[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
     ELUSIVE ANTIDOTES: PROGRESS DEVELOPING CHEMICAL, BIOLOGICAL, 
                RADIOLOGICAL AND NUCLEAR COUNTERMEASURES

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                  EMERGING THREATS, AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 14, 2005

                               __________

                           Serial No. 109-83

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

Subcommittee on National Security, Emerging Threats, and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
KENNY MARCHANT, Texas                DENNIS J. KUCINICH, Ohio
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         BERNARD SANDERS, Vermont
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           CHRIS VAN HOLLEN, Maryland
TODD RUSSELL PLATTS, Pennsylvania    LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. DUTCH RUPPERSBERGER, Maryland
MICHAEL R. TURNER, Ohio              STEPHEN F. LYNCH, Massachusetts
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
             Kristine Fiorentino, Professional Staff Member
                        Robert A. Briggs, Clerk
             Andrew Su, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 14, 2005....................................     1
Statement of:
    Hanna, Dr. Michael G., Jr., Chief Scientific Officer, 
      Intracel; and Dr. James H. Davis, executive vice president 
      and general counsel, Human Genome Sciences, Inc............    95
        Davis, Dr. James H.......................................   102
        Hanna, Dr. Michael G., Jr................................    95
    Klein, Dale, Assistant to the Secretary of Defense for 
      Nuclear, Chemical and Biological Defense Programs, 
      Department of Defense; Dr. Anthony S. Fauci, Director, 
      National Institute of Allergy and Infectious Diseases, 
      National Institute of Health; Stewart Simonson, Assistant 
      Secretary for Public Health, Emergency Preparedness, 
      Department of Health and Human Services; John Vitko, Jr., 
      Director, Biological Countermeasures Portfolio, Science and 
      Technology Directorate, Department of Homeland Security; 
      and Ronald J. Saldarini, Scientific Consultant, Institute 
      of Medicine................................................     5
        Fauci, Dr. Anthony S.....................................    21
        Klein, Dale..............................................     5
        Saldarini, Ronald J......................................    74
        Simonson, Stewart........................................    48
        Vitko, John, Jr.,........................................    65
Letters, statements, etc., submitted for the record by:
    Davis, Dr. James H., executive vice president and general 
      counsel, Human Genome Sciences, Inc., prepared statement of   104
    Fauci, Dr. Anthony S., Director, National Institute of 
      Allergy and Infectious Diseases, National Institute of 
      Health, prepared statement of..............................    23
    Hanna, Dr. Michael G., Jr., Chief Scientific Officer, 
      Intracel, prepared statement of............................    98
    Klein, Dale, Assistant to the Secretary of Defense for 
      Nuclear, Chemical and Biological Defense Programs, 
      Department of Defense, prepared statement of...............     8
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................   121
    Ruppersberger, Hon. C.A. Dutch, a Representative in Congress 
      from the State of Maryland, prepared statement of..........   125
    Saldarini, Ronald J., Scientific Consultant, Institute of 
      Medicine, prepared statement of............................    76
    Sanders, Hon. Bernard, a Representative in Congress from the 
      State of Vermont, prepared statement of....................   129
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3
    Simonson, Stewart, Assistant Secretary for Public Health, 
      Emergency Preparedness, Department of Health and Human 
      Services, prepared statement of............................    50
    Vitko, John. Jr., Director, Biological Countermeasures 
      Portfolio, Science and Technology Directorate, Department 
      of Homeland Security, prepared statement of................    67


     ELUSIVE ANTIDOTES: PROGRESS DEVELOPING CHEMICAL, BIOLOGICAL, 
                RADIOLOGICAL AND NUCLEAR COUNTERMEASURES

                              ----------                              


                         TUESDAY, JUNE 14, 2005

                  House of Representatives,
       Subcommittee on National Security, Emerging 
              Threats, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:06 p.m., in 
room 2154, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives: Shays, Marchant, Platts, Duncan, 
Turner, Kucinich, Van Hollen, Ruppersberger, and Higgins.
    Staff present: Lawrence Halloran, staff director and 
counsel; Kristine Fiorentino, professional staff member; Robert 
A. Briggs, clerk and professional staff member; Andrew Su, 
minority professional staff member; and Jean Gosa, minority 
assistant clerk.
    Mr. Shays. The Subcommittee on National Security, Emerging 
Threats, and International Relations' hearing entitled, 
``Elusive Antidotes: Progress Developing Chemical, Biological, 
Radiological and Nuclear Countermeasures,'' is called to order.
    First, let me apologize for keeping you waiting. It is not 
my practice to keep any of you waiting, you have very important 
things to do.
    More than a decade after U.S. armed forces faced exposure 
to Saddam's chemical arsenal and 4 years after the anthrax 
attacks here at home, the development of medical 
countermeasures against unconventional weapons remains an 
elusive goal. A multitude of Federal offices and programs 
pursue separate, shifting, often competing priorities without 
disciplined linkage to a strategy to address the most pressing 
threats.
    By one count last year, 75 high level Federal officials in 
seven Cabinet departments were responsible for biodefense 
policies, program execution or budgets. The Department of 
Health and Human Services, the Department of Homeland Security, 
the Department of Defense, the Department of Agriculture, the 
Department of Commerce, the Department of State and the 
Environmental Protection Agency all have some responsibility 
for the Nation's defenses against chemical, biological, 
radiological assaults.
    To date, this littered landscape has not been fertile soil 
for the growth of needed countermeasures against the threats 
posed by the pathogens, toxins, chemicals and isotopes known to 
be within the grasp of terrorists. Five years ago, the Defense 
Science Board saw the need for 57 vaccines, drugs and 
diagnostics to meet the threat. Today, we have just two of 
those in hand, both based on old technologies.
    The Department of Defense specifically, the Joint Vaccine 
Acquisition Program, offers a sadly illustrative example of the 
difficulties plaguing the broader Federal effort. A 2004 study 
by the Institute of Medicine found the DOD biodefense program 
fragmented and often prey to competing priorities. Launched in 
1997 with $322 million, the JVAP has spent that much and more. 
Yet lists of JVAP ``accomplishments'' provided to the 
subcommittee include just one recently licensed therapeutic, no 
completed vaccines and two target vaccine programs terminated 
after significant expenditures.
    Without question, countermeasure development is an 
expensive, technically challenging process that cannot be 
forced to yield results on an arbitrary timetable. The current 
approach lacks cohesiveness and urgency. Those trying to 
advance medical countermeasures face a torturous labyrinth of 
Federal fiefdoms into which billions disappear, yet very few 
antidotes have yet to emerge.
    In October 2001, this subcommittee held a field hearing on 
the development of medical countermeasures against biological 
warfare agents. We met across the street in the Department of 
Health and Human Services headquarters building, because the 
Capitol complex was closed for anthrax testing and remediation. 
We were told aggressive steps were being taken to defend both 
civilian and military personnel against anthrax, smallpox, 
botulinum toxin and other likely threats.
    Today we find the biodefense pipeline still producing 
little more than promises of cures to come. Project BioShield 
represents an essential mechanism to streamline the 
countermeasure development end game, acquisition, but it can do 
little to accelerate the glacial process of moving vaccines, 
drugs and other therapies from basic research to final 
formulation and licensure. That is a function of leadership, 
coordination and strict adherence to a threat-based strategy.
    We asked our witnesses to describe how greater focus and 
momentum can be brought to this complex process. They bring 
world class credentials and unmatched experience to our 
discussion and we look forward to their testimony and we thank 
them for their presence here today.
    At this time, the Chair would recognize Mr. Marchant.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Mr. Marchant. I don't have any opening statement. I am 
happy to be here.
    Mr. Shays. Thank you. I appreciate the gentleman's 
participation and his help with the work of this subcommittee.
    Let me now take care of some business. I ask unanimous 
consent, given that we have a quorum, that all members of the 
subcommittee be permitted to place an opening statement in the 
record and the record remain open for 3 days for that purpose. 
Without objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record and 
without objection, so ordered.
    At this time, I will introduce the first panel. We have Dr. 
Dale Klein, Assistant to the Secretary of Defense for Nuclear, 
Chemical and Biological Defense Programs, Department of 
Defense; Dr. Anthony S. Fauci, Director, National Institute of 
Allergy and Infectious Diseases, National Institute of Health; 
the Honorable Stewart Simonson, Assistant Secretary for Public 
Health, Emergency Preparedness, Department of Health and Human 
Services; Dr. John Vitko, Jr., Director, Biological 
Countermeasures Portfolio, Science and Technology Directorate, 
Department of Homeland Security; and Dr. Ronald J. Saldarini, 
Scientific Consultant, Institute of Medicine.
    As is the custom, we swear our witnesses and I would ask 
you to stand.
    [Witnesses sworn.]
    Mr. Shays. We prefer that your testimony be closer to 5 
minutes but we will roll it over for another 5 minutes and 
would like you to stop within that time because we have a 
number of panelists.
    Dr. Klein.

STATEMENTS OF DALE KLEIN, ASSISTANT TO THE SECRETARY OF DEFENSE 
    FOR NUCLEAR, CHEMICAL AND BIOLOGICAL DEFENSE PROGRAMS, 
DEPARTMENT OF DEFENSE; DR. ANTHONY S. FAUCI, DIRECTOR, NATIONAL 
    INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES, NATIONAL 
INSTITUTE OF HEALTH; STEWART SIMONSON, ASSISTANT SECRETARY FOR 
PUBLIC HEALTH, EMERGENCY PREPAREDNESS, DEPARTMENT OF HEALTH AND 
     HUMAN SERVICES; JOHN VITKO, JR., DIRECTOR, BIOLOGICAL 
COUNTERMEASURES PORTFOLIO, SCIENCE AND TECHNOLOGY DIRECTORATE, 
   DEPARTMENT OF HOMELAND SECURITY; AND RONALD J. SALDARINI, 
          SCIENTIFIC CONSULTANT, INSTITUTE OF MEDICINE

