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[H.A.S.C. No. 106–62]








JULY 13, 2000

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STEVE BUYER, Indiana, Chairman

J.C. WATTS, Jr., Oklahoma
LINDSEY GRAHAM, South Carolina
JIM RYUN, Kansas
MARY BONO, California
JOSEPH PITTS, Pennsylvania
ROBIN HAYES, North Carolina

MARTIN T. MEEHAN, Massachusetts
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JOHN B. LARSON, Connecticut

John D. Chapla, Professional Staff Member
Thomas E. Hawley, Professional Staff Member
Michael R. Higgins, Professional Staff Member
Edward P. Wyatt, Professional Staff Member
Debra S. Wada, Professional Staff Member
Nancy M. Warner, Staff Assistant






    Thursday, July 13, 2000, Department of Defense Anthrax Vaccine Immunization Program (AVIP)


    Thursday, July 13, 2000
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    Abercrombie, Hon. Neil, a Representative from Hawaii, Ranking Member, Military Personnel Subcommittee

    Buyer, Hon. Steve, a Representative from Indiana, Chairman, Military Personnel Subcommittee


    de Leon, Rudy, Deputy Secretary of Defense; General Tommy R. Franks, Jr., U.S. Army, Commander in Chief, United States Central Command; Major General Randall L. West, U.S. Marine Corps, Senior Advisor to the Deputy Secretary of Defense for Chemical and Biological Protection; Rear Admiral J. Jarrett Clinton, Public Health Service, First Assistant to the Assistant Secretary of Defense for Health Affairs; Anna Johnson-Winegar Ph.D., Deputy Assistant Secretary of Defense for Chemical and Biological Defense; and Colonel Gaston M. Randolph, Jr., U.S. Army, Director, Anthrax Vaccine Immunization Program

    El-Hibri, Fuad, Chief Executive Officer, Bioport Corporation; Accompanied by Robert Myers, Chief Scientific Officer, Bioport Corporation, and Robert Kramer, Chief Financial Officer, Bioport Corporation

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    Stephenson, April G., Chief, Policy Programs Division, Defense Contract Audit Agency

    Zoon, Kathryn C., Ph.D. Director, Center for Biologics Evaluation and Research (CBER), U.S. Food and Drug Administration


Abercrombie Hon. Neil

Buyer, Hon. Steve

de Leon, Hon. Rudy, General Tommy R. Franks Jr., Dr. Anna Johnson-Winegar, Major General Randall L. West, and Rear Admiral J. Jarrett Clinton

El-Hibri, Fuad

Shays, Hon. Christopher

Stephenson, April G.

Zoon, Dr. Kathryn C.

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[The Documents submitted for the Record are pending.]

[The Charts submitted for the Record can be viewed in the hard copy.]

Stages of Review and Regulation Submitted by Dr. Zoon

[The Questions and Answers submitted for the Record can be viewed in the hard copy.]

Mr. Abercrombie
Mr. Bartlett
Mr. Buyer
Mr. Larson
Mr. Shays


House of Representatives,
Committee on Armed Services,
Military Personnel Subcommittee,
Washington, DC, Thursday, July 13, 2000.

    The Subcommittee met, pursuant to notice, at 10:08 a.m., in room 2118, Rayburn House Office Building, Hon. Steve Buyer (Chairman of the Subcommittee) presiding.
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    Mr. BUYER. Good morning. This hearing of the Subcommittee on Military Personnel of the House of Representatives Committee on Armed Services will come to order. I would ask at the beginning for unanimous consent that Congressman Chris Shays, who chairs the National Security Subcommittee of the House Government Reform and Oversight Committee, be permitted to sit in this Subcommittee hearing. Hearing no objection, so ordered. He will be recognized at the end; every other Subcommittee member will be permitted to ask questions, and then he will be recognized in proper order.

    We welcome you here today.

    We also ask unanimous consent that Walter Jones, a member of the full Committee, be permitted to sit also at this Subcommittee hearing. Hearing no objection, so ordered.

    Both of these men have taken great interest in the anthrax program, and I believe their addition to the Subcommittee hearing will be productive.

    This is the second hearing of the Subcommittee which we have held on the Department of Defense (DOD) Anthrax Vaccine Immunization Program (AVIP).

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    Earlier this week, in response to growing concerns with the potency testing of the anthrax vaccine, the Secretary of Defense announced a temporary slow-down in the important element of the Department's force protection strategy.

    The witnesses appearing before the Subcommittee today will provide testimony on the overall program and the Department's approach to managing the dwindling supply of vaccine in the face of a continuing threat.

    We will also receive testimony about the vaccine manufacturer, BioPort Corporation's, effort to gain Food and Drug Administration (FDA), approval of their new manufacturing facility and their contractual relationship with the Department of Defense.

    I am, as always, glad to be joined in these efforts by the Ranking Member, Mr. Abercrombie, as we oversee in a non-partisan way the Department of Defense efforts to protect men and women of the armed forces from this particular biological threat.

    I am also pleased to welcome to the dias today again our colleagues, Chris Shays and Mr. Jones.

    The House of Representatives Committee on Armed Services has closely followed the Department's implementation of AVIP since its inception. As Chairman of the Military Personnel Subcommittee and as a Gulf War veteran, I have also taken the anthrax vaccine twice during the Gulf. I also have been a leading advocate of men and women who have suffered from Gulf War illnesses, which also include myself.

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    The driving force of this program is the threat of the exposure to weaponized anthrax. Absent the threat, the vaccination program would be unnecessary. However, absent the vaccination in the presence of a known threat, unprotected exposure would result in near certain death.

    The central questions we on the Committee must continue to ask are:

    1. How real is the threat?

    2. Is the vaccine safe?

    3. Is the vaccine reliably effective against the threat, i.e., potency?

    I remain convinced that the threat is real and that the Department of Defense is obligated, indeed has, a very clear duty, to take all necessary actions to protect our soldiers, sailors, airmen and Marines against this deadly biological weapon. On the issue of safety, I believe that the Department has responded to our concerns by increasing its monitoring efforts and working with the Food and Drug Administration aggressively reviewing the vaccine's adverse event reports that service members are encouraged to submit if they have a reaction to the shots. That brings us to the potency of the vaccine and the tests that each lot of the vaccine must satisfactorily complete prior to release for use by the force.

    Several of the most recent potency tests have resulted in multiple lots of the vaccine, all of which were previously approved for safety and purity, not being approved for use because they failed the test for potency. In other words, the vaccine in those lots were not proven in accordance with FDA standards to be effective in protecting our service men and women against anthrax as a weapon.
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    These failures, combined with the inability of BioPort to produce vaccine in the renovated production facility have resulted in the Department of Defense actions taken earlier this week to temporarily slow down the rate at which the force has administered the anthrax vaccine. In other words, we are in a pickle.

    Among our witnesses today is a representative from the Food and Drug Administration. In my view, the FDA's tough standards have been critical to maintaining the support for this program. The FDA managers have insisted on the toughest standards before authorizing the release of already manufactured anthrax vaccine or approving the new production facility. Their continued rigorous oversight will be critical to continuation of the program.

    Clearly, the current strategy did not anticipate problems with the potency testing of the vaccine or that it would take so long for BioPort to achieve final approval for new production of the anthrax vaccine.

    This unexpected delay, combined with a limited supply of vaccine and new problems with pre-released potency tests have resulted in the Secretary of Defense's decision to slow down the Program until guaranteed production can be assured.

    From the outset of this program, my support has been based on three considerations: Is the threat real? Is the vaccine safe? Is it effective?

    I am open to all levels of all criticism to say that, Congressman Buyer, you chose the wrong three tests, but I felt that as an individual, that there were several hundred thousand of us that stood there in the desert that took these shots in the face of a known threat and when you stand there and you know what that feeling is in your gut, that you are facing an enemy that is going to use a biological or chemical weapon against you, that is why I chose those three.
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    This is a time that concerns me greatly because if we have a vaccine that does not pass the potency test, it raises some reasonable doubts as to the effectiveness of these lots of the vaccine for actually protecting the force.

    In preparatory discussions several weeks ago, we could anticipate that as soon as the public began to learn that the lot failed in its potency test that soldiers that were then receiving additional anthrax shots, we believed at the time that we would see an increase in adverse event reports and it is happening.

    So what you have out there is we had general fears about the anthrax as a program, we work hard to educate the force and even in the face of a known threat and an FDA approval of the safety of a drug, as soon as the public or the force learns that there is a potency problem, they think that somehow then the vaccine is not safe and we have an increase in adverse event reports. It was predictable and it is happening.

    Additionally, I continue to be convinced that our soldiers, sailors, airmen and Marines are better protected with a safe and potent anthrax vaccine than they would be without it. However, I am concerned about the Department of Defense's short, intermediate and long-term strategies for providing force protection and I look forward to hearing their testimony on those challenges today.

    Before we receive our testimony, I would ask my colleagues, in particular the Ranking Member, Mr. Abercrombie, for any opening remarks that he may have.

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    [The prepared statement of Mr. Buyer can be found in the Appendix.]


    Mr. ABERCROMBIE. Thank you very much, Mr. Chairman. Mr. Chairman, ordinarily I would make a brief comment or two and submit my statement for the record so that we could get to the witnesses as soon as possible. However, today, I would like to make essentially a full statement before I submit it so that the panel members can understand exactly where my situation is and it may help them to shape their testimony in a responsive way. And I ask your indulgence in that because of the seriousness of the situation as you have presented it.

    I certainly share your concerns, Mr. Chairman, as you know, regarding the Department of Defense Anthrax Vaccine Immunization Program. I am pleased to be here and would like to commend you again publicly on holding today's hearing. It is particularly important and timely, as delay in acquiring approval from the Food and Drug Administration for the anthrax vaccine has adversely impacted our ability to provide protection to our troops against this deadly biological agent, as you have noted. As we also know, the threat of an anthrax attack against our military personnel is real. I think that needs to be reemphasized. There is a particular concern for those stationed in southwest Asia and Korea.

    We have an obligation to assure that our uniformed men and women are provided the force protection they need and deserve. This Subcommittee has a vital responsibility to ensure that the vaccine provided to our service members is safe, potent and effective. If that seems to parallel your concerns as you have stated them, it is because we have both come to the same conclusion without having to speak to one another about it and I think that speaks to the essential nature of what you have zeroed this Committee in on.
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    The delays in the FDA licensing of the renovated BioPort vaccine manufacturing plant, the limited supply of FDA-approved vaccine and many misperceptions of the Program are of grave concern to me and to you and this Subcommittee.

    The production problems at BioPort and the simultaneous shortage of FDA-approved vaccine have had an adverse impact on the Department's ability to provide our forces protection against an anthrax attack, in my judgment.

    As a result, the Department recently announced a slowdown of the anthrax vaccination effort and proposes to focus its limited anthrax supply to protect those most at risk, personnel serving in high threat areas for more than 30 days. This will, in effect, provide protection to those serving in a high threat area for a limited time. The Department has indicated it will expand its vaccination effort, and I quote, ''As soon as logistically feasible.''

    However, the sole source manufacturer, BioPort, has yet to receive FDA certification and may not receive certification for their renovated facilities until the end of the year.

    Mr. Chairman, I ask your indulgence as I cite some of these things, not because you do not know them or other Subcommittee members do not know them or our panel, but because there are certain conclusions that I have reached and I feel I should have it on the record.

    Although the Department has laid out a proposal to address the shortage of vaccine therefore in the short term, the Department has not indicated what contingency plans are being made should BioPort fail to gain FDA certification before the remaining supply of FDA-approved vaccine is consumed by our troops in the field. I think this is a very important question. What options are available to the Department? Will we have to procure a vaccine from a foreign manufacturer for the interim? Will such a vaccine meet our stringent FDA requirements? How long would FDA take to approve a foreign vaccine?
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    These are questions that need to be answered now so that we can have a long-range plan in place for our service men and women and for the Congress, for that matter. And the American public needs then to be informed as to how the Department intends to protect the Nation's troops against this odorless, colorless and deadly biological agent.

    The Department, in my judgment, Mr. Chairman, must also address the issue of the inability of BioPort to gain the FDA certification that I have just cited of its manufacturing facilities. It raises concerns, again, in my judgment, about whether it should continue to be a sole source provider.

    BioPort has struggled financially since it purchased Michigan Biologic Products Institute, the only biologic facility in the country licensed by the FDA to produce the anthrax vaccine, from the state of Michigan in 1998.

    Since the Department of Defense initiated the AVIP program, the Department has made significant investment, in my research, almost $12 million, in renovating BioPort's facilities to meet its increased demand for vaccine. Even with contract modifications, extraordinary contractual effort relief, interest-free advance payments, BioPort continues to face financial difficulties that adversely impact its ability to gain the FDA certification.

    Although the Department has recently begun an effort to see a second anthrax vaccine source in this Nation, any other domestic source would have to meet the same stringent FDA requirements, I presume, and this could take several years, possibly. I think this is a question I hope the FDA can answer with respect to how long such certification might take.
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    Given the importance of the anthrax vaccine in our force protection policy and the need for other vaccines which has not had much play so far, Mr. Chairman, for our troops, it may be in the best interests of our military personnel and the Nation's security for the Department to establish a Government-owned vaccine facility. I want to repeat that. It may be in our interests to have a Government-owned vaccine facility or facilities.

    The Department already retains an interest in the equipment at BioPort, in the information I have received, of nearly $7 million. I understand there is a lien against the majority of BioPort's assets, which makes me very, very concerned about the stability of the management.

    I hope that the Department reviews this option as it looks towards the long-term strategy with respect not only to the anthrax vaccine, but any other vaccines that we might deem as being essential to the safety of troops.

    Even if the Government were to establish a vaccine facility or find a second source, BioPort will need to vastly improve its management of this Program. The Department of Defense Office of Inspector General conducted an audit on the contracting of the anthrax vaccine in March of this year. Given the current financial situation as I understand it, of BioPort, the report noted inappropriate capital expenditures, questionable travel expenses, sizeable employee performance bonuses.

    The Defense Contract Audit Agency (DCAA), also indicated, and I quote, ''Excessive costs which may not have been prudent in the light of BioPort's financial situation and are unallowable in accordance with the Federal Acquisition Regulations.''
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    These audit statements do not generate confidence in BioPort's management of the anthrax Program. While the Department has initiated efforts to address the concerns raised by these audits and I commend you for that, nonetheless the management of BioPort also needs to be committed to addressing these issues. That I am not aware of.

    Mr. Chairman, I want to thank you and I want to thank the witnesses for your patience in letting me make this statement, but I hope that you will agree having heard it that some of these issues need to be stated and stated up front so that we can conduct this hearing in a manner that is going to see to it that the security of this Nation is advanced and that other members not only of this Armed Services Committee but of the Congress as a whole can have confidence in what we have done and what we are attempting to do. Thank you very much.

    [The prepared statement of Mr. Abercrombie can be found in the Appendix.]

    Mr. BUYER. Mr. Abercrombie, you are respected for your contribution, and I appreciate your statement.

    At this time, as a prerogative of the chair, I am going to invoke the five-minute rule on the Committee. Before I do that, since I go by the rules, I will ask if any members would have any opening statements that they would like to make.

    Mr. Bartlett? Mr. Ryun? Mr. Thompson? Mr. Shays? Mr. Shays, you are now recognized for five minutes.

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    Mr. SHAYS. Thank you, Mr. Chairman. From the bottom of my heart, thank you for allowing me to participate, and also, the same motivation I have to put on the record a statement so we can have a meaningful dialogue.

    The vulnerability of the Department of Defense Anthrax Vaccine Immunization Program, AVIP, to supply shortages was one of the major reasons the Government Reform Committee recommended suspending the program four months ago. We saw then what DOD only now has been forced to concede: the program is too broad an undertaking built on too narrow a foundation.

    The recent decision to scale back the AVIP addresses the reality of the current shortage, but fails to confront the fundamental flaw in the program, use of antiquated medical technology to counter a decidedly modern threat. No program based on the old vaccine can be sustained. The current producer, the BioPort Corporation, has proven unreliable. The facility is virtually government-owned already, so there is no reason to believe that another government-owned/contractor-operated (GOCO) or GOCO enterprise will have any greater success attempting to use the same elaborate, highly regulated manufacturing process.

    Why? Because neither BioPort nor DOD is ready to admit the significance of the key FDA inspection finding first stated in February 1998 and repeated in November 1999: the anthrax vaccine production process is not validated.

    That means BioPort lacks data to support the way they conduct key steps in the production process. That, in turn, means BioPort cannot prove the process is ever the same twice in a row or the vaccine is the same lot from lot. Validating the anthrax vaccine production process will not be quick and it will not be cheap.
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    When DOD spokesmen blithely describe the company's efforts to work down the list of 30 FDA inspection findings, they make it sound like a car repair checklist. DOD seems to believe all BioPort needs to do is tighten a few screws, plug a few leaks, fill out some pesky paperwork and the FDA will be satisfied.

    In fact, validating a 1950s era vaccine process against current biologic manufacturing standards is more like trying to get an Edsel through modern auto safety and emissions testing. To pass muster will require bending the rules or the expenditure of extraordinary amounts of money, money that could be better applied to the approval of an improved vaccine.

    Without an assured supply of modern anthrax vaccine in hand, continuing to order soldiers, sailors, airmen and Marines to start a course of shots they may never finish constitutes in my judgment military malfeasance and medical malpractice. Despite earlier promises to adhere to the FDA-approved regimen of six shots over 18 months, DOD now admits the shortage means many service members will not be kept on the ''only regimen shown to protect humans against anthrax.''

    According to DOD, shots can be delayed up to two years before the series has to be restarted. Now that the Program has been reduced to a more sizeable size, what will be the fate of those who were punished for resisting an order that no longer stands? They did not get a two-year reprieve.

    Because DOD placed more faith in BioPort's faulty production estimates than in the intelligence and the integrity of those with legitimate questions about the program, hundreds of dedicated, loyal Americans have had their health damaged or their military careers ruined. Don't they deserve the same deference, even forgiveness, DOD seems so willing to extend to BioPort?
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    No one should doubt the threat is real, as real as the threat of radiological weapons and the threat posed by a myriad of easily obtained chemical compounds against which we have no medical pretreatments. No one should doubt that good intentions motivated this reason to the anthrax threat, but I have come to doubt the judgment, the foresight and the competence of those who choose the wrong approach, persisted in pursuing that approach well after it had been obviously unsustainable and now cannot seem to admit their mistake and move on.

