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Obama Rationale for Smallpox Drug Contract Called Into Question

(Nov. 14) -An Obama administration plan for the biotechnology firm SIGA Technologies to mass produce the smallpox drug ST-246 has raised questions, in part because a principal company shareholder in the contracting firm is a longtime Democratic Party supporter (SIGA Technologies photo). (Nov. 14) -An Obama administration plan for the biotechnology firm SIGA Technologies to mass produce the smallpox drug ST-246 has raised questions, in part because a principal company shareholder in the contracting firm is a longtime Democratic Party supporter (SIGA Technologies photo).

The Obama administration's decision to award a contract worth hundreds of millions of dollars to manufacture a smallpox antiviral of questionable efficacy has been called into question, particularly because a principal shareholder in the contracting firm is a longtime campaign donor, the Los Angeles Times reported on Sunday (see GSN, June 28).

High-ranking administration officials became more closely involved in the contracting process than is typically the case, according to the report. SIGA Technologies was awarded a single-bid contract worth $443 million to produce 1.7 million doses of the smallpox drug ST-246 for inclusion in the Strategic National Stockpile. The New York-based pharmaceutical company's largest shareholder is Ronald Perelman, a wealthy supporter of the Democratic Party.

After SIGA groused that Health and Human Services Department contracting experts were objecting to the firm's monetary compensation requirements, Obama officials removed the senior HHS negotiator on the contract.

SIGA chief executive Eric Rose wrote a letter criticizing government contracting specialists' "approach to profit."

Health and Human Services Assistant Secretary for Preparedness and Response Nicole Lurie responded to Rose by promising that the "most senior procurement official" would be removed from the deal talks.

"I trust this will be satisfactory to you," she wrote.

Later, when SIGA was in jeopardy of losing the contract in 2010, Obama administration officials chose to bar other companies from bidding on the deal.

A final deal was worked out in May using a "sole-source" process in which SIGA was the only company invited to put forth a proposal. The government agreed to pay roughly $225 for each dose of ST-246 -- a price tag that is considerably higher what contracting experts had previously said was justifiable, according to interviews and internal papers.

Though smallpox has been declared completely eradicated from nature, U.S. biodefense experts are concerned about the possibility that some hostile nations may have retained strains of the highly virulent and deadly variola virus or that terrorists could find a way to replicate the disease using cutting-edge technology.

The Strategic National Stockpile presently has enough smallpox vaccine for everyone in the United States. The vaccine, at $3 a dose, confers immunity when administered no more than four days after exposure. The ST-246 drug would be administered when diagnosis comes too late for the vaccine to be effective.

However, the antiviral's actual effectiveness on people cannot be known, as ethical standards prevent it being tested on humans and animal trials cannot guarantee it will have the same impact.

"We've got a vaccine that I hope we never have to use -- how much more do we need?" said former Bush administration biodefense adviser and epidemiologist Donald Henderson. "The bottom line is, we've got a limited amount of money."

University of Southern California Keck School of Medicine epidemiologist Thomas Mack also criticized the SIGA contract as "a waste of time and a waste of money."

Lurie defended the decision to buy the drug.

"I don't put probabilities around anything in terms of imminent or not," said Lurie, who is the lead government official in charge of the SIGA contract. "Because what I can tell you is, in the two-plus years I've been in this job, it's the unexpected that always happens."

The senior HHS official insisted the single-bid contract was given to SIGA solely on merit. The decision to purchase the smallpox antiviral was talked over with officials at the White House and with HHS chief Kathleen Sebelius, but those conversations dealt with the policy rationale for acquiring the drug, she said.

Lurie at first maintained in an interview with the Times that she had no contact with Rose regarding the contract, but her department later admitted Lurie had responded in writing to Rose.

Rival pharmaceutical firm Chimerix previously objected to SIGA receiving the contract on the grounds that the New York firm did not fit the contract specifications of a small business with a maximum of 500 workers. Small Business Administration officials concurred with this view (David Willman, Los Angeles Times, Nov. 13).

Note to our Readers

GSN ceased publication on July 31, 2014. Its articles and daily issues will remain archived and available on NTI’s website.

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