December 02, 2007|David Willman |
Times Staff Writer Now VaxGen wanted to win the first BioShield contract. The company had been formed in 1995 by scientists from Genentech Inc., which retained an ownership stake. Lance K. Gordon, inventor of the first vaccine for infant meningitis, became VaxGen's chief executive in 2001.
But by 2003, the company's survival was in doubt. It had seen an experimental AIDS vaccine fail in late-stage testing. And in August 2004, the Nasdaq stock exchange delisted VaxGen for failing to file timely financial results; the company's stock price sank 35%.
VaxGen sought the BioShield contract by proposing to genetically engineer an anthrax vaccine with greater purity, more consistent potency and fewer unwanted side effects than Emergent's old vaccine.
But inside the company's salmon-colored walls facing San Francisco Bay, technicians were seeing disquieting data: Blood samples drawn from study patients showed that the vaccine failed to trigger enough anthrax-fighting antibodies.
VaxGen hired more vaccine experts, including a new chief scientific officer.
The complication did not deter federal health officials. On Nov. 4, 2004, HHS Secretary Thompson announced that VaxGen had been awarded the BioShield contract, worth $877.5 million. The money would start to flow when the company made its first delivery of vaccine, expected in two years.
"Acquiring a stockpile of this new anthrax vaccine is a key step toward protecting the American public against another anthrax attack," Thompson said.
The announcement was bad news for Emergent, whose vaccine remained the only revenue generator for its BioPort subsidiary.
"We were worried about it," recalled retired Navy Adm. William J. Crowe Jr., a former chairman of the Joint Chiefs of Staff who served on the company's board from 1998 through late 2005. (Crowe was interviewed at a hospital in Virginia in late August, two months before his death at age 82.)
BioPort was founded in 1998 by Ibrahim El-Hibri, a Lebanese financier. Along with Fuad, his U.S.-educated son, El-Hibri formed BioPort by purchasing vaccine-making facilities of the state of Michigan for $24.75 million. The company's only product was the anthrax vaccine, called BioThrax, which it sold chiefly to the U.S. military. In mid-2004, the company reorganized as Emergent BioSolutions.
To counter the challenge posed by VaxGen, Emergent invested where it could buy immediate impact: lobbying.
"We had 500 employees who were about to lose their jobs, and we went out and became advocates for them," said Allen Shofe, a company vice president who managed its lobbyists.
In 2005, Emergent's yearly spending for lobbying nearly quadrupled, to $1.41 million. Last year it reached $2.1 million, federal records show. All told, from 2004 through June 2007, the company used 52 lobbyists at a cost of $5.29 million, the records show.
During the same period, VaxGen spent $720,000 on six lobbyists.
Emergent's lobbyists stressed a core message:
* U.S. civilians were at risk of death without an immediately expanded stockpile of anthrax vaccine;
* Emergent stood ready to supply the civilian stockpile, whereas VaxGen had yet to prove it could deliver a new product;
* Emergent might stop making the vaccine if the government chose not to buy its product for the stockpile.
The company enlisted friendly members of Congress and recruited a cadre of former government officials to press its attack. Among them was Jerome M. Hauer, a former acting assistant secretary for emergency preparedness at HHS.
Hauer had been in the thick of decisions to pursue a new anthrax vaccine. While at HHS, he told Emergent in a February 2003 letter that the department had concluded a new vaccine was "a better long-range option than investing in expanding manufacturing capacity" for BioThrax. Hauer wrote that "the scientific basis" for a genetically engineered vaccine was "very sound and will result in an improved product."
But after leaving the Bush administration in late 2003, Hauer did an about-face, delivering Emergent as a client to his new boss, the Fleishman-Hillard public relations and lobbying firm, according to company records and people familiar with the matter.
At a December 2004 biotech-industry conference, Hauer said the government should purchase more of the old vaccine. He also took aim at Simonson, the HHS lawyer, who had succeeded him as assistant secretary. Hauer said that Simonson should be stripped of his authority for his handling of the BioShield contract.
In June 2005, Emergent placed Hauer on its board of directors. In that year and 2006, Emergent paid $360,000 to Fleishman-Hillard, records show.
In an interview, Hauer said he lobbied members of Congress and advised the company how to "educate" the administration. He said he changed his mind about Emergent's vaccine after concluding that he had relied earlier on "biased information" from his then-colleagues at HHS.
