Wary of Attack With Smallpox, U.S. Stockpiles a Costly Drug

The NY Times ' Donald McNeil has followed up the juicy story of how billionaire political donor Ronald Perelman got a sweetheart contract (OMG, read David Willman's story and weep, that deal was so sweet) for a high-priced smallpox drug, which isn't actually needed cause we have enough vaccine for every American, and if you are vaccinated within about 4 days after exposure to smallpox, you won't get the disease, which has a 2-3 week incubation period.

Plus, the price is way too high. The drug is cheap to produce but cost the taxpayer an arm and a leg.  Talk about golden toilet seats.

The new wild west of biodefense contracting can turn paupers into millionaiers.  More commonly, however, it turns the extremely wealthy into the wealthiest.  But you have to pay to play.

David Willman broke the story 16 months ago, and Forbes called this contract another Solyndra.  There were screams in the halls of Congress.

DHHS waited for the noise to die down, and has now finalized the contract.

By DONALD G. McNEIL Jr.
The United States government is buying enough of a new smallpox medicine to treat two million people in the event of a bioterrorism attack, and took delivery of the first shipment of it last week. But the purchase has set off a debate about the lucrative contract, with some experts saying the government is buying too much of the drug at too high a price.

A small company, Siga Technologies, developed the drug in recent years. Whether the $463 million order is a boondoggle or bargain depends on which expert is talking.

Smallpox was eradicated by 1980 and the only known remaining virus is in government laboratories in the United States and Russia. But there have long been rumors of renegade stocks that could be sprayed in airports or sports stadiums. Experts say the virus could also be re-engineered into existence in a sophisticated genetics lab.

As part of its efforts to prepare for a possible bioterrorism attack, the government is paying over $200 for each course of treatment.

Siga Technologies, which is controlled by the billionaire takeover specialist Ronald O. Perelman, will show a profit for the first time once the contract is paid for. It argues that the price is a fair return on years of investment.

And Robin Robinson, director of the Biomedical Advanced Research and Development Authority, part of the Department of Health and Human Services, the overseer of the contract for the drug, Arestvyr, defended the size of the order and the price paid. He said that

two million doses was the amount modelers predicted would be needed to contain a smallpox outbreak in a large city and that the whole country would require 12 million, along with vaccines.

The price, he said, was arrived at through federal purchasing guidelines and was “fair and reasonable” compared with the price of other commercial antiviral drugs, which he said ranged from $108 to $7,364.

But when stockpiling a smallpox drug was first proposed in 2001 after the Sept. 11 and anthrax attacks, it was expected to cost only $5 to $10 per course, said Dr. Donald A. Henderson, who led a government advisory panel on biodefense in the wake of those attacks. Dr. Henderson was a leader in the eradication of smallpox in the 1960s and is now at the Center for Biosecurity at the University of Pittsburgh Medical Center.

Dr. Richard H. Ebright, a bioweapons expert at Rutgers University, said there was little need for so much of the drug, Arestvyr, since the country has raised its stockpile of smallpox vaccine to 300 million doses now, up from only 15 million in 2001.

“Is it appropriate to stockpile it? Absolutely,” he said. “Is it appropriate to stockpile two million doses? Absolutely not. Twenty thousand seems like the right number.”

Vaccines are normally given before an infection to prevent a disease, while antivirals are given after virus infections, to treat them. Smallpox has such a long incubation period that the vaccine can prevent disease even if given as late as three days after infection. Arestvyr may also prevent infection if given early enough, but that has not been proven.

Dr. Eric A. Rose, the president of Siga and a vice president of Mr. Perelman’s holding company, MacAndrews & Forbes, acknowledged that the drug cost little to make, but said the price being charged for a patented drug was a bargain compared with AIDS antiretrovirals that cost $20,000 a year and cancer drugs that cost over $100,000 a year.

Asked about the size of the purchase, he compared it with a flu drug. “There are 80 million courses of Tamiflu in the strategic national stockpile,” he said. “Smallpox is just as contagious and has 30 times the mortality. By measures like that, I’d say 2 million is on the low end.”

