockpile have already expired, resulting in losses of over  $12 million. According to the data provided by CDC, 28 lots of BioThrax  vaccine will expire in calendar year 2008. ASPR paid approximately $123  million for these lots. For calendar year 2009, 25 additional lots—valued at  about $106 million—will reach their expiration dates. ASPR could  minimize the potential waste of these lots by developing a single inventory  system with DOD—which uses large quantities of the BioThrax vaccine— with rotation based on a first-in, first-out principle.
Because DOD is a high-volume user of the BioThrax vaccine, ASPR could  arrange for DOD to draw vaccine from lots long before their expiration  dates. These lots could then be replenished with fresh vaccine from the  manufacturer. DOD, ASPR, industry experts, and Emergent BioSolutions  (the manufacturer of BioThrax) agree that rotation on a first-in, first-out  basis would minimize waste.
DOD and ASPR officials told us that they discussed a rotation option in  2004 but identified several obstacles. In July 2007, DOD officials believed  they might not be able to transfer funds to ASPR if DOD purchases  BioThrax from ASPR. However, in response to our draft report, DOD  informed us that funding is not an issue.  However, ASPR continues to  believe that transfer of funds would be a problem.  DOD stated smallpox  vaccine (Dryvax) procurement from HHS is executed under such an  arrangement. Further, DOD and ASPR officials told us that they use  different authorities to indemnify the manufacturer against any losses or  problems that may arise from use of the vaccine. According to DOD, this  area may require legislative action to ensure that vaccine purchased by  ASPR can be used in the DOD immunization program.  Finally, since DOD  vaccinates its troops at various locations around the world, there may be  logistical distribution issues. A DOD official acknowledged that these  issues could be resolved.
Second, ASPR plans to use expired vaccine from the stockpile, which  violates FDA’s current rules. Data provided by CDC indicated that two  lots of BioThrax vaccine expired in December 2006 and one in January  2007. CDC officials stated that their policy is to dispose of expired lots  since they cannot be used and continuing storage results in administrative  costs. FDA rules prohibit the use of expired vaccine.
Nevertheless, according to CDC officials, ASPR told CDC not to dispose of  the three lots of expired BioThrax vaccine. ASPR officials told us that  ASPR’s decision was based on the possible need to use these lots in an  emergency. ASPR’s planned use of expired vaccine would violate FDA’s  current rules and could undermine public confidence because ASPR  would be unable to guarantee the potency of the vaccine.
section_title: Conclusions
paragraphs: The termination of the first major procurement contract for rPA anthrax  vaccine raised important questions regarding the approach taken to  develop a new anthrax vaccine and a robust and sustainable biodefense  medical countermeasure industry by bringing pharmaceutical and  biotechnology firms to form a partnership with the government. With the  termination of the contract, the government does not have a new,  improved anthrax vaccine for the public, and the rest of the biotech  industry is now questioning whether the government can clearly define its  requirements for future procurement contracts.
Since HHS components have not completed a formal lessons-learned  exercise after terminating VaxGen’s development and procurement  contracts, these components may repeat the same mistakes in the future in  the absence of a corrective plan. Articulating concepts of use and all  critical requirements clearly at the outset for all future medical  countermeasures would help the HHS components involved in the anthrax  procurement process to avoid past mistakes. If this is not done, the  government risks the future interest and participation of the biotechnology  industry.
Given that the amount of money appropriated to procure medical  countermeasures for the stockpile is limited, it is imperative that ASPR  develop effective strategies to minimize waste. Since vaccines are  perishable commodities that should not be used after their expiration  dates, finding other users for the stockpile products before they expire  would minimize waste. Because DOD requires a large amount of the  BioThrax vaccine on an annual basis, it could use a significant portion of  BioThrax in the stockpile before it expires.
section_title: Recommendations for Executive Action
paragraphs: To avoid repeating the mistakes that led to the failure of the first rPA  procurement effort, we recommend that the Secretary of HHS direct  ASPR, NIAID, FDA, and CDC to ensure that the concept of use and all  critical requirements are clearly articulated at the outset for any future  medical countermeasure procurement.
To ensure public confidence and comply with FDA’s current rules, we  recommend that the Secretary of HHS direct ASPR to destroy the expired  BioThrax vaccine in the stockpile.
To minimize waste of the BioThrax vaccine in the stockpile, we  recommend that the Secretaries of HHS and DOD develop a single  integrated inventory system for the licensed anthrax vaccine, with rotation  based on a first-in, first-out principle.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Health and Human  Services and the Department of Defense for review and comment.  HHS  and DOD provided written comments on our draft, which are reprinted in  appendixes II and III, respectively.  Both agencies also provided technical  comments, which we have addressed in the report text as appropriate.
