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How a company cashed in on anthrax



 
 
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Old December 9th 05, 08:12 AM posted to misc.kids.health,sci.med,misc.health.alternative,uk.people.health
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Default How a company cashed in on anthrax

E-NEWS FROM THE NATIONAL VACCINE INFORMATION CENTER
Vienna, Virginia http://www.nvic.org

* * * * * * * * * * * * * * * * * * * * * * *
UNITED WAY/COMBINED FEDERAL CAMPAIGN
#8122
* * * * * * * * * * * * * * * * * * * * * * *

"Protecting the health and informed consent rights of children since
1982."

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

==============
BL Fisher Note:

The lesson learned from the anthrax vaccine fiasco is that strict
government
regulation of vaccines, public oversight and citizen access to the
judicial
system is absolutely necessary to keep the vaccine industry honest.
Drug
companies making vaccines have been lying to Congress and the American
people for years in order to escape responsibility in the judicial
system
for their carelessness and make bigger profits.

The truth is that there is no "lawsuit" crisis - there are about 10
vaccine injury lawsuits pending in U.S. courts and the majority are for
the
highly reactive whole cell DPT vaccine which isn't used anymore in the
U.S.
It is an urban myth that drug companies have been driven out of the
vaccine
business by lawsuits. The truth is that there are twice as many drug
companies making vaccines today than were making vaccines twenty years
ago.

The coverup of vaccine dangers and the profit making that goes along
with
forced use of vaccines by military and civilian populations is the real

story behind vaccine myths. Learn more about pending legislation in
Congress (S. 1873) that will take away all liability for injuries
caused by
vaccines used in a public health "emergency" declared by the Secretary
of
Health at www.nvic.org



http://www.dailypress.com/news/dp-an...446.story?coll

=dp-widget-news
DailyPress
December 7, 2005

How a company cashed in on anthrax
The vaccine maker's frequent cries for help brought it millions of
additional tax dollars - even when it could not deliver a product that
troops could use.

BY BOB EVANS


In a two-year span, the nation's only licensed anthrax vaccine maker
went
from pleading poverty to announcing $100 million in acquisitions,
including
other pharmaceutical companies and a new manufacturing plant near
Washington, D.C.

It's a pattern that's worked well for BioPort Corp.: Tell the Pentagon
or
Congress that it doesn't have the money to keep going, negotiate a new
deal,
then count the extra cash rolling in.

During the past seven years, it's transformed an initial investment of
less
than $4.5 million into an international biotech firm, with contracts
worth
more than $450 million. During that time, the company has capitalized
on its
monopoly over the vaccine and on fears that opposing armies and
terrorists
will unleash tiny anthrax spores somewhere.

BioPort is an example of how a sole-source government contract can
become a
gold mine - especially if you spend wisely on the right lobbyists and
public
relations professionals.

BioPort counts a former Cabinet member and assistant secretary of
health and
human services among those it pays to gain favor with government
agencies.

"You always pay a higher price when you're stuck with a sole-source,"
says
Philip Coyle, a former assistant secretary of defense for procurement.
"The
government has nowhere else to go if it wants what you have to sell."

He says Pentagon officials talked about taking over the anthrax vaccine

plant and operations - especially after the government held the license
for
the vaccine as collateral for a series of loans and payments that kept
the
company afloat.

"What I never heard in those discussions was why nothing ever came of
it,"
he says.

The Pentagon isn't telling that story, and neither is BioPort.

MOST BIOPORT FINANCES AREN'T OPEN TO PUBLIC

Troops and veterans who've been asked to put BioPort's products in
their
bodies often point to the company's problems getting a clean bill of
health
for its manufacturing plant, as well as to the company's ability to
always
get its way with government officials. They wonder whether BioPort's
connections - not its scientific and medical prowess - are behind the
company's success.

BioPort is a privately held company that doesn't make its stock
available
for public sale. As a result, most aspects of its finances and
management
aren't open to public scrutiny.

The company declined to provide its officers for interviews with the
Daily
Press. Six weeks after receiving a list of detailed questions - and
promising answers - it sent a box containing two books and some news
releases. None of the questions was answered.

