Tech firms wary on biodefense

Even as Congress finalizes a bill to fund vaccines and other countermeasures against bioterror attacks, many executives say the much-ballyhooed measures from Washington have sidestepped the toughest issues facing the drug industry.

These executives, especially from biotechnology companies, worry that their firms could be held liable for side effects patients might suffer if the government urged them to take experimental treatments for smallpox, anthrax, or other pathogens during an emergency.

The companies also say current rules don't offer the patent protections they need or enough funding.

All these issues are heating up as politicians consider a new set of biodefense proposals -- dubbed "Bioshield II" -- to address questions left unanswered by "Project Bioshield" legislation passed by the House and Senate since last fall.

"We're very pleased we got something, but what we're going to need in the future is some real funding for improvements," said Una S. Ryan, chief executive of vaccine maker Avant Immunotherapeutics Inc. in Needham and a senior leader of two large biotechnology industry trade groups.

Ryan spent part of this week in Washington to press for the industry's agenda. Liability is a central issue because often the drugs that might be needed during a crisis -- such as Avant's experimental vaccines against anthrax and plague -- haven't yet gotten long-term safety approvals from the Food and Drug Administration. Even running clinical trials can pose ethical problems because such trials might put healthy people at risk.

As a result, larger companies often won't get involved in biodefense in the first place, Ryan said, while smaller companies could be bankrupted by a single lawsuit. "It's a huge issue, certainly for a company like mine," Ryan said.

Bills passed by the House and Senate so far will provide about $1 billion to fund a Bush administration effort known as Project Bioshield. The White House forecasts spending nearly $6 billion over 10 years to develop and stockpile better vaccines or treatments for various diseases. The bills also aim to fast-track biodefense research sponsored by the National Institutes of Health and broaden the FDA's emergency powers to make early-stage drugs available.

Other language proposed by senators Joseph Lieberman, a Connecticut Democrat, and Orrin Hatch, a Utah Republican, would have extended liability protections to drug companies. But it never made the final bill, after others including Senator Edward M. Kennedy of Massachusetts argued that such protections are already available in some cases.

"With issues of liability there's always a delicate balancing act between the needs of industry and the rights of consumers and patients," said Jim Manley, a spokesman for Kennedy.

Lieberman, Hatch, and Kennedy have already begun work on new proposals for Bioshield II. Ideas on the table, Manley said, include extending current vaccine-liability programs to biodefense and offering extra periods of exclusivity for some biodefense drugs that don't have major commercial value. New Hampshire Senator Judd Gregg, a Republican who chairs a committee overseeing health issues, will probably hold hearings as soon as this summer to look at issues such as liability, a spokeswoman said.

For now, however, funding and liability concerns remain unresolved and help explain why biodefense hasn't emerged as a major component of the pharmaceutical industry, said Richard Hollis, chief executive of Hollis-Eden Pharmaceuticals Inc. in California, which is developing a compound to protect bone marrow against radiation.

Other well-known companies with biodefense products include VaxGen Inc. in Brisbane, Calif., and Acambis PLC, a British company with research facilities in Massachusetts. But their revenue and stock-market values pale in comparison to the largest drug makers, such as Pfizer Inc., which had $45.2 billion in sales last year, compared with $14.3 million at VaxGen, much of which was from government contracts for an anthrax vaccine. Currently, the larger companies' involvement in biodefense is so small that their trade group, the Pharmaceutical Research and Manufacturers of America, doesn't even track it.

Hollis noted that a year ago, President Bush spoke to the Biotechnology Industry Organization, stressing the need for the development of countermeasures. But when the same trade group hosted a series of talks on biodefense in San Francisco last week, the conference room was only half-full, Hollis said, with big pharmaceutical companies notably absent.

"You would think that at this year's meeting it would have been standing room only," Hollis said. "The country's at war. But the attendance was just marginal."

A spokesman for the pharmaceutical trade group said officials there wouldn't comment, and executives from large companies including Pfizer and Bayer weren't available yesterday afternoon, representatives said.

But even some of the drug industry's allies say more needs to be done to get these companies onto the playing field.

"The question is, why is it that the industry is still completely disinterested, and what will it take to get them interested?" said Chuck Ludlam, legislative counsel to Senator Lieberman. "If we don't get them interested, we have no prospects for developing the medicines we need."

Others also have suggested offering companies tax breaks for their work in biodefense.

But J. Leighton Read, a biotechnology investor in Palo Alto, Calif., said that won't work since so many of these companies lose money and don't pay much tax anyway.

Read said he considers the bills so far a useful start but more changes are needed to get the industry moving nearly three years after the anthrax attacks that shuttered federal buildings and killed five.

Read fears another Bioshield bill won't pass until the country suffers another large-scale attack.

"Look how long it's taken to get this bill through," Read said.

Ross Kerber can be reached at kerber@globe.com.