    The Government Reform Committee I chair has been examining the overall chemical and biological (CB), Defense program of which the anthrax vaccine is just one element, countering just one threat. To date, we see a disjointed effort unable to establish clear priorities and unwilling to address long standing flaws in protective equipment, suits and masks effective against all CB threats.

    When confronted about masks that leak, suits with open seams or questionable effect of anthrax vaccine, some DOD officials retreat to the indefensible position that something is better than nothing, but that is a false choice. Elevating mediocrity is not an acceptable force protection standard. U.S. forces deserve the best protection against a growing array of chemical and biological threats and should not have to choose between defective equipment and antiquated vaccines that run out.

    I appreciate sincerely the opportunity to participate in this hearing and look forward to the dialogue that will occur.

    Mr. BUYER. Thank you, Mr. Shays. Mr. Jones, you are now recognized for five minutes.
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    Mr. JONES. Mr. Chairman, thank you. I am going to be very brief because I do not really have a prepared statement. I want to thank you and the ranking member for holding this hearing and permitting Mr. Shays and myself to be here today.

    I think quite frankly that this has been a real tragedy for men and women in uniform for the past year and a half. I got involved in March of 1999. I was contacted by five pilots from Seymour Johnson Air Force Base in Goldsboro (North Carolina), which is in my district. Three of those five were Reservists and two were active duty. And four of the five have gotten out of the military since this issue of anthrax.

    I remember General West, who I have great respect for, said in my office it would be a tragedy to lose one man or woman in uniform over this issue of anthrax, and we have lost a large number of men and women in uniform. We have also had men primarily who have accepted administrative punishment because of their refusal to take this shot.

    So I hope when we leave here today that we come to some conclusion that the Department of Defense has a responsibility to the men and women in uniform to be able to convince those men and women in uniform that this vaccine is safe and that this shot is necessary because this is a time in the history of this country where we need to have men and women that are qualified to serve this Nation, who want to serve this Nation, not be leaving over a vaccine. And so with that, Mr. Chairman, I thank you very much for the opportunity of being here, and I will wait to listen to the panel. Thank you.

    Mr. BUYER. Thank you, Mr. Jones.
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    Our first panel of witnesses represents the Department of Defense. We are very pleased to welcome the Honorable Rudy de Leon, the Deputy Secretary of Defense. Other witnesses at the table will be recognized for testimony in this order: General Tommy R. Franks, Jr., the Commander in Chief, United States Central Command; Major General Randall L. West, Senior Advisor to the Deputy Secretary of Defense for Chemical and Biological Protection; next will be Rear Admiral J. Jarrett Clinton, Public Health Service, First Assistant to the Assistant Secretary of Defense for Health Affairs. Then we will hear testimony from Dr. Anna Johnson-Winegar, Deputy Assistant Secretary of Defense for Chemical and Biological Defense.

    I appreciate all of you appearing here today to offer testimony on this important anthrax vaccination Program. I especially want to welcome General Franks and Admiral Clinton to their first appearance before our Subcommittee. Somehow I realize this may not be your last.

    We look forward to hearing your testimony today and we have distributed your written statements and I would appreciate if you would summarize your testimony and that way it permits us to get into the details of many different questions.

    Secretary de Leon, you may proceed at your pleasure.

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    Secretary DE LEON. Thank you, Mr. Chairman, for the chance to appear before the Subcommittee this morning. This is an extremely important topic. It is an important topic for the men and women of our armed forces. It is an important topic because there are legitimate views and legitimate questions that the Congress and this House of Representatives has asked that appropriately need to be answered. That is our purpose and responsibility here today.

    So, Mr. Chairman, Mr. Abercrombie, Mr. Chairman Shays and other Members, our goal here is to stay as long as necessary to answer your questions. As you referenced, Mr. Chairman, I am joined by the U.S. Commander in Chief (CINC) of Central Command, Tommy Ray Franks, who became the CINC in the last two weeks, but prior to that in an earlier assignment had been the Commander of U.S. Army ground forces in Kuwait. I am joined by Jarrett Clinton of the Public Health Service, who is the chief medical officer in Health Affairs responsible for military readiness and the medical force protection of our men and women.

    Major General Randy West, who brings an operator's perspective to these issues, who has, I think, worked vigorously to make sure that we have an open door and full communications with the Food and Drug Administration because at the end of the day the FDA is the preeminent organization in the world in terms of the safety of medicines and vaccines and obviously because of Secretary Cohen's commitment to safety we want to assure ourselves that we are in full compliance with all FDA regulations and procedures.

    And then Dr. Anna Johnson-Winegar, the Deputy Assistant Secretary for Chemical and Biological Defense Issues, who has closely monitored this, who in her number of years of serving the Department has served in this critical area, including being a member of the U.N. inspection team that has done inspections in Iraq.
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    As the opening statements indicated, this is a real threat. There is weaponized anthrax that exists in two of our theaters today, in Korea, in the area of responsibility for U.S. Central Command. Those weapons exist. They are in the stockpiles of our adversaries. In addition to the weapons, there exist delivery systems that are capable of delivering those warheads against military units, those of our allies, against civilian population centers as well. In addition, we see one adversary in the Central Command theater who continues to experiment with even more innovative ways to deliver chemical and biological attack through unmanned vehicles, someone who clearly continues to threaten U.S. forces.

    So this is a threat and because of the threat, when the Joint Chiefs of Staff made a unanimous recommendation to the Secretary of Defense and when he received the recommendation of the then-U.S. Commander in Chief in Central Command and the U.S. Forces Korea that the anthrax immunization proceed, the Secretary of Defense approved that program in early 1998, largely driven by the threat, largely because of the advice of his military advisors, the Joint Chiefs and the CINCs, and based upon a full discussion with the Surgeons General of the military departments. So we begin with a threat.

    The next issue is obviously the acquisition of vaccine. Thus far, those shots that have been administered have come from the stockpile. Each shot that has been extracted from the stockpile and has been used in the field has met the FDA standards for safety, for purity, for sterility and potency.

    As a sign of his own commitment to the program, Secretary Cohen was one of the first to take the shot, he has completed the full series; the Chairman of the Joint Chiefs has also completed the full series; Dr. (John) Hamre (former Assistant Secretary of Defense for Health Affairs) completed the full series and I am close to completing the full series; as a commitment that the leadership of the Department was willing to stand side-by-side with the military men and women in terms of receiving this vaccine.
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    Now with respect to the acquisition issues that you, Mr. Chairman, Mr. Abercrombie and other members of the Committee have taken, specifically the question that Mr. Abercrombie raised, should there be only a single provider of vaccine, not only for anthrax but in other areas as well, let me just announce the actions that we have taken in terms of the Department's oversight of vaccine acquisition, both in the short term and also longer term initiatives.

    First, we have provided Defense Contract Audit Agency oversight and separate company consultants to enhance the management practices and performance of BioPort who is today our only vaccine supplier for anthrax vaccine.

    Second, we have identified and are contracting with a second source for testing, filing and packing the vaccine.

    Third, on June 30, 2000, the Department issued through the Commerce Business Daily a sources sought announcement seeking to identify interest in the industry in providing a second source for the manufacture of anthrax vaccine. This is to explore the feasibility of another producer that would share the product license with the BioPort Corporation, but also provide a second manufacturing capability. Responses are due July 31st with the possibility of contract award following as soon as submissions received can be appropriately reviewed.

    Fourth, later this month, I will be chairing the Defense Resources Board that will make decisions on whether or not to approve funds to build a Government-owned/contractor-operated facility to manufacture a variety of vaccines to address the most likely and deadly spectrum of threats our soldiers, sailors, airmen, Marines and Coast Guardsmen face when they are deployed. This budget may also include funds to continue development of recombinant vaccines designed to provide protection against multiple threats. One of these will likely be anthrax and serves as our long-range strategy to provide our troops the protection they will need against this deadly agent.
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    Fifth, we are restricting further payments to BioPort to only those items requested by DOD and allowable as expense costs to comply with both good government fiscal practices and Congressional direction.

    Last, the Department has directed that Admiral Jarrett Clinton of the Public Health Service and the Secretariat for Health Affairs and Dr. Hans Marx, the Director of Defense Research and Engineering, contract with a private organization to provide an independent review of the Department's overall management of vaccine procurement. This will further ensure that our efforts are credible, consistent, in compliance with all FDA directives and are effective use of taxpayer dollars.

    Now, why have we taken these actions? Why did the Secretary (Cohen), with the concurrence of the Chairman of the Joint Chiefs, scale back the Program earlier this week?

    Those actions were taken because we have reached a point where existing stocks of previously manufactured vaccine are no longer available. There are some lots which have met sterility, purity and safety standards but still need to pass a potency test to be considered by FDA for release. We will continue our efforts working with the manufacturer and the FDA to gain approved release of these existing lots.

    Each lot of vaccine from the stockpile undergoes rigorous testing prior to release to ensure that it is fully safe and effective against anthrax. Because fewer lots than anticipated have been released, we are running low.

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    Admiral Clinton, on behalf of our Surgeon General (Blanck), working with General West, has maintained liaison with our operators in the field, are working the contingency protocols.

    One of the major changes because of the refocusing of the Program will be that when we began the anthrax immunization Program in early 1998, we had what we referred to as a 30-day policy. If U.S. military personnel were in the region for 30 days or longer, then we were going to proceed with the vaccine and if they were in the theater for a shorter period, then we would forego their vaccination until additional supplies were available.

    We later changed that to a zero day policy, but I think given the amount of supply that we have and after consultation, we believe the prudent policy is to return to the 30-day policy and to give our Commanders in Chief the available vaccine that we have to ensure that those that are in the highest threat areas will be able to continue to receive the vaccine.

    Finally, both in terms of the safety of the vaccine and the safety of our service members against the very real threat of anthrax, these are the guiding principles of the Department's initiative and the commitment to the anthrax vaccination Program. No member of the armed forces has or will receive vaccine in which the FDA and the Department does not have full confidence.

    Those are at the heart of the initiatives that we have taken, Mr. Chairman. The panel and I are pleased to answer any questions that you may have.

    [The prepared statement of Secretary de Leon can be found in the Appendix.]
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    Mr. BUYER. Thank you. General Franks, you are recognized for five minutes.

    General FRANKS. Mr. Chairman, Mr. Abercrombie, distinguished members of the Committee, thank you for this opportunity to appear for the first time, sir, before this Committee on this very important issue.

    As you know, the biological warfare (BW), threat in the U.S. Central Command region is considerable today and we expect that threat to grow over the coming years as means to produce and weaponize these agents become increasingly more available. The pace and scale of BW efforts will vary widely and will be driven by perceptions of threats to national security within the region and a desire for low cost, high impact, asymmetrical weaponry. Some states in the region may seek to stockpile biological agents for deterrent value and certainly extremists can also be expected to seek BW for use in isolated attacks.

    The trend in our region is clear. After nearly five years of claiming that it had conducted only defensive research on biological weapons, Iraq reluctantly declared in 1995 that in fact it had produced approximately 30,000 liters of bulk biological agent. Iraq has also admitted that during the 1991 Gulf War, biological warfare-agent filled munitions were intended for use against Israel and coalition forces in Saudi Arabia and were deployed to airfields.

    Additionally, Iran has a growing biotech industry, significant pharmaceutical experience and the overall infrastructure to support its biological warfare program. It continues today to pursue dual-use biotech equipment and expertise from Russia and other sources, ostensibly for civilian reason. Iran has had a limited capability to employ biological warfare agents since at least 1986.
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    Anthrax is considered the premier BW agent because it is stable, relatively easy to produce, and highly lethal, potentially 90 to 100 percent lethal in sufficient dosage. It can be stored as a bulk agent or in filled munitions with a long shelf life. It is difficult to detect and since several days pass before symptom onset, its use may afford plausible deniability to its users.

    Production can be masked because the technology needed to produce anthrax is virtually identical to production of some biopesticides and seed cultures that are readily available to educational, medical and other civilian research organizations.

    If a country has already planned for a production mobilization capability, biological agents and weapons can be produced within weeks or months. Even without advance preparations, a country with basic arms producing facilities would probably need no more than a year to move beyond BW agent research and development to a production capability for biological weapons.

    Many of the components needed for BW agent weaponization and delivery are also used for other types of weapons systems, some of which are available on the international arms market.

    In Central Command, we have taken actions to protect our forces against chemical and biological threat. These actions range from detection to protective equipment, decontamination, and to vaccination. With early detection, we can take protective measures against chemical weapons, but for biological agents like anthrax, the damage has been done by the time they are detected. Vaccination remains the first line of defense for force health protection, augmented by protective masks and antibiotics.
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    I have supported and I continue to support anthrax immunization of all military personnel, mission essential civilian employees and contractor personnel assigned and deployed in our area of responsibility. We continue to take the threat seriously and immunization is the appropriate course of action.

    Full protection is the best protection. As available stocks of vaccine will preclude for the foreseeable future this level of protection, I will advise continuing vaccination of those at greatest risk first with a return to the announced policy of 100 percent inoculation as soon as possible.

    Thank you, Mr. Chairman. I am prepared to answer your questions.

    Mr. BUYER. Thank you, General Franks. Major General West? You are recognized for five minutes.

    General WEST. Mr. Chairman, I am pleased to be here before the Committee today. I have no opening remarks, but am prepared to answer your questions.

    Mr. BUYER. All right. I have by opening here a question. Secretary de Leon, as I was listening to General Franks, there was some form of satisfaction, I think, during the Gulf War by U.S. forces and our coalition partners on the ground prior to the ground war that if Iraq did something stupid and actually deployed a chemical or biological munition that we would respond. Now, we did not know what that meant, but we knew whatever it would be, it would be en masse and it would be very strong.
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    So my question to you, as our Nation, what is our deterrent policy against nations that would weaponize anthrax and use them against U.S. forces or U.S. targets, whether they are abroad or at home here in our own country, by nations, rogue states, organized terrorist organizations? What is it, Secretary de Leon?

    Secretary DE LEON. Mr. Chairman, our response would be swift, it would be comprehensive and it would be complete if we were attacked using a biological weapon.

    Mr. BUYER. All right. Let me ask a second question. What does that mean?

    Secretary DE LEON. It means if they hit us, we are going to hit them back.

    Mr. BUYER. With what?

    Secretary DE LEON. With our conventional capabilities.

    Mr. BUYER. With conventional capabilities? Now, when you look at the chemical weapons treaty, and as we are going through demilitarization of our own chemical stockpiles, what you are telling me is that we do not respond in kind, that you have some other national military strategy to respond?

    Secretary DE LEON. I think it is generally not the policy of our military leadership to discuss hypothetically what forces they would use or what tactics other than to say that I know the response would be swift, it would be comprehensive and it would be complete.
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    Mr. BUYER. Then I take it you are putting an exclamation point at the end of that.

    Secretary DE LEON. A vigorous exclamation point. And I am sure that that would be the advice of the CINC, were that to happen in his region.

    General FRANKS. That is correct, Mr. Secretary. And in response to the chair, I would add nothing beyond swift and complete. I do not believe that our advice would remove anything from the table.

    Mr. BUYER. Mr. Secretary, what are the implications of picking a shorter or longer period on the ground as the trigger for taking the vaccine in the theater of operations? You have testified that it was zero, you are now moving it to 30 days. I would like to know what would the implication be that if you change that from 30 to, say, 45 or 60 days as you are attempting to manage the risk versus the stockpile remaining?

    The reason I ask that question is that based on the testimony in yesterday's Senate hearing, I believe that your goals are very ambitious. Your hopes are unrealistic, perhaps, and that if BioPort is not FDA approved and new manufacturing begins, six to eight months we run out. So if we extend this to 45 or even up to 60, what does that get us?

    And then to General Franks, please discuss for us how we could properly manage that risk.

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    Secretary DE LEON. Well, as I had testified earlier with respect to the stockpile, we will be examining that on a month-to-month basis to make sure that we are effectively using the remaining vaccine and then to measure that against the progress that is being made in terms of obtaining new vaccine.

    I think the discussion of 30 days was advice that came forward from military advisors. I know General West was at the center of these calculations, I might ask him to elaborate, but I think that there was a general feeling that 30 days was a prudent measure.

    Mr. BUYER. General West.

    General WEST. Sir, by going to a 30-day policy, we would save about 10 percent of what we would use during that month. It would vary month-to-month depending on deployments and exercises that were ongoing, but it would save us around 1400 or 1500 doses a month to go to a 30-day policy.

    Mr. BUYER. Forty-five days gets you what? And 60 days gets you what?

    General WEST. I do not have that exact number, sir. I could provide that for the record, but there would be a small additional savings if we went to 45 and 60.

    [The information referred to can be found in the Appendix.]

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    Mr. BUYER. General Franks, some people believe that it would be wise for the Department of Defense to make this program voluntary. What are your views on a voluntary vaccination program and how would it impact how you would tactically deploy your forces if necessary?

    General FRANKS. Mr. Chairman, it would have an impact. I believe our responsibility is in accordance with our judgment to provide the very best force protection that we can provide. I cannot support voluntary force protection because I believe the implications of that for the tactical commitment of formations on the field are near overwhelming. I believe we in this case take the very best medical advice that we can get and make the judgments about what the best protection available to our men and women in uniform is and then provide that force protection asset to the commands that we may place in harm's way.

    So, sir, I do not support voluntary inoculation.

    Mr. BUYER. If you deploy your coalition force with one of our allies that did not use anthrax and we use anthrax, if you put them side-by-side, would it not be true that our force becomes litter barriers for theirs?

    General FRANKS. Mr. Chairman, my response to that would be very similar to what my predecessor, General Tony Zinni, had to say. We take into consideration the capabilities and the liabilities of each member of a coalition and try to use those in the very best plug and play approach we can. Obviously, the best protected we will place greater reliance upon.

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    At the end of the day, each of these sovereign states will make its own determination as to what levels of protection or in fact military capability they may have, but in charge of the coalition, we will be in charge of placing them in positions tactically and operationally in order to take advantage of their strengths and minimize their weaknesses.

    Mr. BUYER. My colleagues, I just have two more questions. Some critics of the program believe that using protective clothing alone could adequately protect our soldiers. Since you have commanded our forces in Kuwait, do we have any early warning detection systems that would permit the opportunity for your force to deploy all the Mission-Oriented Protective Posture (MOPP), suits necessary to protect them?

    General FRANKS. Mr. Chairman, with respect to chemical munitions, yes, we have a proven capability for early enough detection. As you know, and in fact some two years ago when Secretary de Leon visited our formations in Kuwait, I believe, sir, in February or March of 1998, during the Desert Thunder time frame, we were employing some biological detection capability there at that time and we have retained that capability. So we do have some detection capability that will put us in advance of a massive attack. We do not have sufficient quantities of proven detection capability to proliferate across the entirety of the force as we would need them during time of conflict.