BioPort's approach to veterans is similar: It sends substitutes to
speak for
it, often without disclosing that those sources were paid by the
company.
Those surrogates disregard evidence of deaths or severe health problems
from
the vaccine, and they provide testimony to government regulators and
the
public.

Meanwhile, the veterans who think that they've been harmed by the
vaccine
live on disability payments or suffer in silence.

No government grants support research into their questions about the
shot.

EX-JOINT CHIEFS HEAD WAS NAMED DIRECTOR

Until 1998, the nation's only manufacturing plant for anthrax vaccine
was
owned and operated by the state of Michigan. The state agency that ran
the
plant was losing money, so the state put the operation and its license
for
making the anthrax vaccine up for bid.

Fuad El-Hibri, a 40-year-old German businessman with a Yale University
management degree, formed a team of investors to buy the business,
which
included a $100 million contract with the Pentagon.

His bid faced a problem, though: He and his father, Ibrahim El-Hibri, a

wealthy international financier from Lebanon, dominated ownership of
the
company, which they named BioPort.

Both were considered friendly to the United States. Father and son had
directed a company involved in Britain's anthrax vaccine program and
they
had worldwide interests in cell phone networks and other ventures.

But the U.S. government was not keen on letting a foreign-owned company

control its anthrax vaccine. The only other bidder was also based
overseas.

So Fuad El-Hibri played a trump card: A family friend, former Chairman
of
the Joint Chiefs of Staff Adm. William Crowe, was made a director.

Crowe put no money into BioPort but got about 10 percent of the stock,
government records show. El-Hibri says Crowe immediately advised him to

apply for U.S. citizenship.

Crowe's advice was good, El-Hibri said. But Crowe's connections were
better:
He was the military's top officer during the Reagan administration,
then
endorsed Bill Clinton for president in 1992. Clinton made him U.S.
ambassador to the United Kingdom, and while serving there, Crowe was
close
to the El-Hibri family, congressional testimony shows.

Crowe has persistently declined comment on his investment or role with
the
company, except for congressional testimony in 1999, when BioPort was
seeking its second government bailout. During that testimony, he was
asked
whether he'd lobbied Pentagon officials for BioPort. Crowe vehemently
denied
it.

At that point, BioPort had all the leverage over the Pentagon that it
needed - if the military wanted to continue its year-old program of
inoculating every service member against anthrax.

Even though the Pentagon gave Michigan more than $20 million for new
equipment and repairs and $100 million in guaranteed contracts the
previous
de- cade, the plant had several problems. It was shut for renovations
in
March 1998, six months before BioPort bought all operations and
licenses in
a $25 million package of cash, loans and promises of future payments.

Food and Drug Administration inspections found repeated problems before
and
after BioPort took over. BioPort brought in more, and better-paid,
consultants and employees to fix things up - even though its minor
partners
included managers who had run the plant that provided millions of doses
of
vaccine to U.S. troops, congressional records show.

As part of the sale, BioPort assumed the right to sell about $7.9
million of
vaccines already made and promised to the U.S. military. Within weeks,
it
signed a new contract with the Pentagon providing for $45.1 million
more,
including $16 million in immediate cash for plant renovations. The deal

required the government to pay for vaccine even if the drugs weren't
licensed for use.

MONEY FLOWED DESPITE

QUESTIONS ON EXPENSES

That wasn't enough for BioPort: Nine months later, in June 1999, it was

still struggling to get FDA approval of its manufacturing plant. The
company
said it was running out of money and needed more help.

Pentagon auditors looked at BioPort's books and concluded that millions
of
dollars were unaccounted for. BioPort didn't even know the cost of
making a
dose of vaccine, the auditors reported.

It was clear that $1 million had been spent to renovate and furnish
offices,
as well as $1.28 million more on bonuses for "senior management."

One unnamed former manager got $10,000 a month for as much as 40 months
-
whether he worked or not, records show.

And $1 million more had been spent on items unrelated to anthrax
production,
the auditors said.

They concluded that BioPort's request for extra money didn't meet legal

requirements.

But Pentagon contract officers, citing "the interests of national
security,"
overruled them and approved a $24.1 million bailout in September 1999.

