Project BioShield: Appropriations, Acquisitions, and Policy Implementation Issues for Congress
Congressional research reportJun 11, 2007
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Project BioShield: Appropriations,
Acquisitions, and Policy Implementation
Issues for Congress
name redacted
Specialist in Science and Technology Policy
June 11, 2007
Congressional Research Service
7-....
www.crs.gov
RL33907
CRS Report for Congress
Prepared for Members and Committees of Congress
Project BioShield
Summary
The Project BioShield Act of 2004 (P.L. 108-276) established a 10-year program to acquire
civilian medical countermeasures to chemical, biological, radiological, and nuclear (CBRN)
agents for the Strategic National Stockpile. Provisions of this act were designed to encourage
private companies to develop these countermeasures by guaranteeing a government market for
successfully developed countermeasures.
Congress has expressed concern about the implementation of Project BioShield. It has held
multiple oversight hearings and considered several pieces of legislation to improve the execution
of this program, including the Pandemic and All-Hazards Preparedness Act (P.L. 109-417), H.R.
1089, and H.R. 1684. Stakeholders and policymakers have criticized specific contract award
decisions and the rate at which they are made. Additionally, contract awards reported by the
Department of Health and Human Services (HHS) do not directly correspond with figures
provided in the President’s annual budget documents, which may suggest problems with
interagency coordination and communication.
Both the Department of Homeland Security (DHS) and HHS have responsibilities in this
program. Funds for this program are appropriated to DHS, while contracts are executed through
HHS. The interagency process responsible for deciding which countermeasures to procure has
changed multiple times since this program’s inception.
The Homeland Security Appropriations Act, 2004 (P.L. 108-90) provided an advance
appropriation of $5.6 billion to acquire CBRN countermeasures over a 10-year period (FY2004FY2013). This act also limited the amount that could be obligated during specified time periods.
The Project BioShield Act of 2004 (P.L. 108-276) assigned the $5.6 billion advance appropriation
to Project BioShield countermeasure acquisitions. Two separate rescissions reduced the total
amount available for Project BioShield by a total of $25 million. Congress retains the power to
make additional appropriations and rescissions to this account.
HHS has awarded Project BioShield contracts for a countermeasures against anthrax, smallpox,
botulinum toxin, and radiological or nuclear agents. These awards total approximately $2.331
billion. However, the largest contract, $878 million for an anthrax vaccine, was cancelled in
December 2006 for failure to meet a contract milestone. Taking this into account, approximately
$1.889 billion remains available for obligation through FY2008 and $4.064 billion available for
obligation through the end of the program in FY2013.
This report discusses actions taken by Congress and the Administration that have affected this
program, describes the decision-making process for choosing countermeasures, describes the
countermeasures for which the Department of Health and Human Services (HHS) has contracted,
and discusses accounting discrepancies in Project BioShield budget documents. This report will
be updated periodically.
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Project BioShield
Contents
Overview of Project BioShield ....................................................................................................1
Project BioShield Procurement Process .................................................................................2
DHS Roles...................................................................................................................... 2
HHS Roles...................................................................................................................... 4
Presidential Roles ...........................................................................................................5
Interagency Roles ...........................................................................................................6
Appropriations, Rescissions, and Future Funding Options ...........................................................8
Appropriations ......................................................................................................................8
Rescissions ...........................................................................................................................9
Future Funding Options ........................................................................................................9
Acquisitions.............................................................................................................................. 10
Anthrax............................................................................................................................... 15
rPA Vaccine................................................................................................................... 15
AVA Vaccine ................................................................................................................. 16
ABthrax ........................................................................................................................ 17
Anthrax Immune Globulin ............................................................................................ 18
Smallpox ............................................................................................................................ 18
Botulinum Toxin ................................................................................................................. 18
Radiological and Nuclear Agents......................................................................................... 19
Potassium Iodide........................................................................................................... 19
Chelators ...................................................................................................................... 20
Differences in HHS Contract Awards and Annual Budget Document Accounting....................... 20
Remaining Available Funds....................................................................................................... 23
Concluding Observations .......................................................................................................... 23
Figures
Figure 1. Project BioShield Acquisition Process ..........................................................................3
Figure 2. Project BioShield Acquisition Activity........................................................................ 13
Tables
Table 1. Project BioShield Appropriation and Rescissions by Years Funding Is Available .......... 10
Table 2. Project BioShield Appropriation and Rescissions by Year Money First Becomes
Available................................................................................................................................ 10
Table 3. HHS Reported Project BioShield Contract Awards....................................................... 12
Table 4. Disposition of Project BioShield Special Reserve Fund
According to the President’s Budget....................................................................................... 21
Table 5. Comparison of HHS Award Reporting and DHS Budget Accounting............................ 21
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Contacts
Author Contact Information ...................................................................................................... 25
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Project BioShield
F
ollowing the terrorist attacks of 2001, the federal government determined that it would
need additional medical countermeasures (e.g., diagnostic tests, drugs, vaccines, and other
treatments) to respond to an attack using chemical, biological, radiological, or nuclear
(CBRN) agents. The enactment of the Project BioShield Act of 2004 (P.L. 108-276) was designed
to be an important part of federal efforts to obtain new civilian medical countermeasures. It
provides countermeasure developers with a guaranteed government market for their products. As
Congress continues oversight of federal efforts to protect the United States, the effectiveness and
efficiency of the Project BioShield implementation may draw legislative attention.
This report discusses actions taken by Congress and the Administration that have affected this
program, describes the decision-making process for choosing countermeasures, describes the
countermeasures for which the Department of Health and Human Services (HHS) has contracted,
and discusses accounting discrepancies between the President’s Budget and HHS reporting of
Project BioShield awards.
Overview of Project BioShield
The Project BioShield Act of 2004 (P.L. 108-276) contains three major provisions. One relaxes
some procedures for bioterrorism-related procurement, hiring, and research grant awarding.
Another permits the emergency use of countermeasures not approved by the Food and Drug
Administration (FDA). The third authorizes a 10-year program to encourage the development and
production of new countermeasures for chemical, biological, radiological, and nuclear (CBRN)
agents. This last provision is usually referred to as Project BioShield and is the focus of this
report.1
In contrast to federal programs that directly fund research and development of biomedical
countermeasures, Project BioShield is a procurement program. It acts as a guarantee that the
federal government will buy successfully developed countermeasures for the Strategic National
Stockpile (SNS).2 It allows the government to enter into contracts to procure countermeasures
while they still are in development, up to eight years before product delivery is expected. The
government guarantees that it will buy a certain quantity at a specified price, once the
countermeasure meets specific requirements. The government pays the agreed-upon amount only
after these requirements are met and the product is delivered to the Strategic National Stockpile.
If the product does not meet the requirements within the specified time frame, the contract can be
cancelled without any payment to the contractor. Thus, Project BioShield is intended to reduce
the developer’s market risk; that is, the possibility that no customer will buy the successfully
developed product. However, it does not reduce the development risk; that is, the possibility that
the countermeasure will fail during development. The Pandemic and All-Hazards Preparedness
Act (P.L. 109-417) modified the Project BioShield Act to allow for milestone-based payments for
up to half of the total award before countermeasure delivery.
1
For brief overview of this program and information on other aspects of this act, see CRS Report RS21507, Project
BioShield: Purposes and Authorities, by (name redacted).
2
The SNS contains pharmaceuticals, vaccines, medical supplies, and medical equipment to respond to terrorist attacks
and other emergencies.
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Project BioShield Procurement Process
The Project BioShield procurement process requires actions by the Department of Homeland
Security (DHS), HHS, and the President, and relies on interagency working groups. Figure 1
illustrates the Project BioShield decision-making and acquisition process.
DHS Roles
The first step in the BioShield acquisition process is to determine whether a particular CBRN
agent poses a material threat to national security. This analysis, generally referred to as a Material
Threat Assessment (MTA), is performed by DHS. Between 30 and 40 subject matter experts are
consulted during an MTA.3 On the basis of this assessment, the DHS Secretary determines
whether that agent poses a material threat to national security. The Project BioShield Act of 2004
requires such a written Material Threat Determination (MTD) for procurement using BioShield
funds and authorities. This declaration neither addresses the relative risk posed by an agent nor
determines the priority of its acquisition. Furthermore, the issuance of an MTD does not
guarantee that the government will pursue countermeasures against that agent.
