Project Bioshield: Actions Needed to Avoid Repeating Past Mistakes
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 testify on its report on Project BioShield, which is being released today. This testimony summarizes (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 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 that 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: We are pleased to be here to discuss our findings on Project BioShield’s  first major procurement contract and the potential for waste in the  Strategic National Stockpile. My statement is based on our report, which  we are releasing today.
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 was  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 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 stockpile of medical countermeasures.
The Project BioShield Act of 2004 formalized this initiative and authorized  the Secretary of Health and Human Services (HHS) to acquire and ensure  the management of and accounting for a stockpile of medical  countermeasures. The Secretary, in turn, entrusted this responsibility to  the Office of the Assistant Secretary for Preparedness and Response  (ASPR). 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 that date.  The only other large user of BioThrax vaccine is the Department of  Defense (DOD), which has procured its own inventory of the vaccine.
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 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 about  whether the government can clearly define its requirements for future  procurement contracts.
Today, my testimony will focus on the following two issues that you asked  us to address: (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 respond to these questions, we interviewed agency and industry  officials, reviewed documents, and consulted with biodefense experts. We  conducted our review from June 2007 through August 2007 in accordance  with generally accepted government auditing standards.
section_title: Background
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  chemical, biological, radiological, or nuclear agents. The act also  authorizes HHS to procure these countermeasures for the Strategic  National Stockpile.
section_title: Agency Roles in Developing, Procuring, and Stockpiling of Medical Countermeasures
paragraphs: Project BioShield procurement involves actions by HHS (including ASPR,  NIAID, FDA, and the Centers for Disease Control and Prevention (CDC))  and an interagency working group.
Various offices within HHS 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, the Biomedical Advanced Research and  Development Authority (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 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 emergency use authorization (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—such as  antibiotics and vaccines—stored in the Strategic National Stockpile.
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 being deployed 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: The Licensed Vaccine for Anthrax
paragraphs: An FDA-licensed anthrax vaccine, BioThrax, has been available since  1970. The vaccine has been recommended for a variety of situations, for  example, laboratory workers who produce anthrax cultures. 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 had already acquired 10 million  doses of BioThrax from Emergent BioSolutions by 2006 and recently  purchased an additional 10 million doses.
section_title: Three Factors Contributed to the Failure of ASPR’s First Project BioShield Effort to Produce 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 Contract Too Soon
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.
NIAID awarded VaxGen two development contracts, neither of which was  near completion when ASPR awarded the procurement contract.  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.
At the time of the award, ASPR officials had no objective criteria, such as  Technology Readiness Levels (TRL), to assess product maturity. They  were, however, optimistic that 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.  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.
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 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 contracts undermining VaxGen’s  ability to deliver the required number of doses within the 2-year time  frame.
section_title: VaxGen Took Unrealistic Risks in Accepting the Procurement Contract
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 to initiate 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. 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.
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. However VaxGen was 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, according to  VaxGen, purchases 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: 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 was dependent on the accumulation and submission of  the appropriate data to support the “use of the product (under IND) in a  postexposure situation.” However, 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.”
According to FDA, while VaxGen and FDA had monthly communication,  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 view 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 closer 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.  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 assessing  potential risks and benefits from using 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.
However, in late 2005, as VaxGen was preparing for the second phase 2  trial and well into its period of performance under the procurement  contract, it became clear that FDA and the other parties had different  expectations for the next phase 2 trial. 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 and not to produce meaningful safety and efficacy  data to support use of the vaccine in a contingency protocol under IND as  expected by VaxGen, ASPR, and CDC. This lack of a clear understanding  of the concept of use for VaxGen’s product 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. 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 and, in VaxGen’s opinion, raised  the bar for its rPA vaccine.
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 the 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: The report that we are issuing today makes three recommendations. 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.
HHS and DOD generally concurred with our recommendations. In  addition, with regard to our recommendation on integrated stockpile, they  identified 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 issues, both authorities could apply to either DOD or HHS;  consequently, indemnity does not appear to be an insurmountable  obstacle for future procurements.
Mr. Chairman, this concludes my remarks. I will be happy to answer any  questions you or other members may have.
section_title: Contacts and Acknowledgements
paragraphs: For questions regarding this testimony, please contact Keith Rhodes at  (202) 512-6412 or rhodesk@gao.gov. GAO staff making major contributions  to this testimony included Noah Bleicher, William Carrigg, Barbara  Chapman, Crystal Jones, Jeff McDermott, Linda Sellevaag, Sushil Sharma,  and Elaine Vaurio.
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