The contract addition that they blessed paid all the company's debts
and
provided a 144 percent increase in payment for each anthrax vaccine
dose,
from $4.36 to $10.64.

It was $2 million less than BioPort sought. Pentagon officers wrote
that by
chopping the amount, they didn't have to notify Congress about the new
deal.

Congress found out anyway, but did nothing to stop the deal.

Hearings were held, including one by Sen. John Warner, R-Va., chairman
of
the Senate Armed Services Committee. His session involved only BioPort
officials and others who supported the bailout.

A second hearing involving critics of the company and the renegotiated
contract was promised but never held.

More aggressive questioning took place in the House of Representatives.
It
was determined that El-Hibri and his partners had invested only $4.5
million
of their own money, in cash and loan guarantees.

All that money and the cash the Pentagon had chipped in was gone, spent
on
renovations, consultants' fees and physical improvements, congressional

investigators found.

Further, the original $25 million deal with Michigan had become $14.45
million.

"The message seems clear: If a company wants to make millions without
providing a product or service, enter into a sole-source contract with
the
De- partment of Defense to produce vaccines," Rep. Walter Jones,
R-N.C.,
said in a written statement. "BioPort appears to have the government
over a
barrel."

Louis J. Rodrigues of the Government Accountability Office - a
congressional
oversight agency that's frequently criticized BioPort and the
Pentagon's
management of the vaccine program - told Congress that it "had no
option"
but to pay up if it wanted anthrax vaccine.

The Pentagon contractors who made the original deal with BioPort should
have
known there was no way that the company could stay in business,
Rodrigues
said.

"We did nothing to force BioPort's hand and make them come up with a
cost-control system," he said.

Or, he added, a realistic business model.

COMPANY TROUBLED BEFORE 9/11

Pentagon officials promised Congress that they'd do a better job - in
part
by assigning government employees to oversee the company's bookkeeping
and
quality-control systems.

They denied that they'd been patsies for the well-connected company.

"All I am trying to say is that this is not a sweetheart deal," David
R.
Oliver, then principal deputy undersecretary of defense for acquisition

technologies, told Congress.

BioPort struggled for more than three years to get licensing for its
plant
and product. Meanwhile, batches of vaccine were made and the Pentagon
paid
for each - including money for storage of unusable vaccine.

Vaccine made before the plant renovation kept going into the arms of
thousands of troops. Dozens of them came to Congress, complaining that
the
drug made them permanently ill, giving them headaches, joint pain, loss
of
memory and more severe symptoms.

By 2000, even the Pentagon had lost patience and told BioPort to stop
making
vaccine until the plant regained its license. But the military agreed
to
keep making payments anyway, to keep the company afloat.

Those payments meant that BioPort's owners didn't have to borrow money
elsewhere and didn't have to risk their personal finances, a
congressional
auditor testified in 2000.

By January 2002 - when federal drug regulators finally agreed that the
plant
and company could resume licensed operations - the Pentagon had paid
BioPort
$126 million for drugs that were stored and unlicensed, congressional
records show. It also paid $33.5 million during that time for vaccine
given
to 525,000 troops.

The months before the licensing approval were tumultuous for the
company and
the nation.

In August 2001, Congress and the Pentagon publicly said they were
considering giving up on BioPort and its failures in getting operations
up
to snuff.

Meanwhile, BioPort brought in more business partners and consultants
from
established vaccine companies and government contractors to figure out
how
to regain its license.

Then came Sept. 11, 2001, followed the next month by deadly
anthrax-laden
letters to members of Congress and others in Washington, D.C.;
Connecticut;
and Florida.

Instead of asking questions about the vaccine's safety, many members of

Congress began asking why more doses weren't available.

Tommy Thompson, then secretary of health and human services and the
Bush
administration official responsible for vaccine and drug licensing, was

caught between a Congress that wanted action and critics who feared
political pressure would hasten licensure.

"I can assure you nobody is pressuring FDA to approve this," he said in

October 2001.

Three months later, BioPort had its license back.

A few months after that, it was back to pleading poverty.