3
Dr. John Vitko, Director, DHS Chemical and Biological Division, Public comments at the Project BioShield
Stakeholders Meeting, Washington DC, September 25, 2006.
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Figure 1. Project BioShield Acquisition Process
DHS
Agent pose
material threat to
national security ?
(MTD )
DHS*
Evaluate agent (MTA) and
develop scenarios
Yes
HHS*
Countermeasure
required ?
Yes
HHS/DHS
Secretaries’ joint
recommendation for use of
BioShield funds
OMB
Approve use of BioShield
funds?
Yes
Yes
HHS*
Appropriate for BioShield
procurement?
HHS*
Set countermeasure
requirements
HHS
Acquisition process :
RFI, RFP, award and
manage contract
HHS
Countermeasure
acceptable
for delivery ?
Yes
DHS
Pay for countermeasure
HHS
Accept countermeasure
into SNS
Source: CRS analysis.
Note: Bold indicates lead agency, * indicates interagency input. MTA: Material Threat Assessment, MTD:
Material Threat Determination, OMB: Office of Management and Budget, RFI: Request for Information, RFP:
Request for Proposals, SNS: Strategic National Stockpile.
DHS has issued MTDs for 13 agents. These included the biological agents that cause anthrax,
multi-drug resistant anthrax, botulism, glanders, meliodosis, tularemia, typhus, smallpox, plague,
and the hemorrhagic fevers Ebola, Marburg, and Junin.4 Additionally, DHS issued a single MTD
covering radiological and nuclear agents. According to HHS, the first four MTDs (anthrax,
radiological/ nuclear agents, botulinum toxin, and smallpox) were completed before or shortly
after the enactment of the Project BioShield Act.5 No other MTDs were issued until September
2006, when nine were issued.6 HHS predicted no additional MTDs would be issued unless
“technology advances or if our understanding of the potential threats changes.”7
4
HHS, “Public Health Emergency Medical Countermeasure Enterprise Implementation Plan For Chemical, Biological,
Radiological and Nuclear Threats,” 72 Fed. Reg. 20119, April 23, 2007.
5
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007.
6
Dr. Gerald Parker, Principal Deputy Assistant Secretary for Preparedness and Response HHS, Testimony before the
House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, Education and Related
(continued...)
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Homeland Security Presidential Directive (HSPD)-10 and HSPD-18 direct DHS to perform
additional risk assessments.8 HSPD-10 directs DHS to develop, and periodically update, risk
assessments that include a ranking of relative risks for biological agents. HSPD-10 states that this
overall biological agent risk assessment is to be used to prioritize federal government-wide
planning and response to the threat of biological agent attacks. The first iteration of this
assessment was delivered in 2006. Following its completion, this overall biological agent risk
ranking helped determine which agents should have MTAs and MTDs.9 HSPD-18 requires DHS
to develop a comprehensive risk assessment that integrates all CBRN agents into a single ranking
of relative risk. This risk assessment is required to be completed by June 1, 2008. HSPD-18
directs that this assessment be used to prioritize CBRN countermeasure research, development,
and acquisition.
In addition to making MTDs and performing risk assessments, DHS contributes to the
interagency process by developing credible attack scenarios to help establish countermeasure
requirements and response planning.
HHS Roles
For agents that have received an MTD, HHS assesses the public health consequences of an attack
using that agent. This analysis relies on interagency working groups (see below) and is now
coordinated by the HHS Office of Public Health Emergency Medical Countermeasures
(OPHEMC). OPHEMC is within the Office of the Assistant Secretary for Preparedness and
Response (ASPR).10 Following this assessment, HHS determines whether this material threat
lacks an existing, effective countermeasure and whether a countermeasure should be procured
using Project BioShield authorities and funds. If so, the HHS and DHS Secretaries may
jointly submit a recommendation for presidential approval to use BioShield funds to acquire
such a countermeasure.
The HHS Secretary is also responsible for establishing countermeasure requirements, such as
dosage, patient administration method (e.g., injection or pill), minimum effectiveness, and
quantity. This process is coordinated by OPHEMC and relies on input from interagency working
(...continued)
Agencies, March 8, 2007.
7
HHS, “Public Health Emergency Medical Countermeasure Enterprise Implementation Plan For Chemical, Biological,
Radiological and Nuclear Threats,” 72 Fed. Reg. 20119, April 23, 2007.
8
Executive Office of the President, Homeland Security Presidential Directive 10, April 28, 2004 and Executive Office
of the President, Homeland Security Presidential Directive 18, January 31, 2007.
9
Dr. John Vitko, Director, DHS Chemical and Biological Division, Public comments at the Project BioShield
Stakeholders Meeting, Washington DC, September 25, 2006.
10
These offices have undergone several name changes. The Office the Assistant Secretary for Preparedness and
Response (ASPR) was formerly the Office of Public Health Emergency Preparedness (OPHEP), and was renamed
pursuant to P.L. 109-417, The Pandemic and All-Hazards Preparedness Act, in December 2006. The name OPHEP was
created administratively in August 2004 (69 Fed. Reg. 51679-51680). Prior to that change, the office was called the
Office of the Assistant Secretary for Public Health Emergency Preparedness (ASPHEP), pursuant to P.L. 107-188, the
Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (67 Fed. Reg. 48903-48905). Briefly,
before that change, it had been called the Office of Public Health Preparedness, which was created administratively in
January 2002 (67 Fed. Reg. 1980). In July 2006, Office of Public Health Emergency Medical Countermeasures, an
office within ASPR, was renamed, replacing the name Office of Research and Development Coordination (ORDC, 71
Fed. Reg. 38403-38405). ORDC was created administratively within ASPHEP in December 2002 (67 Fed. Reg.
71568).
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groups. HHS is responsible for the entire Project BioShield contracting process, including issuing
Requests for Information, Requests for Proposals, awarding contracts, managing awarded
contracts, and determining whether contractors have met the minimum requirements for payment.
OPHEMC maintains a website detailing all Project BioShield solicitations and awards.11
HHS implementation of Project BioShield and its management of the procurement process have
been widely criticized. 12 These issues provided some of the impetus for creating the Biodefense
Advanced Research and Development Authority (BARDA) through the Pandemic and AllHazards Preparedness Act (P.L. 109-417).13 Despite concerns that OPHEMC was not optimally
executing its BioShield responsibilities, HHS has chosen to implement P.L. 109-417 by adding
the new BARDA responsibilities and authorities to this office.14 To reflect this increase in
responsibilities, HHS also plans to rename OPHEMC as the Biodefense Advanced Research and
Development Authority. These new duties include directly funding the advanced development of
countermeasures which are not yet deemed eligible for Project BioShield contract awards.15
Presidential Roles
Presidential approval is required before HHS enters into any Project BioShield countermeasure
procurement contract or issues a call for countermeasure development. The President may only
make such approval subsequent to a joint recommendation from the Secretaries of HHS and
DHS. The President delegated this approval responsibility to the Director of the Office of
Management and Budget.16
The Executive Office of the President also had coordinated the interagency process, largely
through the Homeland Security Council (HSC), the National Security Council (NSC), and the
National Science and Technology Council (NSTC). This was changed by HSPD-18, which
directed the HHS Secretary to lead the interagency process (see below).
11
See online at http://www.hhs.gov/ophep/ophemc/bioshield/PBSPrcrtPrjct/. OPHEMC is also responsible for
procurement of countermeasures (e.g., vaccines, antiviral drugs, and tests) for a possible influenza pandemic. Pandemic
procurements are not financed through Project BioShield. See CRS Report RS22576, Pandemic Influenza:
Appropriations for Public Health Preparedness and Response, by (name redacted). See also OPHEMC online at
http://www.hhs.gov/aspr/ophemc/PanFlu/procurement_activities/index.html.
12
For examples, see Elizabeth MacDonald and Robert Langworth, “Spore Wars,” Forbes, Vol. 175, No. 12, p. 162,
June 6, 2005; and Eric Lipton, “Bid to Stockpile Bioterror Drugs Stymied by Setbacks,” New York Times, September
18, 2006. Additionally, both chambers of Congress have held hearings examining these issues.
13
Senator Richard Burr, Statement before the House of Representatives Committee on Homeland Security
Subcommittee on Emerging Threats, Cybersecurity, and Science and Technology, April 18, 2007.
14
Dr. Gerald Parker, Principal Deputy Assistant Secretary for Preparedness and Response HHS, Public Comments at
“Implementation of Project BioShield and BARDA: A Dialogue with HHS,” Washington DC, May 18, 2007.
