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New Law Aims to Reduce Financial Risk of Developing Biothreat Tools for US Gov't

NEW YORK (GenomeWeb News) — A little-known bill enacted into law at the end of last year could be a boon to biotech companies, including those using genomic technologies, developing diagnostics for pathogens and other biosecurity-related products and services.
The Pandemic and All-Hazards Preparedness Act creates a new way for the federal government to contract out its biosecurity programs for biothreat responses, among other provisions.
It aims to reduce some of the risks faced by companies developing bio-threat technologies for the federal government.
Specifically, it will try to cover R&D costs for companies developing biothreat tools as NIH funding runs out but before Project BioShield kicks in, which can take between three and five years.
“The government is finally getting it,” David Persing, a vice president at Cepheid, told GenomeWeb News. “They’re finally understanding what companies need and how companies work.”
The Pandemic Act creates a new scaffold of powers, called the Biomedical Advanced Research and Development Authority, through which federal agencies are given more freedom to offer companies enticements to develop biothreat responses.
BARDA, which is slated to receive a $1.07 billion funding budget for fiscal years 2006-2008, will be used to supplement Project BioShield, which includes the Departments of Homeland Security, Agriculture, Energy, Health and Human Services, and the National Science Foundation, among other organizations.
Experts say BARDA may help re-fuel BioShield projects that appear to be stalled. Had the Pandemic and All-Hazards Preparedness Act been around in 2006 it might have helped vaccine developer VaxGen, which was promised $877.5 million by Health and Human Services to develop a vaccine for anthrax.
Working under Project BioShield, HHS eventually pulled the plug on the deal after VaxGen spent a reported $175 million out of its own pocket, with almost no federal matching funds. The deal had specified that VaxGen would not to be paid until it had a working product on the table ready to begin production.
In BARDA’s language, VaxGen could not get the project across the “Valley of Death” — the chasm between NIH-funded basic research and end-stage BioShield-backed development — and HHS would not offer a hand.
HHS spokesman Bill Hall said there are inherent and novel risks to developing biothreat products, and BARDA “will help some of these companies … get through that valley.”
Hall said all drug- and disease-related research is risky, but biothreat programs are doubly so. “There is a tremendous amount of money spent on biotech on cancer,” Hall explained, “but there have been many dead ends. The same is true for biotech or biosecurity. But [in biosecurity] you’re dealing with issues [such as terrorist attacks] which may not come to fruition.
“And there is not a built-in delivery system in place,” Hall continued. “For a cancer drug, there is a delivery system: hospitals, doctors, etcetera. …” 
BARDA may help companies cross the Valley of Death by “authoriz[ing] us to spend more money for these programs,” Hall told GenomeWeb News. “This is not a new agency with a new staff. It is a new authority.”
BARDA “allows us more flexibility to offer advance payments” for biothreat contracts. “Or, if a company gets to point x in development, and they say they need an infusion of money, then the department can make a payment to that company,” he said.
Hall also said that BARDA has enabled HHS to develop an “infrastructure that will allow us to incorporate these new authorities” that will allow “HHS to take a leadership role to strategically define our biodefense countermeasure development.”
For HHS, Hall said, that will mean increased cooperation with the research industry.
“Once a threat has been assessed and decided on” by HHS or the Department of Defense, “part of it involves canvassing industry to find out what’s out there already, and going to them and saying, ‘We’re interested in developing a countermeasure,’” Hall said.
Then, HHS will be able to tell industry: “’We’re going to give you $500 million, and you need to meet certain milestones.”
Hill stressed that because the project is new, it is not yet clear where its funding will come from, how it will be overseen, or how it will be implemented.
Some in industry welcome the new bureaucracy. “What it says to me is that the government is finally getting it,” said David Persing, a vice president at Cepheid, which makes diagnostic tests for influenza, including a portable test designed to identify flu viruses within 24 hours. “They’re finally understanding what companies need and how companies work.”
As a contractor making a diagnostic for avian flu, for example, Persing said Cepheid might be likely to shy away from a restrictive contract.
“If [the government] had come up with a proposal and restricted it to avian flu, we’d say, ‘Well, why do we want to do that? We don’t even know if we’re ever even going to need” the tests. “Nobody is excited about that kind of business model. Everybody gets discouraged and interest starts to wane.”
BARDA looks promising to Persing because it looks to retool that model. “What they did was say, ‘How can we design this to allow companies to build a product they can sell year after year while developing a product that will allow us to be ready in case of a pandemic outbreak,’” Persing told GenomeWeb News. “That’s the kind of model that companies respond to.”

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