This time, BioPort was after a bigger prize: a contract to supply
millions
of doses of anthrax vaccine for use by civilians, postal workers,
police,
firefighters and others who might encounter domestic terrorism.

A $1 billion contract was being waved in front of vaccine and
pharmaceutical
makers, the largest in government history.

BioPort responded as it had in the past.

In a series of interviews, company officials said their business was
"at
risk" and in financial jeopardy if the government did not quickly give
it
the contract for a domestic vaccine stockpile - or a new Pentagon deal.


If BioPort was on the ropes financially, its biggest stockholders
didn't
seem to feel it.

During the same week the president of BioPort pronounced it "at risk,"
the
chairman of the board and biggest stockholders - El-Hibri and his wife,

Nancy - were in the news because neighbors were complaining about their

plans to build an 88-acre commercial equestrian and polo center near
their
home in Gaithersburg, Md., near Washington, D.C.

The El-Hibris had never moved to Michigan to oversee the daily struggle
over
licensing at the vaccine plant there.

BIOPORT FOCUSES ON WASHINGTON, D.C.

Washington, D.C., was the focus of much of BioPort's attention anyway.

In 2002, records show, the company increased spending for lobbyists in
Congress, from $30,000 to $110,000. The amount doubled the following
year.

BioPort also hired Ruder Finn and Fleishman-Hillard, high-powered
public
relations firms staffed by many former government officials.

BioPort, still the nation's only licensed anthrax vaccine manufacturer,

began sponsoring "public education seminars" and studies to build
support
for a bigger government stockpile of the drug.

On the first anniversary of the Sept. 11 attacks, six doctors,
scientists
and former military officers - described as a "panel of bioterrorism
experts" by BioPort - announced the need for preparedness. Their
primary
recommendation was to not rely on a new anthrax vaccine but to purchase

millions of doses of BioPort's product.

BioPort paid several of the people on that panel to review and endorse
the
report, including former military officers who only a year before told
Congress how safe and effective the company's vaccine was.

They included Marine Maj. Gen. Randy West and Lt. Gen. Ronald Blanck, a

former Army surgeon general.

West said he was paid $5,000 for reviewing the report, which was
written by
either BioPort or its public relations agent - not the experts on the
panel.

Even though the ghost writing wasn't known at the time, a critic from
the
conservative Cato Institute publicly dismissed the panel's work as
"just
BioPort trying to make some money."

COMPANY CONNECTIONS WEREN'T PUBLICIZED

After that, the company's efforts became less obvious.

Muhiuddm Haider, an unpaid member of the panel and a professor in the
school
of public health at George Washington University, started operating a
Web
site for BioPort in support of the anthrax vaccine.

BioPort's name doesn't appear anywhere on the site, but the company
supplies
all the money to operate it, $40,000 a year, Haider said.

The Web site says it's sponsored by the Partnership for Anthrax
Vaccination
Education, or P.A.V.E., a group of medical organizations that includes
the
prestigious American Medical Association.

Earlier this year, Haider and P.A.V.E. petitioned the FDA to license
the
anthrax vaccine for use against inhaled spores of the bacteria.

The ties to BioPort were not disclosed then, either.

P.A.V.E.'s Web site and the organization's publications extol the need
for
vaccine and say the vaccine is safe. They mention none of the side
effects,
even the minor ones that the Pentagon acknowledges are suffered by a
third
or more of those who get the shots.

"I am not marketing for BioPort," Haider says. "I am marketing for
public
safety."

P.A.V.E.'s public safety efforts began with a series of forums.
Featured
speakers were West, officials from BioPort, Haider and others connected
to
BioPort.

People who question the effectiveness and safety of the vaccine aren't
on
the agenda for those forums.

A frequent speaker is Jerome Hauer, former assistant secretary of
health and
human services for emergency preparedness. He was a leading proponent
of
stockpiling anthrax vaccine for civilian use while he was on the
government
payroll.

In his first few appearances at P.A.V.E. events, Hauer's connections to

BioPort weren't disclosed. He'd become a paid consultant.

Later, he took over a new bioterrorism institute at Haider's
university.

He was named to BioPort's board of directors in June and has been
lobbying
for the company's products.