15
For more on P.L. 109-417, see CRS Report RL33589, The Pandemic and All-Hazards Preparedness Act (P.L. 109417): Provisions and Changes to Preexisting Law, by (name redacted) and (name redacted).
16
President Bush, “Designation and Authorization to Perform Functions Under Section 319F-2 of the Public Health
Service Act,” 69 Fed. Reg. 70349, December 3, 2004.
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Interagency Roles
Much of the priority-setting and requirement-determining activities have input from multiple
agencies, such as HHS, DHS, Department of Defense, and some of the intelligence agencies. The
interagency process has been changed multiple times in the past, most recently by the issuance of
HSPD-18 and the enactment of the Pandemic and All-Hazards Preparedness Act (P.L. 109-417).
Weapons of Mass Destruction Medical Countermeasures Subcommittee
In the past, the interagency process relied on expertise resident in the Weapons of Mass
Destruction Medical Countermeasures (WMD MCM) Subcommittee. As part of the National
Science and Technology Council (NSTC), this interagency group predated Project BioShield. The
NSTC, a cabinet-level council, acts to coordinate science and technology policy across the federal
research and development enterprise.17 The WMD MCM Subcommittee is a part of the NSTC
Committee on Homeland and National Security. According to HHS, the charter of the WMD
MCM Subcommittee was changed in 2005, and it began reporting to the joint HSC/NSC
Biodefense Policy Coordinating Committee. 18 According to NSTC, the Subcommittee also
continues to remain within NSTC.19 The WMD MCM Subcommittee contains representatives
from Centers for Disease Control and Prevention, Food and Drug Administration, National
Institutes of Health, DHS, Department of Defense, Department of Agriculture, Nuclear
Regulatory Commission, Department of Energy, Department of Veterans Affairs, Environmental
Protection Agency, Homeland Security Council, National Security Council, Office of the Vice
President, Office of Science and Technology Policy, Office of Management and Budget, and
various intelligence agencies. 20
The WMD MCM Subcommittee’s role in the Project BioShield process appears to have been
assumed by the Public Health and Emergency Countermeasure Enterprise Governance Board
(see below).
Public Health and Emergency Medical Countermeasures Enterprise
The Public Health and Emergency Medical Countermeasures Enterprise (PHEMCE) is an
interagency working group that was established in July 2006 during a HHS Office of Public
Health Emergency Preparedness reorganization. It is to:
(1) define and prioritize requirements for public health medical emergency countermeasures,
(2) coordinate research, early and late stage product development and procurement activities
addressing the requirements [including BioShield procurement], and (3) set deployment and
use strategies for medical countermeasures held in the Strategic National Stockpile.21
17
See online at http://www.ostp.gov/nstc/index.html.
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007, p. 17.
19
See online at http://www.ostp.gov/nstc/html/_committees.html.
20
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007, p. 17.
21
HHS, “Office of Public Health Emergency Preparedness; Statement of Organization, Functions, and Delegations of
Authority,” 71 Fed. Reg. 38404, July 6, 2006. This regulation establishes the name of this group as the Public Health
Medical Countermeasures Enterprise (PHMCE). This name was apparently changed to include “Emergency” in the
title, making it the Public Health Emergency Medical Countermeasures Enterprise (PHEMCE). See 71 Fed. Reg.
53097, September 8, 2006.
18
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PHEMCE is distinct from the HHS Office of Public Health Emergency Medical Countermeasures
(OPHEMC). PHEMCE is an interagency working group while OPHEMC resides solely within
HHS. However, the Director of OPHEMC is also responsible for coordinating PHEMCE. Neither
its establishing regulation nor the PHEMCE strategy22 states to whom this interagency group
reports nor details its membership.
According to HHS, the WMD MCM Subcommittee’s duties were transferred to the PHEMCE
Governance Board.23 However, the apparent continuance of the WMD MCM Subcommittee in
the NSTC suggests that not all of its duties have transferred to PHEMCE.24 It is unclear what
effect this transfer of duties from a subcommittee of a Cabinet-level Council to an interagency
working group associated with an office under the Assistant Secretary for Preparedness and
Response will have on the interagency process and the efficiency of the Project BioShield
acquisition process.
HSPD-18
Homeland Security Presidential Directive 18 (HSPD-18) was issued on January 31, 2007. When
fully implemented, HSPD-18 may change the interagency process described above. HSPD-18
establishes a government-wide strategy for developing and acquiring civilian WMD
countermeasures. One of its provisions requires the HHS Secretary to
establish an interagency committee to provide advice in setting medical countermeasure
requirements and coordinate HHS research, development, and procurement activities.25
HSPD-18 also requires the HHS Secretary to establish a
dedicated strategic planning activity to integrate risk-based requirements across the threat
spectrum and of the full range of research, early-, mid- and late-stage development
acquisition and life-cycle management of medical countermeasures.26
The Secretary is to align all relevant HHS programs to support this plan.
These roles are similar to those of PHEMCE whose draft strategy was published prior to the
issuance of HSPD-18.27 The final PHEMCE strategy appears to support the interpretation that
HHS intends PHEMCE to fulfill the interagency committee and dedicated strategic planning
activity requirements of HSPD-18.28 HSPD-18 requires the interagency committee to “apprise”
the joint HSC/NSC Biodefense Policy Coordination Committee of countermeasure development
and acquisition progress.
22
HHS, “Office of the Assistant Secretary for Preparedness and Response; HHS Public Health Emergency Medical
Countermeasures Enterprise Strategy for Chemical, Biological, Radiological and Nuclear Threats,” 72 Fed. Reg.
13109, March 20, 2007.
23
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007, p. 18.
24
See online at http://www.ostp.gov/nstc/index.html.
25
Executive Office of the President, Homeland Security Directive-18, January 31, 2007.
26
Executive Office of the President, Homeland Security Directive-18, January 31, 2007.
27
71 Fed. Reg. 53097, September 8, 2006.
28
72 Fed. Reg. 13109, March 20, 2007.
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The Pandemic and All-Hazards Preparedness Act
The Pandemic and All-Hazards Preparedness Act (P.L. 109-417), enacted December 19, 2006,
may also affect the Project BioShield interagency decision-making process. 29 It gives the HHS
Secretary until June 19, 2007 to
develop and make public a strategic plan to integrate biodefense and emerging infectious
disease requirements with the advanced research and development, strategic initiatives for
innovation, and the procurement of... countermeasures30
This role is similar to that directed by HSPD-18. The finalized PHEMCE Strategy and PHEMCE
Implementation Plan appear to only partially fulfill this requirement in that they address the
biodefense plan but do not address emerging infectious diseases. HHS is preparing a separate
strategic plan to fulfill the requirements of P.L. 109-417.31
Appropriations, Rescissions, and Future
Funding Options
Appropriations
The Department of Homeland Security Appropriations Act, 2004 (P.L. 108-90) provided an
advance appropriation of $5.593 billion to procure civilian medical countermeasures for a 10-year
period (FY2004-FY2013).32 This appropriation was enacted October 1, 2003, almost a year
before the July 21, 2004 enactment of the Project BioShield Act of 2004 (P.L. 108-276). The
appropriations act established the “Biodefense Countermeasures” account for “necessary
expenses for securing medical countermeasures against biological terror attacks.”33
Although all the funds for this account were provided in the 2004 appropriations act, only a
portion became available for obligation upon enactment. The Department of Homeland Security
Appropriations Act, 2004 specified that no more than $890 million could be obligated in FY2004,
and no more than $3.418 billion could be obligated from FY2004 through FY2008 (Table 1). Any
money not obligated within these defined periods would remain available through FY2013. Thus,
before rescissions were enacted, DHS had $890 million available as budget authority for this
account in FY2004. In FY2005, an additional $2.528 billion would have become available. The
remaining $2.175 billion would become available in FY2009 (Table 2).
29
For more on this legislation, see CRS Report RL33589, The Pandemic and All-Hazards Preparedness Act (P.L. 109417): Provisions and Changes to Preexisting Law, by (name redacted) and (name redacted).
30
The Pandemic and All-Hazards Preparedness Act (P.L. 109-417), 120 Stat. 2866. 42 U.S.C. 247d-7e.
31
Dr. Carol Linden, Acting Director for Public Health Emergency Medical Countermeasures Office of the HHS
Assistant Secretary for Preparedness and Response, Public Comments at “Implementation of Project BioShield and
BARDA: A Dialogue with HHS,” Washington, DC, May 18, 2007.