                    STATEMENT OF DALE KLEIN

    Dr. Klein. Chairman Shays and members of the subcommittee, 
I am honored to appear before your subcommittee again to 
address your questions regarding the Department's efforts to 
develop and acquire countermeasures to chemical, biological, 
radiological and nuclear threats. As you indicated, I am the 
Assistant to the Secretary of Defense for Nuclear, Chemical and 
Biological Defense Programs.
    Today, I will address the Department's defense process to 
identify, prioritize, develop and acquire countermeasures to 
the threats we face today and future threats. I will also 
provide an update on some of the accomplishments of the medical 
research program and the Joint Vaccine Acquisition Program. 
Finally, I will highlight some of our interagency cooperative 
efforts and following my comments, I welcome questions the 
subcommittee might have and I will do the best I can to answer 
them.
    In accordance with congressional authority, I serve as the 
focal point, overseeing the Department's chemical and 
biological defense research, development and acquisition 
programs. The Secretary of Defense recently provided direction 
to enhance the chemical and biological defense posture. The 
resulting study generated several options for increased 
investment based on these new requirements and accompanying 
risk.
    Based on the study findings, senior leaders agreed to 
increase the investment for WMB countermeasures by $2.1 billion 
for the fiscal years 2006-2011. The increase included $1.3 
billion for Chemical and Biological Defense Program. This 
investment strategy begins in fiscal year 2006 with $1.5 
billion for the President's budget request.
    In addition to this study, the Director of Program Analysis 
and Evaluation identified an additional $100 million in fiscal 
year 2006 for the Chemical and Biological Defense Program to 
address biological warfare and medical countermeasure 
initiatives. These medical countermeasure initiatives will 
apply transformational approaches which leverage our genomics, 
proteomics consistent biology data exploitation.
    The Chemical and Biological Defense Program has made 
progress in several areas of medical defense. In 2003, the 
first successful application of the new animal efficacy rule 
occurred with Food and Drug Administration approval of 
pyridostigmine bromide to increase survival exposure to soman 
nerve agent poisoning.
    In March 2005, a contract award was made for development of 
a chemical agent bioscavenger for a pre or post-exposure 
treatment of nerve agent exposure. In February of this year, 
the FDA approved the DOD Vaccinia Immune Globulin used to treat 
adverse events following smallpox immunization. In early 2005, 
clinical trials began for both a multivalent botulinium vaccine 
for stereotypes A and B and a plague vaccine. In July clinical 
trials will begin for a Venezuelan Equine Encephalitis vaccine.
    The DOD Chemical and Biological Defense Program activities 
are informally coordinated with the Department of Health and 
Human Services. Stewart Simonson and I meet on a regular basis 
with the National Institute of Allergy and Infectious Diseases 
with Dr. Fauci and the Centers for Disease Control and 
Prevention.
    DOD and the DHS are currently working on an interagency 
agreement regarding cooperation on medical countermeasure 
development. It is important to note that some of the medical 
countermeasures currently being developed through NIAID for the 
national stockpile have their technology bases and programs 
which initially began in the Department of Defense. Examples of 
this are the next generation anthrax vaccine and self-culture 
derived smallpox vaccine.
    A critical aspect of interagency coordination is DOD's 
support for Project BioShield. The first product that DOD may 
be able to transition to the Department of Health and Human 
Services under Project BioShield is a plasma-derived, 
bioscavenger for pre and post-exposure treatment of nerve agent 
exposure. The DOD has awarded an initial contract for a Phase I 
clinical trial at which time DHHS would be expected to assume 
advanced development through FDA licensure under the BioShield 
authority.
    The joint project manager for the Chemical and Biological 
Medical System is responsible for systems acquisition, 
production and medical countermeasures against chemical and 
biological agents, including the Joint Vaccine Acquisition 
Program. In February of this year, the Under Secretary of 
Defense for Acquisition Technology and Logistics provided you 
with a detailed update on the JVAP acquisition program.
    The Chemical and Biological Events Program budget provides 
a balanced investment strategy which includes the procurement 
of capabilities to protect U.S. forces in the near term, 
investment in advanced development to protect U.S. forces in 
the mid term and investment in the science and technology base 
to protect U.S. forces in the far term and beyond.
    As we look to the future, our main concern is a 
bioengineered threat to our men and women in uniform. Our main 
task continues to be to provide the best technology to the war 
fighter in the most expeditious and efficient manner possible. 
Therefore, my office will continue to focus on providing the 
technology necessary to counter the threats posed by chemical 
and biological agents, especially the biological agents.
    Thank you for the opportunity to address these issues and I 
will attempt to answer any questions and concerns the committee 
might have.
    [The prepared statement of Dr. Klein follows:]

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    Mr. Shays. Thank you, Dr. Klein.
    Dr. Fauci.

               STATEMENT OF DR. ANTHONY S. FAUCI

    Dr. Fauci. Thank you for giving me the opportunity to 
discuss with you this afternoon the NIH biomedical research 
effort in the development of countermeasures against three 
major threats, biological, mainly microbes and toxins; 
radiologic and nuclear countermeasures as well as chemical 
countermeasures.
    We began this endeavor over 3 years ago with the biological 
and the medical countermeasures including radiologic, nuclear 
and chemical based on the fundamental basic scientific approach 
that has been adapted at the NIH for decades in our research in 
other areas. This includes most recently an expansion of the 
research capacity, both intellectual capacity of individuals 
involved as well as physical structure and laboratories. All of 
these are directed at the development of countermeasures in the 
form of diagnostics, vaccines and therapeutics.
    The greatest success thus far has been in an area in which 
we have had decades of experience in confronting emerging and 
reemerging infectious diseases at our NIH programs. In the end 
of 2001 and early 2002, following the anthrax attacks, we 
developed a comprehensive, strategic plan and a research agenda 
for Category A as well as Category B and C agents. In addition, 
we have developed and published now for your perusal the 
progress reports for the Category A agents and most recently, 
we have included the progress reports for the Category B and C 
agents.
    I would like to spend just a moment or two summarizing some 
of these accomplishments that have occurred over the past 3 
years. First, in the arena of smallpox, you may recall right 
after the anthrax attack when we examined our stockpile, we had 
about 15,000-18,000 doses which with dilution brought us up to 
90,000. Now, with the techniques that were developed and Dr. 
Klein just mentioned, we have over 300 million doses of 
smallpox. In addition, we are working on clinical trials in the 
next generation, safer, modified vaccinia Ankara as well as 
antiviral drugs against smallpox.
    As was mentioned, the anthrax situation is based on 
research that is involved in the recombinant protective antigen 
which has now been contracted for the stockpile through Project 
BioShield. In addition, we are developing monoclonal and 
polyclonal antibodies. We have success with Ebola. The Ebola 
vaccine developed at NIH has proved 100 percent effective in 
monkeys in protecting them from a challenge. We have just 
completed a Phase I trial in humans showing it to be safe and 
immunogenic. Botulism toxin, we are accelerating the 
development of antibodies, particularly monoclonal antibodies 
and influenza, which is a Category C agent, we are now well 
into clinical trials for the H-5 N-1 pandemic flu threat that 
we now face in Asia. This work is built upon the decades of 
experience with emerging and a reemerging microbes.
    With regard to nuclear countermeasures, this is one that is 
not as mature in the sense of development of countermeasures 
from a new standpoint as has the microbes because of the fact 
this was fundamentally a cold war issue that was developed 
through the Department of Defense and over the last several 
years following the dissolution of the cold war threat, we have 
had to revitalize the program. We are doing that in 
collaboration with the Department of Defense.
    We have a strategic plan for radiologic and nuclear 
countermeasure development which will be available and was 
signed off just last night and will be available to you. It 
includes our intermediate as well as our long range goals. The 
low hanging fruit is to expand the licensure for material that 
is already in the strategic national stockpile as well as to 
develop centers of excellence.
    In addition, we are developing protectants as well as 
response agents and importantly a program to use adult stem 
cell reconstitution of bone marrow suppression following a 
radiologic attack. We are using the expertise that was 
developed in fighting cancer in which one gets exposed to 
radiation deliberately to kill cancer cells, there is the 
effect on the bone marrow which we are now using that expertise 
to try and develop reconstitution.
    The same can be said about chemical countermeasures. We 
have a strategic plan that is not as mature as the radio-
biological one. This will likely be available at the end of 
this calendar year and it is based on the same situation as I 
mentioned in looking at what we already have in the strategic 
stockpile and trying to expand the FDA-approved usage of that.
    We are doing this in very strong partnership with the U.S. 
Army Medical Research Institute of Chemical Defense. Again, we 
have immediate, intermediate and long term goals. The long term 
goal is to ultimately develop countermeasures that can be used 
both to detect as well as to counter the effects of tissue 
damage due to chemical weapons.
    Finally, on this last poster, I want to mention the 
coordination and the collaboration among the various agencies 
to which the chairman alluded. At the NIH, we coordinate 
through my institute by a Biodefense Research Coordinating 
Committee. That is within the NIH institutes as a whole. Much, 
if not all of the biological microbial is done through the 
Infectious Disease Institute but when you get into chemical and 
radiologic, we have a number of the other Institutes at the NIH 
and we coordinate that through our committee.
    The coordination within HHS as you will hear from Assistant 
Secretary Stewart Simonson takes place in his office at the 
Office of Public Health Emergency Preparedness and the more 
global Federal Government coordination among agencies including 
DHS, DHHS, DOD and others takes place through the Homeland 
Security Council, particularly through the Weapons of Mass 
Destruction Medical Countermeasures Subcommittee.
    I am finished with the oral statement. I would be happy to 
answer questions later.
    [The prepared statement of Dr. Fauci follows:]

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    Mr. Shays. Thank you.
    We have four doctors and an honorable. Mr. Secretary.