    Mr. BUYER. So what you are telling us is that if they deploy—if they take weaponized anthrax in a delivery system and fly it not in the no-fly zone in southern Iraq, they could fly it within their own zone of protection and permit the winds to carry—

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    General FRANKS. Sir, that is correct.

    Mr. BUYER.—to carry it over your force, at which time your early detection systems are not going to have as advanced warning as you may think. Would that be a correct analysis?

    General FRANKS. Mr. Chairman, part of that is correct. What we have done, without going into the specific technicalities, is we have taken some of the detection capability that we have based on wind vectors, prevailing winds and prevailing meteorological data, and we position those assets in order to take greatest advantage of the technical capability of detection that they can give us.

    And so without talking specifically to Kuwait, if we position the detection capability that we have in the right place, then we will get some warning of the spores as they are aerosolized.

    Mr. BUYER. My last question is the management of the risk. I can almost sense that your duty as a CINC is force protection for them all, but that is now unrealistic. The recommendation is for 30 days. My question to you in the face of a dwindling supply, whether or not you would—what is your recommendation?

    Are you going to say of the force that is on the ground, that is going to be stationed there—you know that is going to be there for 180 days or for a year, that those are the ones that need it, those who are coming in and out or who may be a Reservist assigned there for 60 days or 90 days and they are back out, maybe not? I do not know what your sense and recommendation is on how to actually manage that risk. We need your best and competent advice.
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    General FRANKS. Chairman Buyer, that is difficult. As you know, in our area of responsibility, we have a very small standing force and we get the forces we use in southwest Asia from the military departments and from the other unified commands on a by-task and mission basis.

    I will remain very much concerned about the management problems that the services and the other unified commanders will have as they make determinations of which of their forces to deploy in the area.

    As you know, I believe it is on the record from before, we have something over 56,000 men and women in uniform who have received the full inoculation series and we have, I think, 455,000, there are those at the table better able to answer that with precision than I, with some part of the shot series.

    I think my counsel and what I have discussed with Secretary de Leon is to consider those in the highest threat envelope for the longest duration of time in order to provide the best force protection we can, even though it will be suboptimized for the period of time when we do not have fully inoculated troops.

    And so, sir, my short answer would be those for the longest duration of time in the highest threat envelope will be those that I would suggest to prioritize for the receipt of shots, irrespective of branch or service or component.

    General WEST. Mr. Chairman, if I could add one thing to give you a better answer to your earlier question. My staff had done some work on that last night. The majority of the people that are there for greater than 90 days, we use about 90 percent of our vaccine for those forces.
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    About 10 percent of the vaccine is used for people that are there less than 30 days and the number between 30 and 90 is very negligible, so going to a 30-day policy gives us a significant savings, but a number larger than 30 days would be a very small difference.

    Mr. BUYER. I know my colleagues are prepared to ask questions and as I look at Dr. Johnson-Winegar, you did not give an opening statement. You have a long history with the anthrax vaccine program and I think it would be very helpful before all the members jump in and ask you all types of questions, they may not know you, may not be aware of your history, what your present duties and responsibilities are. You have been involved with this program for many years and if you would please give us a quick overview and then I will yield to Mr. Abercrombie.

    Dr. JOHNSON-WINEGAR. Thank you very much, Chairman Buyer. I would be happy to.

    I am Anna Johnson-Winegar, currently the Deputy Assistant Secretary of Defense for Chemical and Biological Defense. I have a Ph.D. in microbiology and have spent my entire career working for the Department of Defense, first in a research capacity and later in other capacities.

    Throughout the course of my career, I have personally taken 21 doses of the anthrax vaccine, first because I was working in the laboratory to understand the pathogenesis and immunogenicity of anthrax strains and so was considered to be an at-risk person. Later, I served as the contracting officer's representative on the contract that we had with the Michigan Department of Public Health to produce the vaccine and had occasion to visit the production facilities and testing facilities and therefore needed to continue my immunization.
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    As Secretary de Leon mentioned, I was privileged to be invited to serve as an inspector for United Nations Special Commission (UNSCOM), teams going into Iraq and was very appreciative of the fact that I had the full course of anthrax immunizations prior to that potential exposure.

    My current duties involve a comprehensive program in chemical and biological defense which includes oversight of research and development programs, our procurement and acquisition programs, and generally serving as a senior advisor to the Secretary and senior leadership in the areas of chemical and biological defense.

    Mr. BUYER. Thank you, ma'am.

    Mr. Abercrombie, you are now recognized for five minutes.

    Mr. ABERCROMBIE. Thank you, Mr. Chairman.

    Mr. BUYER. Or any time you may consume.

    Mr. ABERCROMBIE. Thank you. Mr. Chairman, I think your questions and the statements of General Franks and Secretary de Leon have essentially addressed the majority of questions that I had and I appreciate that, so I would like to yield such time as he consumes to Mr. Larson of Connecticut.

    Mr. BUYER. The gentleman is recognized for five minutes.
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    Mr. LARSON. Thank you, Mr. Chairman. I want to thank the gentleman from Hawaii for yielding me the appropriate time and also acknowledge as well and express the thanks of the Committee for acknowledging and having had the opportunity to hear from the gentleman from Connecticut, Mr. Shays', remarks earlier at the onset of this meeting.

    I also, Mr. Chairman, would request to be able to extend my remarks and submit other written questions, inasmuch as I do not want to consume all the Committee's time.

    [The prepared statement of Mr. Larson can be found in the Appendix.]

    Mr. BUYER. There is no objection.

    Mr. LARSON. Thank you.

    Mr. BUYER. So ordered.

    Mr. LARSON. It is my understanding that Section 735 of HR 4205 requires each of the service secretaries to implement systems and procedures for tracking separations from the services resulting from refusal to participate in the Anthrax Vaccine Immunization Program. Additionally, it requires the secretaries to conduct an independent review of the Vaccine Adverse Event Reporting System (VAERS) and a periodic review of personnel receiving the vaccine to ensure early detection and tracking of adverse reactions.

    Now, although the legislation has not been signed into law, can you tell me what is being done with respect to this situation within the Department at this time?
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    General WEST. Sir, we have instituted a program to track the things that you mentioned. We already had a very aggressive program to identify adverse reactions. We make the forms available to all of our medical providers, to all the people that are taking the shots, to our leadership chain of command. Those are not submitted to us, they are submitted through the country's normal practice for that.

    They go to the FDA, they are eventually given to a special committee that has been set up of experts from around the country that review each and every one of those and we do not wait until they are reviewed to provide the medical protection or treatment that anyone that is sick for any reason, whether it is anthrax related or otherwise, should get. We begin that immediately. But each and every VAERS is tracked.

    If a person is determined to have actually had a reaction or if there is reason to believe that they have had a reaction, they are given a medical exemption and are not required to take another shot until our medical personnel and experts are satisfied that there is no reason to be concerned about an additional reaction.

    Mr. LARSON. What are the findings to date? Have you been able to develop any statistics with respect to that?

    General WEST. Out of 848 VAERS forms that have been reviewed through the 6th of last month, 647 of those persons had reactions that were mild enough in nature that they required no missed work. There were 163 of those that missed work for one day. There were 38 who were hospitalized and six of those were determined to have actually had allergic reactions to the vaccine. That is out of 455,000 plus people that have received over 1.8 million doses.
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    The FDA, the Centers for Disease Control (CDC), the other people that we talk to tell us that although you do not want to have any reactions that this number is much lower than most of the other vaccines that are given in our country.

    Mr. LARSON. Given the shortage that we are experiencing at this time, to my understanding, maintaining the six-shot regimen on schedule requires a sophisticated information and tracking system to monitor compliance. Coming out of the Gulf War, the Department's track record in this area was not exactly stellar. What actions have been taken to improve the Department's ability to record and the reliability to retrieve immunization or for that matter all health-related information on specific service members?

    General WEST. Sir, the Secretary required a very specific system and a very responsive system. Each service secretary was required to develop and come up and implement a system that would provide all of that data ending up as collectible in our VAERS system that was already established and a person that has had one, two, three, four, five or six shots, you can go into the system with his name or with his Social Security number and determine how many shots he had, what lot the vaccine came from, when he had his last shot, when he would be expected to receive his next shot, and if there was any adverse reaction reported and what the results of that were. I think it is a very good system and our tracking and our timeliness has improved over the time since we started this program in 1998.

    Mr. LARSON. Given the six shot regime and some of the problems of vaccine availability, how does your plan in dealing with this shortage affect Reservists?

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    General WEST. They would be treated exactly like the rest of our total force. The tracking system tracks their shots as well. Probably one result not planned because they are Reservists but because of the times that they serve is that there will be fewer Reservists receiving shots because of those personnel that would fall under the 30-day policy. There are probably more Guard and Reserve people than there are total force personnel. But we track their shots in the same way.

    We have gone to great effort to be sure that we make the shots available to them in a way that is not disruptive to their other careers. We try to plan the vaccinations as near as we can to their scheduled drill and active duty periods and when we cannot do that, we have established additional medical providers that can administer the shots in the area and communities where they live to as great an extent as possible.

    Mr. LARSON. How confident is the Department that BioPort will ever be able to meet the production targets called for in the contract with DOD?

    General WEST. Sir, I have visited their plant. I work with their people every month. I think that they have gotten better throughout the period that we have been working with them. It would be my expectation that some time later this year or within the next few months that they would receive licensing for new production and I would expect to be shipping and using vaccine that they produced that has been certified safe and effective by the people that our country depends on to do that.

    Mr. LARSON. Has this in effect placed almost a moratorium on the use of the vaccine because of the lack of availability, reliability, efficacy and safety because of the FDA's finding with BioPort?
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    General WEST. Well, let me answer that in two ways. We are having to slow down the program because we do not have an adequate supply to provide vaccination to as many people as we would like to be vaccinating. We would like to be in our full phase now vaccinating the total force. We are in effect running about a year behind our original plan, but we have given no vaccine to any of our service men and women that had not already received safety, purity, sterility and potency certification by FDA and the people that our country depends on to make that determination. No vaccine that was experimental or at risk has been used in administering this program.

    Mr. LARSON. Thank you. And I thank the Chairman.

    Mr. BUYER. I thank the gentleman for his questions and I advise members that we bought this new timer system and it does not work, so what I would like to do is we are going to maintain the clock up here, but I want to give latitude to everyone because it is such an important issue, so I will permit you to penetrate, go for the second question, and I think that would be very helpful to us. We do not always get to do that under a five-minute rule and we will permit that sort of latitude, if we can all sort of be respectful of each other. Mr. Bartlett, you are now recognized for five minutes.

    Mr. BARTLETT. Thank you. Ultimately, will DynCorp take over the responsibility for producing the anthrax vaccine?

    Dr. JOHNSON-WINEGAR. Perhaps I can try to address that question for you. The Department currently has a contract in place with BioPort as our only manufacturer of anthrax vaccine. We recently advertised in the Commerce Business Daily for any interested parties who would like to be our second source, to submit that information to us. As Secretary de Leon indicated, those responses are due by the end of this month.
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    Mr. BARTLETT. It is my understanding that DOD has entered into a contract with—I think the company is DynCorp?


    Mr. BARTLETT. Then DynCorp will have the responsibility for manufacturing and storing all of the vaccines in the future which are needed by DOD? Is that not correct?

    Dr. JOHNSON-WINEGAR. We have a contract with DynCorp, that is correct. But the current terms of that contract exclude the anthrax vaccine adsorbed.

    Mr. BARTLETT. So they will be producing all the vaccines other than the anthrax?

    Dr. JOHNSON-WINEGAR. The current scope of that contract is for them to do the advance development portion of the work related to a number of other bio defense vaccines which could include small scale initial production and storage of those particular products, yes.

    Mr. BARTLETT. Thank you. I have here a book written by Kanatjan Alibekov called Biohazard. His name has been anglicized to Ken Alibek—that does not sound very Russian—but he was, and he was deputy director of the big bio prepared manufacturing capability.
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    He states in his book on page 78 that anthrax was the most powerful of the dozens of strains investigated. He then notes that in 1953, there was a leak from one of their production facilities and anthrax got loose. Three years later, they captured a rat in the sewer of Kirov that had a more virulent strain, which they then weaponized and placed on S–18 weapons that were targeted on western cities.

    My question is, you know, remembering that many of the bacteria in our hospitals have now mutated so that they are immune to the agents that we have, staphylococcus being one of them, which is now very difficult to control. My question is: how many of these dozens of strains that the Soviets explored, against how many of these would your vaccine be effective?

    Dr. JOHNSON-WINEGAR. Well, sir, we have tested our current vaccine against a number of different strains of anthrax in animal models in the laboratory. I do not know that we have specific cultures of all of those strains that are mentioned in Dr. Alibek's book, and I think if you wanted the specific details of strain by strain and whether it was tested in mice, guinea pigs, or non-human primates we could provide that information for the record.

    [The information referred to can be found in the Appendix.]

    General WEST. What we can say, sir, of the several strains that we have been able to obtain, our vaccine has worked against all of them. It has not failed against any strain that we have tested against, and because the vaccine relies on a protective antigen which would be common to any of the strains, our expectation and our hope is that it would be effective against all strains.
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    Mr. BARTLETT. There will not be mutants of anthrax which would not be affected by our vaccine?

    Admiral CLINTON. I will add I think that from a medical standpoint we think that is most unlikely, because the key to the anthrax strain, irrespective of its variation and strain, is the protective antigen, and that is what our vaccine provides protection for. So if an anthrax spore mutated to the point that it no longer had protective antigen, then it is not anthrax any more. There comes a point where something might be done with it, but it is the protective antigen that causes the disease, it is the protective antigen antibody that is created in our body that protects us against that. So from a general medical standpoint, we believe the vaccine is protecting anyone who takes that vaccine.

    Mr. BARTLETT. But aren't these—

    Admiral CLINTON. Again, it is protective antigen anthrax.

    Mr. BARTLETT. But aren't these antigens very specific, which is the reason the vaccine works against them?

    Admiral CLINTON. If the protective antigen does not get changed, other coatings around the spore or whatever pathological particle you are talking about change, but we are going to the central core of what makes anthrax specific a disease that causes the disease that we understand. It is the protective antigen that is important.

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    Mr. BARTLETT. So we have some confidence that the vaccine which we are using will be effective against any mutant that an enemy might use.

    Secretary DE LEON. We have confidence that the vaccine that we have would be effective against a strain that is likely to be placed in a weapon, that there are things, Mr. Bartlett, that can be accomplished in the laboratory that because of the unique environment in the laboratory cannot be replicated in the kind of stable environment you would need to load a biological agent into a canister and have it become a weapon. This is a fairly sophisticated debate and I think it is one that if you would like a follow-up in a more classified environment, we could discuss.

    Mr. BARTLETT. Have we asked Alibekov if the strains which they developed were developed because of potential immunity to our vaccines?

    Secretary DE LEON. I think what we would like on this particular issue is to be able to respond in more detail with, I think, a few other people in a more classified environment.

    Mr. BARTLETT. Thank you. Just one more question. If at the end of the day it is decided that the vaccine which we have is effective and that the threat is real, would it be useful to you if at a public hearing of our full Committee, that all of our Committee members took that shot?

    Secretary DE LEON. That is an issue, I think, for the Committee members to resolve.
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    Mr. BARTLETT. Well, my question was would it be useful to you in your education of the force, that our Committee visibly at an open hearing like this took that shot?

    Secretary DE LEON. I believe that Members of the House, the Chairman and others, have taken the vaccine. It is safe and effective, and so for any person who is contemplating taking it from our own personal testimony, since many of us here have taken the vaccine, we believe that it is safe and effective. So that would be our advice, without asking the Congress. They can make decisions on many things without our advice, and I am sure that is one area.

    Mr. BARTLETT. Thank you. Thank you, Mr. Chairman.

    Mr. BUYER. With a limited, dwindling supply, I prefer that the shots go to the troops in the field. But I do not even like a flu shot. I do not even like the flu shot, it is a needle thing, but I have taken them, and I have taken my anthrax shots.

    I want to remind members, our second panel will be testimony from the FDA and the Defense Contract Audit Agency, and then we will receive on the third panel testimony from the President and CEO of BioPort.

    Mr. Jones, you are now recognized for five minutes.

    Mr. JONES. Mr. Chairman, thank you very much. To Mr. Secretary de Leon, let me ask you a question. What year did you and BioPort finalize your contractual agreement?
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    Secretary DE LEON. Say that again?

    Mr. JONES. What year did the Department of Defense finalize their contractual arrangement with BioPort?

    Secretary DE LEON. I believe Dr. Johnson-Winegar was at the heart of those negotiations.

    Dr. JOHNSON-WINEGAR. Sir, the current contract with BioPort was completed in 1998, when BioPort bought the existing facility from the Michigan Department of Public Health. We actually have four contracts in place. Three of them are essentially carryovers from previous contracts with the Michigan Department of Public Health.

    Mr. JONES. Okay. Let me ask you, Doctor, or Mr. de Leon, how much money has the taxpayer paid to prop up BioPort? The total.

    Dr. JOHNSON-WINEGAR. The total amount that we have expended for anthrax going back to the 1989–1990 time frame, has indeed been over $100 million. Not all of that has gone to BioPort.

    Mr. JONES. How much has BioPort been paid by the taxpayer? BioPort.

    Secretary DE LEON. We would want to break that down year by year because the bulk of those payments would have gone to the state of Michigan.
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    Dr. JOHNSON-WINEGAR. That is correct. The current contract that we have that provided funding to BioPort was for $24.1 million and we are in the process now of negotiating amendments to that contract.

    Mr. JONES. What month, I think it was in 1999, did you determine that you would pay more to BioPort for the vaccine and how much was that increase?

    Dr. JOHNSON-WINEGAR. That was August of 1999 when the Army Contract Board approved the action for extraordinary relief to BioPort.

    Mr. JONES. And the increase was—what was the cost at the time and what was it increased to?

    Dr. JOHNSON-WINEGAR. The cost of the vaccine originally was $2.36 per dose, and the revised cost was $10.64 per dose.

    Mr. JONES. Okay. So when you negotiated and finalized the contract, you were planning on paying roughly $2 for the vaccine and then you increased the cost or you accepted the increase to $10, right?