32
This section was written with the assistance of (name redacted), CRS Analyst in American National Government,
Government and Finance Division.
33
The Department of Homeland Security Appropriations Act, 2004 (P.L. 108-90), 117 Stat. 1148 (6 U.S.C. 320(a)).
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The Project BioShield Act of 2004 (P.L. 108-276) designated the “Biodefense Countermeasures”
account established by the Department of Homeland Security Appropriations Act, 2004 (P.L. 10890) as the special reserve fund for Project BioShield acquisitions. 34 P.L. 108-276 placed
additional restrictions on the use of these funds, including requiring a determination that an agent
constitutes a material threat to national security, requiring Presidential approval before a
countermeasure can be purchased, and restricting these funds to procurements only (i.e., not for
administrative costs). It also broadened the types of countermeasures that may be acquired from
this account to include those against biological, chemical, radiological, and nuclear agents.
Rescissions
Although Congress provided the entire appropriation for the 10-year program, Congress retains
the power to increase or decrease the amount available for Project BioShield. Two separate
rescissions have removed a total of $25 million from the Project BioShield special reserve fund.
The Consolidated Appropriations Act, 2004 (P.L. 108-199) contained an across-the-board
rescission of 0.59%. This rescission applied to the amount of the Project BioShield advance
appropriation that became available for obligation in FY2004 (Table 2). This rescission removed
$5 million from the amounts available for obligation in FY2004, as well as reducing the total
special reserve fund by an equal amount. Thus, the amount available for obligation in FY2004
was reduced from $890 million to $885 million, and the total amount available for FY2004FY2013 was reduced from $5.593 billion to $5.588 billion (Table 1 and Table 2).
The Consolidated Appropriations Act, 2005 (P.L. 108-447) contained an across-the-board
rescission of 0.8%. This rescission applied to the $2.528 billion that became available for
obligation in FY2005 (Table 2). This removed $20 million from the amount available for
obligation for FY2005-FY2008 as well as reducing the total special reserve fund by an equal
amount. Thus, the amount that became available for obligation in FY2005 was reduced from
$2.528 billion to $2.508 billion, and the total amount available until FY2013 was reduced from
$5.588 billion to $5.568 billion (Table 1 and Table 2).
Future Funding Options
Across-the-board rescissions generally only affect those amounts that become available in that
fiscal year. Therefore, the special reserve fund is unlikely to be affected by future across-theboard rescissions, except in FY2009, when the remaining $2.175 billion becomes available
(Table 2). However, Congress retains the power to make both specific appropriations and
rescissions to this account and could thus directly increase or decrease the amount available for
Project BioShield obligations.
34
The Project BioShield Act of 2004 (P.L. 108-276), 118 STAT. 852, (6 U.S.C. 320 (b)).
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Table 1. Project BioShield Appropriation and Rescissions by
Years Funding Is Available
Years Money Is Available ($ in millions)
Public Law
Action
FY2004
FY2004FY2008
FY2004FY2013
P.L. 108-90
Appropriation
890
3,418
5,593
P.L. 108-199
0.59% Rescission
(-5)
(-5)
(-5)
P.L. 108-447
0.8% Rescission
n.a.
(-20)
(-20)
885
3,393
5,568
Total
Source: CRS analysis of P.L. 108-90, P.L. 108-199, and P.L. 108-447.
Note: Amounts rounded to nearest million.
Table 2. Project BioShield Appropriation and Rescissions by Year Money First
Becomes Available
Year Money First Becomes Available ($ in millions)
Public Law
Action
FY2004
FY2005
FY2009
P.L. 108-90
Appropriation
890
2,528
2,175
P.L. 108-199
0.59% Rescission
(-5)
n.a.
n.a.
P.L. 108-447
0.8% Rescission
n.a.
(-20)
n.a.
885
2,508
2,175
Total
Source: CRS analysis of P.L. 108-90, P.L. 108-199, and P.L. 108-447.
Note: Amounts rounded to nearest million.
Acquisitions
The HHS has reported awarding $2.331 billion worth of Project BioShield contracts (Table 3).35
These contracts address four material threats: Bacillus anthracis (the bacteria which cause
anthrax), smallpox, botulinum toxin, and radiological and nuclear agents. The distribution of
contract awards has been uneven between these threats, with $1,429 million against Bacillus
anthracis (61%), $500 million against smallpox (21%), $364 million against botulinum toxin
(16%) and $38 million against radiological and nuclear weapons (2%). While HHS has made
additional requests for information from companies developing CBRN countermeasures, none
have resulted in contract offers.36
35
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007. HHS also maintains an
updated list of awards on their Project BioShield: Procurement Activities website, available online at
http://www.hhs.gov/ophep/ophemc/bioshield/PBSPrcrtPrjct/. HHS asserts that all of the obligations from this account
are detailed on that website. Personal communication with HHS staff, November 20, 2006.
36
These requests addressed acute radiation syndrome, chemical agents, and a general request for information from all
companies developing CBRN countermeasures. For details, see http://www.hhs.gov/ophep/ophemc/bioshield/
PBSPrcrtPrjct/.
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Project BioShield
On December 17, 2006, HHS terminated an anthrax countermeasure contract for failure to meet a
contract milestone. 37 This contract was the first, and largest to date, awarded using Project
BioShield funds. This cancellation took place after the preparation of both the HHS’ Project
BioShield Annual Report to Congress and the President’s FY2008 Budget. Thus, neither of these
documents reflect the recovery of these funds. Taking this cancellation into account, the HHS has
obligated $1.454 billion to date (Table 3).
Government acquisitions often follow a pattern of gathering information about available products,
contract solicitation, award of the contract, and finally product delivery. Figure 2 displays a time
line of Project BioShield acquisition activity.
37
HHS, “Termination Letter - Contract No. HHSO100200500001C,” Letter to VaxGen, Inc., December 19, 2006.
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Table 3. HHS Reported Project BioShield Contract Awards
Product
Doses
(thousands)
Cost
($ millions)
Company
Award Date
rPA vaccine
75,000
877.5
VaxGen, Inc.
11/4/04; Cancelled
12/19/06
AVA vaccine
10,000
242.7
Emergent BioSolutions (formerly BioPort
Corp.)
5/6/05 and 5/5/06
ABthrax
20
165.2
Human Genome Sciences
6/19/06
Anthrax Immune Globulin
10
143.8
Cangene Corp.
7/28/06
Smallpox
MVA vaccine
20,000
500.0
Bavarian Nordic A/S
6/4/07
Botulinum Toxin
Botulinum Antitoxin
(Heptavalent)
200
362.6
Cangene Corp.
6/1/06
Potassium Iodide (Liquid)
4,800
17.5
Fleming & Company
3/18/05 and 2/8/06
Ca-DTPA
395
Zn-DTPA
80
21.9
Akorn, Inc.
2/13/06
Material Threat
Anthrax
Radiological/Nuclear
Total Announced Obligations to Date:
$2,331.2 million
Total Current Obligations:a
$1,453.7 million
Source: HHS, Project BioShield: Procurement Activities website http://www.hhs.gov/ophep/ophemc/bioshield/PBSPrcrtPrjct; Project BioShield Annual Report to Congress: July 2004July 2006, January 26, 2007; and CRS calculations.
a.
CRS-12
Accounts for cancellation of the rPA vaccine.
Figure 2. Project BioShield Acquisition Activity
Aug
2003
Jan
2004
Jan
2005
Jan
2006
Jan
2007
Jan
2005
Jan
2006
Jan
2007
MTD
MTD
MTD
MTD
MTD
Aug
2003
Jan
2004
Material Threat Determination
Request For Information
Contract Solicitation
Contract Pre Delivery
Source: HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007, and CRS analysis.
CRS-13
Product Delivery
Project BioShield
A Request for Information (RFI) is a mechanism for the government to determine what products
are available or that are under development that might fulfill a specified government need. It can
cover a broad area or be narrowly focused. For example, in September 2006, HHS issued an
relatively broad RFI to help in “identifying and characterizing the current and projected status of
the research and development programs related to CBRN medical countermeasures” (CBRN
General in Figure 2).38 In contrast, an RFI issued in December 2003 focused on a specific type of
treatment for a specific disease, anthrax therapeutics, based on antibodies (Figure 2).39
Agencies can use the information in RFI responses to help shape policy and to help develop
requirements for a contract solicitation. However, RFIs do not necessarily lead to contract
solicitations. Four of the eight Project BioShield RFIs have not lead to contract solicitations.