                 STATEMENT OF STEWART SIMONSON

    Mr. Simonson. Thank you.
    Good afternoon. I am Stewart Simonson, Assistant Secretary 
at HHS for Public Health Emergency Preparedness. I appreciate 
the opportunity to share with you information on the 
Department's progress on research development and acquisition 
programs for medical countermeasures and specifically 
implementation of the Project BioShield Act of 2004.
    HHS shares the subcommittee's desire for an effective and 
efficient interagency process to identify, prioritize and 
acquire medical countermeasures to address chemical, 
biological, radiological and nuclear threat agents. We also 
share the subcommittee's concern that this process needs to be 
linked to validated threats.
    The events of September and October 2001 made it very clear 
that terrorism is a serious threat to our Nation and to the 
world. The Bush administration and Congress responded 
forcefully to this threat by strengthening our medical and 
public health capacities to protect our citizens from these 
attacks. To encourage the development of new medical 
countermeasures against threat agents and to speed their 
delivery, President Bush in his 2003 State of the Union Address 
proposed, and Congress enacted, Project BioShield. The $5.6 
billion, 10 year, special reserve fund was created to assure 
developers of medical countermeasures that funds would be 
available for the Government to purchase critical products.
    Since enactment, my office has moved aggressively to fill 
immediate gaps in our countermeasures. A genuine sense of 
urgency informs all of our homeland security work at HHS but it 
is important to note that the successful development and 
manufacture of safe and effective countermeasures requires an 
investment of both money and time. No matter how hard we work 
or how much money we spend, some steps in the process cannot be 
rushed.
    There is a complex spectrum of efforts needed along the 
research and development pipeline to produce a usable medical 
product countermeasure. Defining specifications for a needed 
countermeasure often reveals few, if any, candidates in the 
pipeline. To date, we have been fortunate that some of our 
highest priority needs for medical countermeasures could be 
addressed using the available, advanced development products in 
the pipeline.
    However, research and early development efforts, even when 
robustly funded, often take years before a concept is mature 
enough for advanced development. It is only when a product has 
reached the advanced development stage that Project BioShield 
provides a meaningful incentive for manufacturers the product 
the rest of the way.
    In determining the requirements for and elaborating options 
on medical countermeasure acquisitions, the focal point for 
U.S. Government interagency efforts is the Weapons of Mass 
Destruction Countermeasures Subcommittee. HHS, along with 
representatives from the Department of Homeland Security and 
the Department of Defense, chair the WMD Subcommittee and 
stakeholders from throughout the Government are represented on 
its working groups.
    In setting priorities for medical countermeasure 
acquisitions under BioShield, the WMD Subcommittee considers a 
number of factors. The credibility and immediacy of the threat 
are driving factors and our informed by material threat 
assessments conducted by DHS. We also consider the current and 
projected availability of appropriate medical countermeasures 
as well as the target population for which the countermeasure 
would be used. In addition, logistical issues are considered 
such as the feasibility of deployment in public health 
emergencies, shelf life, storage and maintenance requirements.
    Project BioShield also requires a number of findings by the 
Secretaries of Homeland Security and HHS prior to an 
acquisition commencing. These findings include three 
determinations: first, that there is a material threat against 
the U.S. population sufficient to affect national security; 
second, that the medical countermeasures are necessary to 
protect the public health from the material threat; and third, 
that acquiring a specific quantity of a particular 
countermeasure, using the special reserve fund, is appropriate. 
These determinations are followed by a joint recommendation to 
the White House by the two Secretaries. If approved, Congress 
is notified and HHS executes the acquisition program.
    The process that I have outlined has been successfully 
implemented through contract award three times since the 
enactment of Project BioShield less than a year ago. HHS has 
completed contract awards for acquisitions of next generation 
recombinant protective antigen anthrax vaccine, the current 
generation licensed anthrax vaccine, and pediatric formulation 
of potassium iodide. Additionally, the acquisition process is 
in the final execution phases for several other needed medical 
countermeasures including anthrax therapeutics, botulinum 
antitoxin and next generation smallpox vaccine.
    This robust interagency process mines the expertise in the 
scientific and intelligence communities to define requirements 
for medical countermeasures and enables policymakers to 
identify and evaluate acquisition options to address immediate 
and future needs.
    In closing, let me say that HHS has a clear mandate from 
President Bush and Congress to lead the charge in medical 
countermeasure development. We have already made important 
strides to address the public health needs of the Nation but 
more needs to be done. I look forward to working with you and 
the subcommittee to address the challenges of CBRM preparedness 
and its importance to public health.
    I look forward to answering your questions.
    [The prepared statement of Mr. Simonson follows:]

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    Mr. Marchant [presiding]. Thank you, Mr. Secretary.
    The chairman had to attend a Rules Committee meeting and I 
will be chairing for a while.
    At this time, I will recognize Dr. Vitko.

                  STATEMENT OF JOHN VITKO, JR.

    Dr. Vitko. Good afternoon. Thank you very much for inviting 
me here to speak to you today on DHS's role in this process.
    We at DHS do not develop medical countermeasures but play a 
critical role in informing and guiding the prioritization of 
those medical countermeasures. I would like to cover four key 
steps in that process today: threat assessments and 
determinations conducted specifically to guide Project 
BioShield, a broader set of risk assessments, a strategy for 
addressing engineered threats in partnership with and led by 
the Department of Health and Human Services and scientific 
studies to better inform these assessments.
    As you know, the Project BioShield Act of 2004 charges the 
Secretary of Homeland Security with the responsibility to 
determine which biological, chemical, radiological or nuclear 
threats constitute a material threat to our Nation's security. 
To fulfill this responsibility, the Department of Homeland 
Security Science and Technology Directorate, in partnership 
with our Information Analysis and Infrastructure Protection 
Directorate, has been conducting formal threat assessments on 
the agents of greatest concern to establish plausible, high 
consequence scenarios. These assessments are then used by the 
Secretary of DHS in determining whether to issue material 
threat determination and by HHS and the Interagency Weapons of 
Mass Destruction Medical Countermeasures Subcommittee in 
determining the need for and the requirements of any new 
medical countermeasures.
    To date, the Secretary of the Department of Homeland 
Security has issued material threat determinations for four 
agents: anthrax, smallpox, botulinum toxin and radiological 
nuclear devices. Additional assessments are underway for 
plague, tularemia, viral hemorrhagic fevers and chemical nerve 
agents and will be completed this fiscal year.
    DHS has an even broader responsibility in the President's 
strategy for biodefense for the 21st century. In this strategy, 
we are charged with conducting formal, periodic risk 
assessments in coordination with other departments and agencies 
to guide the prioritization of the Nation's ongoing biodefense 
activities not just medical but also including such areas as 
surveillance and detection, decontamination and restoration and 
forensics.
    These risk assessments factor in technical feasibility of a 
broad range of biological threats. The vulnerability of 
different portions of our society to those threats and the 
resulting consequence of any such attacks. The first such 
formal risk assessment is due in the winter of 2006 and will 
address all Category A and B agents from the Centers of Disease 
Control Prevention and Threat List, some Category C agents and 
a number of potential engineered threats.
    Recognizing that the rapid advances in biotechnology demand 
that we also consider the possibility of engineered threats, we 
have partnered with HHS and others in formulating and 
implementing a strategy for anticipating and responding to such 
threats. Together, we have developed an informed estimate of 
the types of emerging threats that might be within the ability 
of a terrorist organization to develop over the near, mid and 
longer terms and have laid out a strategy for addressing them. 
The strategy emphasizes ongoing technology watch and risk 
assessments, rapid surveillance and detection capabilities for 
engineered threats and expanded range of medical 
countermeasures and an integrated concept of operations for 
identifying and responding to emerging or engineered threats.
    The threat or risk assessments described above are 
performed with the best available information. However, there 
are large uncertainties, sometimes factors of 10 to 100 in some 
of the key parameters and hence in the associated risks. In one 
case, it can be the minimum amount of agent needed to infect a 
person and in another case, it can be the time that such an 
agent remains viable, that is capable of causing an infection 
in the air, food or water; and in a third, it can be the effect 
of food processing or water treatment of the agent's viability.
    The Department of Homeland Security has established a 
National Biodefense Analysis and Countermeasure Center to 
conduct laboratory experiments needed to close these knowledge 
gaps. To support this and new facilities being designed and 
constructed on the National Interagency Biodefense Campus at 
Fort Detrick, MD. Pending completion of this facility in fiscal 
year 2008, we have established an interim capability with other 
Government and private laboratories to begin this vital work.
    In summary, the Department of Homeland Security Science and 
Technology Directorate, in coordination with its Federal 
partners is conducting a threat and risk assessment critical to 
prioritizing the Nation's near and long term medical 
countermeasure development.
    This concludes my prepared statement and I would be 
delighted to answer questions at the appropriate time.
    [The prepared statement of Dr. Vitko follows:]

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    Mr. Marchant. Thank you, Dr. Vitko.
    I would like to acknowledge that we have been joined at 
this time by Representative Turner from Ohio, Representative 
Higgins from New York, and Mr. Van Hollen from Maryland.
    At this time, I will recognize Dr. Saldarini.

               STATEMENT DR. RONALD J. SALDARINI

    Dr. Saldarini. Good afternoon.
    My name is Ronald Saldarini. I am currently a scientific 
and business consultant to the vaccine and pharmaceutical 
industry. From 1986 to 1999, I was president of the global 
vaccine business of American Cyanamid and American Home 
Products. I am here today as a member of the Committee on 
Accelerating the Research, Development and Acquisition of 
Medical Countermeasures Against Biological Warfare Agents which 
was convened by the Institute of Medicine and the National 
Research Council. In my remarks this afternoon, I would like to 
draw attention to the committee's central findings and 
recommendations.
    First, let me note that the committee was convened in 
response to a congressional mandate and was charged with 
examining the DOD acquisition process for medical 
countermeasures to protect against biological warfare agents. 
We were asked to identify factors that were impeding the DOD 
acquisition process and to recommend strategies for 
accelerating the process. Our review was conducted throughout 
2003.
    The scope of the committee's assessment covered early 
research and development through Food and Drug Administration 
approval. We did not examine production and procurement 
activities, the extent or nature of any biological warfare 
threat or to assess the value to DOD of developing medical 
countermeasures compared with pursuing other obligations. We 
worked from the premise that biological weapons pose a threat 
to the health of military personnel and that additional FDA 
approved countermeasures are needed.
    Under the best of circumstances, developing new vaccines 
and drugs is technically and financially challenging. 
Furthermore, developing biodefense products poses additional 
scientific, regulatory and ethical challenges because it is not 
always possible to test efficiency in humans. In our review of 
DOD's work on medical countermeasures, we have found 
fragmentation of responsibility and authority, changing 
strategies that had resulted in lost time and expertise, and a 
lack of financial commitment adequate to meet the requirements 
of the program's goals.
    The work was part of a program covering both medical and 
non-medical countermeasures against both chemical and 
biological warfare threats. Responsibility for centralized 
oversight of the program, for program planning and budgeting 
and for operational tasks was distributed across several 
different chains of command.
    We viewed the state of the program as an indication that 
DOD leaders lacked an adequate grasp of the commitment, time, 
scientific expertise, organizational structure and financial 
resources required for success in developing vaccines and 
drugs. We also saw it as an indication that DOD had not given 
the task sufficient priority to produce the desired result.
    In response, we recommended action in several areas. We 
first recommended making the DOD program a truly high priority 
which would include organizational, scientifically 
knowledgeable leadership, scientific infrastructure improvement 
and necessary funding to achieve program goals. We recommended 
accomplishing these changes through the creation in DOD of the 
Medical Biodefense Agency which would be a new agency with 
comprehensive responsibility for the research and development 
program for medical countermeasures against biological warfare 
agents.
    We proposed that this agency consolidate the functions and 
resources of several existing activities to overcome the 
competing lines of authority and multiple reporting 
relationships that the committee had found. In the committee's 
view, it was essential that the head of this agency have direct 
authority over budgeting and over the full range of agencies 
management and operational activities including managing 
candidate products from the science and technology stage into 
and through the DOD acquisition system.
    The committee also recommended giving the Medical 
Biodefense Agency responsibility for developing medical 
countermeasures against infectious diseases. We emphasized the 
agency should have a highly qualified director with strong 
experience in vaccine and drug research, development and 
manufacturing. In addition to strengthening the intramural 
research and development program, the committee encouraged 
building a strong extramural program to bring the expertise and 
creativity of industry and the academic community to the task.
    External oversight and accountability for performance were 
also seen as necessary. The committee recommended an annual, 
independent, external review by a standing group of experts 
from academia and the biotechnology and pharmaceutical 
industries. If DOD were not taking the steps necessary to 
establish an effective program and make appropriate progress, 
some or all of the responsibility should as a last resort be 
transferred from DOD to another appropriate Federal agency.
    Finally, the committee also pointed out the need for DOD to 
work with other Federal agencies and the broader scientific 
community to address other challenges which would include 
establishing effective collaborations with academia and 
industry and reducing administrative and legal barriers to such 
collaborations, meeting the special regulatory challenges in 
testing biodefense projects, overcoming current and potential 
bottlenecks from insufficient access to essential research 
resources, including specialized laboratory facilities, 
laboratory animals and ensuring the availability of a well 
trained work force.
    For many years, DOD researchers were among the very few 
pursuing the development of medical countermeasures against 
biowarfare agents. Despite the recent upsurge in interest, 
effort and funding aimed at protecting the civilian population 
against bioterrorism, the committee saw a need for a continuing 
and effective DOD program to ensure that unique military needs 
for battlefield protection receives sufficient attention.
    Thanks for the opportunity to testify and I am pleased to 
answer any questions you have.
    [The prepared statement of Dr. Saldarini follows:]