    Dr. JOHNSON-WINEGAR. I would like to clarify that just a bit, if I could. When the original proposal was submitted by BioPort and was reviewed by the Army, I think there was some failure to understand a lot of the costs that had been actually borne by the State of Michigan and that would not subsequently be available to a private enterprise, such things as infrastructure maintenance, personnel resources, et cetera. And so I think that perhaps the initial proposal was underestimated.
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    Mr. BUYER. Would the gentleman yield?

    Mr. JONES. Yes, sir.

    Mr. BUYER. I was interested in your question, I have the audit report here done by the Office of Inspector General with DOD and I am going to give Dr. Johnson-Winegar an opportunity to perhaps clarify her testimony so that you have received accurate answers, I believe, Mr. Jones.

    When I go through this and look at the chronology of significant events to include, Secretary de Leon, exactly what you just said about some of these are contracts that were made to the State of Michigan and the Department of Public Health for different testing, whether it is potency, sterility, safety and those types of things, I go through this and we added it up. So from 1991 to present, it is about $131 million and when you said $100 million, it would be $100 million since the Gulf War to now, not—if you go back to 1988, 1989, I mean, I do not understand where you came up with that number.

    Dr. JOHNSON-WINEGAR. I believe I said over $100 million and I did not mean to be exact, but I believe your figures are exact.

    Mr. BUYER. I think $31 million is significant money, to round off at $100 million.

    Admiral CLINTON. If I may, sir, I think I could put that in some perspective. The $10 or more that we pay for the vaccine compares with vaccines that are currently available through Federal prices in the United States and is a lower price than any private sector for any vaccine available in the United States.
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    A third of almost 30 vaccines that the Centers for Disease Control buys for this country, only a third of them, are above the price that we are paying. That is to say a third are even higher than what we are using commonly in the United States. So the price is quite reasonable, looking at today's market.

    Mr. JONES. Well, my problem is those of us elected to Congress, certainly we are very interested in protecting our troops and their safety when they are called upon to go to war or any type of situation, but we also have a responsibility to the taxpayers.

    My problem with this whole arrangement is that here we are in July of the year 2000 after two years and I do not know if it is $100 million or $130 million or $40 million, and you have a company that you have made a contractual arrangement with that cannot produce the product. That would not happen in the private sector.

    And that is why the Chairman, and I thank the Chairman and the Ranking Member for holding these hearings because I will accept, even though I do not agree, but I will accept with you professionals that this is necessary, but from a business standpoint, to provide the product that supposedly will help save our troops, you have a company that cannot stand on its own feet. And, quite frankly, you know and I know that the State of Michigan held hearings once this sale took place between the State of Michigan and BioPort.

    My question to you, Mr. de Leon, is how much longer are we going to prop up BioPort? And what is going to be the cost? They cannot produce the product.

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    Secretary DE LEON. Mr. Jones, let me answer the question, if you do not mind, in some detail because I think the history of the transaction here is pertinent, as well as the relationship to some of the initiatives that I announced.

    You look like you have a follow-up, though. I do not want to—

    Mr. JONES. No, no. I wanted to make sure—I have one or two more questions, but you go ahead because I think this is an answer I need to hear.

    Mr. BUYER. This is very important to give the gentleman the opportunity to answer and I will make sure that you have the time for your follow-up question, Mr. Jones.

    Secretary DE LEON. First, I think I have made clear in the testimony that on the entire issue of vaccine acquisition we, as a future policy, are not going to become dependent upon a single source. And through the Commerce Business Daily announcement as well as the initiative to create a government-owned/contractor-operated facility for the future that would look in addition to anthrax, at smallpox and plague and botulinum and the other biological threats that unfortunately we have to deal with in a security environment as well as in a public safety environment, that we are not going to find ourselves dependent upon a single source in the future.

    You do not create these capabilities overnight. With perfect hindsight, we probably would have taken this action two or three years ago. For whatever reason, we did not, but we are prepared to step forward and take those actions today.
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    Now, the broader issue with respect to BioPort and the anthrax vaccine, the vaccine business is not a profitable business unless there are hundreds of millions of doses. The American pharmaceutical industry is the best industry in the world in terms of medicines and that is why the initiative of the Committee to have a pharmacy benefit for our military retirees—pharmacy is where the great advances in medical care are right now in America. But considering all of the advances that our industry is making, our industry is not interested in items that do not have a significant profit margin associated with them.

    The procurement of several million doses of anthrax vaccine versus tens and hundreds of millions of other pharmaceuticals is something that the industry has told us they are not interested in.

    The State of Michigan subsidized the acquisition of these vaccines for a number of years. This was part of the reason that the FDA, in the mid-1990s, went and inspected and gave them notice on a number of items that they had to improve because as the Department of Defense was relying on the State of Michigan for the acquisition of vaccines for our stockpile, it became clear in the mid 1990s that the State of Michigan for fiscal reasons did not want to continue to make an investment in this area, they were looking to sell the entity.

    At the time, though, that Secretary Cohen made the decision that was recommended by the Joint Chiefs to start the anthrax immunization program, the vaccine facility was owned by the State of Michigan, it is located in close proximity to Michigan State University. A general in the Army went and met with the Governor and his representatives as well as representatives of the legislature in Michigan, expressing the Department's need to obtain this vaccine.
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    But at the time, one of the issues that was on the table was that the State, as a long-term decision, was no longer that interested in strategic investment in the facility. And so they put the facility out there in the market place and the facility was sold with much of the initial cost of the sale going to compensate the State of Michigan for the procurement of the facility itself and the license rather than putting capital into the manufacturing base.

    Now, here we are two years later. There has, I think, been vigorous oversight of BioPort. We have, consistent with all of our authorities, restricted the kinds of payments and are anticipating even further restrictions with respect to the payments that we will be making to BioPort.

    Second, following the advice of Dr. Johnson-Winegar, we have mandated that BioPort enhance its management through the hiring of a number of consultants that have extensive background in this area.

    And so given our obligation to procure this vaccine, I think that the financial transactions have been prudent, that the management and oversight of BioPort's management has been vigorous. You will hear from the Defense Criminal Investigative Service (DCIS), and the representative of our inspector general. We have tried to be vigorous. And then additionally we have tried to work very closely with the Food and Drug Administration to make sure that the Department and BioPort are in 100 percent compliance with all FDA regulations and procedures.

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    But ultimately, in this country, our very capable pharmaceutical industry does not see a large profit margin in vaccines, given the numbers, and so the lesson that I have learned from this experience, listening to your questions, listening to the other members, is that in terms of the acquisition of these critical vaccines, we need to have some capability that is consistent with the public interest, whether it is smallpox or anthrax, and we have begun to work with the Department of Health and Human Services in this area.

    I am sorry for the length of my answer, Mr. Jones, but I did want to put all of those issues on the table and I thank the indulgence of the Chair for allowing you the time.

    Mr. JONES. Mr. Secretary, thank you. Mr. Chairman, I have just two more questions and statements and they will be brief.

    I continue to still be somewhat amazed that—I am the one that requested the Inspector General's report that the Chairman made reference to. When I had that briefing, your presentation, and I say this respectfully, you know, it is almost like this is a company and the owners—and I look forward to listening to the owner very shortly—that, you know, they are just out here, can hardly make ends meet. And we, the taxpayers, must help them because, yes, I agree that we must do what is necessary to protect our troops and if you all believe that this is the right way to go, as much as I might disagree, I will accept that because you are the professionals and I am not, but I know that when I looked at the Inspector General's report, I did not—when I see monies going to consultants that we have to hire, the taxpayer has to hire consultants to come in to help make this BioPort a company that will be approved by the FDA, there has to be a decision by the Department of Defense months ago that we have made a bad mistake.
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    I cannot believe as smart as you people are that months ago you could not see that you had a problem because they could not produce the inventory, they could not produce the vaccine that you needed. And that certainly there should have been some discussion about how much longer are we going to go on, how much longer can we afford to spend this kind of money to prop up a company that cannot produce what we need. Did you all have those discussions?

    Secretary DE LEON. You are right. We should have made this decision months ago. We did not. We are making it now, to make sure that we have more than one source so that we are not in this position again.

    Mr. JONES. Are you saying to BioPort—I think we have five or six minutes and I will be through before then anyway, before we go vote—have you already had the discussion with BioPort that you are on a short-term leash, that if you cannot get approved by FDA at the next inspection, we are not going to continue to spend the taxpayers' money in this black hole? Have you had that discussion?

    Secretary DE LEON. I can assure that we have had vigorous conversations with the contractor and that the senior leadership in the acquisition area, General West and others, have been very much engaged in terms of sending the signal that this vaccine is critical and that we are taking action to give us more capability and more options in this area.

    Mr. JONES. Well, I hope at the proper time and classified setting or closed session you could assure me and every member of this Committee that there is going to be a date certain and if at that date certain they are not able to produce inventory that by God, we are going to stop spending the taxpayers' money because it is going down a black hole.
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    Last question, very quickly. General Franks, I understand what you said about the voluntary program. I respect the chain of command, I know that you must have the chain of command. But if this was a voluntary program, which it is not and it is not going to be, in your opinion honestly, how many of the troops would stand in line and say give me the shot? Would it be a large number? Would it be a fair number or a low number?

    General FRANKS. Sir, I have to tell you, this is a Tom Franks off-the-cuff response to you. My sense is that the number were it voluntary, the number would be large. The reason that I said what I said, I do not know how large, and I will not tie up the record, but I will tell a quick story about Kevlar helmets during the Gulf War.

    Mr. Chairman, you will be familiar with this. The division I worked in in about 120 degree heat during Desert Shield made the determination, a force protection determination, that the Kevlar helmet would be worn by all who rode in any kind of vehicle, a wheeled vehicle. Painful. Hot. None of the troops, probably myself and General John Tilelli, who was the division commander at that time, would have voluntarily worn this helmet. But at the end of the day, it saved a lot of lives.

    I think we would have volunteers, sir. I am not sure that we would rest that we had met our responsibility to provide in accordance with our best professional judgment force protection if we made that sort of issue voluntary, sir.

    Mr. JONES. Well, I appreciate your answer.

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    This will be my last statement, Mr. Chairman. Whether it is voluntary or mandated, the problem is we are running out of vaccine. We have a company that cannot produce the vaccine. That is a sad commentary. Thank you.

    Mr. BUYER. I suppose, General Franks, if your force there in Saudi Arabia and Kuwait had to mobilize in the face of a growing threat, you would have a hell of a lot of your men and women standing in line to take a shot and then it may have been too late to take the shot. Would that be about accurate?

    General FRANKS. Yes, sir.

    General WEST. Sir, if I could take a second, I could add a short story from Mr. Jones' own district. I was fortunate to command a chemical biological incident response force down at Camp LeJeune before I came to this job and before it was a mandatory program, when that unit of about 400 people was briefed on the threat, realizing that they were among the first responders to an incident, all 400 of them went down and voluntarily took the shot. There were no objections and no adverse reactions and nobody missed a day of work.

    Mr. BUYER. Ladies and gentlemen, there is a 15-minute vote, followed by two five-minute votes. When we return, Mr. Shays has some questions and I still have some follow-up questions of this panel. I anticipate that we will recess the Subcommittee and return at a quarter after 12:00. We stand in recess.


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    Mr. BUYER. The House Armed Services Committee Subcommittee on Military Personnel will come to order. To be recognized now is Mr. Shays for five minutes.

    Mr. SHAYS. Thank you very much, Mr. Chairman. Mr. Chairman, I was trying to think of the way I fit into your opening statement about you serving in the Persian Gulf and I realized that I was one of the people who helped send you there. But when we did that, we wanted to know what our national interest was, what our mission was, we wanted to know that we had the best trained troops, the best equipped, that would use all the fire power needed to win and we also knew our exit strategy. And we wanted to make sure that you were protected and not come home with any illnesses that you could have avoided receiving.

    It is with this in mind that I am asking some questions. I would first like to ask the Secretary, you made reference to lots that had been approved except for potency. Would you speak a little more specifically as to what you meant? You said it was approved for this, this, or was it you, General, that made that point?

    Secretary DE LEON. No, I referenced that in my opening statement.

    Mr. SHAYS. You said it had been—

    Secretary DE LEON. Sterility, purity, safety.

    Mr. SHAYS. But not potency.

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    Secretary DE LEON. Not potency.

    Mr. SHAYS. But you did not make reference to what it was. What were you talking about? Stuff done in the new plant? Things done in the old plant?

    Secretary DE LEON. The vaccine that is in the stockpile requires testing every three years for potency.

    Mr. SHAYS. Right. So this is an old batch.

    Secretary DE LEON. These were lots out of the stockpile.

    Mr. SHAYS. Right. In this stockpile, we have lots going from 1 to 40 and this was a particular lot, lot 22. Correct?

    Secretary DE LEON. Correct.

    Mr. SHAYS. And this lot is basically got about 189,000 shots to it, correct? Give or take?

    Secretary DE LEON. General West advises me that the number is 194,000.

    Mr. SHAYS. Okay. But the point is that this, again, is a 1997 lot, correct?
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    Dr. JOHNSON-WINEGAR. 1993.

    Secretary DE LEON. I believe it is 1993, but I would ask—

    Mr. SHAYS. I see. A 1993 lot.

    Mr. BUYER. Mr. Secretary, pull your microphone closer and move it higher, please. Thank you.

    Mr. SHAYS. A 1993 lot. It is an old lot from the old plant, correct?

    Secretary DE LEON. Correct.

    Mr. SHAYS. And the FDA basically shut down the old plant. Isn't that correct?

    Secretary DE LEON. I would ask Dr. Johnson-Winegar, since she has been our action officer.

    Dr. JOHNSON-WINEGAR. Sir, the FDA did not shut down the plant. The plant was scheduled for renovation and upgrade and that was initiated. In the meantime, these lots—

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    Mr. SHAYS. Didn't the FDA make it clear that they would not approve any more from this old plant and that they needed to upgrade it?


    Mr. SHAYS. And that is a matter of public record, correct?


    Secretary DE LEON. Correct.

    Mr. SHAYS. Okay. What I am surprised about is it is an issue of proportion to me. The threat is real, the program is global, you had two CINCs that asked for the vaccine, and you all decided to have it be all the CINCs. I do not get that. Why would you have done that?

    Secretary DE LEON. Well, Congressman Shays, the proposal from the Joint Chiefs was for the immunization of our entire armed forces.

    Mr. SHAYS. No, I understand that, but what I do not understand is you were working with old lots. You did not have the supply to make it universal and mandatory.

    Secretary DE LEON. That is correct and that is why there was an initial phase one of the program to focus in the high threat areas and specifically the high threat area—
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    Mr. SHAYS. You went beyond that.

    Secretary DE LEON. The high threat areas were identified by the two CINCs, the CINC in Korea and the CINC of Central Command.

    Mr. SHAYS. Isn't it a fact, though, you went beyond those two CINCs?

    Secretary DE LEON. I do not believe so. I believe that the program that was constructed, and I will yield to others who have been more closely associated with the day-to-day supervision, but the strategy has been to vaccinate those troops that were going to the Korean peninsula or to the theater of Central Command.

    Mr. SHAYS. The question is isn't it true that people had to take this vaccine who were not in any of those two CINCs in those two theaters?

    Admiral CLINTON. The point of that from a medical standpoint, Mr. Shays, is that it requires six shots over an 18-month period to get the full protection per the required label of the FDA. Now, if it were simply a one-shot event, then obviously you could wait until people are absolutely assigned to a specific area. But in this instance, there is a good deal of turnover—

    Mr. SHAYS. I am understanding the logic, but I am not getting the answer to the question.
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    General WEST. I thought we—

    Mr. SHAYS. The question is: isn't it true that you required soldiers, sailors, Marines, navy people to take the shot who were not in either of these two CINCs? And what is the answer?

    Secretary DE LEON. If they were scheduled to go to one of those two theaters, then they were scheduled to receive the vaccination.

    Mr. SHAYS. So the answer is first, ''Yes, we gave it to people who were not in those two CINCs.'' I want a clear answer and then you can give me your reasons.

    Secretary DE LEON. They might have been at Camp Pendleton when they received the shot, but they were scheduled to go to Korea several months later.

    Mr. SHAYS. So is your testimony that the only people who had these shots were people in the two CINCs?

    Secretary DE LEON. That was the program that we are implementing.

    Mr. SHAYS. That is not the answer to the question.

    Secretary DE LEON. I think I have answered the question from the perspective that if units were scheduled to go—
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    Mr. SHAYS. I know what in theory you are answering. The question I am asking is: were the shots given to soldiers, sailors, Marines, Air Force men, who were not in either of the two CINCs? And you can tell me yes or no and then you can give me your explanation.

    Secretary DE LEON. If they were scheduled to go to one of those two theaters, then they would have been scheduled to receive the vaccine. They may have received it at home base—

    Mr. SHAYS. Let me give you the next question. I do not know the answer to it, so I am not trying to box you, I just want an answer.

    The next question is did you give the shots to anyone who was not in the two CINCs who was not going into any of the two CINC theaters?

    Secretary DE LEON. Well, for example, if you were rotating into Bosnia or into Kosovo, you would not need the vaccine because the CINC there offered an assessment relative to the threat. So the program was structured so that U.S. forces that were going to the Korean peninsula or into the area of responsibility for Central Command would receive the vaccine.

    Mr. SHAYS. Okay. I know what the program was structured. I want to know the answer to this question. The question is: did people receive shots who were not either in the two CINCs or who did not go to the either of the two CINCs?

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    Secretary DE LEON. Do you have elaboration?

    Mr. SHAYS. No, I have a question. General West?

    General WEST. Sir, it was our intent to vaccinate the entire force. Because of the supply that we have, our phase one program was to vaccinate those personnel that were there or scheduled to go to the two high threat areas identified by the CINCs. There are a few other special mission units, like the chemical biological incident response force that I talked about and some special operation forces that were also given the vaccine because of certain missions that they have.

    There were also a couple of commands in the Air Guard that determined in the beginning before the specifics of the program were defined that if one part of their force was going to the theater and there was a possibility that the remainder of the force could be called upon to follow them, that also gave shots in phase one that did not end up deploying to the Gulf or to Korea. But it was the intent and the commander's intent to be vaccinating those forces that were going or already in those theaters when that occurred.

    Mr. SHAYS. If you knew the industry is not interested in getting into the vaccines in general, why did you publish a request soliciting private sector proposals to produce the anthrax vaccine? I mean, your basic comment was that nobody was interested in getting into this.

