WASHINGTON (Reuters Health) - The US government is planning a fund for biotech companies to use to pay for late-stage clinical trials and manufacturing of vaccines, the head of the National Institute of Allergy and Infectious Diseases said Thursday.

At first, the fund would be for vaccines against bioterrorism agents, but it would eventually be expanded to cover other infectious diseases, Dr. Anthony Fauci said at the Partnership for Global Health Forum, sponsored by the Biotechnology Industry Organization (BIO) and the Bill & Melinda Gates Foundation.

"If we're going to get vaccines off the ground, we need to meet industry halfway," Fauci said, noting that he is working with Health and Human Services (HHS) Secretary Tommy Thompson to get the fund in place.

Small biotech companies developing new therapies and vaccines for diseases that primarily affect developing nations have complained they can't get financing for late-stage development because of uncertain demand.

"Lots of good medications and vaccines are in the pipeline, but they are stuck," said Una Ryan, president and CEO of Avant Immunotherapeutics. The problem comes to a head with phase III (late-stage) clinical trials and manufacturing--a low-risk, but expensive juncture, she said.

Fauci said the government understands the problem, but that it is "cost-prohibitive" for the National Institutes of Health (NIH) to finance late-stage trials out of its own budget.

So Fauci has been discussing with Thompson a separate fund that could provide for phase III studies and manufacturing. The proposal "is in very active negotiations right now," he said.

The fund amount would be based partly on what price the government could be expected to pay for the vaccine. But the government would not set the price, Fauci said.

It is one of many new government approaches, he noted, adding that it will also pursue more partnerships with manufacturers, as mentioned by NIH director Elias Zerhouni at the same meeting on Wednesday.

HHS and the White House have become much more interested in infectious diseases that are undermining stability in developing nations, according to Fauci. The economic impact of AIDS, malaria and tuberculosis is "galvanizing everyone," he said.