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    Mr. Marchant. Thank you, Doctor.
    Mr. Platts is with us at this point and we will now begin 
questions. Mr. Turner and Mr. Platts, do you seek recognition 
for questions? The Chair recognizes Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    I want to thank Chairman Shays for holding this hearing and 
continuing his efforts in ensuring that our country is prepared 
in the area of the terrorist threats that we are facing both in 
the area of first responders and in the areas of our Federal 
agencies that have responsibilities for coordinating their 
efforts as we plan and also restructure our assets to address 
these threats.
    Dr. Klein, in looking at your testimony and in light of the 
chairman's efforts for us to get an understanding of past and 
current approaches, how we are being flexible in transforming 
to meet the risk, at the top of page 3 I see your comparison of 
the past and current approaches and I get a little confused. 
The first sentence says, ``The current CBRN defense strategy, 
the current strategy, emphasizes a capabilities-based approach 
rather than the previous approach which provided greater 
emphasis on prioritizing threat agents and targeting budgetary 
resources based on validated intelligence.'' When you talk 
about the previous approach, you say the previous approach had 
a greater emphasis on prioritizing threat agents and targeting 
budgetary resources based on validated intelligence. If we are 
going away from that, it sounds to me like we are preparing for 
things that we know aren't likely to happen and diluting 
resources from things we know may happen but I am certain that 
is not what you mean.
    Going to the next one, it says ``Capabilities-based 
planning focuses more on how adversaries may challenge us than 
on whom these adversaries might be.'' You go on to emphasize 
the reduction of the dependence on intelligence data. Could you 
give us your thoughts separate from the testimony that is 
written here on what that contrast means?
    Dr. Klein. That is certainly a very good question. If you 
look at the way the Department of Defense is trying to 
transform, we are trying to go through a capabilities based 
approach as opposed to the specific threats. If you look at 
what we had done in the past, we looked at specific things like 
anthrax, botulism, what is happening in today's environment is 
we are now seeing a lot of engineered threats, genetic 
activities and things which we cannot pursue, for example, 
vaccines against everything the terrorists might throw at us.
    What we are trying to look at is a more broadbased generic 
approach so rather than saying, for example, that country x is 
developing a specific toxin be it chemical or biological, we 
are trying to have a more broadbased approach so that we are 
not having to rely specifically on intelligence. Hopefully we 
will be able to respond in a more quick and broad way. 
Certainly the issues facing our Nation, where civilians are 
being targeted as well, with our advances in genetic 
engineering, it is very difficult for us to come up with 
specific antidotes, pills, vaccines for everything the 
terrorists might throw at us. So therefore, we are going to a 
more broadbased approach.
    We still need actionable intelligence on how to perform but 
we are trying to do more on capabilities rather than a specific 
threat.
    Mr. Marchant. Mr. Platts, do you seek recognition?
    Mr. Platts. I apologize for my late arrival and do 
appreciate the written testimonies. There are a couple 
questions I would like to address.
    Dr. Klein, I think in your testimony you talked about the 
Joint Vaccine Acquisition Program. I am just trying to get an 
understanding of the $322 million committed in 1997 and where 
we are today. Am I understanding correctly that we are talking 
about fiscal years 2012, 2020 is when we expect to see results 
from this investment we are making?
    Dr. Klein. We hope we will see investments earlier. As you 
probably realize, getting a vaccine licensed is challenging at 
best. It takes a long time. Certainly HHS and DHS as well as 
Dr. Fauci have realized we have these challenges.
    We are doing now with the animal efficacy rule will let us 
speed up processes. DOD only uses licensed vaccines, so we have 
a requirement to go through a long and cumbersome process, but 
we certainly hope we will have these vaccines available prior 
to 2020. What I think is really changing our ability to license 
vaccines will be the animal rule and our understanding of 
genetic characteristics such as a better understanding of the 
DNA.
    Mr. Platts. From a funding standpoint, what are the current 
projections on the cost, the $322 million we have already 
invested?
    Dr. Klein. That is correct. During the building of our 5 
year budget from 2006 to 2011, we added an additional $2 
billion for our chemical-biological defense program. Probably 
$80 million of that will be directed toward vaccine development 
so that we can protect our men and women in uniform. Our 
mission is somewhat easier than the civilian side where they 
have a very large age group to be under consideration from 
infants to the elderly. In our case, we have men and women of 
very healthy, predictable ages. So we are optimistic that some 
of our applications will come out earlier than those that will 
be more broadbased for the entire population but we are 
investing a considerable amount of money for vaccine 
development.
    Mr. Platts. The $322 million investment is not a lost 
investment, that is laying a foundation?
    Dr. Klein. Yes, it is laying a foundation. It is absolutely 
not a lost investment. We had clinical trials, we had product 
development. So it was not money wasted by any means.
    Mr. Platts. I chair the Subcommittee on Financial 
Accountability so I am always looking at what we are investing, 
how we are investing and bottom line, what return are the 
taxpayers getting, so I understand this is a very complex 
process and it is multiyear, but I want to make sure that we 
are moving in the right direction.
    Dr. Fauci, on the actual investments or the research being 
done, how are we not competing with the private sector for the 
free market reasons for pursuing these projects with tax 
dollars? How are we guarding against that?
    Dr. Fauci. Actually, we don't want to compete, we want to 
totally synergize with them. We cannot make countermeasures 
ourselves. We are not manufacturers of countermeasures. We do 
the basic research and the clinical and applied research and 
partner with either biotech or pharmaceutical companies to 
ultimately develop a countermeasure.
    In fact, that is the whole purpose of the BioShield Project 
where the HHS in the form of NIH predominantly does the 
research that does the concept development, does the early 
Phase I, II and sometimes into more advanced development and 
then the companies partner with us to actually manufacture it 
and make the commitment which under the circumstances that we 
have now are being aided by the set aside money, the $5.6 
billion in BioShield, to be able to then make a procurement of 
that. It really is a partnership. It is not at all a 
competition.
    Mr. Platts. Thank you.
    Mr. Marchant. Dr. Klein, in your testimony, you talk about 
the DOD Clinical and Biological Defense Program activities and 
state they are informally coordinated with the Department of 
Health and Human Services. Can you talk to us about the 
informal agreement and how it works?
    Dr. Klein. One of the things we do is we have a lot of 
interaction at the working level where the staff of the 
Department of Defense meets with Stewart Simonson's staff. We 
have a lot of technical exchanges, a lot of regular meetings 
scheduled and in addition, Mr. Simonson and I meet periodically 
to prioritize to make sure we are spending the taxpayers' 
dollars in the most effective way, that we are not duplicating.
    The current agreement we are trying to work between the two 
departments is where DOD's role and responsibility will be 
clearly defined on some of the screening and up to Phase 1, 
then we will transfer that work through the Department of HHS 
where they can take it through more of the clinical trials 
where they have greater expertise than DOD. So we are trying to 
utilize the expertise of both departments to the benefit of the 
taxpayer.
    Mr. Marchant. What steps has DOD taken to respond to the 
Institute of Medicine?
    Dr. Klein. We have taken several steps. I was confirmed in 
2001 about the time a lot of activities were increasing, 
obviously the terrorist attack and subsequently the anthrax 
attacks. We have reorganized the Chemical and Biological 
Defense Program to have a Joint Requirements Office through the 
joint staff where they define our requirements; we have 
organized our science and technology development through the 
Defense Threat Reduction Agency; we have increased the 
technical competency of our staff where we have several 
professional medical staffs onboard; the Deputy for the 
Chemical and Biological Defense Program is a medical doctor, a 
former Assistant Surgeon General of the Air Force. We have 
taken a lot of the recommendations of the Institute of 
Medicine.
    Since then BioShield has been created in addition to the 
Department of Homeland Security. So there is a lot of 
activities created since the Institute of Medicine study.
    Mr. Marchant. Can you explain why the JVAP program should 
continue to receive funding in its present form?
    Dr. Klein. The JVAP Program is one which like all programs, 
it has successes, it has things we would like to occur at a 
more rapid rate but the program is responsible for the vaccine 
procurement as well as a lot of the science and technological 
development. Again we are focusing a lot of attention on that 
program. The Army is the executive agent for this activity. We 
have a joint program activity through the Army to coordinate 
those activities. So we are focusing our attention to hopefully 
increase the end result and that is to protect our men and 
women in uniform.
    Mr. Marchant. Secretary Simonson, you say in your testimony 
that HHS has defined a three stage development and acquisition 
strategy with open competition awards at each stage. How are 
you reaching out to companies who have developed or are in the 
process of developing countermeasures?
    Mr. Simonson. That is an important part of the operation of 
BioShield and our success I think will be contingent upon how 
well we are out there probing the market to bring firms in to 
propose on our various projects. One we do it is with request 
for information where we will actually send out a circular 
seeking sources to find out what is out there, what companies 
are making product or investing in products that might be 
useful to us. It is a way of doing market research and also 
assessing the state of science.
    We are also working very aggressively through the WMD 
Subcommittee to understand what is going on in other agencies. 
Dr. Klein mentioned the informal work that he and I are doing 
to bring our two agencies together. There is also a more formal 
process, this Weapons of Mass Destruction Subcommittee where 
you have all of the stakeholders in the Federal research 
community. That is a place where we can exchange information on 
who is funding what and try to elicit support for or interest 
in the projects we are trying to develop.
    I think those are two ways that we do it. We are also still 
learning. There are other ways of reaching out to industry, 
especially the smaller, biotech companies to keep them 
interested in BioShield.
    Mr. Marchant. Do you feel there is sufficient interest out 
in the biotech industry to try to address these issues? Do you 
think there is sufficient interest in that industry to 
stimulate the kind of research we probably need?
    Mr. Simonson. I think there is sufficient interest. I think 
the interest is more in the smaller biotech firms than it is in 
big pharma simply because of the tradeoffs that have to be 
made. Dr. Fauci talks about the relative tradeoff of 
cholesterol lowering agent as opposed to a biomedical 
countermeasure. There is no comparison. The whole vaccine 
market worldwide is less than one cholesterol lowering agent, 
so it is not as appealing to the big manufacturers so I think 
our future is with the small to medium sized biotech firms.
    There is a lot of work to bring this along but once you do, 
you are building an infrastructure, building something within 
the United States that can be useful to us in other ways. It is 
a very labor intensive and collaborative process between us and 
these biotechs. The ultimate result is one that makes the 
industrial base better in the United States, we think. We saw 
this with the company that produced the second generation 
smallpox vaccine.
    Mr. Marchant. Dr. Saldarini, your committee concluded 
biodefense efforts of DOD were poorly organized to develop and 
license vaccines, therapeutic drugs, and antitoxins to protect 
members of the armed forces against biological warfare agents. 
What can we expect from the JVAP Program it continues in its 
current form without implementing your committee's 
recommendations?
    Dr. Saldarini. First, while JVAP was the topic of 
conversation during the committee's deliberation, and while it 
was clear there were some issues with JVAP in terms of their 