    Dr. JOHNSON-WINEGAR. I think that I would like to answer that and our answer was based on historical information. If you look back at the number of Request for Proposals (RFPs), and sources sought that the Department has issued over the last ten years or so to see who might be interested in producing these vaccines or who indeed might even be willing to talk to us about their capability, we have not received those responses. So it is possible that someone could respond to this solicitation.
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    Mr. SHAYS. If all the vaccines cost $10 per dose, why did you sign a contract to pay $2.36 per dose for the anthrax vaccine?

    Dr. JOHNSON-WINEGAR. As I said before, I think that the initial information that was used to negotiate that contract might not have been the full amount of information that should have been available and when that information became available was when the pricing for that contract was subsequently modified.

    Mr. SHAYS. Mr. Secretary, you seem committed to spending some precious time and money on finding a second source of the current vaccine, but say nothing about modernizing the anthrax vaccine. This is basically a 1950s technology and in 1950, the bottom line is you would not have used an F-80 today, you would not use a Pershing tank today, you would not use an M-1 carbine today. I am wondering why we are using a 1950s technology to protect our troops.

    Secretary DE LEON. The vaccine that is currently available is approved by the Food and Drug Administration as being safe and effective. Beyond that, however, Congressman Shays, our Defense Advance Research and Engineering Group does work on the acquisition of new vaccines. We are collaborating with the Department of Health and Human Services (HHS) relative to areas where we may jointly work together, specifically, smallpox is one area.

    I would note, though, at the same time, though, that the polio and tetanus vaccines are of that same era and they are still used and considered to be safe and effective.

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    Mr. SHAYS. Your statement says that the proposed budget only ''may also include funds to continue development of a recombinant vaccine designed to provide protection against multiple threats,'' including anthrax?

    Dr. JOHNSON-WINEGAR. Yes, sir. Perhaps I could address that question for you. That is right. We are looking at developing a recombinant anthrax vaccine, but the use of recombinant technology itself provides the opportunity for what we like to think of as a multi-valent vaccine so that we could indeed include the appropriate pieces of genetic information that would code for immunity to a number of different vaccines and thereby provide protection for a number of biological threats in one vaccine.

    Mr. SHAYS. See, I am not clear, though. Are you developing a new anthrax vaccine?

    Dr. JOHNSON-WINEGAR. Yes, we are.

    Mr. SHAYS. A modern anthrax vaccine?

    Dr. JOHNSON-WINEGAR. It is a recombinant vaccine, yes, sir.

    Mr. SHAYS. Where are you getting the money to do that?

    Dr. JOHNSON-WINEGAR. Right now, that is funded out of our research programs and it is planned to go into further testing in the upcoming years.

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    Mr. SHAYS. On page 4 of your statement, Mr. Secretary—Do I have your permission, Mr. Chairman, to continue? On page 4 of your testimony, you said you will chair the board deciding ''whether or not to request funds to build a government-owned/contractor-operator (GOCO) facility to manufacture a variety of vaccines to address the most likely and deadly spectrum of threats.'' My question is: isn't that what the Joint Vaccine Acquisition Program is supposed to be doing?

    Secretary DE LEON. That is the focus of the Joint Vaccine Office. That is a Department of the Army office of the Defense Resources Board. It is senior representatives of the Department of Defense, the Joint Chiefs, the service secretaries, the under secretaries of DOD, coming together to review all of the resourcing requests from the military services and for various research and development programs.

    So we do have a joint program office within the Army whose principal responsibility is the acquisition of vaccines. There is a recommendation that we deliberate and consider whether we should essentially develop a government-owned/contractor-operated facility.

    Mr. SHAYS. Let me ask you about that and then I will be done. In 1999, DOD considered and rejected the option of a GOCO production facility for a number of reasons and we have given you the tab that was provided to us, that handout. I am wondering if you could turn to the page that is entitled ''Why not government-owned/goverment-operated (GOGO) and GOCO?'' Do you have that in front of you?

    Secretary DE LEON. Dr. Johnson-Winegar has it in front of her.

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    Dr. JOHNSON-WINEGAR. Yes, sir. I do.

    Mr. SHAYS. Okay. And it says ''Joint Program.'' Would you give it to the Secretary? Could you give that to the Secretary?

    Mr. Secretary, it says ''Joint Program Office for Biological Defense'' and it is title 829, ''Why sole source?'' And we were wondering why we were having a sole source. And the document says ''Why not GOGO and GOCO?'' Contrary to Federal acquisition policies, product license transfer to U.S. Government, no precedent for transfer of product license amendment, the anti-vaccine adsorbed would likely become an investigative new drug, little expertise in DOD to manage biologic vaccine production, regulatory affairs, quality and assurance control, facility operations, spill and packaging, animal testing, warehousing and training. What would reverse all of this? That is your document.

    Secretary DE LEON. Well, these will be issues that the Defense Resources Board will examine and have discussion on. Right now, we have one approved FDA license for anthrax vaccine and that is the former one of the Michigan biological that was sold to BioPort. The time period to create a GOCO is considerable. It is at least five years. And so the question is in the long term, do we need more of a capability in this area?

    Since the time that I have been in this position there have been discussions with HHS in terms of that Department's focus on the acquisition of vaccines that may be necessary for a public health stockpile. There is a specific requirement for a public health stockpile of smallpox vaccine. And so looking at how we procure that vaccine consistent with our desire to do it effectively with public dollars and also to provide a safe product, I think it is appropriate that we look at other options in terms of how we might acquire vaccine in the future.
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    Mr. SHAYS. Thank you, Mr. Chairman. I appreciate your patience.

    Mr. BUYER. Thank you. I have several questions. I want to go back, Mr. Secretary, to comments that General Franks had made about detection systems. I was surprised by the General's testimony that we have early warning detection systems against anthrax.

    Now, we have deployable labs and if you do a deployable lab, what is it that makes it so immediate? If the symptoms—now, I am not a doctor, but if it takes 24 to 36 hours to show the symptoms, how long does it take to grow a culture, or do we have any other method out there that we are able to immediately detect either through DNA or examination of genes to immediately notify from these labs to the commander that bingo, it is anthrax?

    Dr. JOHNSON-WINEGAR. Yes, sir. I will try to answer that question for you. We have fielded a limited number of biological detectors that work on the basis of an immunoassay and I will try to give you an analogy of that. If you go into your doctor's office, now they can do a test for strep throat or the home pregnancy test, both of which respond in a matter of minutes. And we are using similar types of technology where we have antibodies to the anthrax that are embedded in a matrix and when a sample from the air comes in contact with those, if it contains the anthrax organisms, you get a positive test.

    Currently, those read out within a matter of minutes, rather than having to wait for a day or more to culture the organism. So we have both the immunoassays and we have some Polymerase Chain Reaction (PCR), types of assays which require a bit more sophistication.

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    Mr. BUYER. So, Mr. Secretary, we have the testimony from the CINC saying that he does not have enough of those detection systems in his high threat theater. In your budget submissions, are you purchasing more or do you have requests ongoing? I do not know.

    Secretary DE LEON. There is an additional element to the discussion and that is some of the biological detectors have a tendency to offer false positives or to give incorrect readings. And so when they go off, the technology right now is limited. We have additional technologies that are in the research and development (R&D), side and so we are left with the Hobson's choice of how much of the old system do you buy, how many dollars do you put in terms of perfecting new systems and then making them available? I believe that there are several units, though, that work with this technology. I believe they are in the Army Reserve.

    In fact, General Franks and I had a chance to meet with them, but I also can report that this is an area where Secretary Rostker has spent considerable time working with the R&D community to make sure that we are balancing the acquisition of the systems that are available with the need to continue with research and development investment to further perfect this technology.

    Mr. BUYER. I am just going to give my own gut reaction here. If the threat is real and it is known and we feel that it is so important to protect our force, we also as a Nation view the asymmetrical threat, we are making investments and to make sure that our National Guard is prepared to respond, why wouldn't we want to make that type of an investment into early warning systems? Especially—let me add this to the ingredient here.

    As you examine your equation, a logical equation to judgment, if you find yourself in a situation where you now have to manage the risk and there are some unknowns out there such as will BioPort be FDA approved and, if so, how long—if not, then how long will it take, and I do not even know how long it takes to make such an investment into these early detection systems, but if I were you, General Franks, I would like that, because we have the second tier of protection in our protective gear, I am just throwing out my present thoughts, Mr. Secretary.
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    Secretary DE LEON. And what I would like to do is to be able to consult with our R&D people and give you a more detailed answer. I think it deserves it, but I think the Chairman is asking a very pertinent and significant question to us.

    Mr. BUYER. I have another question because Dr. Johnson-Winegar, you brought up the recombinant vaccines and, Mr. Secretary, it was also in your statement. You have done some work on these vaccines, as we attempt to use biotechnology to synthesize these proteins. Can you give us an update?

    Dr. JOHNSON-WINEGAR. We have a candidate product for a recombinant anthrax vaccine where we have taken the gene that actually codes for the protective antigen that Admiral Clinton referred to before and we have put that into a couple of different carrier systems. We plan to take that forward to make a pilot lot of that material later this year and move forward into final testing of that.

    We have similar ongoing efforts for a number of the other biological threat organisms. We have some recombinant technology that we are using for the equine encephalitis vaccines. And I think that that is clearly an area of major investment in our medical biological defense program.

    The opportunities are quite large in that we could combine antigens from a number of different potential threats into one vector or expression system, thereby providing medical coverage against a number of different biological threats.

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    Mr. BUYER. Ma'am, I have several other questions for you. I want you to help us with regard to lessons learned. Since 1991, regarding the Department of Defense investment now in BioPort, what lessons have you learned from this experience and how it will be applied to the future dealings with BioPort or to a second source supplier?

    Dr. JOHNSON-WINEGAR. Well, let me just first say that we have only been dealing with BioPort since 1998. Prior to that time, the anthrax vaccine was produced by the Michigan Department of Public Health and they were our sole source. I was personally involved during the time of the Gulf War in trying to put into place efforts for them to increase their capacity to produce vaccines and, indeed, it was a very difficult situation when we did not have sufficient quantities of vaccine for all of the military forces that needed that vaccine. And I found that very difficult to deal with.

    On the other hand, we have the issue of all vaccines and biological products have a normal shelf life and do we want to invest our funds in buying a huge stockpile of every vaccine that we might have to make or do we invest in the types of research and development that can lead us to things where we can develop a vaccine that only requires one or two shots rather than six shots or vaccines that can engender immunity more quickly so that—I mean, you know, the goal that I hear from the military operators is they want one shot that they can get while getting on the plane and by the time the plane lands, you know, they will be protected. And, oh, by the way, they want to be protected against everything, known and unknown, and they want it to last forever. My answer to that is the technology just is not there right now.

    So we do the best we can. We have incremental approaches to the problem. And, yes, it is true that for a number of years we have been developing vaccines by the ''eaches.'' That is why we have a vaccine for this, that, the other disease. I think the technology is now coming forward when we can expect to see a number of multi-valent types of vaccines come forward to the market. So that is clearly one lesson learned, to continue our investment in the technologies that will lead us to improve products.
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    With regard to acquisition strategies, I certainly think that one of the lessons learned is that we need to increase our efforts to identify other sources. As has already been identified in testimony today, we have had limited responses and limited luck in dealing with most of the pharmaceutical firms in the area of bio defense vaccines.

    Even during the time of Desert Shield/Desert Storm, there was an amazing reluctance from the pharmaceutical industry to assist the Department of Defense. The primary reasons that they cited were ''Is this going to be a long-term project for us or is this just a passing fancy? What is the profit motive going to be? What is our big market going to be? How about liability and indemnification? What about bio safety, environmental concerns, implications of treaty inspections?''

    Most of them say, you know, we have a normal product line, we are busy making all the vaccine we can make for flu or measles, mumps, rubella or polio or whatever it is and it is not in our business plan to get into the bio defense manufacturing business. So that is clearly a lesson learned for us. We need to develop some innovative strategies for finding ways to meet our need for these critical vaccines.

    Mr. BUYER. The military is the first tier of the market. What is the secondary market for an anthrax vaccine?

    Dr. JOHNSON-WINEGAR. We certainly view most of these vaccines in three tiers, tier 1 being the military, the core military, whether that is active duty or active duty and Reserve, I defer to people who have expertise in that area. The second area would be our allies and host nation civilians and certainly critical DOD civilians would be the second tier. And the third tier would be something larger that could extend potentially to the entire population of the United States, et cetera. Also in that second tier I would include people that we classify as the first responders, the police, the fire, the medical people who would be the ones to come and respond to an incident.
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    Mr. BUYER. Ma'am, there was some mention here earlier by one of my colleagues in a question regarding consultants. Just exactly what is the role of the consultants that have been hired with BioPort and what qualifies them to be the experts to provide whatever advice they are seeking?

    Dr. JOHNSON-WINEGAR. I think that the primary expertise that the consultants bring is that of regulatory affairs and some of those people have had previous experience with other companies, some in fact have had experience working for the FDA per se and they bring a point of view that can help BioPort identify ways to improve their process validation paperwork and their biologic license application.

    Mr. BUYER. I have a question for Admiral Clinton. There have been pockets, while in the minority, yet vocal, regarding resistance to the vaccine. Those who resist taking the vaccine are concerned about its safety. How does the rate of reactions to this vaccine, anthrax, relate to other commonly used vaccines?

    And, second, have you seen any in the VAERS reports that would lead you to believe that there is a pattern of adverse reactions that is different from those of other vaccines?

    Admiral CLINTON. On the first instance, the reaction profile is approximately the same as many other adult immunizations we use in the United States, including hepatitis and pneumococcal vaccine.

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    On the second question with regard to the VAERS report, there is nothing that we have learned or that FDA has learned to my knowledge that would suggest there is a trend. We monitor this, as you understand, on a continuous basis. They first get the reports and then an additional external review group examines all of the VAERS reports to make further determinations of whether it is likely that that event was associated with the vaccine or where indeed it was not associated, they were simply sick with something else at the same time they had the vaccine. There is nothing in that data at the moment that would suggest any trends of any significant events. Now, that is the purpose of that surveillance system, but we are encouraged by that.

    Finally, I would add that we have a very robust medical surveillance system which can tell us hospitalization and mortality rates around the world and we have done a very active surveillance of that data system. The hospitalization rate in Korea, for example, continues to go down, despite the introduction of this vaccine and others in an earlier period, such as hepatitis. The hospitalization rates for things that are alleged to be associated with this vaccine such as Guillaine-Barre Syndrome, and there are many others, is no different among those who are vaccinated compared with those who are not vaccinated, so in addition to VAERS we have this robust surveillance system that we constantly look at for other things that would perhaps lead us towards something and to date we have no information to suggest that there is a new safety or serious reaction rate profile.

    Mr. BUYER. Doctor, sitting right behind you is Colonel Randy Randolph. If you would step forward, please, sir, and grab the microphone? Admiral Clinton has referred to a vaccine side effect profile.

    Colonel RANDOLPH. Yes, sir.
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    Mr. BUYER. When Mr. Jones earlier had spoken and said we want to make sure the troops understand if the FDA says it is safe, yet there is still fear in the force, is this vaccine side effect profile, in our attempts to educate the force and show them that the anthrax vaccine has a less incident reporting rate than other vaccines, whether it is lyme vaccine, diphtheria, typhoid, hepatitis A, flu shot, even placebos—placebos for some of these vaccines have higher incident rates than anthrax. Are these things being done in the education of the force?

    Colonel RANDOLPH. Mr. Chairman, thank you for allowing me to address this education process. We actually began the anthrax immunization program with an unprecedented amount of education to the force. I was personally responsible for bringing together the tri-fold pamphlet for forces then deployed in March of 1998 in Desert Thunder.

    When the Commander in Chief of Central Command (CENCOM), came to the Secretary (Cohen) and asked for permission to begin an accelerated program and vaccinate forces there, I was charged with the responsibility of getting an informational brochure that addressed many of the concerns you just went over out to each member of the force. We actually printed that many copies, we shipped them in many cases overnight using Fed Ex and other shippers and got those into the hands of those service members.

    Now, I will say up front right that the education of the force, although it was unprecedented, remains a great challenge and we have several initiatives that we have begun since that time to address that challenge.

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    First of all, in the summer of 1999, we did begin a toll free information line to allow individuals, service members, family members, mothers, dads, they all call us, and ask information of folks who are trained to answer their questions in a very honest, forthright manner. If there are questions that perhaps have not been asked before and we cannot answer right away, we get back to them and/or refer them to sources who can.

    We additionally have an e-mail resource for them. What we have learned as a lesson learned here is that our service members and their family members are Internet savvy and that is how they communicate. So they do send us e-mails, about 200 a month, and we answer them in a timely manner as well. That alludes to the fact that we do have a unique challenge that I think the whole world is facing with this new dynamic of information imparted on the Internet.

    We began a Defense Internet website specific to the Anthrax Vaccine Immunization Program in about June of last summer, 1999. That has been enormously successful. Personnel in my office who are trained to educate the force travel all over the world constantly doing just that. We spend time with service members at the request of commanders, family members, spouses after hours, moms and dads to educate them on the safety and the effectiveness of the vaccine. And we still need to do more. We still need to get out and educate the force.

    There is also another dynamic that I do not think we realized at the beginning that we are now addressing and that is we up front at the beginning educated our health care providers in the military system so that they could answer the individual concerns of service members as they came forward out of the shot line and said, ''Well, is this going to affect me in this way or not?''

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    But the majority of our force is in the Reserve components and that means that they go out to family physicians who are not part of the military health care system and we need to educate that health care provider as well as our military health care providers and we have started doing that.

    Mr. BUYER. Earlier, you were in the room when I made the comment regarding—actually, it was an astute member of my staff who believed that once the force and the public learn that the potency test on the lot had failed that people would transfer that immediately into believing that, well, if it is not potent enough then it is also not safe enough and you have this increase in reports. What that immediately tells me is that you have a hurdle thrown in front of you and you have to intensify your education effort. Would you concur?

    Colonel RANDOLPH. Mr. Chairman, I agree with that completely. Every day, there is misinformation. It is caused by some truths that then become reflective of untruths and the challenge is there every single day and we work very hard to address that.

    Mr. BUYER. I have one last—Mr. Jones, you wanted a follow-up. I will give you two. You did not touch on the areas of decontamination. I do not know who is the relative expert here in decontamination, but I do not even know how you—what do you do when you have, General Franks, when your force there in Kuwait is contaminated and you have spores that are going to live for a long time? How do you decontaminate a force that has just been exposed?