HHS and DOD generally concurred with our recommendations.  However,  with regard to our recommendation on an integrated stockpile, they  identified funding and legal challenges to developing an integrated  inventory system for BioThrax in the stockpile, which may require  legislative action. Although HHS and DOD use different authorities to  address BioThrax liability and funding issues, both authorities could apply  to either DOD or HHS; consequently, indemnity does not appear to be an  insurmountable obstacle for future procurements.
HHS also disagreed with a number of our specific findings. We have  addressed these areas of disagreement in detailed comments in appendix  II.
We are sending copies of this report the Secretary of the Department of  Defense and the Secretary of the Department of Health and Human  Services.  We are also sending a copy of this report to other interested  congressional members and committees. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staffs have any questions about this report or would like  additional information, please contact me at (202) 512-6412 or  rhodesk@gao.gov, or Sushil K. Sharma, Ph.D., Dr.PH, at (202) 512-3460 or  sharmas@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.
GAO staff who made major contributions to this report included Noah  Bleicher, William Carrigg, Barbara Chapman, Crystal Jones, Jeff  McDermott, and Linda Sellevaag.
section_title: Appendix I: Time Line of Events in the First rPA Anthrax Vaccine Development and Procurement Effort
subsections: section_title: Letters contaminated with anthrax spores sent through U.S. Postal Service, resulting in death of five persons.
paragraphs: National Institute of Allergy and Infectious Diseases (NIAID) issues first rPA anthrax vaccine request  for proposal (RFP).
NIAID awards rPA contracts to Avecia and VaxGen for first RFP.
NIAID issues second rPA anthrax vaccine RFP.
Health and Human Services (HHS) issues request for information (RFI) for large-scale manufacturing  capabilities for next generation anthrax vaccines.
NIAID awards Avecia and VaxGen contracts for second rPA RFP.
HHS issues Strategic National Stockpile rPA anthrax vaccine RFP.
President George W. Bush signs Project BioShield into law.
HHS awards Strategic National Stockpile contract to VaxGen for rPA anthrax vaccine procurement.
HHS awards Emergent Strategic National Stockpile contract for 5 million doses of BioThrax Vaccine.
Food and Drug Administration (FDA) issues draft Guidance for Emergency Use Authorization of  Medical Products.
NIAID issues RFP for third-generation anthrax vaccine.
HHS issues broad RFI regarding Technology Readiness Levels for medical countermeasures.
HHS issues draft Public Health Emergency Medical Countermeasure Enterprise (PHEMCE) Strategy.
FDA issues clinical hold notice on Vaxgen’s trial.
HHS issues “cure” notice on VaxGen.
HHS terminates contract with VaxGen for rPA anthrax vaccine.
NIAID cancels RFP for third-generation anthrax vaccine.
HHS issues PHEMCE Strategy.
HHS issues PHEMCE Implementation Plan.
Biomedical Advanced Research and Development Authority (BARDA) releases presolicitation notice  for BioThrax.
BARDA releases sources sought notice for rPA vaccine.
section_title: Appendix II: Comments from the Department of Health and Human Services
paragraphs: The following are GAO’s comments on the Department of Health and  Human Services’ letter dated October 4, 2007.
subsections: section_title: GAO Comments
paragraphs: 1. Our draft report acknowledged the Office of the Assistant Secretary for  Preparedness and Response’s (ASPR) sense of urgency to develop an rPA  anthrax vaccine following the 2001 attack.  However, our report also  stated that by November 2004, ASPR had had sufficient time and  opportunity to thoroughly evaluate contractual risks and issues without  being overly influenced by the sense of urgency.  By November 2004, it  was clear that significant manufacturing issues needed to be overcome  and that a 2-year time scale to produce 25 million doses was accordingly  unrealistic.    2. We agree that ASPR has taken several steps to develop and  communicate its strategy and plans to acquire medical countermeasures to  potential manufacturers. In addition, HHS has conducted several  workshops to stimulate discussion with potential manufacturers.  However, these steps were taken just before or after VaxGen’s  procurement contract was terminated.  While we reviewed the HHS Public  Health Emergency Medical Countermeasures Enterprise Strategy and  Implementation Plan for Chemical, Biological, Radiological, and Nuclear  Threats, we did not find these documents to be relevant to our evaluation  of ASPR’s performance with regard to VaxGen’s procurement contract.    3. ASPR’s definition of the concept of use refers, as expressed in its  comments, to the anthrax vaccine in combination with antibiotics as post- exposure prophylaxis.  However, our report discusses the potential use of  the unlicensed rPa vaccine in the stockpile when the licensed anthrax  vaccine was already available.  We cite the Food and Drug  Administration’s position that it would give preference to the licensed  vaccine over the unlicensed vaccine.
