Vaccine Maker Faltering

By Thomas D. Williams

The Hartford Courant

July 17, 2000

Two separate congressional hearings last week exposed serious financial problems within a drug company that never produced its one prime product, the anthrax vaccine used by the U.S. military.

During the hearings, Pentagon officials acknowledged fronting the manufacturer with millions of dollars even as the company's failures continued, and as hundreds of wary service members quit the armed forces rather than take the vaccine. The vaccine being used is exclusively old lots of the drug produced by the predecessor to BioPort Corp.

Witnesses said the Pentagon has spent more than $131 million over 11 years in propping up BioPort and its predecessor. But it could be years before the agency inoculates all 2.4 million service members. Many service people question the effectiveness of the vaccine and have expressed concerns about potential adverse reactions; the military insists such reactions are minor.

The logical question after the hearings is what happens with the mandatory inoculation program now.

BioPort of Lansing, Mich., is six to 12 months away from being able to produce more vaccine, if it can ever earn federal approval to do so. Faud El-Hibri, one of BioPort's owners, said the federal approval process is far more complicated than he expected. As a result, the Pentagon recently, after two years of production and quality control problems with BioPort, decided to look for a second manufacturer. So far there have been no takers.

Now the Pentagon is proposing to build its own vaccine manufacturing plant and hire a contractor to run it to produce various vaccines, including anthrax. But such an effort could take four years or more, according to government officials. In the meantime, the defense department continues to pour money into BioPort, a company in part owned by retired Navy Adm. William Crowe, formerly President Clinton's ambassador to Great Britain and formerly head of the Joint Chiefs of Staff.

Last year, the agency gave BioPort Corp., the manufacturer a new $24.1 million contract and presented it with $18.7 million, interest-free, in advance of production.

The congressional hearings were called to review actions of the Pentagon and the U.S. Food and Drug Administration regarding recent questions about the quality of existing anthrax vaccine and a supply shortage threatening the program. But the hearings are not expected to result in formal congressional action.

U.S. Rep. Christopher Shays, R-Conn., recommended recently that the Pentagon halt the vaccination program until a new, effective and safe vaccine is developed. He also called on the Pentagon to drop punishment of more than 350 service members refusing to take the vaccination. In addition to active service people, more than 300 members of the National Guard and military reserve have resigned.

Shays told the House Armed Services Committee Thursday that wasted taxpayer dollars will continue to flow from the Pentagon to pay for a vaccine that has made some sick and ended the careers of those who refused to take it.

"Hundreds of dedicated, loyal Americans have had their health damaged or their military careers ruined. Don't they deserve the same deference, even forgiveness, DOD seems so willing to extend to BioPort?" Shays asked.

The defense department's own inspector general has discovered the most recent Pentagon supervision of BioPort was quite relaxed.

In getting extraordinary financial relief from the defense department, its inspector general said, the company submitted its application in advance of completing the application's fiscal requirements. One of those requirements was that BioPort prove it could not get bank financing.

The audit concluded that BioPort was denied financing from two banks after it showed a net loss of about $4.8 million in 1998. But, the inspector general said, the company did not submit projections for 2000 and 2001 that showed revealed net income of, respectively, $28.4 million and $13.8 million in those years.

The Inspector General's audit also showed that the Pentagon gave BioPort $800,000 more than the company requested, and about $2.2 million more than Defense Department auditors had recommended.

BioPort insisted it provided accurate, detailed information about its financial status in seeking loans or investments, before being rejected by such institutions.

"Our own commercial bank, which had an intimate knowledge of our financial status, turned us down. In subsequent audits, [defense department auditors] reviewed our records and validated our need for assistance," said Kelly Rossman-McKinney, a BioPort spokeswoman.