    General FRANKS. Mr. Chairman, that as you described it, is a tough issue. There is not an elegant answer that would tell you we are prepared to do that with everything we need to do that now, for both chemical and biological agents.
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    We have across all the services, the uniformed services, paid attention in areas like we talked bio detection a little bit earlier. On the decontamination side, we have the Chemical Biological Incident Response Force (CBIRF), Marine units that have been brought to bear to prepare us for this sort of problem. There is work inside the United States Army and I will not speak to Air Force and Navy because I am not sure of that, although I will provide it for the record.

    [The information referred to can be found in the Appendix.]

    The business of decontamination is something—the whole business of consequence management is an area that we continue to work, not only within our own command and within the Department, but also through initiatives such as the Cooperative Defense Initiative (CDI), initiative that we are working over in southwest Asia with the Gulf countries. CDI—

    Mr. BUYER. I do not know what that is.

    General FRANKS. It is an initiative that the Secretary has to try to bind the Gulf countries, as well as Egypt and Jordan, to appreciate issues such as consequence management. And so we have begun the education program even with our coalition partners in the area to address the point that you make, decontamination, as well as other issues.

    Mr. BUYER. Since you bring up our allies, real quick, tell me about—if there is anyone sitting in the Middle East that has such a high threat, it would be Israel. What is Israel's policy with regard to anthrax, not only its military, but its civilian population? Is anyone here qualified to tell me?
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    Secretary DE LEON. They have requested to purchase vaccine from us and that will certainly be considered and processed when we have a sufficient supply.

    Mr. BUYER. How do we in the Government—Mr. Jones brought up the fact of how much money we have put into BioPort, how do we begin to recoup the investment?

    Secretary DE LEON. There are different ways. If it is a foreign military sale, there are different formulas that are used, some amortize the R&D costs and recapture, some sell at the cost. These are judgments that are made based upon the criticality of the request and the dollars that are available.

    Mr. BUYER. Thank you. Mr. Jones?

    Mr. JONES. Thank you, Mr. Chairman. I want to very briefly follow up on what the Chairman asked you about Israel. I cannot believe—we mandated this shot in 1998 and I cannot believe, because I think only second to the American armed services—we are the best, but I think they are next, to be honest with you, I cannot believe that they are not concerned before now if they would agree with your analogy, which I do agree, that the threats are there, because as the Chairman said, I do not know anyone that probably in the Middle East is more hated by enemies than the Israelis.

    So I am just amazed and I hope that if they are waiting for BioPort to produce the inventory for them to buy, I think they are going to have a long wait, to be honest with you, but that is secondary.
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    Mr. BUYER. Mr. Jones, could you yield for just a second?

    Mr. JONES. Yes, sir.

    Mr. BUYER. Do I understand it that not only are we unable, actually, I will put it this way, that our present manufacturer is not FDA approved to ramp up new production, but that our allies, Great Britain, are in the same pickle?


    Mr. BUYER. So there is no one out there that is able to buy this? Is that correct?

    Dr. JOHNSON-WINEGAR. Yes. The U.K. does have a vaccine that is licensed there and coincidentally, their facility has undergone some renovations and is awaiting approval from their regulatory agencies also before they can resume production.

    Mr. BUYER. And there are only three manufacturers? The United States, Great Britain, and Russia? Would that be right?

    Dr. JOHNSON-WINEGAR. And Israel is working to develop their own vaccine and their own production. They are not in production today, but they are developing their own independent capacity.

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    Mr. BUYER. And Russia's vaccine is different than ours, correct?

    Dr. JOHNSON-WINEGAR. It is a live attenuated vaccine that we believe has some safety problems associated with it.

    Mr. BUYER. I yield back. Thank the gentleman for yielding.

    Mr. JONES. Thank you, Mr. Chairman.

    Let me also say that I am amazed that the State Department of the United States of America, that this is a voluntary choice for the employees. I know that it is not your responsibility, but maybe I would think that Secretary de Leon might have an opinion because I am sure that Mrs. (Madeleine) Albright, (Secretary of State) who I do have respect for, I think she is a brilliant lady, but I just cannot imagine with those employees probably truthfully being in as much of a threat, if not more so, because of their employment that the State Department would say, ''Well, we think it should be voluntary to our employees.''

    In addition to that, as you mentioned, Britain, I believe still today that to the British military this is a voluntary program.

    So, Mr. de Leon, if you could give me a quick answer, that would be just your opinion. Do you not think—

    Secretary DE LEON. The State Department has requested that we make vaccine available to them and as soon as we have vaccine that we can make available to them, we will.
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    With respect to the British program, I think it was mandatory, then they ran into supply problems; they made it voluntary, and they have since been trying to get the acquisition of vaccine resolved so that they can resume their program.

    Mr. JONES. Well, let me also say that you brought up another point that I do not want to get back on it because we talked about it earlier, but I have reviewed with my staff the Inspector General's report and I still am just amazed, quite frankly, I guess is the only word I can use that BioPort, which the American taxpayer is propping up, they saw fit last year to give a bonus to their board and to the employees. Don't you think until—truthfully, until a company can meet its contractual obligation to produce the product that they signed a contract to produce the volume that is needed and requested that they should not be giving any type of bonus? I do not care if it is $1. Don't you think that sends the wrong message since the taxpayer is paying for this company?

    Dr. JOHNSON-WINEGAR. I believe that while there was a potential line item in the budget to provide those bonuses to the employees, I believe I am correct in saying that those bonuses were not provided and I know that the chief Executive Officer (CEO), of BioPort will be speaking later today and I am sure that he can confirm that to you one way or the other, but that is my understanding.

    Mr. JONES. I do have other questions for him because based on the Inspector General's report, not only talking about bonuses, but how some other dollars were spent, so we do have further questions on that.

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    Just one or two very quick questions.

    I guess to the gentleman that just spoke about education, what has really amazed me particularly, and whether we like it or not, we are very dependent on our Reserves, I hope that the presidential candidates this year will talk about rebuilding the military and increasing the active duty force. That is just a personal opinion. But as long as we are dependent on the Reserves, I have been amazed—you are right about the Internet, but those that seem to be concerned are your officers as much as those that are enlisted. The officers, the pilots that we need so desperately who are in the Reserves, they are the ones that have gotten out over this issue and I think that is a tragedy.

    The last point I want to make, and I guess this would be for be for Dr. Johnson-Winegar. General (Ronald R.) Blanck (Surgeon General of the Army) was in my office months ago and I know this depends on developing a new vaccine to deal with this issue of vaccine, but remind me why we are at a six-shot per soldier program instead of a three. I realize that you give the number of shots hoping that will give the protection, but hasn't there been some controversy or discussion to the fact that could we really just give three shots and they would be protected?

    Dr. JOHNSON-WINEGAR. Yes, sir. And the current immunization regimen as approved by the FDA was indeed based on information that was obtained many years ago, as Congressman Shays alluded to.

    We do have an ongoing effort in collaboration with the Centers for Disease Control to look at what we call a reduced shot protocol so that we can, in fact, get away from having to administer six shots and whether we can reduce that by one or two. We will have to wait for the data, for those studies to be completed. Certainly we have animal data that shows that we believe that a fewer number of shots will provide protection. However, that is not the FDA approved protocol and it is the full intention of the Department to comply with the approved license protocol.
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    Mr. JONES. Well, I look forward to the answer to Mr. Bartlett's question that I think you will provide in writing later.

    Dr. JOHNSON-WINEGAR. Yes, sir.

    [The information referred to can be found in the Appendix.]

    Mr. JONES. Because we are dealing with a 24, 30-year-old technology and we are saying that with all these different anthrax viruses and the strands that we are seeing that we know—and I think Secretary de Leon said a while ago in an answer to Mr. Bartlett, he said, ''We believe that this shot will protect against all types of strands,'' and I really would love to see that information in writing. Mr. Chairman, with that, I will conclude my questioning.

    Mr. BUYER. Thank you. I would like to do a follow-up to Mr. Jones' question with regard to the State Department.

    General Franks, when you were in Kuwait and you were giving the recommendation at the time to General (Anthony) Zinni (former CINC-U.S. Central Command), about your opinions and the threat, did you ever have a discussion with the U.S. ambassador in Kuwait regarding that threat and whether or not he concurred or believed that there should be a mandatory anthrax vaccination program at our embassy in Kuwait?

    General FRANKS. Mr. Chairman, I did not ever have such a discussion with Ambassador LaRocca.
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    Mr. BUYER. Do you have any knowledge whether or not he would entertain such a—does he have that? Or it is strictly voluntary, anybody who works for the U.S. embassy in the face of the greatest threat? Strictly voluntary?

    General FRANKS. I really cannot answer the question. I do not know. I have really never discussed it with him.

    Mr. BUYER. All right. We will ask them. Mr. Bartlett.

    [The information referred to can be found in the Appendix.]

    Mr. BARTLETT. Thank you very much. Dr. Johnson-Winegar, I am appreciative of your institutional memory of what has been going on the last several years. I have had an intense interest in this vaccine program now for eight years. Eight years ago, there were headlines in our local newspapers in Frederick, Maryland, saying that a vaccine facility was going to be built at Fort Detrick. I went there and my host pointed out the window and said, ''There is where it is going to be built.''

    The contract for preliminary design, for design of it, had already been let. There have been two studies, a Badger study, which I believe was a classified study, and an unclassified study and both of them indicated, as Secretary de Leon indicated, that it was very unlikely that the commercial manufacturers were going to be interested in making these vaccines and therefore our country needed a Government-owned/contractor-operated facility.

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    In the time frame 1993, 1994, somebody, presumably a staffer in the Senate, placed in the authorization bill unbeknownst to any Congressman or any Senator, placed in that bill the requirement that all activities be suspended until there was another study. There had already been two studies.

    What that did was to throw this whole thing—by the way, the initial requirement for this was a top-down directive in my understanding from President Bush and Secretary (Richard) Cheney (former Secretary of Defense), because of the difficulties which all of you have alluded to in getting vaccines for our troops, they were inoculated on the ground in Kuwait because we could not produce the vaccines fast enough here. The Administration recognized we had to have this capability and it was a top-down requirement to get this thing going.

    There have now been three turnovers in the Pentagon, each new group there having no knowledge of what transpired previously. They have all been in my office. I have seen their jaws drop as I showed them from our local newspapers and showed them documentation of the previous contracts that had been let and the headlines in our newspapers.

    I just met last week with the senior people in DynCorp and contrary Mr. Secretary, to what you have indicated, they told me that there is no intention of developing a government-owned/contractor-operated facility.

    My concern is that we have now had eight years—had we had another Desert Storm, we might have come to grief because we would not have the vaccines for our young men and women, that they would have been unprotected in these environments.

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    We have now been spinning our wheels for eight years. I am frustrated, I am angry, and I have met—seriously, there have been at least three turnovers in the Pentagon with no institutional memory, the people I talked to, who did not even know what had happened under the previous command in the Pentagon.

    I would very much appreciate it if we could get together and review what has been going on and what is now going on. What they did was to let a contract to a prime contractor who, as far as I knew, knew little or nothing about this area and their responsibility was to go out and find the people who knew something. I know that there were competitors in that procurement who did know something who I believe would now be producing the vaccines had the contract been let to them.

    I understand the culture in the military that likes prime contractors that go out and hire subcontractors to do things, but I think in this case you really needed somebody that knew something other than how to go out and look for subs, which I think is what the present organization is doing.

    Let me just leave that with the request that we please get together to look at where we are and where we have come from and where we ought to be going in the future.

    Now I have one specific question to ask. I am reading here from Alibekov's book and he says in 1997, scientists of Obolensk, that is Russian, reported in the British scientific journal, Vaccine, that they had developed a genetically altered strain of the anthrax bacillus capable of resisting anthrax vaccines.

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    Now, if they reported that in 1997, and they have been in operation since the early 1980s, all of this started way back in the early 1980s and even before that, back in the 1950s, they were doing it, intensively they began developing these weapons in the 1980s, how do we know that they have not produced a number of strains that are like this one, resistant to anthrax vaccines that they have not reported in the journals? Because until very recently, there was not this kind of openness and they were not reporting these things in journals.

    My question is if you were an enemy of the United States and you wanted to weaponize anthrax, why wouldn't you get this one or another one like it to weaponize, one that was resistant to the anthrax vaccines?

    Dr. JOHNSON-WINEGAR. Well, as was discussed earlier, one of the things that makes anthrax attractive as a biological weapon is the fact that it is relatively easy to produce and it is relatively easy to deliver and it stores pretty well and it stays around for a long time.

    By the mere fact that someone has done genetic manipulations to an organism to make it ''vaccine resistant'' may, in fact, have altered some of the other characteristics of that organism, and without being able to do a full evaluation, what you can do in the laboratory does not always translate to something that can be manufactured full scale or that is suitable for weaponization.

    Mr. BARTLETT. Have we looked at this vaccine? Do we know whether it could be weaponized? I will tell you that when President Nixon, with an Executive Order, stopped our development of biological weapons, as a scientist I had some serious concerns. I know that unless you are at the cutting edge you do not know what is going on at the cutting edge. I do not want us producing biological weapons, but unless you are at the cutting edge of technology, you have no idea what is going on at the cutting edge of technology, and therefore you do not know what your potential enemy is doing and you do not know what you need to do to counter that. And my concern is that that is exactly where we are today.
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    Here is a strain which is reported in a scientific journal as being immune to the anthrax vaccines and since we have not been at the cutting edge of technology, we do not know anything about this and presumably have not acquired this strain and we do not know whether it can be weaponized or not.

    I just think there are some very serious questions here. I think that we are behind the curve and I think that is not your fault. I think it happened when Nixon—I do not think that he understood that if you are not at the cutting edge of technology you do not know what is going on at the cutting edge of technology.

    Dr. JOHNSON-WINEGAR. Well, I have often said that I think it would be much easier to be ''the bad guy'' because there are no limitations on you as to what you can do with genetic engineering or the types of things that you can think of and you are limited only by your imagination.

    I am sure many of you have read Cobra Venom and a number of the other books that are out there, and we quite often get asked the question, ''Is it really possible to genetically engineer cobra venom into influenza virus?'' and those types of things. And what is theoretically possible, what is scientifically possible, and what can be done in the laboratory is one thing.

    We, of course, in our biological defense program are prohibited from doing a number of these types of technologies and, as you indicated, we do not engage in an offensive biological warfare program, so you are right, we are always on the defense and we are always perhaps a step behind.
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    We try to figure out what the other guy has done. That is the whole issue of the threat list itself. When the threat list changes and the intelligence community tells us that there is a new biological agent that is a threat, we have to start from scratch to develop a program for that. So there are constraints upon us. I think many of those are appropriate, of course, but your comment is right on target.

    Mr. BARTLETT. I do not want us building biological weapons, but I don't want—I am not stupid, either. And I think that there is a happy medium here and if you need our help, if you need legislation to get to that happy medium, why, then, please tell us what you need from us. Thank you very much.

    Mr. BUYER. Thank you, Mr. Bartlett. Mr. Shays.

    Mr. SHAYS. Thank you, Mr. Chairman. I know we need to get to the next panel, but let me just clarify a few points, if I could.

    I would like to ask General Franks, not in the heat of the battle, but in the general course of activity, does the military view that they have a right to ignore medical protocol on their soldiers?

    General FRANKS. Congressman Shays, I do not understand your question.

    Mr. SHAYS. There is medical protocol, there is six shots. Do you have the arbitrary ability to decide that soldiers are protected with one or two and then give them those shots?
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    General FRANKS. Sir, if I have that authority, I am not aware of it.

    Mr. SHAYS. So you do not have that authority.

    General FRANKS. No, sir.

    Mr. SHAYS. As far as you are concerned, they need all six shots, correct?

    General FRANKS. That is correct.

    Mr. SHAYS. I would like to ask someone else there, maybe Rear Admiral Clinton. Does the Navy, the DOD, have the right to ignore medical protocol?

    Admiral CLINTON. We are not ignoring medical protocol. To the extent that we have a supply of vaccine, we follow that schedule.

    Mr. SHAYS. That is not the question I asked. See, you are trying to anticipate.

    Admiral CLINTON. We do not—

    Mr. SHAYS. I am asking if you view that you have the arbitrary ability because you are the military to ignore medical protocol?
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    Admiral CLINTON. We cannot.

    Mr. SHAYS. Okay. So you have to follow—

    Admiral CLINTON. We are talking about this vaccine, in the context of this vaccine.

    Mr. SHAYS. I am just talking in general.

    Admiral CLINTON. It cannot be discussed in general, sir. In the context of this vaccine, we are obligated to follow the FDA label.

    Mr. SHAYS. Thank you. Times past in the 1950s, we would order airmen to go on the wings of planes that had flown through radioactive material after dropping bombs and they became ill, died of cancer and so on at early ages and we had to compensate them. At the time, we did not know, I guess, that we were putting our airmen in danger, but, General Franks, you would not order someone to go on the plane and clean it off if you knew in later life it could cause their death? I am asking that question to you. We washed the planes, we washed them down.

    General FRANKS. Sir, my answer is no, but I believe you know that in the context of what I do and what we do, we follow two orders and they are to accomplish the mission and to protect the force.

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    Mr. SHAYS. Right. And to protect the force, not just presently but in the years—you know, when they leave the force, you would like to know that you did not leave them with an illness, correct?

    General FRANKS. Yes, sir.

    Mr. SHAYS. If I was an airman and I knew that if you ordered me on that plane to clean it off that I would be endangering my life, my children potentially, but you did not know and you ordered me on top of that plane to clean it off, would you think that I, as an airman, would have the right to say no to you or would I have to follow your order?

    General FRANKS. I would not believe you had the right to say no to me. No, sir. I would expect you to follow my order.

    Mr. SHAYS. Therefore, it is absolutely sacred that those with that extraordinary power be absolutely certain that whenever they do an order they know that they are right.

    Now, the question I want to ask is: what is the amount of dosage that we have left? Right now, how many doses of this vaccine do we have left? General West.

    General WEST. We have a little over 160,000 doses, sir, that are certified, safe, effective and potent.

    Mr. SHAYS. And they will last for how long? What is the time line on them?
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    General WEST. They will last us from six to ten months with the slowed down procedures.

    Mr. SHAYS. Okay. Now, explain to me what you mean by slowed down procedures. See, I had always thought this was a force wide program.

    Secretary DE LEON. It was considered and designed to be a force wide program, but we have never gotten beyond phase one simply because we did not have the supply of vaccine.

    Mr. SHAYS. Okay. So would these—and you said 160,000, is that what you said, dosages, 160,000? That will cover how many men and women? General West.

    General WEST. Sir, that will cover the forces that are deployed to Korea and southwest Asia to receive their shots on schedule for six to ten months and that will require about 14,000 doses or so per month, it will vary from month to month, depending on replacements.