activities for acquisition, it was the committee's conclusion 
that JVAP was not the sole source of the problem, in fact was a 
part of a larger problem where it was unclear who was in charge 
of the program and assessing priorities and how the entire 
thing was organized to get something done.
    If you look at the charts that we looked at as we tried to 
evaluate the different groups involved, it became very, very 
difficult to understand the distinction between each of these 
groups. It was an alphabet soup of acronyms for an outsider who 
doesn't live in the military or the DOD on a daily basis. It 
was very difficult to assess who was in charge of what and how 
things actually got done and how priorities were moved through 
the systems.
    So where JVAP did have some problems, JVAP was not the sole 
source of the problem. From our perspective, it was the overall 
organization with an inadequate priority infrastructure funding 
resource base that created the problem.
    This committee finished its activities in 2003, so it has 
been 18 months since we last, or certainly I looked at it and I 
don't believe any other of the former committee members have 
looked at it, so I don't know really what has transpired. There 
were changes. Apparently Dr. Klein mentioned something about 
changes with JVAP but I don't know what they are and I don't 
think any of our committee members do.
    We reported what we found at the time. Perhaps things have 
been streamlined but it is still unclear to me whether or not 
there is adequate authority available to make things happen in 
a committee fashion.
    Mr. Marchant. Thank you.
    The committee counsel would like to ask some questions.
    Mr. Halloran. First, Dr. Fauci, NIAID awarded a grant to 
the Dynport Vaccine Co. which is the prime integrator or 
contractor for the Joint Vaccine Acquisition Program. Could you 
tell us something about that grant and why it looked on the 
face to be a duplication of paying for an activity that JVAP is 
already being paid for.
    Dr. Fauci. It may appear that way but it actually is 
complementary. The grant that we are talking about was actually 
three grants and a contract to Dynport and the total was I 
think about $29 million. Two grants were to support development 
of a vaccine candidate for botulism toxin that complemented the 
activity that was going on in the Department of Defense.
    In addition, there was a grant for Phase II trial of the 
Venezuelan Equine Encephalitis. Again, although the DOD was 
also working on that, it was complementary and one was to 
support research on a vaccine candidate for tularemia which the 
DOD had responsibility for before but then handed that over to 
us and we are now working fundamentally on the tularemia.
    So if you look at the organisms and match them, you say, 
wait a minute, the DOD is really doing that but actually in one 
of them, they are no longer doing the tularemia and the other 
two are complementary working on aspects of it that the DOD is 
not.
    Mr. Halloran. Complementary in the sense of adding the 
population to the testing profile that Dr. Klein mentioned that 
the DOD doesn't have to cover?
    Dr. Fauci. There are two things, different scientific 
aspects but importantly geared toward and Dr. Klein mentioned 
this in his oral testimony, that they are fundamentally looking 
at forced protection and the warfighting individuals where we 
are looking at everything from children up through and 
including the elderly. It is much more for the civilian 
population, so a lot of the complementariness is due to the 
broader scope of people that we are responsible for in the 
civilian population.
    Dr. Klein. I think this is an example of the two 
departments working together very well where we complement to 
the benefit of the taxpayer rather than duplicate. When you 
look at just the headlines and don't dig into the technical 
aspects of it, one can see on paper it might have been 
duplication until you really look at the details.
    Mr. Halloran. Why did DOD hand over the tularemia work? Is 
that not a force protection threat?
    Dr. Klein. We felt that NIAID had better technical 
expertise than the Department of Defense. We took it up to a 
certain point and felt their technical expertise was better 
than ours.
    Mr. Halloran. Let us talk about botulism, where we are. The 
next panel has some testimony about some kind of halting and 
stumbling attempts to get botulism antitoxin, particularly 
outside the A and B serotypes. Where are we in that, both in 
terms of what we have in hand should an attack take place in 
the United States now or in the military theater and what is 
coming down the pipeline and when?
    Dr. Fauci. Botulism is a complex issue and is somewhat 
problematic for a number of reasons that I will briefly 
describe. There are seven, it is a heptavalent toxin and we are 
in the process now of making monoclonal antibodies which are 
antibodies against a particular component of a botulism toxin. 
The most common that are used are A, B and E but you really 
have to have sort of a cocktail of all of them.
    The difficulty that we face with transitioning from the 
horse sera botulism antitoxin which has been the standard that 
has been used both in the unusual occurrence of situations of 
natural infection with botulism in this country as well as what 
the DOD has been working on for years as a countermeasure for 
force protection. The transition from the polyclonal sera and 
plasma from the horses is taking a lot of time for the simple 
reason that relates to one of the things we have been saying in 
one way or another among all of us, the difficulty in engaging 
researchers and industry on the outside to get involved.
    We have one very good researcher that is superb at 
developing the initial monoclonal antibodies against the 
individual subtypes of botulism. The difficulty is that this is 
one group working alone so it takes about 6 months per subtype 
and then you hand it over to the more industrial related ones 
that go on do the actual manufacture and the clinical trial.
    So if you stagger them at 6 month periods, by the time we 
get a robust heptavalent polyclonal cocktail, it is going to 
take several years. It would be wonderful if we had 20 or 30 
investigators on it but there just is not the interest that we 
would like to see for the reasons that people want to work on 
other things. That gets back to the principle of trying to 
incentivize not only individual investigators but also 
companies to get involved.
    Right now in an emergency we would have to rely on the 
polyclonal serum that we have had and are making more of but 
hopefully we will transition over to the monoclonal antibodies.
    Dr. Klein. One of the areas and what I am hoping is as we 
get a better understanding of our DNA structure, that the kinds 
of research activities that individuals are currently 
performing will be enhanced by genetic splicing, DNA splicing 
and things of that nature. So we are hopeful that we will be 
able to get products out quicker with our understanding of the 
basic fundamental responses under our DNA.
    Dr. Saldarini. I can talk about the current generation 
botulinum program. HHS picked up after September 11th a DOD 
program that began during the first Gulf war to hyperbenize 
horses against all seven serotypes and then to ferrice them and 
collect this hyperimmune plasma but it was never finished. They 
just had fairly substantial amount of hyperimmune plasma in 
storage. It was transferred to us I think at the end of 2002.
    HHS undertook to have that material processed. This was a 
process that hasn't been done in an awful long time, so the 
firm we engaged to do it had to spend a lot of time moving 
deliberately because of the risk of losing material if they 
made a mistake. In any event, that work is done. They finished 
processing the plasma. We had sort of mixed results on the 
yield because of the age of the plasma and so forth. I would be 
happy to come to your office give you more detail on exactly 
how much we have. We don't talk about it openly.
    We also have a program now where a whole new population of 
horses is being hyperimmunized against all seven serotypes. 
This is an example of where things can't be rushed beyond what 
science will allow. The horses have been immunized and then 
challenged with botulinum but it takes a period of time to get 
the titer up so you can actually begin to ferrice them.
    We expect some time in the fall that we will have enough 
hyperimmune plasma that we can begin processing the new 
material. We have an objective, an ultimate objective of 
100,000 treatment courses of heptavalent antitoxin but it is a 
big operation, 200 horses over a few farms and it is also I 
have learned as much an art as it is a science.
    The current botulinum toxoid or vaccine is no longer 
licensed, it is in IND status and there is a cohort within the 
research community and at the Defense Department that has a 
need for botulinum vaccine and so we are looking at what 
options are available there.
    Dr. Vitko. It is an interesting term because I use 
capabilities with a slightly different meaning. Right now I 
believe that it still makes a lot of sense to look agent by 
agent in terms of the extent of the threat that they pose. So 
we look at the feasibility of a terrorist organization 
engineering that threat, producing that agent, disseminating it 
and look at the consequences associated with it and we do make 
use of intelligence information both on interest by known 
organizations, skills levels associated with those 
organizations to give some assessment of what could be done, 
but then we really do take a look at the scientific basis for 
producing that agent and disseminating it, irrespective of the 
threat group. We believe at this stage that is the best way of 
assessing what constitutes a material threat to this country. 
Material threat determination says if an organization can 
produce it, is it one. As you heard, we postulated and 
formulated working with HHS in an interagency forum a timeline 
for when we think certain engineered threats could come on and 
the general characteristics of those. We have developed a 
strategy for dealing with that as well as a hedge strategy in 
case our projections are off.
    I think in that sense it will be a while until we get to 
the goal where we can treat broad classes of agents as a class 
and until we have, as desirable as it is, sort of broadbased 
either vaccines or antibiotics for dealing with those. That 
doesn't take away from that being a desirable R&D goal but for 
near term strategy, I think it does have to focus on which 
agents pose the greatest risk in the current scenarios.
    Mr. Halloran. Thank you.
    Mr. Marchant. The Chair acknowledges that Mr. Duncan from 
Tennessee has joined us. Mr. Duncan, do you have any questions?
    Mr. Duncan. Thank you and since I just got here, I won't 
ask any questions but I will say this. I am disturbed about 
this statement or Chairman Shays' that says ``A 2004 study by 
the Institute of Medicine found that the Department of Defense 
Biodefense Program fragmented and often prey to competing 
priorities. Launched in 1997 with $322 million, the JVAP has 
spent that much and more. Yet lists of JVAP accomplishments 
provided to the subcommittee included just one recently 
licensed therapeutic, no completed vaccines and two target 
vaccine programs terminated after significant expenditures.''
    I notice there is testimony from one of the witnesses on 
the next panel that says ``This procurement process which 
formally began on April 1, 2004 and has yet to be completed 14 
months later is simply too long and too burdensome to sustain 
continued interest in participating in BioShield by companies 
such as Human Genome Sciences whose principal focus is not the 
Federal sector.''
    I serve on three different committees and several different 
subcommittees and I read articles and columns all the time 
about what all these other committees and subcommittees do. It 
seems that every day we see examples of unbelievable waste and 
inefficiency here at the Federal level. It seems if we want 
something to cost 10 or 15 times more than it should and 10 or 
15 times more than it would with fewer results than if the 
private sector did it or if State and local governments did it, 
just turn it over to the Federal Government. It gets pretty 
tiresome to hear this out of every department and agency.
    Everybody today, because we have a patriotic fervor going 
on wants to give the Department of Defense everything they ask 
for and more but the waste and inefficiency, we had a hearing 
in this committee last week which said the Department of 
Defense has blown $466 million in its ordinary procurement 
processes. We just gloss over things like that because I guess 
figures in the billions and $466 million are too big to 
comprehend but it gets pretty sad after a while.
    Thank you, Mr. Chairman.
    Mr. Marchant. Thank you, Mr. Duncan.
    I thank the panel today for its participation and we will 
recognize the next panel. Our next panel will be: Dr. Michael 
G. Hanna, Jr., Chief Scientific Officer, Intracel and Dr. James 
H. Davis, executive vice president and general counsel, Human 
Genome Sciences, Inc.
    [Witnesses sworn.]
    Mr. Marchant. At this time, the Chair will recognize Dr. 
Hanna for his testimony.

