Only maker of anthrax vaccine asks government to pay more

Company's financial woes could raise cost of drive to inoculate U.S. soldiers

July 01, 1999|By Tom Bowman | Tom Bowman,SUN NATIONAL STAFF

WASHINGTON -- The Pentagon's mandatory anthrax vaccine program, troubled by a wave of resignations and courts-martial of personnel who refuse to take the shots, now has another problem: The sole manufacturer of the vaccine is in financial trouble.

Bioport Corp., of Lansing, Mich., "has a serious cash flow problem" and is about five months behind in its deliveries, due to an "overly optimistic business plan," the General Accounting Office, Congress' watchdog arm, told a House hearing yesterday.

The company is asking the Pentagon to increase its payments from $3 per shot to $10, costing taxpayers millions of additional dollars. The vaccinations are intended to defend all 2.4 million U.S. military troops against an attack with the biological agent by terrorists or rogue states.

Last year the Pentagon awarded a $29 million contract to the company to produce the vaccine, which is given to military personnel in a six-shot regimen. Officials would not say how much more the Pentagon would have to pay if they approved the increase.

About 300,000 soldiers have been immunized so far, and Pentagon officials said they expect no delays in its vaccine program because they have stockpiles.

Company President Fuad El-Hibri told the hearing there have been unanticipated costs and problems since he purchased the company from the state of Michigan last year. The Pentagon contract was signed shortly after he bought the firm.

There was no correlation between the cost to produce the vaccine and the price paid by the Defense Department when the state owned the facility, El-Hibri explained. Other factors include delays in renovations at the company and start-up problems with its other products.

David R. Oliver, principal deputy undersecretary of defense for acquisition and technology, told a subcommittee of the House Committee on Government Reform that despite the problems both the program and the company are on track.

He acknowledged that the Pentagon has yet to make a decision on Bioport's request for a price increase but said, "I think they're on their way to significant improvement."

Rep. Christopher Shays, a Connecticut Republican who chairs the subcommittee, said he has an "uneasy feeling" about the company and expressed concern that the federal government has spent $18 million since 1991 at the company on equipment and renovations.

"The program isn't on solid ground," he said.

Oliver said the Pentagon is considering an additional anthrax vaccine source.

One option would be for Bioport to develop a second site and another would call for another contractor to produce the vaccine. The first option would take up to five years and the second up to seven years.

Defense Secretary William S. Cohen says he wants all 2.4 million active duty and reserve forces to complete inoculations by 2003.

While the Pentagon is calling the anthrax vaccine program a success, more than 200 military personnel -- many of them National Guard and Reserve pilots -- have refused to take the shots, citing health concerns and the lack of long-term studies on the vaccine.

Most recently five Marines in California were court-martialed for their failure to take the shots. All of them were sentenced to a month in the brig and given bad conduct discharges.

At least six members of a Wisconsin Air National Guard unit say they will resign rather than take the vaccine.

Defense officials say the vaccine has been proven safe by the Food and Drug Administration and is effective against all known strains of anthrax, a deadly disease that affects sheep and cattle.

The dried spores of anthrax are the easiest -- and therefore most likely -- biological agent to develop into weapons, according to defense and terrorism experts.

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