    Mr. SHAYS. Are you varying the six-shot, 18-month schedule?

    General WEST. We are reducing the number of people that we are giving the six-shot schedule to.

    Mr. SHAYS. Right. Are you sending people into the theater without the required shots?
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    General WEST. No, sir. It is our plan to use the available vaccine to continue vaccination for those people that are there and to continue to immunize those people that are going there and to use the remainder of the supply only for those things.

    Mr. SHAYS. And I just want to be clear on this, General West. Because you have come before my Committee and you have just been an excellent and candid witness. Is it your testimony today that—first off, we had 55,000 who have done all the entire program? Is that correct? Is it 55,000? In other words, they have done the all six-shot regimen? I just want to go over those numbers again.

    General WEST. Yes, sir. We have 56,725 persons as of the last report earlier this week that have taken all six shots.

    Mr. SHAYS. And then you have about 400 and what that have taken some?

    General WEST. 455,378 that have taken at least shot one.

    Mr. SHAYS. At least shot one. Now, obviously, you have a number of those individuals who will not with the protocol that you have—you are supposed to take them every few months, correct?

    General WEST. Yes, sir.

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    Mr. SHAYS. And so you have 160,000 dosages, you have 455,000 that have taken at least one shot. So how does the military reason through the failure to live up to the protocol?

    General WEST. We want to live up to the protocol, sir. We want everyone that started the protocol to get all six shots.

    Mr. SHAYS. But that is not going to be possible because you need at least a million dosages to deal with the 455,000. At least. Probably more than that.

    General WEST. In the near term, until we reestablish the supply, there will be some people whose shots will have to be deferred, not because we want to—

    Mr. SHAYS. I understand.

    General WEST.—but because we simply do not have the vaccine to give the shots.

    Mr. SHAYS. Yes, but we knew that. No, we did know that. I see people shaking their heads behind, but we did know that.

    We knew that we were running out of supply and we did not just know a week ago, we knew months ago and months before that and yet we were spreading it so broadly, now what you have done is you practice medicine on 455,000 people who are not going to get the adequate shots. And so they have gotten partial shots. And yet the testimony is clear, you cannot alter the six-shot regimen. You may want to, you may wish it, you may will it, but you cannot alter it.
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    So the question then is you have 160,000 dosages, you have 455,000 people who have had one, that may mean they need five times more. So it may be, you know—you should be able to tell us in this Committee in order to bring the 455,000 up to the level they are supposed to be, how many dosages do you need?

    General WEST. I could do the math and give you that number. It would be a number in excess of 160,000.

    Mr. SHAYS. Oh, it would be over a million, wouldn't it?

    General WEST. Yes, sir.

    Mr. SHAYS. And, Admiral Clinton, could you give that number to me? Because it is shocking—shocking is a strong word. It is disappointing that you all would not be able to tell this Committee—like that—that we have so many this, so many this, and we need so much to complete their regimen of the six shots. Is it the panel's position that they cannot give us that number?

    General WEST. No, sir. I can tell you that there are 455,378 that have had one, 432,224 that have had two, 409,329 that have had three, 292,661 have had four, 170,033 have had five—

    Mr. SHAYS. But you cannot tell me the reverse.

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    General WEST.—801 people have had boosters. And if I did quick math on it, it would be a little over 918,500 that we would need to complete the regimen of six shots on all those people.

    Mr. SHAYS. Right. And you have 160,000. And you do not know if you are going to have an approved dosage next month, two months or even a year from now, correct?

    General WEST. We do not know exactly when we will have new safe and effective vaccine and we will not use any vaccine that we do not know is both safe and effective.

    Mr. SHAYS. Well, that part I agree with. But the problem is that you are stuck between a rock and a hard place, but unfortunately, our military personnel are stuck with the fact that they have had partial protocol on this but not completed. And it would seem to me you would have been able instantly to tell us this is what we need in order to bring them up to the protocol and then it would seem to me you would be able to tell us the likelihood of approval and when you think it is going to happen because from the sources that we have, it could be a year before you have any addition to the 160,000. Isn't that true?

    General WEST. That is true, sir. And as I have told you before, we initially anticipated that the manufacturer would be able to reach licensing for new production faster than they have achieved that.

    Mr. SHAYS. But I do not know what would give you the basis to think that. Under what basis, under what track record, under what basis could you come to that conclusion and basically make a decision that affects the health of all these individuals who are supposed to be part of a protocol? It just seems to me kind of a risky game that you all are playing.
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    General WEST. We have not made a decision to affect the health of the service men and women, sir. What we have done is use the available supply of vaccine to provide them the best protection and as much protection as we could.

    Mr. SHAYS. No, but, see, what you are doing is you are deciding—Mr. Chairman, I will yield back the floor, and I appreciate your patience—but what you are arbitrarily deciding is that you will give them protection without the six vaccines.

    General WEST. No, sir. It was always our intent to give six. Unfortunately, because production has not come as fast and because as much of the supply as we expected to be safe and effective turned out not to be, we are unable at this time to keep everyone on schedule to receive six shots.

    Mr. SHAYS. I guess—

    General WEST. It does not affect their health. What it does is defer the additional protection.

    Mr. SHAYS. No, no. See—

    General WEST. They are still healthy.

    Admiral CLINTON. That is quite correct. And as soon as we have a supply, we initiate the series and have developed the protocol.
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    Mr. SHAYS. No, but the series says you have to do it in 18 months. It does not say you can do it for two months and then wait two years.

    Admiral CLINTON. But there have been instances, sir, in which vaccine shortage has occurred in the United States and an external advisory group to the Centers for Disease Control has made a statement of how one reinstitutes an immunization schedule, having had to defer for the lack of supply. We will follow that.

    Mr. SHAYS. Well, I could accept that if we were talking about a few thousand people, but you are talking about potential millions.

    Admiral CLINTON. That is the way this Nation has handled other nationwide vaccine shortages in the past—

    Mr. SHAYS. Yes, the problem is—the problem that the military has is that they have an extraordinarily poor record, ignoring radiation, ignoring Agent Orange, ignoring a lot of things, but they were under orders, so they had better follow their orders.

    And I know Mr. Buyer would follow his orders no matter what they were because he has told me that a hundred times, and I believe him. And so that is why you have an extraordinary—I think exceptional obligation to make sure that you bend the other way, and my concern is that you will use the same logic, that you can buy this for $2.30 when you've told us the marketplace is $10 and somehow think that you can get it for $2.30.
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    Well, you would know that, indeed, you didn't have the supply. You would know they had no track record. And so I just think you've had some missing medicine. I thank you for my comments.

    Mr. BUYER. Congressman Shays, I thank you for your contribution. And I would like to follow up Mr. Shays' questions.

    I have, as I can see from here, I have three Gulf War veterans in front of me. How many shots of anthrax in the Gulf War did you take, General Franks?

    General FRANKS. Mr. Chairman, I do not know how many I took during the Gulf War. I took the series that was offered.

    Mr. BUYER. What was that?

    General FRANKS. In 1990, 1991. I do not recall the number of shots in that series at that time.

    Mr. BUYER. I remember how many shots I took and you remember how many shots you took.

    General FRANKS. No, sir. I really—I really do not. I think at that time I may have been being vaccinated for a variety of things and I really do not know. No, sir. It is true.
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    Mr. BUYER. I am going to give you an opportunity to sit and recollect.

    General West, how many anthrax shots did you take in the Gulf War?

    General WEST. Sir, I went to the Gulf War. I did not take any shots. I wish I had, particularly when I went across the line and found enemy documents that said that they had deployed it to the battlefield and could have used it under certain conditions and I knew that we had passed those. I was in the latter part of the build-up and we had used the safe and effective available supply by the time I got there.

    Mr. BUYER. What was your rank at the time?

    General WEST. Colonel, sir.

    Mr. BUYER. Why did a lowly captain get them and you guys did not get them?

    Colonel RANDOLPH. Mr. Chairman, I was a major at the time, an executive officer (XO). I was not in the highest risk area in the theater, as you obviously were, and I did not receive anthrax vaccinations at that time. I have received all six now.

    Mr. BUYER. All right. Back to General Franks. What was your rank in the Gulf War?
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    General FRANKS. Brigadier general, sir.

    Mr. BUYER. As a brigadier general, where were you assigned?

    General FRANKS. I was the assistant division commander for operations in the cavalry division.

    Mr. BUYER. Oh, you are right in it. So how many anthrax shots did you take? I took two.

    General FRANKS. I really believe it is two. I really believe it is two, but—

    Mr. BUYER. I believe—

    General FRANKS. But, sir, I am not sure, but I believe it is two.

    Mr. BUYER. That is correct. It was two. Matter of fact, there were some that were in Dharan and Riyadh that got one, some that did not get any, some got one and if you were assigned to the front, where we were, you took two. So when Mr. Shays talks about what is the proper protocol, Dr. Johnson-Winegar says it is six. Why did we only get two?

    So when you ask these questions about breaching a protocol and arbitrary decisions, obviously here a decision was made because time is of the essence, get in what you can get into the soldiers and whatever you can get in gives them about the best protection we can get because it is better than nothing. That is a horrible way to do risk management.
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    And that is what part of this hearing—the purpose of this hearing today is to try to figure out, Mr. Secretary, how you are going to work cooperatively with your CINCs in the high threat areas, such as General Franks, General (Thomas A.) Schwartz, (CINC, UN Command/Combined Forces) and how we are going to actually manage that risk as we also then work on the FDA approval on BioPort and how we then prospectively work on this in the future.

    General WEST. That is one thing that we have gained, sir. When Desert Storm happened, at the beginning, we had no one that had protection. Today, we do not have as much vaccine as we want, but we inherited a threat, we inherited a single source supplier, we inherited a vaccine that was 30 years old.

    We have taken that and done the best we could to give safe and effective vaccine to as many people as we can, following the protocols up to now, trying to keep the production base built so we could continue as long as we can. But having 455,000 people to have some protection is not bad. That is two and a half Marine Corps.

    Mr. BUYER. My last question is this. Mr. Shays, I think, is on the right track when he said, all right, here is the protocol, you need those six shots within 18 months. We have a force out there that have—I mean, I am looking at your own total force anthrax immunization statistics as of 21 June, we are all over the map. We have numbers all over the place.

    If we are now going to say as we manage this risk in the face of a dwindling supply—I hate to get into the ''what if'' scenarios, Mr. Secretary, but I want to put the force in comfort.
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    Doctor, at what point do we say to the force you have about—if you go through the one, two and three shots, I mean, that is like—oh, my gosh, you have a lot of people. What do you say to these individuals that have only taken one, two and three shots yet are not in the high threat area and BioPort does not get FDA approved and now we are having to wait? How long—when do you make the decision that you have to start the whole six-shot protocol over again?

    Admiral CLINTON. Mr. Chairman, as I noted earlier, we are going to follow the Centers for Disease Control's advice which comes from an external advisory committee that if indeed there is an individual who has only had three and let's say hypothetically they have to wait nine months or twelve months which is well past their fourth shot due date, we will pick them up as if that were their fourth shot. So we pick them up from where they left. That is to say we will defer the shot and then reinstitute the program, not repeating but rather picking up their next shot when the supply exists.

    Mr. BUYER. But how long can we defer? When General Franks took over, could he then start on his third shot?

    Admiral CLINTON. The intent is that this will be resolved in six to twelve months. I cannot pick the number either and you have heard the testimony of what we think can happen, so we are talking about a time that is within the scope as understood by the advisory committee. When we had a supplier shortage earlier, we waited well that long with Diptheria, Pertussis and Tetanus (DPT) in this country for over a million children.

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    Mr. BUYER. I hope I am wrong and you are right, but I think that is an ambitious schedule.

    No other questions?

    [No response.]

    Mr. BUYER. Mr. Secretary, I thank you for coming. General Franks, congratulations on your new command. The Committee will be working with you over your tenure. Thank you and thank our troops that serve in the Middle East for what they are doing for our country. Thank you. Thank you, gentlemen.

    Our second panel represents the Food and Drug Administration and the Defense Contract Audit Agency. Dr. Kathryn Zoon is a Ph.D., Director of the Center for the Biologics Evaluation and Research, Food and Drug Administration. Joining her at the witness table is Ms. April Stephenson, Chief, Policy Programs Division, Defense Contract Audit Agency.

    We would like to thank both of you for testifying today. As with our first panel, I will ask the witnesses to limit your opening remarks five minutes to give members the opportunity to ask questions. Dr. Zoon, you are now recognized.


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    Dr. ZOON. Mr. Chairman and members of the Committee, I am Dr. Kathryn Zoon, Director of the Center for Biologics Evaluation and Research (CBER) at the Food and Drug Administration. I appreciate the opportunity to explain FDA's role in the pre-market review and post-market surveillance of regulated products and specifically to discuss the regulation of anthrax vaccine.

    As you know, FDA is charged with, among other things, helping to assure that drugs marketed in the U.S. are safe and effective and are manufactured in accordance with good manufacturing practices.

    The process of pre and post-market activities associated with the review and regulations of the vaccine are shown in the charts that I have provided to you this afternoon and hopefully you will accept them for the record as part of my testimony.

    In referring to the chart as I described, there are multiple stages of review and regulation in the development of biological products. The first is a series of documents submitted to the agency with respect to the investigational new drug applications.

    [The information referred to can be found in the Appendix.]

    In this process, the FDA interacts with a sponsor who could be the manufacturer or others responsible for that particular product coming in and discussing with them the characteristics of the products, talking about the designs of the clinical trials.

    The conduct of those clinical trials are then done under investigational new drug applications. They consist generally of three phases, the first dealing with safety and, in the case of a vaccine's immunogenicity, the second dealing with safety, dose ranging and immunogenicity, and the third dealing with immunogenicity, safety and efficacy of the product. Once that data has been accumulated and discussed, the applicant will then provide in the form of a biological license application the information that they believe supports the approval of that product.
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    In the course of that, FDA will review that material, have comments, et cetera, regarding that submission. In addition, prior to licensure, there will be a pre-approval inspection.

    Once a product is approved, that begins the life cycle of the product in the commercial area. There are a number of activities the FDA continues to perform. The first is continuing inspections which we call good manufacturing practices (GMP), or surveillance inspections to ensure that the product is made in conformance with good manufacturing processes.

    In addition, we oversee the safety of the product in several ways. One, we do lot release of each of the products prior to their release for many of our products, and this includes anthrax vaccine.

    In addition, we have our surveillance systems which includes the vaccine. In the case of vaccines, it is the Vaccine Adverse Event Reporting System, which we do in accordance and in conjunction with the Centers for Disease Control.

    At this point, though, the applicant may also have modifications in their particular use of the vaccine or changes in their facilities. This will constitute the need for a supplement to their biologics license application. They will give us submissions and information and data in accordance and, in some cases, there will need to be an inspection that either precedes the approval of that particular change. In addition, we continue to look at lots made in accordance with that change if necessary.

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    So in further emphasis on the process, I would just like to further emphasize the role of the inspections in what we do. When FDA conducts pre-license inspections for biologics, we do this prior to the product approval or licensure. As I mentioned, we do our routine inspections. Generally, those are done biennially.

    The inspections will also be done, as I mentioned, before the approval of a major supplement, which includes manufacturing changes.

    When a sponsor submits an application or manufacturing supplement to the FDA, our review team may decide to request the initiation of a pre-license inspection. If FDA discovers manufacturing deficiencies while conducting a pre-approval inspection, a possible outcome of that is that the application or manufacturing supplement may not be approved. The firm then may initiate corrective actions.

    It is important to understand that FDA's review of an application is a continuing process and that the sponsor has the opportunity to once again attempt to correct the manufacturing deviations and other deficiencies found in the applications. The application may then be approved based on the firm's corrective action.

    Because of the complex manufacturing processes for most biological products, each product lot undergoes thorough testing for purity, potency, identity and sterility. The anthrax vaccine is subject to lot release.

    The manufacturer may not distribute a lot of product until CBER releases it. The lot release program is one component of FDA's multi-part strategy that helps assure product quality.
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    Following issuance of an approved license, there is a continued post-marketing surveillance of the product, as I mentioned, by our VAERS system and since 1990 through June 30, 2000, we have had 1404 reports of adverse events associated with the use of anthrax vaccine that have been reported to VAERS. The 1404 reports are out of approximately 200 million doses that have been distributed.

    While the data gathered from the VAERS system can serve as a useful tool in identifying potential problems, the reports on anthrax vaccine received thus far do not raise any specific concerns about the safety of the vaccine.

    As you know, the anthrax vaccine was licensed in 1970. BioPort is currently the only FDA licensed facility for the production of anthrax vaccine. FDA has inspected this facility on many occasions during the past decade and identified a number of deficiencies requiring correction.

    Based on the surveillance inspection of Michigan Biologic Products Institute, which I will call Michigan, which is now BioPort, in November of 1996, FDA issued a notice of an Intent to Revoke letter to Michigan in March 1997.

    Michigan responded to the notice of Intent to Revoke with a strategic plan for compliance presented to the FDA in April of 1997. In February of 1998, FDA conducted a follow-up inspection of the Michigan facility to evaluate their compliance with its strategic plan. The February 1998 inspection disclosed significant deviations from FDA regulations.

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    In addition, the inspection resulted in a request by FDA that Michigan quarantine 11 lots of anthrax vaccine held in storage, pending review of additional information to be submitted by Michigan regarding the lack of investigations into possible problems with potency, sterility and particulate matter.

    FDA continues to work closely with BioPort to resolve issues concerning the use of these lots. If satisfactory resolution is not obtained, BioPort has stated that these lots will be rejected.

    Michigan temporarily halted production of anthrax vaccine sublots in January 1998 prior to the sale to BioPort to begin a comprehensive renovation of the anthrax production facilities. Although there has been a resumption of manufacturing in order to produce lots in support of the license application supplement to include the renovated facility, no lots of anthrax vaccine manufactured in the renovated facility have been released.

    In its most recent GMP inspection of BioPort in October of 1998, FDA found continuing improvement and that the firm had made progress toward meeting objectives under its strategic plan in bringing the facility into full compliance. We will continue to work closely with BioPort to ensure that the goals outlined in their strategic plan are met.

    Because the information has been made public, we can disclose that BioPort does have a pending supplement for renovations to their anthrax vaccine manufacturing facility. Renovations are assessed by review of a prior approval supplement and by performing a pre-approval inspection. In order to examine the manner in which BioPort implemented the renovations to the manufacturing facility, FDA conducted an inspection in November of 1999. At the conclusion of that inspection, BioPort received an (Inspectional Observations) Form, FDA 483, with observations and possible deviations in a number of areas. All observations must be addressed adequately before FDA will approve the supplement.
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    We continue to believe that the vaccine is safe and effective protection for those individuals at high risk for exposure when administered according to the approved labeling. We will continue to work with BioPort as we would any other manufacturer in an appropriate manner to resolve all situations involving pending submissions and inspection issues.