   STATEMENTS OF DR. MICHAEL G. HANNA, JR., CHIEF SCIENTIFIC 
   OFFICER, INTRACEL; AND DR. JAMES H. DAVIS, EXECUTIVE VICE 
   PRESIDENT AND GENERAL COUNSEL, HUMAN GENOME SCIENCES, INC.

             STATEMENT OF DR. MICHAEL G. HANNA, JR.

    Dr. Hanna. First of all, let me say how grateful I am for 
having the opportunity to address this congressional committee. 
As you, I am also concerned that such a committee meeting on 
the Elusive Antidotes of CBRN Countermeasures must be held in 
June 2005.
    I would like to tell you about a successful development of 
a unique therapy for botulinum toxin exposure. This story 
consists of scientific success and extreme frustration. There 
are seven serotypes of botulinum toxin. They have been 
identified as the most dangerous biological substances and the 
most likely biological weapons of mass destruction.
    The success is that my company, Intracel, through a 
Department of Defense contract, referred to earlier by one of 
you, between 1991 and 1996 was successfully able to develop a 
heptavalent equine antibody product that was efficacious in 
combating the seven serotypes of botulinum toxin, was safe in 
humans and was FDA-approved for emergency use. We made 5,000 
therapeutic doses before the project was terminated by the 
Joint Program Office of the Department of Defense in 1996. It 
was terminated at this point because we had proof of principle 
and a botulinum crisis was improbable. Since September 11th, 
however, the improbable became probable.
    Today, Federal officials fear the world is vulnerable to 
such an attack and we are ill prepared if one were to occur. In 
fact, Tommy Thompson in his exit speech to HHS declared that he 
was surprised that such an attack had not already occurred, 
which also surprised me that he would say that. Dr. Anthony 
Fauci of NIAID was quoted that this is one of the Federal 
Government's top bioterrorism interests and ``we are marshaling 
all available resources.'' This statement was made in 2002; yet 
as far as I know, as of last year, we still had only the 
residual several thousand therapeutic doses left over from 
Intracel's previous effort. Today there was some discussion 
where they were not prepared to discuss what they have today 
generated from the new contract and I can tell you they have 
monoclonal product only not heptavalent product.
    I was at a meeting with the Department of Defense, the 
Army, when one of them mentioned that they had monoclonals to A 
and B and Congressman Dr. Roscoe Bartlett said, let us not let 
the terrorists know that because then all they have to worry 
about is C through G.
    This is my frustration. With our scientific success of 
overcoming the hurdles to produce such an important therapeutic 
product, we have not been successful in fulfilling our destiny 
of producing the hundreds of thousands of doses necessary to 
protect our military and civilian populations at risk. In Los 
Angeles, they had a simulated botulism attack which was very 
successfully carried out. They calculated they would have 
needed 600,000 doses to protect the population at risk. This 
was months ago. We are no where close to having that number of 
therapeutic doses.
    The NIH used considerable resources to fund grants to make 
recombinant vaccines for protection of botulinum infection and 
to develop drugs which would interfere with the enzymatic 
activity of the organism. These efforts however worthwhile are 
problematic 10 year endeavors.
    Today, Intracel holds the intellectual property, over 300 
standard operating procedures and all the necessary equipment 
to produce the proven heptavalent equine therapeutic product 
and was willing and capable of generating through private funds 
to develop a subsidiary that would build a validated 
manufacturing facility and produce 50,000 therapeutic doses in 
2 years. The yield would be more than 100,000 doses per year 
thereafter. We made this proposal in 2002.
    In addition, using our own moneys, Intracel offered to 
complete the research program and begin the next generation 
product using safer and more effective human monoclonal 
antibodies. We happen to be the only company that has ever made 
a licensed human monoclonal antibody. This second generation 
product could be prophylactically used and be safe for multiple 
injections for better protection of the troops after an 
exposure.
    Clearly, we thought we were the poster child of BioShield. 
However, in spite of who we contacted and how hard we tried, we 
could not get the Government to give us a written commitment to 
purchase the product based on our success in meeting the 
specifications that we had established for the DOD in 1997. We 
talked to everybody and anybody and we had Congressman Shays 
and Congressman Bartlett with us at many of the meetings.
    It seems that the Government agencies are not really 
marshaling efforts to deal with this problem. The agencies have 
relegated down to the ranks of the functionaries and contract 
and grants sections and if they have the urgency that this 
issue requires, it has not overcome the status quo.
    I would like to know what we would have done last year, 
this year or next year if such a botulinum toxic weapon was 
used in the United States in the real sense, not in a simulated 
sense as we did in Los Angeles a few months ago. Clearly the 
BioShield concept with all of its good intentions has not 
gained the strength to overcome the status quo.
    I would like to repeat, Intracel was not asking the 
Government to pay for the production of this important 
component of our medical armament for biodefense. Intracel was 
asking the Government to give us a commitment to buy the 
product if we met specifications already paid for by the 
Department of Defense. That probably was our mistake in not 
asking for money.
    To rapidly generate required antidotes and therapies for 
weapons of mass destruction requires a paradigm of built-in 
redundancies such as those employed in successful NASA goals 
and accomplishments after the Presidential mandate by President 
Kennedy. I would have thought that BioShield provided the 
capability to build in redundancies but it appears to me from 
people I have talked to, BioShield does not impart this kind of 
legislation.
    Thus, I recommend to this subcommittee that the BioShield 
legislation should be rewritten so that it funds multiple 
groups and creates competition of several companies up to Phase 
1 trials, then let the survivor of the most competent prevail. 
With that type of competitions, you would have redundancies to 
better guarantee success and you can end up with the stockpiles 
that will save lives if such an emergency occurs. No longer 
should we rely on these products being generated by the low 
bidders as an independent agent for any agency.
    Second, I think what we saw this morning is that the 
stovepipe type of funding coming down through the agencies does 
not really bode well for interagency interactions which we are 
going to need both at the development level, the manufacturing 
level and mostly at the level of preparedness and defense out 
in the field, the States and the counties and the cities if 
such an attack ever occurs.
    Thank you.
    [The prepared statement of Dr. Hanna follows:]

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    Mr. Marchant. Thank you, Dr. Hanna.
    Dr. Davis.

                  STATEMENT OF JAMES H. DAVIS

    Dr. Davis. Mr. Chairman, members of the subcommittee, thank 
you for the invitation to appear before you today on behalf of 
Human Genome Sciences.
    I am Jim Davis, executive vice president and general 
counsel of HGS. In this capacity I have been extensively 
involved with the business development, regulatory approval 
process and Federal procurement issues related to the 
anticipated sale of our innovative, therapeutic treatment 
Abthrax for victims of anthrax exposure. We undertook this 
project on our own initiative and at our own expense.
    HGS is a biopharmaceutical company located in nearby 
Rockville, MD that discovers, develops and manufactures 
innovative drugs to treat and cure disease. Currently, we have 
seven drugs including Abthrax in clinical development, 
including six monoclonal antibodies.
    The primary focus of our company, however, is not the 
development of drugs to protect against attack by biological 
and chemical weapons. The principal focus of our company has 
been and will continue to be pursuit of innovative 
biopharmaceutical products for the commercial market. 
Nevertheless, just over 3 years ago we realized that our 
company had significant technology and capability to develop an 
effective, near term countermeasure against one of the Nation's 
most immediate and serious bioterrorism threats.
    Located just outside Washington, DC, we witnessed firsthand 
the potentially devastating effects of the use of anthrax as a 
terrorist weapon in late 2001. Using our own funds, we 
developed a fully human monoclonal antibody drug called Abthrax 
that can prevent and treat the lethal effects of anthrax 
infection. The drug can be given prior to or after exposure, 
can be used alone or in conjunction with the current vaccine 
and antibiotics.
    We have shown in animals that it is effective against high 
doses of anthrax, we have demonstrated initial safety in humans 
and we have been ready to manufacture this product and complete 
the final human safety trials for over a year and a half, but 
to move forward we need to bring to conclusion the lengthy 
procurement process now underway with the Federal Government.
    If a contract is signed with the Federal Government and a 
final commitment to acquire a fixed number of doses and the 
number of doses requested is of sufficient commercial quantity 
to make it worthwhile, this countermeasure could be available 
for emergency use as early as next year. While this is an 
exciting prospect for our company and of valuable benefit to 
the Nation, our frustration remains the Federal Government 
could have had this product in the stockpile already if the 
full authority of Project BioShield had been used as intended.
    The primary challenge of biopharmaceutical companies such 
as HGS in this field is the absence of a commercial market for 
bioterrorism countermeasures. The only valuable market is the 
Federal Government and perhaps our foreign allies. Without a 
clear and easily accessible market, the drug will not be 
developed.
    In its initial BioShield solicitation for anthrax 
therapies, HHS has not even specified the precise amount of 
quantity they wish to purchase. Rather, the solicitation 
requires bidders to pose pricing for a broad range of 
quantities ranging from 10,000 doses to 200,000 doses. It now 
appears that even if this contract is awarded and HHS decides 
to exercise its option for the manufacture, HHS is unlikely to 
purchase a full 200,000 doses as originally proposed.
    This is particularly frustrating since the manufacture of 
these compounds requires significant manufacturing capability 
and significant manufacturing startup costs. In short, the cost 
per dose of 200,000 doses is significantly less than the cost 
of 100,000 doses and astronomically less than the amount for 
10,000 doses.
    Setting a firm commitment for the quantity to be purchased 
and making sure those quantities are large enough to be 
commercially viable is critical to advance BioShield's purpose 
of promoting the development of a biodefense industry.
    My written testimony raises additional concerns. There are 
several steps HHS could undertake to increase industry 
participation. In the interest of time, I will not enumerate 
them here. Let me say, however, that timing is critical. I 
applaud the subcommittee for its continued oversight of this 
critical biodefense program. Near term delays in evaluating and 
considering the production of viable countermeasures can 
disproportionately prolong the procurement of such drugs. To 
date, abthrax has been developed entirely with private funds 
but to move forward, we need a firm commitment from the 
Government to purchase this product. With sufficient Government 
support, HGS could begin producing significant quantities of 
Abthrax by the end of next year.
    We look forward to formalizing this commitment in a 
contract with HHS in the coming weeks and we would appreciate 
every effort to ensure that maximum quantities are purchased 
for the stockpile as soon as possible without any further 
delay.
    Thank you for this opportunity to testify and I look 
forward to answering your questions.
    [The prepared statement of Dr. Davis follows:]