These RFIs were seeking countermeasures against CBRN in general, nerve agents, one of the
two anthrax therapeutic RFIs, and one of the two acute radiation syndrome RFIs (Figure 2).
RFIs are also not required before issuing a contract solicitation. Four of the eight contract
solicitations did not have an RFI. These contracts were for AVA based anthrax vaccine, botulinum
antitoxin, and the radiation treatments Zn- and Ca-DTPA and potassium iodide (KI)40 (Figure 2).
These contract solicitations were for specific products from specific companies and not subject to
open competition. 41
Contract solicitations are invitations for companies to submit proposals to provide goods or
services to fulfill government needs. Project BioShield solicitations fall into two basic categories,
sole source and Requests for Proposals (RFP). The sole source solicitations were for specific
products from specific companies and not subject to open competition. Four of the eight contract
solicitations were sole source. These are the same four contracts which did not go through the
RFI process discussed above, AVA-based anthrax vaccine, botulinum antitoxin, and the radiation
treatments Zn- and Ca-DTPA, and KI (Figure 2). Four of the eight contract solicitations were
RFPs. Each RFP specified certain characteristics required by the government and multiple
companies could submit proposals. The government could then choose the proposal or proposals
that best fit its requirements needs or decide that none of the proposals met the minimum
requirements. The contract solicitations which went through the RFP process were those seeking
an rPA-based anthrax vaccine, an MVA-based smallpox vaccine, and treatments for acute
radiation syndrome (Figure 2). Three of the four RFPs have resulted in contract awards to date,
rPA-based anthrax vaccine, anthrax therapeutics, and MVA-based smallpox vaccine. The anthrax
therapeutics RFP resulted in contracts with two companies for two different products. The
government may decide that none of the companies responding to an RFP have products that
meet the government’s minimum requirements. This appears to be the case with the acute
radiation syndrome RFP, which was terminated without an award on March 7, 2007.
38
HHS, “Medical Countermeasures to Address Chemical, Biological, Radiological and Nuclear Threats,” RFIOPHEMC-60-03, September 14, 2006.
39
HHS, “Request for Information (RFI) for Antibody Treatments for Anthrax,” RFI(Anthrax), December 24, 2003.
40
Zinc diethylenetriaminepentaacetate and calcium diethylenetriaminepentaacetate (Zn- and Ca-DTPA) are also known
as referred to as chelators due to how they remove radiation from the body, see the section “Chelators” below.
Potassium iodide is often abbreviated KI, its chemical formula.
41
Details of these and all other Project BioShield-related solicitations can be found on the HHS Project BioShield
Procurement Activities website, http://www.hhs.gov/aspr/ophemc/bioshield/procurement_activities/PBSPrcrtPrjct/
index.html.
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Project BioShield
HHS has awarded ten Project BioShield contracts to six different companies. Of these contracts,
four have been completed (two for AVA-based anthrax vaccine, one for the radiation treatments
Zn-DTPA and Ca-DTPA, and one of the two for the radiation treatment KI), four remain open
(one of the two for the radiation treatment KI, two for anthrax therapeutics, and one for smallpox
vaccine), and one was terminated (rPA-based anthrax vaccine). All of the completed contracts
resulted from sole source contracting rather than an open bidding RFP process. These completed
contracts were for products which required no further development time. It is not clear why HHS
chose to acquire these products through the Project BioShield process rather than using the
standard process for acquiring similar off-the-shelf products for the Strategic National Stockpile.
Of the ten contracts awarded by HHS, five were for products that required further development:
rPA-based anthrax vaccine, smallpox vaccine, botulinum antitoxin, and the two anthrax
therapeutics. None of these contracts have yet resulted in deliveries to the Strategic National
Stockpile. The rPA anthrax vaccine contract was cancelled and development continues on the
remaining four products with open contracts.
Anthrax
The Project BioShield countermeasures against anthrax fall into two categories, vaccines and
treatments.42 The vaccines would likely be used after an attack to prevent those people who were
exposed to Bacillus anthracis from developing the disease anthrax, a procedure called
postexposure prophylaxis.43 This contrasts with the manner in which most vaccines (e.g.,
childhood vaccines) are administered before exposure.
rPA Vaccine
The vaccine based on recombinant Protective Antigen (rPA) is often referred to as the “second
generation anthrax vaccine,” to differentiate it from the anthrax vaccine adsorbed (AVA) vaccine,
which is currently used by the Department of Defense (DOD).44 In 2002, the Institute of Medicine
(IOM) stated, “Although AVA appears to be sufficiently safe and effective for use, it is far from
optimal.”45 The IOM supported the development of a new anthrax vaccine. Officials at HHS
believe that, when fully developed, the rPA vaccine will address many of the shortcomings of the
AVA vaccine as identified in the IOM report.46
42
For a discussion of possible anthrax countermeasures, see Luciana Borio and Gigi Grönvall, “Anthrax
Countermeasures: Current Status and Future Needs,” Biosecurity and Bioterrorism: Biodefense Strategy, Practice, and
Science, Vol. 3, No. 2, 2005, pp. 102-112.
43
Some scientific studies support the use of vaccines in conjunction with antibiotics following exposure to Bacillus
anthracis. For examples, see Z. Altboum et al., “Postexposure Prophylaxis Against Anthrax: Evaluation of Various
Treatment Regimens in Intranasally Infected Guinea Pigs,” Infection and Immunity, Vol. 70, No. 11, November 2002,
pp. 6231-6241; and N. Vietri et al., “Short-course Postexposure Antibiotic Prophylaxis Combined with Vaccination
Protects Against Experimental Inhalational Anthrax,” Proceedings of the National Academy of Sciences, Vol. 103, No.
20, May 3, 2006, pp. 7813-7816.
44
Stewart Simonson, Assistant Secretary, Department of Health and Human Services, Office of Public Health and
Emergency Preparedness, Testimony before the Senate Committee on Appropriations, Subcommittee on Homeland
Security, April 28, 2005.
45
The Anthrax Vaccine: Is It Safe? Does It Work? Institute of Medicine, National Academy Press: Washington, DC,
2002, p. 20.
46
Stewart Simonson, Assistant Secretary, Department of Health and Human Services, Office of Public Health and
(continued...)
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Project BioShield
In November 2004, HHS awarded VaxGen, Inc. an $877.5 million contract for the
delivery of 75 million doses of rPA vaccine to the Strategic National Stockpile ($11.70 per
dose). On December 17, 2006, HHS terminated this contract for VaxGen’s failure to meet
a contract milestone.47
HHS had planned that each person would require a three dose regimen of this vaccine for
protection.48 Thus, 75 million doses would be sufficient for 25 million people. The Food and
Drug Administration (FDA) has not licensed this vaccine. Although FDA licensing is not required
for delivery to the stockpile, this vaccine required additional clinical testing before it could be
accepted by the government. Under the contract with VaxGen, delivery was to begin by the end of
2006 and be completed by the end of 2007. Technical difficulties repeatedly delayed delivery.49
This first, largest Project BioShield contract has drawn intense scrutiny. Critics of this contract
award point to VaxGen’s previous unsuccessful attempts to develop products, financial
difficulties, and problems meeting the contract deadlines as indicative of problems in HHS’
implementation of Project BioShield authorities. 50 HHS responded to such criticisms by stating
VaxGen won the contract through open competition after all the proposals were subjected to “a
robust technical and business evaluation process.”51 HHS portrayed the delays as part of the
normal drug development process. 52 VaxGen reportedly denied responsibility for the delays,
stating that they arose from the government changing its requirements.53
Following the cancellation of the contract, HHS restated its commitment to obtain an rPA-based
anthrax vaccine for the Strategic National Stockpile. 54
AVA Vaccine
The AVA anthrax vaccine was originally licensed in 1970. It is currently approved by the FDA for
use in 18- to 65-year olds prior to exposure to Bacillus anthracis (pre-exposure prophylaxis).
Neither this vaccine nor the rPA vaccine is approved by the FDA for post-exposure prophylaxis.
The FDA-approved regimen for pre-exposure prophylaxis requires a series of six doses
administered over the course of 18 months.
(...continued)
Emergency Preparedness, Testimony before the Senate Committee on Appropriations, Subcommittee on Homeland
Security, April 28, 2005.
