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us from bioviolence is a strategy of dubious value. These doubts are deeply
rooted in the challenge of trying to get ready for an attack that could involve
any of a large array of pathogens and could arise anywhere in the world.
As discussed in Chapter 1, a widespread attack throughout developing
nations would have catastrophic economic and political consequences
for the developed world and, of course, even more catastrophic health
consequences for those targeted. Yet, in the entire bioviolence prevention
arena, the need to encourage development of new medical methods for
resisting an attack is perhaps the most graphic manifestation of tensions
between policies that make sense for developed nations and policies that
are appropriate for developing nations.
The United States and its comparably developed allies have devoted
huge resources to protect their citizens from some bioviolence acts. It
is simply irresponsible to blithely suggest that most developing nations
should undertake comparable steps to protect against bioviolence. More-
over, discovering medicines without building capacities for getting them
148 BIOVIOLENCE: PREVENTING BIOLOGICAL TERROR AND CRIME

to the people who need them, especially in developing regions, is truly
wasteful. Today, for lack of global distribution capacities, millions die from
diseases for which medical treatments already exist. In the chaos of a biovi-
olence catastrophe, it is not credible to believe that these de¬ciencies will
suddenly be overcome.
According to the WHO, low- and middle-income countries bear a dis-
proportionate share of the global disease burden, yet 90 percent of the
expenditures on health across the globe are concentrated on only 10 per-
cent of the world™s population.36 Of the 1,233 new drugs marketed between
1975 and 1999, only 13 were for diseases that commonly af¬‚ict those in
developing or underdeveloped countries. Only four deal with tropical dis-
eases. Altogether, developing countries make up roughly 20 percent of
the global pharmaceutical market. This hardly makes them attractive for
biotechnology ¬rms “ mostly private and western.
Some developing countries devote as little as $2 per capita per year to
health care, and the overwhelming threats of natural disease present an
already tremendous burden. For example, India spends nearly half of its
annual health budget combating malaria. The sub-Saharan African region,
with the highest rates of child mortality on the planet, accounts for only
0.1 percent of the global health expenditure. Diseases like malaria along
with diarrhea and pneumonia overwhelmingly af¬‚ict developing countries
and yet receive only a fraction of the global expenditure on health. Given
how destitute some of these countries are, casual calls for more research,
testing, and distribution of biotechnology to prevent bioviolence are unac-
ceptable.
Economics is not the only barrier. There is also a “brain-drain” problem.
Development of new vaccines requires unique combinations of scientists
and bioengineers plus sophisticated equipment operating in modern lab-
oratories. Worldwide, these combinations are positioned to rapidly pro-
duce vaccines only in a few nations.37 This condition generates a vicious
cycle: competent scientists and researchers in developing countries feel
compelled to leave to seek more gainful employment elsewhere. Even if
these regions could offer basic funding for research and development, it
is unlikely they could match the dollars that are offered to scientists and
trained professionals in developed nations.38
Only in the last few years have enormous amounts of money and effort
been poured into producing and stockpiling medicines for combating
pandemic disease, including bioviolence threats. Wealthy nations, inter-
national health and ¬nancial organizations, generous foundations and
149
IMPROVING RESISTANCE THROUGH SCIENCE

individuals, scienti¬c associations, and prominent academic centers are
rallying to provide assistance. Perhaps most prominent is the WHO Global
Immunization Vision and Strategy, a joint program with UNICEF whose
goal is to cut illness and death caused by vaccine-preventable diseases by
two-thirds by 2015 compared to the 2000 levels. Its three main aims are to
immunize more people against more diseases, introduce new technolo-
gies and vaccines, and provide critical health interventions with immu-
nizations. By assisting governments in designing, ¬nancing, and imple-
menting immunization programs, the program™s goal is an 80 percent vac-
cination rate in underdeveloped areas by 2010. One-third of the estimated
$35 billion cost will be allocated to vaccines; two-thirds will be spent on
immunization delivery systems.39
Not surprisingly, the programs that focus on mass production and dis-
tribution of already-known medicines appear to have greater impact than
programs that seek to create new medicines. Important from this book™s
perspective is that initiatives for elevating resistance against bioviolence
have had sporadic success at best and have arguably deprived global efforts
to combat natural disease of resources that could do more good. More cer-
tain is that key policy decisions are not made at the highest level of global
governance with consideration of those decisions™ global impacts or with
a strategy that effectively anticipates emerging priorities.
The remainder of this chapter examines the challenge of developing
medicines from the perspective of three related barriers: ¬nancial con-
straints, threats of liability, and patent protection. In combination, these
problems and the recent efforts to overcome them demonstrate the pit-
falls and confusion that derive from partial approaches to the challenge of
enhancing resistance against bioviolence.