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    Mr. Marchant. Thank you, Dr. Davis.
    The Chair recognizes Chairman Shays.
    Mr. Shays. Gentlemen, thank you for being here today. I 
feel badly that I could not ask some questions of the previous 
panel because I wanted to get into the stovepiping and so on. I 
wanted to get into why DOD has one program and others have 
another and I wanted to get into the connection between them.
    What did you hear from the previous panel that you agreed 
with the most and that you would disagree with the most? I 
would ask that of each of you. Dr. Hanna.
    Dr. Hanna. I agreed with the statement made by HHS 
representatives that working with large pharmaceutical 
companies is not really going to work. They really could make 
much more money with a cardiovascular drug than they can with 
these types of vaccines. There are many vaccines that were made 
that were never used because they couldn't make any money 
selling them. The countries that were going to use them 
couldn't afford to pay for them.
    Working with the smaller, mid-size, biotechnology companies 
is probably clearly the way to go. Unfortunately, even those 
companies are not going to do some of this work on contracts or 
grants because they can't make a living at a 6 percent margin 
on the work they do but this is the way the legislation is 
written to allow them to fund their programs.
    I think the legislation needs to be changed to allow for 
multiple awards, grants or contracts or allow companies to come 
in and do it on their own but still let them compete. This is 
the way good science gets done in the major projects this 
country has launched.
    Mr. Shays. What statement did you disagree with the most by 
any of the previous panelists?
    Dr. Hanna. I disagreed with the fact that the vaccines in 
the JVAP Program and in some of the other programs are 
difficult to accomplish. We could have had an anthrax vaccine a 
couple of years ago, we could have had a couple hundred 
thousand botulinum antitoxin, polyclonal equine botulinum 
antitoxin in our repertoire. The urgency is there at the top 
level at the present and it is at the congressional level and 
the Senate level and at the top offices of these departments 
but when it filters down to the functionaries, the urgency is 
lost and the status quo steps in and this is demotivating to 
the small, medium or large pharmaceutical companies.
    Mr. Shays. Explain to me why we don't have progress in 
those two areas? Tell me specifically why. You are saying it is 
motivate up here but what specifically wasn't done that should 
have been done?
    Dr. Hanna. It is my understanding that the legislation 
doesn't allow them to think outside the envelope, that they 
have to function according to the legislation and the 
legislation allows them to award a contract to the lowest 
bidder and that contract is what they live with. If they would 
allow them to award several contracts simultaneously for the 
same project and let them compete to Phase 1 trials and the one 
that gets to the Phase 1 trials and can work with the FDA the 
fastest ends up with the purchase order is the way to go.
    Mr. Shays. You are saying that you would cover the research 
costs for the three or four that would get involved?
    Dr. Hanna. We offered to do it through private investment. 
We had investors.
    Mr. Shays. You were willing to compete privately in a 
contest because you believe you would have had a better product 
in the end?
    Dr. Hanna. We have already made it, we had already made it. 
We spent $25 million of DOD's money to make the first 5,000.
    Mr. Shays. I know that and that is why I am asking you why 
we don't have it? What in the law prevented them from moving 
forward with you?
    Dr. Hanna. I don't know. I spoke to somebody recently who 
is well known in this area and he said the law just prohibits a 
multiple contract or multiple awards for the same project.
    Mr. Shays. Why would they have had to do multiple awards? 
If you already had it, why couldn't they just contract to you?
    Dr. Hanna. They did. They contracted a foreign company. HHS 
contracted a foreign company to make it.
    Mr. Shays. Because you were a higher bidder? You weren't 
the lower bidder?
    Dr. Hanna. We didn't bid at all.
    Mr. Shays. Why?
    Dr. Hanna. We were offering to do it at our own costs.
    Mr. Shays. You are confusing me. This has not been a great 
day, so maybe it is my problem but be patient with me here. You 
had a product that DOD helped you develop?
    Dr. Hanna. They contracted with us to develop, yes.
    Mr. Shays. They gave you money to develop the product. You 
developed the product. Are they saying the product won't do the 
job?
    Dr. Hanna. No.
    Mr. Shays. Are they saying the product costs too much 
money?
    Dr. Hanna. No. The project ended in 1997 and there was no 
urgency and need for it.
    Mr. Shays. But the project ended then but you still had the 
capability to produce the product?
    Dr. Hanna. We have had the capability from 1997 to now.
    Mr. Shays. So why do you want me to be so confused here?
    Dr. Hanna. I am not trying to.
    Mr. Shays. There has to be a reason.
    Dr. Hanna. I don't have an answer. I can think of no 
reason. I thought there had to be a reason also.
    Mr. Shays. This is a conversation we had somewhat privately 
and I thought you would be able to publicly put on the record.
    Dr. Hanna. I did at the suggestion of NIAID, Tony Fauci's 
group, I did put in at their request an unsolicited proposal to 
the CDC to make this product and it was rejected.
    Mr. Shays. Did they give you a reason why?
    Dr. Hanna. No, but they turned around and awarded the 
contract to this foreign company which we heard today was 
having extreme difficulties getting geared up to make the 
product.
    Mr. Shays. Dr. Davis, can you enlighten me about this 
issue?
    Dr. Davis. I am not sure I can enlighten you about his 
issue, no. We have been facing a slightly different issue in 
that the Government clearly appears to have some interest in 
our product, it has been a long procurement process and as a 
consequence, our concern is that the delay makes it very 
difficult for us to plan and makes it very difficult for us and 
other companies to be willing to develop from their own funds 
products. There is a need for different procurement methods for 
different things. There are clearly some products where the 
Federal Government probably needs to fund the early research in 
order to get it done but there are also other products and 
other capabilities like ours where we have done the vast 
majority of the research and the development on our own. What 
we need is a commitment from the Government to buy the product 
and we need a commitment to buy it in sufficient quantities 
frankly to make it worthwhile. If somebody only wants a few 
thousand doses, we are not going to start a large scale 
manufacturing facility and dedicate 3 to 4 months of 
manufacturing capability to make a few thousand doses. If they 
want 100,000 doses, that starts to get economically reasonable. 
If they want 200,000 doses, it makes a lot of sense. For us to 
go into future products or other companies like us to go into 
future products, you need to state up front what is really the 
need of the Government. They have told us they want an anthrax 
antibody but never told us how many doses they really want, 
never told us what schedule they really want it on and so we 
are left in a quandary of how we develop this product. We have 
other pharmaceutical products competing.
    Mr. Shays. Do you think they have told other companies what 
they want?
    Dr. Davis. No, no. I don't think they are being 
disingenuous here, I think they are in a quandary about what 
they want or maybe they know and haven't specified. The RFP 
asks us to bid on prices for doses between 10,000 doses and 
200,000 doses. That is a tremendous difference in how you 
manufacture.
    Mr. Shays. So you give them a bid at 10,000 and a bid at 
50,000, a bid at 100,000, a bid at 15,000.
    Dr. Davis. That is exactly what we have done.
    Mr. Shays. So what is difficult about that?
    Dr. Davis. The problem is that the manufacturing needs to 
be planned 12 to 18 months ahead of time.
    Mr. Shays. That is another issue but the bidding issue 
isn't there.
    Dr. Davis. No, we can bid. It's very difficult to know, 
however, if you see that RFP and they are really only thinking 
about 10,000 doses, we may not want to play. It is simply not 
enough economic incentive even if we charge astronomical 
amounts for 10,000 doses.
    Mr. Shays. Is it that difficult to do a bid response? In 
other words, you price the 10,000 at such an extreme price that 
you are not in the running but you give them a price?
    Dr. Davis. And we have done that.
    Mr. Shays. So that is not really the issue. With all due 
respect, that is not the issue.
    Dr. Davis. It is an issue in terms of are we going to go 
after another project like this, are we going to use our own 
money to do the research and development on another project if 
we are not sure what the Government needs?
    Mr. Shays. Let me ask you, do you do the research before 
you do the bid or do you do the bid before you do the research?
    Dr. Davis. In this case, we did the research before the bid 
because we thought there would be a market. I think in the 
future, we are unlikely to do anything more in this area 
without a clear indication of what they want in terms of 
quantities.
    Mr. Shays. What is the statement you agreed with most and 
the statement you disagreed with the most and who made that 
statement?
    Dr. Davis. Dr. Fauci I think made the statement that I 
agree with the most that this does have to be a partnership 
between the Government and industry. The Government does not 
have the capability to do large scale manufacture of these 
products. It is very expensive, takes very specialized 
facilities but we do need a partner in the Government so we 
know what we are doing and when they want it and what it is.
    I think it is hard to say there is a single statement I 
disagree with. I think I am concerned that the procurement 
process for the BioShield as described is not going as smoothly 
as some may think. I think it still has a lot of work to be 
done to make it more efficient, there are a lot of contract 
provisions, a lot of indemnity and liability issues that are a 
hurdle for companies to be willing to go across in order to 
enter this market.
    Mr. Shays. Thank you.
    Mr. Marchant. I have a couple questions and they will be 
questions broached from a freshman in the Congress, just a 
couple of elementary questions.
    If the Government came to you tomorrow and said we want 
200,000 doses of this, how long would it take you to produce 
them?
    Dr. Davis. We would be able to start production in 
approximately 12 to 18 months, but it would take us probably 6 
months, maybe a year to produce all those doses but they would 
be in a rolling batch. We could have doses available. For 
example, if they told us today they wanted 200,000 doses, we 
could certainly have doses for them at the beginning of 2007 
and all the doses by the end of 2007.
    Mr. Marchant. How much public knowledge would be available 
about the amount of doses and the antibody that was being 
produced?
    Dr. Davis. I would presume, and speak with a little 
ignorance here, that the contract would be public and the 