47
HHS, “Termination Letter - Contract No. HHSO100200500001C,” Letter to VaxGen, Inc., December 19, 2006.
48
HHS, “HHS Buys New Anthrax Vaccine for Stockpile,” News Release, November 4, 2004.
49
Renae Merle, “Anthrax Vaccine Testing Called Off: VaxGen Contract in Doubt as FDA Raises Concerns,”
Washington Post, November 4, 2006.
50
Elizabeth MacDonald and Robert Langworth, “Spore Wars,” Forbes, Vol. 175, No. 12, p. 162, June 6, 2005; and
Eric Lipton, “Bid to Stockpile Bioterror Drugs Stymied by Setbacks,” New York Times, September 18, 2006.
51
Stewart Simonson, Assistant Secretary, Department of Health and Human Services, Office of Public Health and
Emergency Preparedness, Testimony before the Senate Committee on Appropriations, Subcommittee on Homeland
Security, April 28, 2005.
52
Darren Fonda, “Inside the Spore Wars,” Time, January 3, 2006.
53
Eric Lipton, “Bid to Stockpile Bioterror Drugs Stymied by Setbacks,” New York Times, September 18, 2006.
54
Dr. Gerald Parker, Principal Deputy Assistant Secretary for Preparedness and Response HHS, Testimony before the
House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, Education and Related
Agencies, March 8, 2007.
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Project BioShield
The DOD currently uses this vaccine for troops and other personnel deployed in certain areas,
including South Korea, Afghanistan, and Iraq. Complaints of adverse reactions and questions
about the vaccine’s efficacy prompted judicial review of its use. In October 2004, a federal judge
ordered the DOD to stop mandatory vaccinations pending FDA review. 55 After this order, DOD
continued to use this vaccine on a voluntary, rather than mandatory, basis. The FDA completed its
review in December 2005.56 In October 2006, DOD announced plans to resume mandatory
vaccinations. Reportedly, several DOD employees plan to sue to block implementation of
mandatory vaccinations.57
In May 2005 and May 2006, HHS awarded contracts to Emergent BioSolutions (formerly BioPort
Corp.) for the delivery of AVA vaccine to the Strategic National Stockpile. Combined, the
contracts are for 10 million doses of AVA vaccine for $242.7 million ($24.27 per dose).
According to the company, 9 million doses have been delivered to the government, and the
remainder is to be delivered in 2007.58
This contract award has also drawn criticism on the basis of cost and questions of policy. Despite
the manufacturer carrying no developmental risk, the AVA vaccine cost per dose is twice the cost
per dose of rPA. Additionally, critics observe that DOD studies indicate that up to 35% of people
have adverse reactions to this vaccine and that 6% of vaccine recipients have reported serious
complications to the FDA’s Vaccine Adverse Event Reporting System.59 Critics point to this and
observations in the IOM report to support their conclusion that AVA is an inferior product. Lastly,
since AVA is the only currently licensed vaccine, critics question whether its acquisition has
resulted from its unique status rather than filling a Project BioShield need.60 Emergent
BioSolutions defended its product stating that both the IOM report and the FDA found its product
safe and that, as the only FDA-approved anthrax vaccine available, it is filling an urgent need. 61
ABthrax
ABthrax is an antibody-based treatment that works in a manner similar to anti-venom
treatments for snake bites. It is currently under development and it is not yet licensed by the
FDA. In June 2006, HHS awarded a $165.2 million contract to Human Genome Sciences for the
delivery of 20 thousand doses of ABthrax ($8,260 per dose). Human Genome Sciences expects to
complete the delivery of ABthrax to the government in 2008.62 This high cost per dose, the
mechanisms of action, and method of patient administration suggest that ABthrax would be used
as a treatment for people who have already developed the symptoms of anthrax, rather than as a
post-exposure prophylactic.
55
Marc Kaufman, “Court Orders Pentagon to Stop Anthrax Vaccinations,” Washington Post, October 28, 2004.
70 Fed. Reg. 75180-75198, December 19, 2005.
57
Josh White, “Defense Employees Set For Another Suit to Halt Mandatory Anthrax Shots,” Washington Post,
December 13, 2006.
58
Emergent BioSolutions, “Emergent BioSolutions Delivers Over 3 Million Doses of BioThrax(R) to U.S. Department
of Health and Human Services for Strategic National Stockpile,” Press Release, December 14, 2006.
59
Anthrax Vaccine Adsorbed (BioThraxTM) FDA-approved package insert, January 31, 2002.
60
Elizabeth MacDonald and Robert Langworth, “Spore Wars,” Forbes, Vol. 175, No. 12, p. 162, June 6, 2005; and
Eric Lipton, “Bid to Stockpile Bioterror Drugs Stymied by Setbacks,” New York Times, September 18, 2006.
61
Thomas Williams, “At Odds Over Anthrax,” The Hartford Courant, April 10, 2006.
62
Human Genome Sciences, “U.S. Government Agrees to Purchase ABthrax™ From Human Genome Sciences for the
Strategic National Stockpile,” Press Release, June 20, 2006.
56
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Anthrax Immune Globulin
Anthrax Immune Globulin is also an antibody-based therapeutic. It is derived from the blood of
people who have received the anthrax vaccine. It is currently under development and is not yet
licensed by the FDA. In July 2006, HHS awarded a $143.8 million contract to Cangene Corp. for
the delivery of 10 thousand doses of Anthrax Immune Globulin ($14,380 per dose). This high
cost per dose, the mechanism of action, and likely method of patient administration suggest that
Anthrax Immune Globulin would be used as a treatment for people who have already developed
the symptoms of anthrax, rather than as a post-exposure prophylactic.
Smallpox
Although the World Health Organization eradicated naturally occurring smallpox, it remains a
terrorist threat. Following the terrorist attacks of 2001, the Untied States acquired for the Strategic
National Stockpile enough of the currently FDA-licensed vaccine (Dryvax® made by Wyeth
Laboratories) to vaccinate 300 million people.63 However, this vaccine has a high rate of
complications, which could be especially serious in people with certain conditions including
pregnancy, compromised immune systems, and eczema.64 The HHS determined that a different
smallpox vaccine is required to protect such vulnerable populations.
In June 2007, HHS awarded a $500 million contract to Bavarian Nordic A/S for 20 million doses
of smallpox vaccine ($25 per dose), enough for 10 million people. This vaccine is based on the
Modified Vaccinia Ankara (MVA) viral strain, which is a different viral strain than the currently
licensed vaccine. Experts at HHS believe that this will make it safer for use in vulnerable
populations.65 HHS plans to use this vaccine as a pre-exposure prophylactic in those populations
following a known or suspected smallpox release.66 Additional research is required before this
vaccine can be accepted into the stockpile and licensed by the FDA. According to the company,
this contract contains options worth up to $1.1 billion for 60 million additional doses and clinical
research to extend the license to include children, the elderly, and people infected with HIV.67
Botulinum Toxin
Botulinum antitoxin is an antibody-based treatment for botulism, a life threatening illness caused
by a toxin produced by Clostridium botulinum bacteria. In June 2006, HHS awarded a $362.6
million contract to Cangene Corp. for 200 thousand doses of a botulinum antitoxin ($1,813 per
dose). The company expects to begin delivery by the end of 2007.68 Botulinum toxin has several
different types; an antitoxin against one type will not be effective against other types. This
contract calls for a combination of antitoxins that will work against seven types of botulinum
toxins. This combination is known as heptavalent antitoxin. Following an intentional release of
botulinum toxin, this antitoxin would probably be administered to people who have developed
63
President Bush, Remarks by the President on Smallpox Vaccination, December 13, 2002.
Dryvax® FDA-approved package insert, June 2003.
65
70 Fed. Reg. 20125, April 23, 2007.
66
HHS, “Acquisition of Smallpox MVA Vaccine for the Strategic National Stockpile,” RFP-DHHS-ORDC-V&B-0506, August 15, 2005, p. 8.
67
Bavarian Nordic A/S, “Announcement to the Copenhagen Stock Exchange, no. 23-07,” June 4, 2007.
68
Cangene Corp., Press Release, May 31, 2006.
64
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Project BioShield
symptoms of toxin exposure, consistent with the way that similar trivalent products are currently
used to treat naturally occurring exposures.
