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Bioterrorism Drugs Join Congress's Agenda

Firms Urge $1 Billion Fund For Vaccines, Treatments For Anthrax, Smallpox, Pandemic Flu

WASHINGTON -- As military tribunals and wiretapping dominate Congress's pre-election agenda, biotech companies are pushing lawmakers to enact a less divisive -- and more lucrative -- homeland-security measure: a $1 billion fund for vaccines and treatments for anthrax, smallpox and pandemic flu.

Since the anthrax attacks in October 2001, the biotech and venture-capital industries have seen new potential in developing products against bioterrorism.

Kleiner Perkins Caufield & Byers, a Menlo Park, Calif., venture-capital firm that has been lobbying for the measure, earlier this year formed a $200 million fund focused on development of vaccines and drugs for flu and bioterrorism threats. Small biotech firms, often with grants from the National Institutes of Health, or NIH, are scrambling to advance their research on products that the government might be interested in buying. Big drug makers are expressing interest in pairing with smaller players. But without greater support from the government, industry leaders say it is difficult, if not impossible, to bring their products to market.

The industry's campaign has drawn bipartisan backing. Senate legislation, sponsored by Sen. Richard Burr (R., N.C.) and several other Republicans, has the backing of Democrats such as Sen. Edward Kennedy of Massachusetts, home to a burgeoning biotechnology industry. In the House, similar legislation is sponsored by a handful each of Republicans and Democrats. The House Energy and Commerce Committee passed the legislation yesterday and the full House is expected to take up the bill soon.

But for all the momentum, the bill could stall amid a tight schedule on Capitol Hill and a climate in which Republicans and Democrats already are squabbling over counterterrorism measures. Yesterday, Republican leaders made bumpy progress on their national security agenda. President Bush's push for broader authority to conduct warrantless wiretapping was approved by the House committee that oversees intelligence. Meanwhile, the House Judiciary Committee initially rejected Mr. Bush's plan for interrogating and prosecuting suspected terrorists, as all Democrats and two Republicans opposed it. Then the committee voted again, after summoning absent Republicans, and passed the measure, 20 to 19.

Republican leaders in the Senate had planned to bring the bioterrorism measure to the floor this week, provided it could be done quickly without Democratic objections or amendments. But, while Democrats say they want to pass the measure, they also want the chance to improve it, said Jim Manley, spokesman for Democratic Leader Harry Reid of Nevada. He said Democrats aren't stalling to deprive Republicans of an antiterror legislative victory before the elections. "People on both sides of the aisle want to try to pass it as quickly as possible," Mr. Manley said.

Among the issues Democrats want to bring up: revisiting liability protections for vaccine makers that were provided in a spending bill late last year and beefing up the focus in the bill on emergency planning for at-risk populations, such as the elderly.

Mr. Burr, for his part, thought the bill had been vetted sufficiently. "This has two years of work put into it. Most objections of any significance have been addressed," he said.

The $1 billion fund is supposed to alleviate some of the problems with Project BioShield, a $5.6 billion program enacted in 2004 that is criticized by both industry and lawmakers for being slow to disburse development funds for new vaccines and other drugs to combat dangerous pathogens. Under the Senate proposal, a new agency would dole out the $1 billion in much the way venture capitalists do: in a series of increments as the recipients show progress, rather than in lump sums as practiced by BioShield's administrators at the Department of Health and Human Services. In addition, BioShield's mission would be expanded to include infectious diseases that could cause a public-health emergency, such as pandemic flu.

In recent years, as the biotechnology industry has grown, it has increased its visibility on Capitol Hill, both in terms of lobbying presence and campaign contributions. The Biotechnology Industry Organization, the industry's trade group, has as its president former Pennsylvania Republican Rep. James Greenwood. While individual companies such as Amgen Inc. are substantial political donors, it is mostly smaller, lesser known companies that have shown interest in entering the uncertain bioterrorism sector.

The $1 billion in grants that would be made available in the bioterrorism legislation is meant to address the "Valley of Death" that such smaller players say they face when trying to develop bioterrorism products. While the government has programs to fund early-stage research and late-stage procurement, companies say they need more support in the middle phase, when they conduct clinical trials and gear up manufacturing capabilities.

Current NIH funding, while crucial, "only takes us up to a certain point," says Peter Young, president and chief executive of AlphaVax Inc., a Research Triangle Park, N.C., company working on technology to deliver into the body vaccines for flu and illnesses caused by bioterrorism. Project BioShield is "insufficient" and "fragmented," Mr. Young adds.

Passage of the bill also would show that the government is committed to funding bioterrorism research and development -- a move companies said would give the private sector greater confidence. "It sends a signal and maybe allows us to raise more money" from the private sector, says Francesca Cook, vice president for policy and government affairs at PharmAthene Inc., an Annapolis, Md., company developing treatments for anthrax and smallpox.

The Senate bill also would address some concerns raised about the government's response to the health emergencies experienced after Hurricane Katrina. It designates the HHS secretary as the lead federal official in charge of responding to health emergencies.

Write to Sarah Lueck at sarah.lueck@wsj.com