http://www.nytimes.com/2001/11/08/business/08VACC.html

November 8, 2001

THE TREATMENTS

3 Smaller Companies Say Their Vaccines Are Cheaper

By KEITH BRADSHER

ASHINGTON, Nov. 7 — Three small vaccine manufacturers that lost out in the first round of bidding for a government contract for smallpox vaccines complained today that they could supply the vaccines for a price that large drug makers still in the running say they cannot meet.

The dispute over vaccine pricing reflects a split in the pharmaceutical industry. Some small biological research companies that have done considerable work on smallpox vaccines over the last two years say that they have the viral seed stock to produce the vaccines and could do so quickly and cheaply by renting space at larger laboratories.

Two of the three finalists in the bidding for the vaccine contract, Merck (news/quote) and GlaxoSmithKline (news/quote), have done little work in recent decades on smallpox vaccines, but have their own big laboratories. The third finalist is a partnership between Acambis (news/quote), a small British biological research company, and Baxter International (news/quote), a large pharmaceutical company with many labs.

Tommy G. Thompson, the secretary of health and human services, told reporters on Tuesday evening that the three finalists' bids were "much higher than I had anticipated." He added that he had just warned the Office of Management and Budget that the contract could cost more than the $509 million he had previously predicted.

Mr. Thompson said this evening that the government was not just looking for the lowest bidder, but for the company or companies that could provide the safest, most effective vaccine earliest. "As far as the price is going, I hope it's going to go down," he said.

Louis Potash, the director of vaccine technologies at Novavax (news/quote), one of seven companies that sought the vaccine contract and were eliminated in a first round of bidding a week ago, said his company could have met the government's target price of about $2 a dose for 250 million doses. "Our price was around $2 a dose, and when I look at this, I'm sick," he said.

An official at Dynport, a company developing a smallpox vaccine under an Army contract, was equally critical. "We've already produced some, so we know how to do it, we can do it under the budget, under the $509 million," said the official, who insisted on anonymity.

The big drug companies "are going to have to spend a couple months figuring out what to do," the official said, adding that Dynport had just been told by the Army to hand over to Merck the viral seed stock it had developed.

Bavarian Nordic, based in Copenhagen, said that it could have provided a different, European kind of smallpox vaccine for $2 or less a dose. But Peter Wulff, the company's chief executive, said that he thought it was "reasonable that the U.S. would like to take one of the larger pharmaceutical companies."

The controversy over the price coincides with a partisan rift in Congress over drug makers' liability for the smallpox vaccines. The vaccines had a high rate of side effects before their civilian use ended in 1972. Doctors predict that inoculating every American now would kill hundreds of people and leave another 1,000 or more with brain damage. Drug makers want complete immunity from liability, with any lawsuits directed at the federal government instead.

Representative Billy Tauzin, the Louisiana Republican who is the chairman of the Energy and Commerce Committee, endorsed the drug makers' position in an interview today. Shifting any and all liability to the federal government is the fastest and simplest approach, at least in the short term, he said.

Two Congressional Democrats who have played a leading role for decades in vaccine legislation, Senator Edward M. Kennedy of Massachusetts and Representative Henry A. Waxman of California, are drafting bills to create a federal fund to compensate victims of bioterrorism vaccines. The fund would be modeled on an existing fund to help children hurt by childhood vaccines. As is the case with the childhood vaccines fund, people harmed by bioterrorism vaccines could still sue vaccine makers, but only in cases of gross negligence or fraud.

But Mr. Tauzin said he doubted "whether in the middle of a bioterrorism crisis we can have a tort reform debate."

ALL INFORMATION, DATA, AND MATERIAL CONTAINED, PRESENTED, OR PROVIDED HERE IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TO BE CONSTRUED AS REFLECTING THE KNOWLEDGE OR OPINIONS OF THE PUBLISHER, AND IS NOT TO BE CONSTRUED OR INTENDED AS PROVIDING MEDICAL OR LEGAL ADVICE.  THE DECISION WHETHER OR NOT TO VACCINATE IS AN IMPORTANT AND COMPLEX ISSUE AND SHOULD BE MADE BY YOU, AND YOU ALONE, IN CONSULTATION WITH YOUR HEALTH CARE PROVIDER.