The United States government is buying enough of a new smallpox medicine to treat two million people in the event of a bioterrorism attack, and took delivery of the first shipment of it last week. But the purchase has set off a debate about the lucrative contract, with some experts saying the government is buying too much of the drug at too high a price.
A small company, Siga Technologies, developed the drug in recent years. Whether the $463 million order is a boondoggle or a bargain depends on which expert is talking. The deal will transform the finances of Siga, which is controlled by Ronald O. Perelman, a billionaire financier, philanthropist and takeover specialist.
Smallpox was eradicated by 1980, and the only known remaining virus is in government laboratories in the United States and Russia. But there have long been rumors of renegade stocks that could be sprayed in airports or sports stadiums. Experts say the virus could also be re-engineered into existence in a sophisticated genetics lab.
As part of its efforts to prepare for a possible bioterrorism attack, the government is paying more than $200 for each course of treatment.
Siga argues that the price is a fair return on years of investment. And Robin Robinson, director of the Biomedical Advanced Research and Development Authority, part of the Department of Health and Human Services, the overseer of the contract for the drug, Arestvyr, defended the size of the order and the price paid. He said that two million doses was the amount analysts predicted would be needed to contain a smallpox outbreak in a large city and that the whole country would require 12 million, along with vaccines.
The price, he said, was arrived at through federal purchasing guidelines and was “fair and reasonable” compared with the price of other commercial antiviral drugs, which he said ranged from $108 to $7,364.
But when stockpiling a smallpox drug was first proposed in 2001 after the Sept. 11 and anthrax attacks, it was expected to cost only $5 to $10 per course, said Dr. Donald A. Henderson, who led a government advisory panel on biodefense in the wake of those attacks. Dr. Henderson was a leader in the eradication of smallpox in the 1960s and is now at the Center for Biosecurity at the University of Pittsburgh Medical Center.
Dr. Richard H. Ebright, a bioweapons expert at Rutgers University, said there was little need for so much Arestvyr since the country has raised its stockpile of smallpox vaccine to 300 million doses now, up from only 15 million in 2001.
“Is it appropriate to stockpile it? Absolutely,” he said. “Is it appropriate to stockpile two million doses? Absolutely not. Twenty thousand seems like the right number.”
Vaccines are normally given before an infection to prevent a disease, while antivirals like Arestvyr are given after virus infections, to treat them. Smallpox has such a long incubation period that the vaccine can prevent disease even if it is given as late as three days after infection. Arestvyr may also prevent infection if given early enough, but that has not been proven.
Dr. Eric A. Rose, the president of Siga and a vice president of Mr. Perelman’s holding company, MacAndrews & Forbes, acknowledged that the drug cost little to make, but said the price being charged for a patented drug was a bargain compared with AIDS antiretrovirals that cost $20,000 a year and cancer drugs that cost more than $100,000 a year.