Financial Barriers
Development of new medicines entails unique investment risks. Substan-
tial resources must be devoted, and any single effort has a low probability
of success. For private investors, there must be a high payoff when a useful
medication is identi¬ed. In the United States, successfully developing a
new drug takes nearly 10 years and between $400“800 million; 5,000 com-
pounds will, on average, be identi¬ed for one approved drug. Even devel-
oping the yearly ¬‚u vaccine involves a costly production method.40 More-
over, the permitting process for new vaccines is time-consuming under
the best of conditions; any misstep entails expensive corrections.41
150 BIOVIOLENCE: PREVENTING BIOLOGICAL TERROR AND CRIME

Weighing this enormous cost and failure rate against a drug™s likely
market impact presents a harsh reality: treatments for chronic condi-
tions with large patient populations who can afford a steep price jus-
tify greater investment than treatments for disease outbreaks caused by
unanticipated pathogens, especially if the treatment does not have wide-
spectrum applicability. In the context of bioviolence that has yet to occur,
the economics of vaccine development lead inevitably to underinvest-
ment. From society™s perspective, having a wide array of medicines on
hand makes sense, but this logic is very different for bioresearch compa-
nies that must invest enormous sums for compounds that might never be
bought.
Many analysts, therefore, call for government funding and a precom-
mitment to purchase new medicines so as to ensure a market even if the dis-
ease that it treats does not appear.42 For example, the United States Orphan
Drug Act (ODA)43 increases incentives to develop drugs for patients with
rare illnesses and guarantees longer than usual market exclusivity. Yet,
while government assumption of risks can stimulate research investment
by creating larger and more reliable markets, such programs are not certain
to lead to optimal allocations and do little to encourage drugs that address
vulnerabilities disproportionately affecting poor countries. Moreover, this
approach forces governments to “pre-pick winners” in a wasteful manner
that likely bene¬ts a few wealthy recipients rather than serves the public
bene¬t.44 Political considerations could also be distorting. For example, it
would be politically unforgivable to be unprepared for a well-understood
disease (e.g., anthrax), but citizens might be more forgiving if authori-
ties are caught off guard for something more novel (e.g., bio-engineered
ebola). Even if an impartial economic analysis justi¬es research on antivi-
ral medications rather than anthrax vaccine, the political analysis would
favor addressing the better known threat.
Since 2001, the solution to the underinvestment problem has been
massive government allocations. In the United States, spending to develop
vaccines and medicines increased from $418 million in 2001 to $3.7 billion
the next year in view of the anthrax attacks that followed 9/11. In 2001, the
National Institutes of Health (NIH) operated with a $50 million budget; in
2005, its budget was $1.7 billion, a 3,400 percent increase.45 In the most
recent FY 2007 budget, federal funding for civilian biodefense increased to
$5.24 billion.46 Project BioShield, begun in 2004, allocates $5.6 billion for
research to counter WMD attacks (chemical, radiological, and nuclear as
well as biological) by contributing to the Strategic National Stockpile (SNS),
which includes vaccines and other medical tools procured and stored by
151
IMPROVING RESISTANCE THROUGH SCIENCE


BOX 6-3. B IOS H I ELD AT A G LANCE

BioShield provides a reserve fund for the HHS Secretary to procure a countermeasure
where the Secretary determines that it is: 1) a priority measure against harm from
chemical, biological, radiological, or nuclear agents; and 2) a “necessary” measure
that is either a) approved or licensed under applicable law; or b) a countermeasure
that will be approved or licensed within eight years of the funding approval. This
reserve fund may also be used if the measure is authorized for emergency use. The
HHS Secretary can simplify procurement if a “pressing need” is identi¬ed, bypassing
the stringent requirements of government contract law and can spur development by
paying up to 10 percent of the negotiated price. This support fosters development and
relieves some of the burdens associated with research by offering drug developers
the incentive of longer contracts.
If an appropriate countermeasure is unavailable, then the President should “call”
for these items to be produced. A call would estimate the ¬nancial cost involved and
determine how much would be needed. The HHS Secretary then decides whether to
allocate the special reserve fund depending on: 1) quantities of product needed to
meet stockpiling needs; 2) feasibility of production and delivery within eight years;
and 3) whether there is a lack of a commercial market for the product other than
as a countermeasure that could be procured from the reserve fund. The President
may then either deny or approve the request; HHS handles the actual ins-and-outs
of procurement, such as negotiating costs, delivery, payment, etc.

