Published 8 December 2005

Direct funding of companies and pipeline approach to BioShield program defy convention

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID) at the National Institutes of Health, has stirred controversy with a new approach to bioterrorism funding, reports the Wall Street Journal. Rather than focusing on basic and academic research in academic laboratory settings, Fauci has thrown considerable resources — to the tune of half a billion dollars this year — into funding private companies. “The industry wasn’t going to make the investment when they had a choice between developing a new Viagra, a new Lipitor, versus the very risky procedure of doing advanced development in a product where there wasn’t going to be a guaranteed payback for them,” Dr. Fauci is reported as arguing. Indeed, the government has juggled significant criticism this year for its failure to offer adequate incentives for the development of new vaccines and bioterror drugs. To some, Fauci’s approach is a novel approach to achieving that end.

Some in the biotechnology industry have cried foul, though, comparing Fauci’s role to that of a venture capitalist rather than a government bureaucrat. In addition to selecting start-up companies and other private corporations as grant recipients, he has in some cases funded direct rivals with an eye to spurring further competition and putting selected companies on track to compete for contracts through BioShield, the HHS-managed federal bioterror purchasing program. Companies not selected by Fauci worry that they will be out of the running for BioShield contracts; San Diego-based Hollis-Eden Pharmaceuticals went directly to members of Congress to protest a NIAID grant solicitation that appeared to disadvantage its radiation sickness product against that of a competitor. Following the solicitation announcement, Hollis-Eden’s stock dropped by fifty percent on Nasdaq.

Adding weight to the controversy is Fauci’s excellent reputation within NIH and the administration, which has led to a significant jump in his budget over the past several years. NIAID’s biodefense-related funding rose from $42 million a year in 2001 to nearly $1.7 billion this year, as Fauci has put forward his agency as a leading candidate to channel federal biotech funding. About a third of that funding goes to product development, much of it at private companies.

-read the WSJ report (sub. req.); and see the Kaiser Family Foundation’s report on the article

MORE: The House Government Reform Committee, in part under pressure from Hollis-Eden Pharmaceuticals, has asked HHS for clarification of its plan for addressing radiation sickness. Describing the committee as “baffled” by HHS behavior on the topic, the committee has asked to see the department’s preliminary, draft and final solicitations for countermeasures to acute radiation syndrome. At issue are an unexpectedly low number of doses to be purchased — 100,000 doses rather than the 200,000 called for in a DHS material threat assessment — and failure to include one of two conditions associated with radiation exposure.

-read the CQ report (sub. req.)