As BioPort's board expanded, so did its business.

By September 2003, the Pentagon was paying $22 a dose - more than
double the
price negotiated in the 1999 bailout.

Cash was coming in fast. The company could make a million more doses a
year
than the military demanded, El-Hibri told TWST, a Web site that runs
verbatim interviews with business leaders.

"We are debt-free and profitable," he said.

VACCINE PROFITS FUEL BIG PURCHASES

BioPort was now a subsidiary of Emergent BioSolutions, led by El-Hibri
and
his business partners.

By the end of 2003, Emergent announced the purchase of a Maryland drug
maker
for more than $3 million and signed a new contract with the Pentagon,
worth
from $29.7 million to $245 million, depending on the doses sold.

The following year, it began building a second, $95 million, anthrax
vaccine
plant in Frederick, Md.

In January of this year, Emergent signed a deal with the British
government
to work cooperatively on toxoid and botulism vaccines, including a
pledge to
spend at least $2 million during the next two years. Purchase of a
British
company working on five vaccines, including an oral anthrax vaccine,
followed weeks later.

ONE CONTRACT LOST, BUT ANOTHER WAS WON

But BioPort and its parent still hadn't landed the big prize: supplying

anthrax vaccine for the U.S. domestic stockpile.

BioPort and other companies received seed money to research a
new-generation
anthrax vaccine. But when the $1 billion contract was awarded in
November
2004, it went to VaxGen Inc., a California company without a licensed
product and in trouble for misreporting financial results to Wall
Street.

VaxGen's vaccine isn't ready for use yet and is in early trials, years
away
from licensing. Government grants finance at least 11 other efforts to
provide alternatives to BioPort's vaccine, aiming for a safer, more
effective product.

When BioPort couldn't win in the lab, it doubled its efforts in
Congress and
other branches of government, adding more and better lobbyists.

It had hired Louis Sullivan, secretary of health and human services
under
President George H.W. Bush - the current president's father. But
higher-powered help was needed.

TWO NEW LOBBYISTS

EQUALS ONE BIG DEAL

McKenna Long & Aldridge, a powerful Washington, D.C., law and lobbying
firm
also known as "MLA," was hired Jan. 1 of this year, U.S. Senate
lobbying
records show.

Within six months, it reported $140,000 in lobbying fees and helped
bring
BioPort a $122.7 million contract to supply 5 million doses of the
vaccine
to the Department of Health and Human Services, the second-largest
award
under BioShield, the federal law that created a domestic stockpile of
antiterror vaccines.

The lobbyist's news release was headlined, "MLA Helps Client Secure
BioShield Contract for AVA Anthrax Vaccine."

MLA had supplied several lawyers, including one who'd helped write the
Homeland Security Act of 2002 and two who'd been tapped by Congress for
help
in creating the BioShield law.

But they couldn't do it alone.

Four days before the big contract award, BioPort added lobbyist John
Hishta
to the team. A few weeks later, he filed a U.S. Senate lobbyist report
saying BioPort had paid him $30,000 for "procuring a government
contract for
anthrax vaccine."

Hishta was executive director of the National Republican Congressional
Campaign Committee during its successful 2002 election campaign. The
committee is the main strategy and fund-raising organization for
Republican
candidates in the House of Representatives.

Hishta also managed a re-election campaign for Virginia Sen. John
Warner.
Warner is an important ally of the Pentagon in the anthrax vaccination
program.

BioPort is still delivering those 5 million doses for the BioShield
contract.

But the company didn't wait to resume its well-practiced, well-rewarded

strategy for success: threatening to stop vaccine production, then
reaping a
new contract.

On July 14, BioPort President Robert Kramer told Congress that if the
government didn't promise to buy even more vaccine for the domestic
stockpile, the company might have to stop producing anthrax vaccine
altogether.

"We'll have to make a very simple business decision," he testified.

Whether it was the renewed threat - or just coincidence - BioPort once
again
got the desired result.

Last month, Health and Human Services posted a notice that it would
enter
private negotiations with BioPort to supply an additional 5 million
doses of
anthrax vaccine for the domestic stockpile.

The price to taxpayers hasn't been determined yet.

 




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