Botulinum antitoxin is produced in a manner similar to anthrax immune globulin, except in this
case, it is extracted from horse blood instead of human blood. In 2004, after the Department of
Homeland Security Appropriations Act, 2004 provided the advance appropriation, but before the
Project BioShield Act was enacted, HHS obligated $50 million from this account to support the
botulinum antitoxin program. These funds were used to process existing horse blood that had
been collected by the DOD and to establish horse farms needed to provide new horse blood. 69
This expenditure would probably not have been eligible for funding from this account after
enactment of the Project BioShield Act, as it limited the use of these funds to procuring products.
Because these funds were not obligated as part of Project BioShield, they are not included in
Table 3, but they are included in Table 4 (see below).
Radiological and Nuclear Agents
In addition to direct blast effects, attacks using radiological or nuclear agents can produce injuries
resulting from ionizing radiation, which can damage or kill living cells. HHS determined that the
threat posed by both acute radiation sickness and internal contamination with radioactive particles
require countermeasures. HHS has contracted for two types of countermeasures designed to
reduce internal contamination. An RFP for countermeasures to address acute radiation sickness
did not lead to a contract award. The RFP was cancelled, apparently because none of the
proposals met the minimum requirements determined by HHS.70
Potassium Iodide
The HHS awarded contracts in March 2005 and February 2006 to Fleming & Company
Pharmaceuticals for the delivery of a total of 4.8 million doses of liquid potassium iodide (KI) for
a total cost of $15.9 million ($3.31 per dose). This product is FDA-approved and available
without a prescription to treat people exposed to radioactive iodine.
Potassium iodide might be distributed following a release of radioactive iodine into the air,
possibly following an attack on a nuclear power plant.71 Because the thyroid gland extracts and
stores iodine present in the blood, it is vulnerable to injury from radioactive iodine. If
administered in time, potassium iodide would block extraction and storage of radioactive iodine
by the thyroid. Potassium iodide does not protect against the effects of any other type of
radioactive material. Even before these acquisitions, potassium iodide tablets were included in the
Strategic National Stockpile, but the tablet formulation was considered poorly suited for children.
This liquid preparation, in contrast, is designed for pediatric use.
69
HHS, Personal communication, November 11, 2006.
HHS, DHHS-ORDC-DDA-05-12 Amendment 4, March 7, 2007.
71
HHS, “HHS Awards BioShield Contract for Liquid Potassium Iodide,” News Release, May 18, 2005.
70
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Chelators
In February and April 2006, HHS awarded a $21.9 million contract to Akorn, Inc. for 395
thousand doses of calcium diethylenetriaminepentaacetate (Ca-DTPA) and 80 thousand doses
of zinc diethylenetriaminepentaacetate (Zn-DTPA). (a nominal average of $46 per dose).
These chelators might be used to treat those exposed to radioactive material through the
detonation of a radiological dispersal device (“dirty bomb”), improvised nuclear device, or
terrorist attack against stored radioactive material. 72 These products are FDA-approved for this
type of internal decontamination.
Radioactive materials that may be inhaled or ingested following a dirty bomb or nuclear attack
are treated as minerals in the body. Thus, they enter into biological processes like other minerals
and become incorporated into internal organs. Once incorporated, they are very difficult to
remove and continue to emit radiation, potentially sickening those exposed. Chelators help
remove these radioactive particles from the body by binding to them and facilitating their
excretion through normal physiological processes.
Differences in HHS Contract Awards and Annual
Budget Document Accounting
The Project BioShield special reserve fund, established by the Department of Homeland Security
Appropriations Act, 2004, is managed by DHS. In FY2006, the DHS management of this
appropriations account passed internally from the Federal Emergency Management Agency to the
Preparedness Directorate. However, the contracts obligating the appropriated funds are executed
through the HHS OPHEMC.
Table 4 shows the accounting from the President’s annual budget documents. In FY2004, $885
million from the advance appropriation became available for obligation. 73 According to the DHS
section of the budget, all available budget authority was obligated in FY2004; no budget authority
was carried into the following fiscal year.74 In FY2005, another $2.508 billion became available
for obligation. The budget documents state that $189 million of this was obligated in FY2005,
leaving $2.324 billion to be carried over into FY2006.75 For FY2006, the budget states that $856
million was obligated, leaving $1.468 billion to be carried over into FY2007.76 DHS anticipates
obligations of $1.045 billion in FY2007, leaving only $423 million available for obligation in
FY2008. The next part of the advance appropriation does not become available for obligation
until FY2009 (see Table 2).
72
HHS, “HHS Awards BioShield Contract for Two Additional Medical Countermeasures for Radiological or Nuclear
Incidents,” News Release, February 13, 2006.
73
These figures account for the across-the-board rescissions in P.L. 108-199 and P.L. 108-447.
74
Budget of the United States Government, Fiscal Year 2006—Appendix, p. 513-514.
75
Budget of the United States Government, Fiscal Year 2007—Appendix, p. 512.
76
Budget of the United States Government, Fiscal Year 2008—Appendix, p. 479.
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Table 4. Disposition of Project BioShield Special Reserve Fund
According to the President’s Budget
($ in Millions)
FY2004
Actual
FY2005
Actual
FY2006
Actual
FY2007
Estimate
FY2008
Estimate
Unobligated Balance from
Previous Years
0
0
2,324
1,468
423b
Recovered Obligations from
Previous Year
0
5
0
0b
0
New Budget Authority
885a
2,508a
0
0
0
Total Amount Available for
Obligation
885
2,513
2,324
1,468b
423b
New Obligations by Fiscal Year
885
189
856
1,045
423
Unobligated Balance Carried
Forward
0
2,324
1,468
423b
0b
Cumulative Total of Obligations at
End of Fiscal Year
885
1,074
1,930
2,975b
3,398b
Source: Budget of the United States Government, Fiscal Year 2006—Appendix, pp. 513-514; Budget of the United
States Government, Fiscal Year 2007—Appendix, p. 512; Budget of the United States Government, Fiscal Year 2008—
Appendix, p. 479; and CRS calculations.
a.
Includes rescissions made by P.L. 108-199 and P.L. 108-447. See Table 2.
b.
This figure was estimated by the Administration before the cancellation of the $878 million rPA anthrax
vaccine contract.
These figures conflict with totals calculated from the countermeasure awards reported by HHS
(Table 3). Table 5 lists all of the contracts that HHS has announced for this account along with
their dates of award and fiscal year subtotals.77
Table 5. Comparison of HHS Award Reporting and DHS Budget Accounting
HHS announcements
($ millions)
FY04
FY05
Botulinum Antitoxin Programa
50
FY04 Total
50
rPA, 11/04
KI, 3/05
AVA, 5/05
878
7
123
FY05 Total
1,008
DHS’ Obligations
in President’s
Budget
($ millions)
Difference
($ millions)
885
-835
189
819
77
HHS, Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007. HHS also maintains an
updated list of awards on their Project BioShield: Procurement Activities website available online at
http://www.hhs.gov/ophep/ophemc/bioshield/PBSPrcrtPrjct/. HHS asserts that all of the obligations from this account
are detailed on that website. Personal communication with HHS staff, November 20, 2006.
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HHS announcements
($ millions)
FY06
Grand
Total
KI, 2/06
Chelators (Zn- and Ca-DTPA), 2/06
AVA, 5/06
Botulinum Antitoxin, 6/06
ABthrax, 6/06
AIG, 7/06
10
22
120
363
165
144
FY06 Total
824
DHS’ Obligations
in President’s
Budget
($ millions)
Difference
($ millions)
856
-32
1,930
-48
1,882
Source: HHS, Project BioShield: Procurement Activities website http://www.hhs.gov/ophep/ophemc/bioshield/
PBSPrcrtPrjct and Project BioShield Annual Report to Congress: July 2004-July 2006, January 26, 2007; Budget of the
United States Government, Fiscal Year 2006—Appendix, pp. 513-514; Budget of the United States Government, Fiscal
Year 2007—Appendix, p. 512; Budget of the United States Government, Fiscal Year 2008—Appendix, p. 479; and CRS
calculations. See Table 3 and Table 4.
Note: Amounts rounded to nearest million.
a.
HHS states that this obligation occurred in FY2004 and does not provide a precise date.
According to HHS, the only obligation from this account in FY2004 was $50 million to support
the botulinum antitoxin program. In contrast, the President’s FY2006 Budget documents state that
$885 million was obligated in FY2004. Additionally, it describes this obligation as falling under
two object classifications; with $190 million for “other services” (object classification 25.2) and
$695 million for “other purchases of goods and services from Government accounts” (object
classification 25.3).78 It is not clear what these amounts represent. The $50 million HHS obligated
for the botulinum antitoxin program support could fall under the “other services” category, since
it was not an acquisition per se, but the amount of this contract does not correlate to the amount
categorized as “other services.”