He also said that Mr. Perelman had invested $80 million in the company through years of research with no sales. Without a profit potential, no company would take up smallpox, Ebola and other lethal but very rare diseases, he said.

And Dr. Isaac B. Weisfuse, who was formerly head of pandemic planning for the New York City Health Department and is now Siga’s medical policy director, said that plans calling for tens of million Americans to be vaccinated within days of a major smallpox outbreak were unrealistic and that Arestvyr could save lives.

Arestvyr — which until November was known as ST-246 or tecovirimat — prevents the virus from forming the double outer envelope that lets it break out of the first cells it infects and spread throughout the body. A 14-day course can be taken in combination with smallpox vaccine, offering double protection, which Dr. Henderson called “quite amazing.”


Arestvyr is not approved by the Food and Drug Administration except for use in emergencies.

It has never been tested on smallpox in humans because the disease was eradicated. However, it has prevented death in dozens of monkeys injected with what would normally have been lethal doses of smallpox or a related virus, monkey pox.

It also appears to have helped several humans suffering from potentially lethal reactions to smallpox vaccine, which is itself a live smallpox-related virus, but normally harmless. They included a child near death after catching his father’s vaccination virus, a soldier vaccinated just before discovering he had leukemia, and a woman whose immune system was suppressed by steroids and who was infected by touching bait meant for raccoons that contained a combined rabies/smallpox vaccine.

However, those patients were also given immune globulin, other drugs and hospital care, so it is hard to know exactly what worked.

Bioterrorism experts say the need for Arestvyr has declined since the United States increased its stockpile of smallpox vaccine, including a less potent but less risky backup vaccine for those who cannot tolerate the standard one.

The word “smallpox” still strikes fear. John Grabenstein , a retired colonel and top biodefense adviser to the Defense Department after the 2001 attacks, recalled reports of refrigerated Soviet warheads loaded with the virus that could, in theory, aerosolize it over large areas. Others have envisioned a few infected terrorists mingling in crowds.

Left untreated, smallpox kills a third of victims. But prominent experts say the danger is overblown. Because it can take up to two weeks before an infected person becomes seriously ill, and up to five more days before he begins to infect others, there is time to respond, they said.

Also, they said, by the time smallpox victims reach the infectious stage, when their pox are erupting, they are too sick to wander around. That is why outbreaks in schools or factories were nearly unheard-of

Smallpox was eradicated by “ring vaccination” — finding each case and vaccinating just the 50 to 200 people closest to it.

“If we had to, we could vaccinate the entire country in three days,” said Dr. William H. Foege, another leader of the smallpox eradication effort who now advises the Bill & Melinda Gates Foundation. This vaccine does not use a syringe, but a forked pin that Dr. Foege said he could “train anyone to use in 10 minutes.” In a true emergency, he argued, schoolteachers, police officers, firefighters and others would all be vaccinators.

Other experts think that is overoptimistic, since an attack would cause panic.

Also, Dr. Rose of Siga pointed out, there are only an estimated 700 million doses of smallpox vaccine in a world of 7 billion people, so the United States might use its vaccine and Arestvyr stockpile to help other countries. (Only the United States, Japan and Israel are believed to have enough doses for their entire populations, experts said.)

Dr. Henderson and Dr. Philip Russell, who formerly headed the Walter Reed Army Institute of Research and served on the advisory panel with him, said they expected the government to pay much less for an antiviral drug since they cost little to make and the alternative, vaccines, cost the government $3 a dose. “If they’re talking $250 a course, they’re a bunch of thieves,” Dr. Russell said.

Other experts, like Dr. Grabenstein , said that since the drugs have no other use, they are like aircraft carriers: to entice companies to make them, the government has to pay all the costs plus guarantee the producer a profit — and that it might be prudent to have extras on hand.

Mr. Perelman’s company, MacAndrews & Forbes, has spent more than $1 million lobbying each year since 2008, according to the Center for Responsive Politics, a watchdog group. A spokeswoman for the company, Christine Taylor, said it had done “absolutely no lobbying” for the Siga contract.