To identify issues associated with using the licensed anthrax vaccine  (BioThrax) in the stockpile, we interviewed officials from ASPR, CDC, and  DOD. The act also authorizes HHS to procure these  countermeasures for the Strategic National Stockpile. Several Factors Contributed to the Failure of ASPR’s First Project BioShield Effort for the Production of an rPA Anthrax Vaccine

Three major factors contributed to the failure of the first Project BioShield  procurement effort. Second, VaxGen took unrealistic risks in accepting the contract  terms. HHS Awarded the Procurement Contract Before Development Had Reached an Appropriate Level of Maturity

ASPR’s decision to launch the VaxGen procurement contract for the rPA  anthrax vaccine at an early stage of development, combined with the  delivery requirement for 25 million doses within 2 years, did not take the  complexity of vaccine development into consideration and was overly  aggressive. Moreover, VaxGen was still finishing up work on  the original stability testing required under the first development contract. These  risks arose from aggressive time lines, VaxGen’s limitations with regard to  in-house technical expertise in stability and vaccine formulation—a  condition exacerbated by the attrition of key staff from the company as  the contract progressed—and its limited options for securing additional  funding should the need arise. When  VaxGen failed to meet a critical performance milestone of initiating the  next clinical trial, ASPR terminated the contract. Key Parties Did Not Clearly Articulate and Understand Critical Requirements

Important requirements regarding the data and testing required for the rPA  anthrax vaccine to be eligible for use in an emergency were not known at  the outset of the procurement contract. In addition, ASPR’s  anticipated use of the rPA anthrax vaccine was not articulated to all  parties clearly enough and evolved over time. All of  these factors created confusion over the acceptance criteria for VaxGen’s  product and significantly diminished VaxGen’s ability to meet contract  time lines. The EUA guidance states that FDA  will “authorize” an unapproved or unlicensed product—such as the rPA  anthrax vaccine candidate—only if “there is no adequate, approved and  available alternative.” According to the minutes of the meeting between  FDA and VaxGen, in January 2006, FDA reported that the unlicensed rPA  anthrax vaccine would be used in an emergency after the stockpiled  BioThrax, that is, “when all of the currently licensed  had been  deployed.” This diminished the likelihood of a scenario where the rPA  vaccine might be expected to be used out of the stockpile. ASPR Lacks an Effective Strategy to Minimize Waste in the Strategic National Stockpile and Plans to Use Expired Anthrax Vaccine

We identified two issues related to using the BioThrax in the Strategic  National Stockpile. Three lots of BioThrax  vaccine in the stockpile have already expired, resulting in losses of over  $12 million. According to the data provided by CDC, 28 lots of BioThrax  vaccine will expire in calendar year 2008. ASPR could  minimize the potential waste of these lots by developing a single inventory  system with DOD—which uses large quantities of the BioThrax vaccine— with rotation based on a first-in, first-out principle. DOD and ASPR officials told us that they discussed a rotation option in  2004 but identified several obstacles. ASPR’s planned use of expired vaccine would violate FDA’s  current rules and could undermine public confidence because ASPR  would be unable to guarantee the potency of the vaccine. With the  termination of the contract, the government does not have a new,  improved anthrax vaccine for the public, and the rest of the biotech  industry is now questioning whether the government can clearly define its  requirements for future procurement contracts. Agency Comments and Our Evaluation

We provided a draft of this report to the Department of Health and Human  Services and the Department of Defense for review and comment. HHS also disagreed with a number of our specific findings. HHS awards Strategic National Stockpile contract to VaxGen for rPA anthrax vaccine procurement. Food and Drug Administration (FDA) issues draft Guidance for Emergency Use Authorization of  Medical Products. GAO Comments

1. 2. 3. We clarified the report text to attribute to VaxGen officials the  statement that the purchase of BioThrax for the stockpile as a stopgap  measure raised the bar for the VaxGen vaccine. GAO Comment

1.
Why GAO Did This Study

The anthrax attacks in September and October 2001 highlighted the need to develop medical countermeasures. The Project BioShield Act of 2004 authorized the Department of Health and Human Services (HHS) to procure countermeasures for a Strategic National Stockpile. However, in December 2006, HHS terminated the contract for a recombinant protective antigen (rPA) anthrax vaccine because VaxGen failed to meet a critical contractual milestone. Also, supplies of the licensed BioThrax anthrax vaccine already in the stockpile will start expiring in 2008. GAO was asked to identify (1) factors contributing to the failure of the rPA vaccine contract and (2) issues associated with using the BioThrax in the stockpile. GAO interviewed agency and industry officials, reviewed documents, and consulted with biodefense experts.

What GAO Found

Three major factors contributed to the failure of the first Project BioShield procurement effort for an rPA anthrax vaccine. First, HHS's Office of the Assistant Secretary for Preparedness and Response (ASPR) awarded the procurement contract to VaxGen, a small biotechnology firm, while VaxGen was still in the early stages of developing a vaccine and had not addressed many critical manufacturing issues. This award preempted critical development work on the vaccine. Also, the contract required VaxGen to deliver 25 million doses of the vaccine in 2 years, which would have been unrealistic even for a larger manufacturer. Second, VaxGen took unrealistic risks in accepting the contract terms. VaxGen officials told GAO that they accepted the contract despite significant risks due to (1) the aggressive delivery time line for the vaccine, (2) VaxGen's lack of in-house technical expertise--a condition exacerbated by the attrition of key company staff as the contract progressed--and (3) VaxGen's limited options for securing any additional funding needed. Third, important Food and Drug Administration (FDA) requirements regarding the type of data and testing required for the rPA anthrax vaccine to be eligible for use in an emergency were not known at the outset of the procurement contract. In addition, ASPR's anticipated use of the rPA anthrax vaccine was not articulated to all parties clearly enough and evolved over time. Finally, according to VaxGen, the purchase of BioThrax for the stockpile as a stopgap measure raised the bar for the VaxGen vaccine. All these factors created confusion over the acceptance criteria for VaxGen's product and significantly diminished VaxGen's ability to meet contract time lines. ASPR has announced its intention to issue another request for proposal for an rPA anthrax vaccine procurement but, along with other HHS components, has not analyzed lessons learned from the first contract's failure and may repeat earlier mistakes. According to industry experts, the lack of specific requirements is a cause of concern to the biotechnology companies that have invested significant resources in trying to meet government needs and now question whether the government can clearly define future procurement contract requirements. GAO identified two issues related with the use of the BioThrax in the Strategic National Stockpile. First, ASPR lacks an effective strategy to minimize the waste of BioThrax. Starting in 2008, several lots of BioThrax in the Strategic National Stockpile will begin to expire. As a result, over $100 million per year could be lost for the life of the vaccine currently in the stockpile. ASPR could minimize such potential waste by developing a single inventory system with Department of Defense (DOD)--a high-volume user of BioThrax--with rotation based on a first-in, first-out principle. DOD and ASPR officials identified a number of obstacles to this type of rotation which may require legislative action. Second, ASPR planned to use three lots of expired BioThrax vaccine in the stockpile in the event of an emergency. This would violate FDA rules, which prohibit using an expired vaccine, and could also undermine public confidence because the vaccine's potency could not be guaranteed.