SOURCE: Frank Rapoport, Christopher Bouquet, & Scott Flukinger, Project BioShield Act of
2004: Dawn of a New Industry? 40-SPG PROCUREMENT LAWYER 3 (2005).




the government to respond to major health emergencies. See Box 6-3 for
more information about BioShield. The Secretary of Health and Human
Services (HHS) is empowered to promote research and development of
drugs and to recommend their procurement from a special reserve fund;
in some critical situations, there are simpli¬ed procurement procedures
that can make available new and promising treatments without awaiting
normal regulatory approval.
Criticisms of BioShield focus on its meager achievements.47 As of 2006,
of¬cials had spent less than a quarter of their budget.48 In December
2006, HHS cancelled its sole supplier $877 million contract with VaxGen,
Inc. for delivery of 75 million doses of an anthrax vaccine beginning in
early 2006. The company had not started human clinical trials because of
FDA concerns about the vaccine™s potency.49 Other pharmaceutical com-
panies have smaller contracts with the U.S. government to produce vac-
cines and antitoxins, but it is unlikely that they can deliver the large amount
152 BIOVIOLENCE: PREVENTING BIOLOGICAL TERROR AND CRIME

required under the VaxGen contract.50 BioShield™s efforts to address other
potential threats have not been much more successful. Cangene has deliv-
ered the ¬rst of 200,000 doses of an antitoxin for botulism but is not cur-
rently planning to pursue a vaccine.51 For smallpox, there were two hun-
dred million doses of vaccine stockpiled before BioShield began, but an
initiative to develop a smallpox vaccine safe for persons with impaired
immune systems has, as of this writing, yet to begin. The NIH has begun
research on vaccines for tularemia, plague, and ebola, but the government
has yet to contract with any pharmaceutical companies through BioShield
to address these threats.52
Cancellation of the VaxGen contract, despite its having spent over $175
million to develop the vaccine, may make other pharmaceutical compa-
nies hesitant to get involved with BioShield.53 According to one expert,
“The inept implementation of the program has led the best brains and
the best scientists to give up.”54 BioShield™s problems might not be fairly
attributable to “inept implementation” as much as to the inanity of hop-
ing that billions of dollars will promptly generate medical protections from
bioviolence. Enduring support for scienti¬c research will likely be bene-
¬cial over time, but to pour in cash and expect an immediate return is
to misunderstand the unique economic aspects of pushing vaccine pro-
duction. The recently enacted Pandemic and All-Hazards Preparedness
Act repairs certain aspects of BioShield such as by allowing contractors
to receive milestone payments, but few experts believe that it will solve
the problems inherent in this effort.55 This lack of success has transpired
during relatively calm conditions “ the odds of the system suddenly ¬xing
itself during a crisis are dim.


Liability Barriers
It is virtually inevitable that wide use of vaccines and other medications
to build resistance to bioviolence will have harmful consequences for a
small minority of the population. Should victims of adverse effects be
compensated? Vaccines are among the greatest achievements of biomed-
ical science and public health. Vaccinated individuals are protected, and
even unvaccinated persons are better off because the circulation of dis-
ease is reduced.56 In many societies, schoolchildren must be vaccinated
against contagious diseases. When the government requires vaccination
for the purpose of promoting public health, who should be liable if there
is an adverse reaction “ the government or the vaccine industry?
153
IMPROVING RESISTANCE THROUGH SCIENCE

Whether victims should be compensated at all raises important ques-
tions of individual versus community welfare. How should unpredictable
reactions to properly manufactured and administrated vaccines be
handled? Several vaccines have brought this issue to the fore, including
the risks of Guillain-Barr´ syndrome (GBS) associated with the swine ¬‚u
e
vaccine and of Sudden Infant Death Syndrome (SIDS) associated with the
diphtheria-tetanus-pertussis (DTP) vaccine.
In many nations, victims of those consequences might seek to recover
damages against producers. This risk of liability is a cost that weighs heavily
against expending vast sums to produce vaccines; vaccine producers could
stay out of the market altogether. In the early 1980s, adverse reactions to
vaccines created liability concerns for U.S. manufacturers which caused
them to stop producing vaccines that, in turn, led to declining child vac-
cination rates. Remaining manufacturers increased their prices to cover
liability costs which led to signi¬cant vaccine shortages.57 The number
of vaccine producers in the U.S. market has decreased signi¬cantly from
twenty-six companies in 1967 to ¬ve companies today.
Providing liability protection could ease pharmaceutical companies™
concerns, especially during an emergency. How much harm to the popu-
lation is appropriate in attempting to mitigate the effects of a bioattack?
While most scientists would agree that the bene¬ts of vaccination out-
weigh the harms, what sort of compensation should be available to those
harmed by these vaccines?
Four policy approaches have emerged to ease disincentives that manu-
facturers face in producing vaccines.58 First, the government can assume
liability either by administering the vaccine itself or by substituting
itself as a defendant if a victim sues the vaccine producers. The United
States National Swine Flu Immunization Program in 1976“1977 took this
approach by providing an exclusive remedy against the government for
“personal injury or death arising out of the administration of swine ¬‚u
vaccine under the swine ¬‚u program and based upon the act or omission
of a program participant.”59 Vaccine producers were protected, but the
government eventually paid more than $73 million to claimants out of
general revenues.60
Second, the government can establish a no-fault compensation pro-
gram. The victim may be compensated from the program if the vaccine

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