Another possibility is that President’s Budget accounted for the rPA vaccine contract (awarded in
November 2004) in FY2004 rather than FY2005. This interpretation is supported by the FY2007
Budget reporting that only $189 million was obligated in FY2005.79 However, the total of the
$878 million rPA obligation and the $50 million botulinum antitoxin program obligation is greater
than the budget authority made available in FY2004 ($885 million). This interpretation also
would not account for the division of the funds into the two object classifications. Furthermore,
the FY2007 DHS Preparedness Directorate BioDefense Countermeasures Congressional
Justification materials list acquiring the rPA vaccine as one of its FY2005 accomplishments. The
source of the FY2004 account discrepancy of $835 million is not apparent.
In FY2005, HHS reported awarding three contracts for a total of $1.008 billion. The FY2007
Budget states that the actual amount obligated in FY2005 was $189 million. The DHS FY2007
Congressional Justification documents state that its FY2005 accomplishments include the rPA,
KI, and AVA contracts. These would equal the $1.008 billion calculated from the HHS figures. It
is not apparent to what the $189 million stated in the Budget correlates.
78
79
Budget of the United States Government, Fiscal Year 2006—Appendix, p. 514.
Budget of the United States Government, Fiscal Year 2007—Appendix, p. 512.
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Like the preceding two years, the stated obligations for FY2006 are different according to HHS
and the President’s Budget. For FY2006, HHS reported awarding six contracts, with obligations
totaling $824 million. This is $32 million less than the $856 million stated as “actual obligations”
in FY2006 in the President’s FY2008 Budget.80
Combining all of the differences in reporting through FY2006, the President’s Budgets state that
$48 million more have been obligated than the HHS documents report.
Remaining Available Funds
Effective management and Congressional oversight of Project BioShield require specific and
clear knowledge of the funds remaining available. For the Administration to most effectively plan
and prioritize future acquisitions, it must know the amount of funds remaining available. For
Congress, knowing the amount of funds remaining can be important in assessing program
management, the implementation pace, and general program effectiveness. Due to conflicting
statements from executive branch agencies, the amount of funds remaining available for
obligation for this program is not clear.
According to HHS, as of June 2007, it has obligated $2.331 billion from this account. This figure
does not include the $878 million that should be recovered in FY2007 from the cancellation of
the rPA anthrax vaccine contract. Taking this recovery into account, $1.889 billion would be
available for obligation in FY2007-FY2008 and $4.064 billion would be available until the end of
the program in FY2013. As stated above, using the President’s Budget figures to calculate
obligations would reduce these numbers by $48 million.
Concluding Observations
Project BioShield plays a key role in the federal government’s response to the threat of chemical,
biological, radiological, and nuclear terrorism. It created a process for the government to agree to
purchase countermeasures while they still are in development. In addition to increasing the
holdings of the Strategic National Stockpile, it was hoped that this government market guarantee
would encourage companies to continue to develop promising countermeasures that they might
have otherwise abandoned, and induce other companies to begin countermeasure development. It
remains unclear how well Project BioShield is meeting these goals.
Many stakeholders, industry leaders, and policymakers have criticized the rate at which DHS
completes Material Threat Determinations.81 To address these concerns, legislation has been
introduced in the previous and current Congresses. In the 110th Congress, the Project BioShield
Material Threats Act of 2007 (H.R. 1089, Langevin) and the Department of Homeland Security
Authorization Act for Fiscal Year 2008 (H.R. 1684, Thompson) would require an assessment, and
an MTD if appropriate, for all currently known CBRN agents likely to pose a significant national
security threat. These assessments would be required to be completed by December 31, 2007. By
assessing all known threats and issuing those MTDs necessary, the full spectrum of material
80
Budget of the United States Government, Fiscal Year 2008—Appendix, p. 479.
For example, see U.S. House of Representatives Committee on Homeland Security, Emergency Preparedness,
Science, and Technology Subcommittee, Hearing on Project BioShield, 109th Cong., 1st Sess., July 12, 2005.
81
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Project BioShield
threats may be considered when developing a countermeasure acquisition strategy. Such a
comprehensive acquisition strategy may allow for more efficient prioritization and balance of
countermeasures, providing optimized protection from CBRN attacks using finite funds in the
shortest time. Since HHS has not issued contracts for the all of the agents that already have
MTDs, an increase in this number may not increase the rate of countermeasure awards. However,
HHS has predicted that no additional MTDs would be issued unless “technology advances or if
our understanding of the potential threats changes.”82
Appropriators set limits on how much could be obligated during specified periods of time. The
pace by which HHS awards countermeasure contracts roughly corresponds to these limits. By this
criterion, this program is on track to fulfill its goals; HHS cannot obligate the money faster than it
becomes available.
Stakeholders, industry leaders and policymakers have criticized HHS for some of the
countermeasures it has chosen. In decisions as complicated and weighty as these, any choice is
likely to be criticized. Given the failure of the largest contract to date, some critics may conclude
that Project BioShield has fallen short of its goals, since the majority of the money that has been
obligated, though not the majority of contracts, has not yet resulted in products in the stockpile.
However, one of the unique features of Project BioShield contracts is that the government may
contract for products that require up to eight years more of development. It was designed to allow
the government to promise to buy something, but only pay for it on delivery. Thus the company,
rather than the government, bears the majority of the development risk, i.e. that the product will
never be deliverable. One industry group estimates that more than half of all pharmaceuticals will
fail during the last eight years of development.83 Thus, it may be expected that at least some
Project BioShield contracts will be cancelled. The government bears some development risk in
the form of opportunity costs since the money available for obligation is finite, i.e., money
obligated to a countermeasure that will ultimately fail in development cannot be simultaneously
obligated to another needed countermeasure.
It is possible that the establishment of the Biodefense Advance Research and Development
Authority (BARDA) in HHS will reduce the likelihood that future Project BioShield contracts
will fail during the advanced development phase. Established by the Pandemic and All-Hazards
Preparedness Act (P.L. 109-417), one of BARDA’s roles is to support the advanced research and
development of promising countermeasures. In theory, funding this part of the development
process through such a dedicated mechanism could allow countermeasures to further mature
through the development process longer before competing for a Project BioShield contract. This
could reduce the risk that a countermeasure will fail while under a Project BioShield contract.
P.L. 109-417 included authorization for approximately $1 billion to support this type of activity
for FY2007 through FY2008. Although, Congress did not appropriate money for BARDA in
FY2007, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability
Appropriations Act, 2007 (P.L. 110-28) transferred $99 million from National Institutes of Health
accounts to fund BARDA. Even if BARDA becomes operational in FY2007, it will take some
time to determine what projects to fund, provide funding, and receive returns on this investment.
It remains to be seen how HHS’ decision to combine BARDA with the HHS office responsible
82
HHS, “Public Health Emergency Medical Countermeasure Enterprise Implementation Plan For Chemical,
Biological, Radiological and Nuclear Threats,” 72 Fed. Reg. 20119, April 23, 2007.
83
Pharmaceutical Research and Manufacturers of America, Industry Profile 2006, p. 4.
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Project BioShield
for executing Project BioShield (Office of Public Health Emergency Medical Countermeasures)
will affect the execution of both programs.
Additional criticism of the Project BioShield procurement process may stem from the perceived
opacity of its decision-making process. HHS is moving to address some of these issues by
publishing its PHEMCE Strategy for Chemical, Biological, Radiological and Nuclear Threats,84
inviting public comment, and reaching out to the public and companies that might develop
needed countermeasures through stakeholder meetings.
Some critics also suggest that the Project BioShield process has been poorly managed overall.
Such suggestions are reinforced by the annual accounting discrepancies between HHS and DHS.
It remains to be seen whether these concerns will be allayed through the management changes
being implemented subsequent to: the establishment of the Public Health and Emergency Medical
Countermeasures Enterprise (PHEMCE) and publication of its strategy; the enactment of the
Pandemic and All-Hazards Preparedness Act (P.L. 109-417); and the issuance of HSPD-18.
Author Contact Information
(name redacted)
Specialist in Science and Technology Policy
[redacted]@crs.loc.gov, 7-....
84
72 Fed. Reg. 13109, March 20, 2007.
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