number of doses they requested would be specified. The precise 
structure of the antibody and the nature of the antibody we 
have been fairly careful not to make public for security 
reasons but some of that would depend on the Government's 
desire to keep it secret or not.
    Mr. Marchant. From someone that thinks the Government or 
some entity has an antibody for any of these diseases can be 
introduced in any form in the water system, through milk, etc., 
do you feel the American citizen has a security that there are 
vaccines, antibodies and things available immediately that can 
be introduced that can combat these things or are they aware 
that we are studying this?
    Dr. Davis. I think it depends on the particular agent you 
are talking about and the particular means of which the product 
is distributed and how you can treat it. In many cases, there 
are inadequate therapies today. In some cases, there are some 
therapies which may be adequate in some circumstances and not 
in others.
    Mr. Marchant. Obviously the general knowledge of the cure 
will make sure whatever entity decides to introduce this into 
society will not introduce that?
    Dr. Davis. There is a strong deterrent effect one would 
think from having stockpile of an efficient deterrent.
    Dr. Hanna. The best offense is a good defense in this case, 
clearly.
    Mr. Marchant. So if DOD or whatever entity decided they 
needed to have sufficient vaccine on hand to combat, how 
prepared are we at this moment for those diseases that could be 
introduced?
    Dr. Hanna. You are not. For most of them, you are not 
prepared.
    Mr. Marchant. You in your case were paid to develop one but 
you were not paid to produce the doses?
    Dr. Hanna. Let me try to clarify one thing. When we stopped 
making it, we closed down our manufacturing facility. We 
recognize one of the problems and why we might have been 
discriminated against is because our manufacturing facility 
didn't exist, so we went back and said, we will volunteer with 
private funds to build that manufacturing facility again and 
within 18 months we will deliver to you 50,000 doses that meet 
the specs, that would be FDA-approved again as we did 
previously for emergency use and we would get it fully licensed 
eventually.
    I think at that time, they decided it would be better to go 
to another contractor that had a facility and underestimated 
the degree of scientific capability required because you heard 
Simonson say that it is not only science, there is a bit of an 
art to it and it is, there is an art to it. It is not something 
that everybody can do. This contractor is working very hard, I 
am sure, but they are not able to accomplish it yet. They will 
eventually.
    Mr. Marchant. They own the formula?
    Dr. Hanna. We have the patent on the procedure.
    Mr. Marchant. So they have to deal with you?
    Dr. Hanna. We have not discussed that with them but my 
point is it would have been better, it would have been smarter 
to let them go and have the security of the contract they 
managed and release us with a commitment that if we did what we 
said, they would purchase from us at a fair price. Then you 
would have had both competing with each other. That would have 
been the smartest way to do it. Instead, they went the contract 
route, which is the one they know the best.
    All I am saying is we need to start some competition 
however we do it, whether we do it with multiple contracts, a 
contract versus an independent operation, with a commitment 
letter. We couldn't raise the money without the commitment 
letter. All we wanted was a letter saying if you do it, we will 
buy it at a fair price to be negotiated.
    Mr. Marchant. Mr. Counsel. Chairman Shays.
    Mr. Shays. If you both were running the program, how would 
you run the program? When I say program, we have agricultural 
needs, we have plant needs, animal needs, we have human needs, 
so it makes sense you would have three separate tracks, 
correct, for each of those?
    Dr. Hanna. Yes.
    Mr. Shays. How would you run the program differently? If 
you were in charge of this program, suppose the United States 
says, I want you to run this program, tell me how you are going 
to run it, what would you say?
    Dr. Hanna. I would do it basically as I described. Let us 
deal first with the biological. We know what the agents are. 
Smallpox is pretty well covered, we have plenty of vaccine for 
smallpox. What we don't have is vaccine for the other nine 
agents or some kind of a therapeutic.
    Mr. Shays. When you say agent versus therapeutic, with 
anthrax there is one element that prevents it from catching 
hold and another is you have it and now how you deal with it. 
Is that your difference when you talk about agent versus 
therapeutic?
    Dr. Hanna. I am talking about a vaccine that would protect 
you versus a therapeutic that you would take after you had 
contact and in some cases, there will be no vaccines. The 
botulism vaccine they were talking about was AB. Those are the 
two common forms. If anyone was going to use an agent, it 
wouldn't be AB. That is the most common and they know that. 
They would use C through G and those are the most difficult to 
defend against.
    I would rank them and I would do just what I said. I would 
set up multiple awards. I would either allow companies to come 
in and give them commitment letters that if they do it, we will 
purchase it or I would set up a contract and an award at the 
same time. I would do what we do in the pharmaceutical 
industry. Oftentimes, when new projects are started, we set up 
two, maybe three groups and let them compete.
    Mr. Shays. That sounds more expensive to me.
    Dr. Hanna. It is a lot more expensive to go with the low 
bitter and come up 7, 8 or 9 years later with the vaccines we 
have seen from JVAP.
    Mr. Shays. You are saying, get more companies and 
individuals involved, you will get a product sooner, it is 
going to cost you more, but we won't be where we are now with 
nothing?
    Dr. Hanna. How do you compare the cost when you have a 
situation where you have nothing and still the threat is equal 
to what it was 5 years ago?
    Mr. Shays. What I am hearing you say in a sense is that by 
doing it this way, it is taking longer which means we remain 
vulnerable when we don't have to remain vulnerable. Your view 
would be that we would get there sooner with a better product 
if we had multiple competition?
    Dr. Hanna. And build in redundancies. That is the thing 
missing here, redundancies. You have a JVAP program with no 
redundancies backing it. The one redundancy for the anthrax 
vaccine, they can't even award it yet. This would be a 
redundancy to what is in the JVAP program. You can't get them 
to make a decision. I think the problem is the legislation is 
written to favor the status quo which is to do it through 
grants and contracts, and grants and contracts allow you to 
give a contract for a particular project. I am saying set up 
competition.
    In NASA, they had a redundancy for everything, everything 
had a backup. That is how they got to the moon and got back but 
that was a Presidential mandate that said make it happen. We 
are doing it in the standard way and I think we have to start 
thinking out of the envelope.
    Mr. Shays. I hear you and I understand now what you were 
trying to tell me. It finally sunk in. Thank you.
    Dr. Davis.
    Dr. Davis. I think that is main thing I would change.
    Mr. Shays. You are running the program.
    Dr. Davis. I am running the program. I think the way I 
would set it up is one, I would be very clear and they have 
been, these are the agents, the terrorist weapons that we are 
most concerned about and I would then give a clear indication 
of what is the amount of need for product and then I would put 
out an RFP but I would streamline the bureaucratic process. I 
would use simplified contracting methods, I would try to bring 
pressure to get the time lines down to much less.
    Fourteen months for RFI to still have a contract 
negotiation is a long time and we have been waiting simply for 
the contract before we even begin our manufacturing. So if you 
can streamline that process, you will get these products on 
line sooner. If you have a clear, up front commitment, 
streamlined process, I think you will find more industry 
interest in participating in these sorts of programs because 
then you can do a real measure of the net present value of this 
project and understand whether it is worth your investment or 
not.
    Mr. Shays. The way counsel is responding to my question to 
him as you were talking about what you were saying was that you 
would use the more traditional system but make sure there was a 
pot of gold and incentive.
    Dr. Davis. Yes.
    Mr. Shays. You would have an incentive but you would have a 
competitive process and both of you would deal with speeding up 
the time process?
    Dr. Hanna. Of course.
    Dr. Davis. Yes.
    Mr. Shays. When you heard what was said today, is your 
emotion just disappointment, disgust? The reason I am asking is 
I am trying to figure out how I should feel about this. Is it 
just give me a break or is it something like, you know what, 
this is going to happen, we are vulnerable and you guys are at 
fault in the end. Tell me what level of feeling you have right 
now.
    Dr. Hanna. My level of feeling is disappointment. It has 
been a lot of energy. I think everybody at this table has done 
their darnedest to get the job done. I have known people in the 
agencies who came in thinking they could get the job done and 
then ran into so many obstacles that they ended up leaving.
    We walked away from it and decided we are not going to get 
involved and do this thing because we couldn't, we couldn't get 
it done. So it is disappointment. I think the disappointment is 
that while there was an urgency and while there was a concern, 
we didn't come up with enough creative mechanisms to get the 
job done and we allowed each agency to funnel through their own 
process, muddle through their own process individually. This is 
an interdisciplinary need. You need a lot of people to get this 
job done. You need industry, you need the Government agencies, 
and you need people who are highly motivated and have a reason 
for being motivated.
    I would say disappointment and encouragement that looking 
forward that you had this hearing and maybe we will get 
something done and something will come out of it.
    Mr. Shays. Let me say in regards to that, we may end up 
having a private meeting with the folks I didn't get to 
question but we know we need to do something different and we 
need to move this along more quickly.
    Dr. Davis, your emotion?
    Dr. Davis. I think my emotion continues to be a certain 
amount of frustration. I believe the agencies are very 
dedicated to getting this done. I think their hearts and their 
minds are in the right place. I think they have not been able 
to motivate the bureaucracy to move and we need to find a way 
to make this a more efficient process. Otherwise, you are going 
to end up with more companies like mine who are frustrated and 
simply aren't going to play.
    Mr. Shays. Thank you, Mr. Chairman. Thank you both very 
much.
    Mr. Marchant. The subcommittee is adjourned.
    [Whereupon, at 3:59 p.m., the subcommittee was adjourned.]
    [The prepared statements of Hon. Dennis J. Kucinich, Hon. 
C.A. Dutch Ruppersberger, and Hon. Bernard Sanders follow:]

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