With regard to critical requirements, HHS acknowledged that critical  requirements would change for different products.  Therefore, HHS should  have known the consequences of changing requirements for a fixed-price  contract with a 2-year time limit.  4. We agree with HHS that it is not always possible to know the exact  regulatory specifications for a product at the beginning of the  procurement process.  However, ASPR failed to recognize that changing  requirements under a fixed-price procurement contract could significantly  affect the finances and the 2-year delivery time line it established.    5. The acting director of ASPR told us that the principal deputy of ASPR  had decided not to destroy the expired lots in case they were needed for  use in an emergency. However, using the expired vaccine would violate  the FDA rule.  In response to the draft of this report, HHS now states that  it is quarantining the expired lots until a decision can be made regarding  disposal. We do not understand HHS’s rationale for continuing to hold the  vaccine in quarantine for nearly a year and the justification for the  administrative expenses involved.   6. Although HHS and the Department of Defense (DOD) use different  authorities to address BioThrax liability and funding issues, both  authorities could apply to vaccines purchased by either DOD or HHS;  consequently, indemnity does not appear to be an insurmountable  obstacle for future procurements.  As indicated in our report, DOD and  HHS should continue to explore the legal implications of different  indemnity authorities and present a legislative proposal to Congress if they  determine that a statutory change is required to establish a joint inventory.    7. Since, as ASPR acknowledges, it does not have a strategy to minimize  waste, we calculated the potential $100 million annual wastage based on  expiration dates of the current vaccine inventory.  ASPR stated that the  annual saving would only be up to $25 million per year but did not provide  any basis for this estimate.  However, according to DOD, in contract year  2006, it purchased BioThrax valued at about $55 million, a savings of more  than double ASPR’s estimate.
A strategy to minimize waste in the stockpile should include not only  integration of inventory based on a first-in, first-out principle but also  reexamination of requirements derived from consequence modeling with  regard to the size of the inventory.  Such a strategy would result in savings  closer to $100 million.  8. We did not mean to suggest that all expired products represent waste or  lost investment. We clarified our definition of waste in the report.  When  there is a large-volume user for the stockpile product, not having an  effective strategy to ensure that stockpile product would be used  constitutes waste.  However, since DOD is a large user of BioThrax,  unnecessary waste will result from ASPR not making an effort to ensure  that to the extent possible, DOD uses the vaccine in the stockpile.  9. We did not question the legality of the contract award to VaxGen but  rather the rationale underlying the contract’s requirement for 25 million  doses in 2 years.   10.  ASPR officials told us that they did not have tools to assess product  maturity at the time of the contract award, and that they were guided by a  sense of urgency.  On the basis of these statements, we concluded that  their assessment was subjective.    11. We disagree that the VaxGen Project BioShield award did not preempt  other support for product development that was being provided to VaxGen  through its National Institute of Allergy and Infectious Diseases contract.  According to our analysis of the contract document and discussions with  NIAID officials, funding under the development contract largely ceased  once the procurement contract was awarded.    12.  We clarified the report text to attribute to VaxGen officials the  statement that the purchase of BioThrax for the stockpile as a stopgap  measure raised the bar for the VaxGen vaccine.  13. Our draft report did not say that HHS changed the requirements for the  VaxGen rPA vaccine.  However, we have clarified the text to state that  purchase of BioThrax for the stockpile raised the requirement for the use  of rPA anthrax vaccine.  14 We clarified the report text to indicate that neither FDA nor VaxGen  understood the concept of use prior to January 2006.    15. We clarified the report text to indicate that ASPR officials told us that  FDA would define “sufficient data” and the testing hurdles a product  needed to overcome to be considered a “usable product.”  16.  See our response to comment 8.
section_title: Appendix III: Comments from the Department of Defense
paragraphs: The following is GAO’s comment on the Department of Defense’s letter  dated October 3, 2007.
subsections: section_title: GAO Comment
paragraphs: 1. Although HHS and DOD use different authorities to address BioThrax  liability, both authorities could apply to vaccines purchased by either DOD  or HHS; consequently, indemnity does not appear to be an insurmountable  obstacle for future procurements.  As indicated in our report, DOD and  HHS should continue to explore the legal implications of different  indemnity authorities and present a legislative proposal to Congress if they  determine that a statutory change is required to establish a joint inventory.