Audit Provides Ammunition Against Anthrax Vaccine

by Thomas D. Williams

The Hartford Courant

June 16, 2000

When the company trying to manufacture the anthrax vaccination for the military asked for financial help from the Pentagon, the agency gave it $800,000 more than the company requested.

And that figure was about $2.2 million more than Defense Department auditors had recommended, a U.S. Department of Defense inspector general's inquiry reveals.

The inquiry also found that the manufacturer, BioPort Inc. of Lansing, Mich., spent about $2 million on office remodeling and furniture, parking lot and road repaving, office moves and renovations. Such costs could have been postponed until the company was more financially stable, the audit says.

BioPort has not yet been approved by the Federal Drug Administration to produce the vaccination; the company's predecessor, an operation run by the state of Michigan, made the only anthrax vaccination that has been used under the military's inoculation program.

BioPort officials defended use of the money provided by the government.

"We invested money to upgrade dilapidated buildings, including bringing many of them up to current fire and safety code requirements. We are not going to apologize for that,'' said Kelly Rossman-McKinney, a BioPort spokeswoman.

In December 1997, Secretary of Defense William Cohen mandated the vaccine to protect all 2.4 million service members from the possible use by foreign powers of the biological warfare agent anthrax.

The safety and effectiveness of the vaccination program has been the subject of a national debate. Hundreds of service people have reported adverse reactions from the drug, and hundreds more have either resigned from the service or been punished for refusing to take it.

A bipartisan group of 35 congressmen has asked Cohen to suspend anthrax inoculations until the safety of the vaccine can be determined. The audit is being used as ammunition by those congressmen, including U.S. Rep. Christopher Shays, R-4th District, in an attempt to temporarily shut down the program at a time when BioPort Inc. is expecting to get millions more in government funds for a new contract.

BioPort is owned in part by former Adm. William Crowe, President Clinton's former ambassador to Great Britain.

Another share of the firm is owned by two former state of Michigan employees who negotiated to buy into the operation even as the state was negotiating to sell the vaccine manufacturing operations to several companies, including the successful purchaser, BioPort.

In reply to the audit, Maj. Gen. Randy L. West wrote: "The extraordinary contractual relief provided in accordance with federal acquisition regulations was necessary to ensure BioPort's financial capability to produce anthrax vaccine absorbed.''

But Shays said Thursday: "It appears DOD is trying very hard to finance the BioPort operation without having to notify Congress."

"We are paying way too much for way too little,'' said Shays, chairman of a committee investigating the Pentagon's handling of the vaccine.

BioPort requested the financial assistance in June 1999 to pay for loans owed to the state of Michigan and for other operating expenses.

A month after the last of the audit reports, the defense department gave BioPort $24.1 million in contractual relief, including $18.7 million as an interest-free advance payment. The contract modification more than doubled BioPort's per-dose price, from $4.36 to $10.64.

The company is completing a new contract with the defense department that could give the firm $2 million to $2.5 million a month for an unspecified amount of time.

BioPort said it needs more cash to survive the FDA's lengthy approval. Rossman-McKinney said a government watchdog agency has supported the kind of expenditures that the contract calls for.

James Turner, the Pentagon's spokesman on anthrax, did not answer repeated requests for comment on the new contract.