http://dailynews.yahoo.com/h/ap/20011021/hl/attacks_smallpox_vaccine_1.html

Sunday October 21 8:53 PM ET

Cos. Focus on Smallpox Vaccine

By THERESA AGOVINO, AP Business Writer

NEW YORK (AP) - In the highly profitable pharmaceutical business, vaccines have long been the low-rent cousin - never matching the profits or prominence of medicines.

That has changed significantly since Sept. 11. Now vaccines have got the attention, but it's unclear if dollars will follow.

New fears of bio-terrorism have led the government to announce it wants to purchase 300 million doses of smallpox vaccine, enough to inoculate every American against the deadly disease.

Many drug makers have shied away from making vaccines in the past; vaccines can be as costly as drugs to develop, but don't offer the same returns.

When the Centers for Disease Control and Prevention (news - web sites) was seeking a firm to manufacture smallpox vaccine last year, it was spurned by major drug companies, and the $343 million contract for 40 million doses fell to a previously obscure British firm, Acambis.

Now more drug companies are offering their services, and the government said it would spend $509 million on additional doses. But that's hardly a windfall in an industry where sales are expected to reach $178 billion this year, according estimates by the Pharmaceutical Research and Manufacturers of America.

The United States has 15 million doses of smallpox vaccine, and has ordered an additional 14 million from Acambis, on top of the original 40 million. The company now expects to have its first doses ready by 2002, two years earlier than originally planned.

But experts say much more is needed. In the wake of recent anthrax cases, concerns have grown about security at the Russian lab that has one of the two remaining smallpox virus samples.

``We couldn't contain an outbreak'' said GiGi Kwik, a fellow at the John Hopkins Center for Civilian Biodefense Studies.

A smallpox epidemic would be much worse than an anthrax outbreak, because smallpox is contagious and more deadly than anthrax. Roughly 30 percent of those who contract smallpox die. A large portion of the U.S. population has never been vaccinated and no one knows if those inoculated have retained their immunity.

Smallpox vaccination stopped in the United States in 1972, and the disease was eradicated by 1980. That meant many major pharmaceutical companies stopped producing the vaccine because it wasn't considered a major public health threat, and no market was foreseen.

Other factors also kept drug companies from making vaccines for smallpox or other bio-terrorist threats such as Ebola (news - web sites).

Lehman Brothers analyst Tony Butler estimates the gross margin on a drug is about 90 percent compared to 70 percent to 80 percent for a vaccine. Drugs also generate more sales - medicines are often taken two and three times daily for years. Vaccines are typically given one to five times over a lifetime.

Butler said it's difficult for vaccine developers to choose promising candidates. Companies must determine if the demand for a vaccine is great enough, or if the affected population could afford the treatment. The same is true for drugs, but medicines are given to sick people while vaccines are given to healthy people.

``You know who should get a cancer drug, but who should really get the vaccine?'' asked Butler.

In addition, vaccines can have side effects that pose risk of litigation. Experts say if healthy people get sick after taking a vaccine they are much more likely to win juror sympathy than a sick person developing complications from a drug.

Lawsuits by parents who assert their children were hurt by vaccines were so widespread that in 1988 the government set up the National Vaccine Injury Compensation Program to handle the complaints.

``When an individual is sick and seeks treatment there is a certain amount of risk associated with the treatment. The risk assessment is totally different with a healthy person,'' said Dr. Adel Mahmoud, president of Merck & Co.'s vaccine division.

Sen. Edward Kennedy, D-Mass., is working on a massive bioterrorism package worth $5 billion to $10 billion. That includes money to hasten vaccine production and ease antitrust restrictions for drug companies.

``There is just so much to do,'' said Kwik. ``There was not a real interest in this because there was no market. My impression is that the drug companies don't do anything unless there is a profit.''

But others have a more optimistic view. Dr. Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, told NBC's ``Meet the Press'' on Sunday that the government could have enough vaccine for everyone in the nation within six to 12 months.

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On the Net:

http://www.hopkins-biodefense.org

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.