    I thank the Committee for the opportunity to testify, and would be glad to answer any questions.

    [The prepared statement of Dr. Zoon can be found in the Appendix.]

    Mr. BUYER. Thank you, ma'am. Ms. Stephenson, you are recognized.


    Ms. STEPHENSON. Mr. Chairman, distinguished members of the Subcommittee, I would like to submit my written statement for the record. My oral statement will be an abbreviated version of my written statement.

    I am April Stephenson. I have been Chief of the Policy Programs Division at the Defense Contract Audit Agency (DCAA), headquarters since this past May. Previously, I was branch manager of the Great Lakes branch office in Detroit, Michigan. As branch manager, I was responsible for the issuance of audit reports at BioPort from June 1999 when we performed our first audit until May 2000 when I left for my current position at headquarters.
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    I will describe the circumstances under which we came to audit BioPort, the types of audits that DCAA conducted, and summarize the results of those audits.

    Before I begin, I would like to provide a little background information about DCAA. DCAA is a separate agency of the Department of Defense under the direction, authority and control of the Under Secretary of Defense (Comptroller).

    The DCAA mission is to perform all necessary contract audits for DOD and to provide accounting and financial advisory services regarding subcontracts and contracts to all DOD components responsible for procurement and contract administration. These services are provided in connection with the negotiation, administration and settlement of contracts and subcontracts.

    Since June 1999, DCAA conducted eight different audits of BioPort: two financial capability audits, three accounting system audits, an audit of BioPort's request for extraordinary contractual relief, and two audits related to extraordinary contractual relief.

    During this period, BioPort had four contracts with the Department of Defense, all of which were with the U.S. Army Medical Research Acquisition Activity at Fort Detrick, Maryland. Our initial audit of BioPort's financial capability was performed in June 1999 to determine if BioPort had adequate financial resources to perform on Government contracts within the next year.

    We concluded that there was substantial doubt that BioPort would be financially able to continue performing on Government contracts. As a result of BioPort's poor financial condition, on June 24, 1999, BioPort submitted a request for extraordinary contractual relief under Public Law 85–804 in the amount of $24.9 million. We audited BioPort's proposal to determine whether BioPort's request complied with the Federal Acquisition Regulations and the reasonableness of the data submitted by BioPort to support its request for extraordinary contractual relief.
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    We determined that BioPort's proposal was not prepared in all respects in accordance with the Federal Acquisition Regulations regarding the reasonableness of the data used by BioPort to support its request. We determined that the original contract prices were reasonable, based on using a cost methodology in which each product line receives an allocable share of BioPort's costs. However, these prices were not sufficient to ensure that BioPort was financially capable of completing Government contracts because BioPort's commercial products were incurring substantial losses.

    To assist the contracting officer in evaluating BioPort's request for extraordinary contractual relief, we computed prices which should have resulted in BioPort being financially capable of performing on Government contracts. The computed prices assumed that the Government would pay for the majority of BioPort's costs, including losses on commercial product lines, and capital expenditures for commercial product lines.

    Because of cash flow problems, BioPort also requested that DOD provide an advance payment of $17.9 million. We recommended reducing BioPort's requested advance payment. The reduction primarily related to BioPort's proposed repayment of shareholder loans. We recommended that the repayment of the shareholder loans be deferred until BioPort repaid the advance payment provided by DOD.

    The Army granted BioPort extraordinary contractual relief on August 4, 1999 by increasing the total contract value by $24.1 million and providing an advance payment of $18.7 million. BioPort's request for extraordinary contractual relief was based on it receiving FDA approval of its facilities and production processes in December 1999 and revenues from commercial products. Neither of these occurred. Consequently, BioPort began experiencing cash shortages in January 2000, despite having received extraordinary contractual relief in August 1999. Therefore, we were asked to perform another financial capability audit in January 2000.
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    The Army requested BioPort prepare a comparison of actual data incurred for 1999 to 1999 projections included in its request for extraordinary contractual relief to determine what went wrong. In addition, since BioPort did not experience the projected commercial revenue it had anticipated for 1999, the Army requested BioPort prepare a financial forecast for plasma and rabies products which are their commercial products for calendar year 2000.

    We concluded in this January 2000 financial capability audit that there was still substantial doubt that BioPort would be financially able to continue performing on Government contracts. We also stated that without financial assistance from either the Government or private sources BioPort would not be able to repay the advance payment provided by DOD as part of its extraordinary contractual relief provided BioPort in August 1999.

    We confirmed BioPort's assertion that the major difference between actual 1999 data and the data submitted in its request for extraordinary contractual relief was its failure to earn anticipated commercial revenues. We also concluded that for the transactions selected for audit that BioPort complied in all material respects with the contract terms and conditions.

    We determined that BioPort had spent all of the $18.7 million advance payment by December 1999 to repay the loans from the State of Michigan, make a settlement payment to a plasma supplier and unspecified expenses.

    BioPort stated the unspecified expenses were primarily operating expenses. BioPort was not required to separately account for the specific expenditures from the advance payment once contracting officer approval to spend the funds was received. Consequently, the unspecified expenses could not be identified to specific transactions.
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    Regarding BioPort's calendar year 2000 financial forecast for plasma and rabies products, we determined that BioPort's profit forecasts were not reasonable because management's assumptions did not provide a reasonable basis for the forecasted profit. BioPort was not able to demonstrate that it had buyers for existing inventory of commercial products.

    Furthermore, on January 27, 2000, BioPort informed us that it had committed to either sell or dispose all plasma inventory, including raw materials, and close the plasma business by the end of March 2000 and suspend production of rabies products until after BioPort received FDA approval of its anthrax production facilities and processes. This FDA approval was expected to occur in October 2000.

    Because of concerns regarding how BioPort was accounting for costs, the contracting officer requested that we perform an accounting system audit. In our report of June 11, 1999, we stated that BioPort's accounting system was inadequate for accumulating and reporting costs on Government contracts. In the year following our 1999 report, BioPort had implemented significant changes to its accounting system. These changes corrected all the deficiencies cited in our 1999 report. In our report of June 22, 2000, we concluded that BioPort's accounting system was adequate for accumulating and reporting costs on Government contracts.

    Mr. Chairman, this concludes my statement. I will answer any questions you may have.

    [The prepared statement of Ms. Stephenson can be found in the Appendix.]

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    Mr. BUYER. Dr. Zoon, I know there are times when a series of vaccine shots must be interrupted for health or other reasons. How does the FDA determine what guidance to give to medical personnel on restarting a vaccine series when it must be interrupted?

    Dr. ZOON. Sir, in terms of looking at our policies, we follow the policies and the labeling. So if the labeling gives a certain schedule, that is what the FDA has data for which the product was approved.

    Mr. BUYER. All right. Now, let's don't use a hypothetical product. Anthrax vaccine.

    Dr. ZOON. Right. I think—clearly, understanding your question is based on the discussions previously. FDA clearly sees this as a break in what is recommended in the labeling. However, based on the conditions surrounding the vaccine shortage for anthrax vaccine, based on the information that has been recommended by the Advisory Committee on Immunization Practices, which is the Centers for Disease Control committee that was reflected on the policies with respect to breaks in immunization. Based on discussions with DOD on their agreement to sit down and talk to us about what kind of data might be generated in the interim, we do not object to the break at this point in time.

    Mr. BUYER. Have you sat down with DOD and had such consultations yet?

    Dr. ZOON. We have had numerous meetings with DOD on a variety of issues. The specifics on this particular issue have been not discussed overtly, although we will be meeting very soon to discuss the specifics of this. We have had numerous meetings, in fact, we meet with DOD every four to six weeks on a variety of issues, as well as conference calls probably once or twice a week on different issues.
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    Mr. BUYER. Given this time line that you handed out to us, stages of review and regulation, obviously for some drugs it takes an awfully long time and for others perhaps not as brief—I am going to ask this question because I do not know, but to me it would have been obvious that there had to have been some ongoing consultations between DOD and the FDA with regard to a time line on when they believed that BioPort would have been FDA approved because they started the program.

    Was their time line one for which you believed was accurate and achievable? Or have other consequences occurred that made it unrealistic? I do not know.

    Dr. ZOON. I will give you my sense of it. You know, in looking back, you would say with good conditions and not having any problems intervening, that could have been a plausible time line. But if things do not go the way everything is planned, there are delays and then one has to calculate back those delays and how they add to those time lines. So I think when time lines are generated sometimes the flexibility of having things that might have intervening problems, one cannot always calculate directly. So my sense is it is not unrealistic to think that could have been a time line, but with intervening issues, the time line has extended.

    Mr. BUYER. And when I view the stages of review and regulation—I am trying to put this in the best words. I suppose in order to go from phase two to phase three you have sort of a go-no go, not necessarily no go, you are out. I mean, you continue to work with them until they get it right.

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    Dr. ZOON. Correct.

    Mr. BUYER. Isn't that how it works?

    Dr. ZOON. Correct. I just—BioPort, just from your chart right now, they are under this Biological License Application (BLA) supplement.

    Mr. BUYER. Okay.

    Dr. ZOON. Okay. They are already licensed, but they have made major renovations to their facility and their production capabilities that are currently—so they are actually over here. They are not under an investigational stage.

    Mr. BUYER. I threw that out as hypothetical.

    Dr. ZOON. Okay.

    Mr. BUYER. I am trying to figure out—well, because part of the language that gets used out there publicly, there is a different perception perhaps.

    Dr. ZOON. Right. If I can just help you a little—

    Mr. BUYER. Let me ask this question.

    Dr. ZOON. Okay.
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    Mr. BUYER. And this is how you can help me. Is the Department of Defense realistic when they advise the Committee that it could be six to eight months, perhaps, if BioPort does an August submission for FDA approval to ramp up new production? Realistic or not realistic?

    Dr. ZOON. My estimate would be six to 12 months.

    Mr. BUYER. Okay. Six to 12 months. What I have learned about in my 19 years associated with the United States military is as planners, we always plan for the worst case scenario and breathe easy thereafter. So if your testimony today is 12 months, then perhaps DOD should plan from the 12 months on how they do their risk management of the remaining vaccines.

    Who is here from—it looks like most have scattered. All right. Can you relay that? Can you relay that?

    I have some other questions, but I am going to turn to Mr. Jones now.

    Mr. JONES. Mr. Chairman, thank you very much. Dr. Zoon, I wanted to ask you if yesterday at a hearing in front of the Senate Armed Services Committee (SASC) that you made this statement. And I am quoting supposedly you, ''Interruption in protocol would not be consistent with FDA recommendations.''

    Dr. ZOON. That is what I said, yes, sir.
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    Mr. JONES. Okay. Then what we were being told earlier, that the military—let me see—actually, it was Chairman Buyer brought up the issue of potency and so I am going to ask you in relationship to that statement that you said in your professional opinion in breaking the protocol of this regimen by not following the FDA recommendation, does the potency of protection lessen, in your opinion?

    Dr. ZOON. I am sorry, sir, I could not quite hear you.

    Mr. JONES. Okay. I am going to repeat that. Basically, I am going to put it in my words. What we were told earlier by the first panel, that because some men and women were only getting one shot and obviously not knowing when they might be sent to a threat area, I got the impression that a little bit of protection is better than none, but if the protocol calls for six shots and you give me one shot and then I am sent to a threat area and should be exposed, I do not know how that one shot is going to do me any good.

    So let me now rephrase what I said earlier, because I have this written down, this was a statement, a question by Chairman Buyer and now I am asking you, in your professional opinion, in breaking the protocol of this regimen by not following the FDA recommendation, does the potency of protection lessen?

    Dr. ZOON. The immunogenicity which is the marker for protection—

    Mr. JONES. Just give me a yes or no.
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    Dr. ZOON. Okay.

    Mr. JONES. I am not a scientist.

    Dr. ZOON. I will try to explain. You will have—the data for which we have in the agency for safety and effectiveness is based on clinical trials that were done using the six dose regimen. So that—and annual boosters. We do not have data at the agency to know the level of protection of less than that.

    There is some animal data that has been generated. There is some immunogenicity data or antibody levels against the anthrax antigen that have been accumulated over time, but we do not have that data to evaluate the safety and effectiveness for less than the six-shot regimen.

    Mr. JONES. Okay. Just very quickly. My follow-up, though, I would assume as a non-scientist, non-professional, which I am not, I just cannot quite understand how with this problem that we have that we would even say to those that have only had one shot, those that have only had two shots, that we can say to you that this is going to do you any good. That is my comment.

    Again, I am speaking as a layman, but I am just saying I do not know how, if FDA says that you need six shots to have the protection how one shot or two and then I am exposed is going to do me any good.

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    Dr. ZOON. Sir, we do not have the data in FDA to say that that vaccine is safe and effective with two shots.

    Mr. JONES. Okay. Let me ask you this. When you go inspect these lots of vaccine and you find one lot or batch that is not acceptable, what do you do? Do you put it aside or do you destroy it?

    Dr. ZOON. Generally, depending on the nature, the FDA will receive information and samples from a company. Generally, if the lot does not pass the company's specifications, they will not submit that to the FDA and generally that lot is done away with or eliminated in some form.

    Mr. JONES. Okay. So any lots that you found at BioPort or any other company, but we are talking about BioPort, and it was not approved by FDA, then it must be destroyed? It must be removed from the warehouse?

    Dr. ZOON. It should not be in distribution and administered.

    Mr. JONES. Let me ask you a couple more questions and then, Ms. Stephenson, I would like to ask you.

    This past December, the FDA inspection of BioPort resulted in the identification of some 40 deficiencies. Is that correct? This past December?

    Dr. ZOON. They have had several inspections. I believe one of the inspections had approximately that number of observations.
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    Mr. JONES. Would you in your professional opinion say that of the 40 that five were major or 30 were major? What would be your opinion as a professional as to how many of these 40 deficiencies were major deficiencies?

    Dr. ZOON. I would have to go back and examine those, sir, those observations, some of which I think would be more major and are usually generated on the Form FDA 483 in the order of which the more important ones are listed first.

    In looking at that, though, I think the overall issues surrounding those inspections dealt with good manufacturing practices and the application of good manufacturing practices which FDA takes very seriously and therefore, based on our actions, as I mentioned in my testimony, the agency did issue a notice of Intent to Revoke, which is a very serious compliance action.

    The company, as I mentioned, responded with a strategic compliance plan which the agency reviewed and found acceptable. That was originally outlined under the Michigan ownership and those responsibilities were agreed upon by BioPort when they took over ownership of that company and there is the expectation and there is movement in the direction of correcting and implementing those corrective action plans. So they have made progress. There is still more to do, but in my opinion there is progress being made in that area.

    Mr. JONES. So I guess that you are working with the consultants that the taxpayers are paying to get BioPort on its feet. That is who you are working with, right?

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    Dr. ZOON. Yes.

    Mr. JONES. So these consultants that are being paid by the taxpayers that were brought in by DOD, and I will ask Ms. Stephenson that in just a moment, to make sure that BioPort will be viable, in your opinion, the first panel felt that—I guess hopefully felt that by the fall BioPort would receive FDA approval. I realize that probably there are more weeks and a couple of months before you would make a final decision.

    Do you feel and can you say at this time that you believe that knowing what you know today that they would be approved in October or September or November or would you say they have a lot of work to do?

    Dr. ZOON. My estimate, as I mentioned to the Chairman, is about six to twelve months.

    Mr. JONES. I remember that now. Thank you.

    Ms. Stephenson, let me ask you a question. My understanding of PL 85-804, when the request for relief comes forward, if it is over $25 million then Congress is to be notified. Is that correct?

    Ms. STEPHENSON. That is correct.

    Mr. JONES. What did you say the figure was that your department approved or however it was handled?
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    Ms. STEPHENSON. The Army granted extraordinary contractual relief in the amount of $24.1 million.

    Mr. JONES. $24.1 million. That is very, very interesting, but yet I do not question anybody, but I guess if it had not been for Mr. Buyer, the Chairman, and some of these other hearings, then we would continue to see these dollars being spent to prop up BioPort and really there would not be any notification to Congress as to the dollars, as long as it was under $25 million. That is correct, basically?

    Ms. STEPHENSON. I am not as versed on fiscal law. I am not sure if there are other times in which Congress is notified other than extraordinary contractual relief and what those dollar amounts might be.

    Mr. JONES. Let me ask you, being that I addressed the first panel, and I am not going to rehash that, but I continue to be amazed with how the Department of Defense with this contract with BioPort and, really, my problem is not with Mr. El-Hibri at all, my problem is the fact that we are guardians of the taxpayers' money and how we could continue down this road for two years of continuing to put millions of dollars—and I understand the need for the vaccine for our troops, that is not the issue, that is not why Mr. Buyer had this hearing today, it was to find out about the stability of the company, could they provide the stock so that we could vaccinate the men and women in uniform.

    But I want to ask you as a professional, do you feel that this contract today, knowing what you know, that for two years we have been putting more and more money into BioPort, and I realize you said they have made some changes that have been, you think, helpful, accounting and some other ways, but do you really as a professional think that BioPort can make it?
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    Ms. STEPHENSON. When you are saying make it—

    Mr. JONES. Business wise.

    Ms. STEPHENSON. In which term?

    Mr. JONES. As a business, without the taxpayers continually having to invest to keep it running.

    Ms. STEPHENSON. Well, currently, the only source of revenue, I would say the only contract that is ongoing with BioPort is the Government contract for anthrax. So given the fact that we are the only entity at this point that are contracting for any services of BioPort, we would under the Federal Acquisition Regulations pay for all their allowable, allocable and reasonable costs.

    Mr. JONES. Let me ask you, and I am sorry, I do not have the Inspector General's report and I was corrected by the first panel and that was fine, if I made a mistake, I want to be corrected, but it is my understanding that BioPort has taken some of these federal dollars that had been advanced to them, I was understanding that there had been some bonuses but I was told that that was incorrect. But it is my understanding that they have spent a multitude of dollars, thousands of dollars, to buy furniture, to do other upgrades in the headquarters of BioPort and surrounding areas. Is that correct?

    Ms. STEPHENSON. I do not understand your question. Are you asking did BioPort comply with the contractual terms regarding the expenditures from the advance payment?
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    Mr. JONES. That would be a better way to phrase it.

    Ms. STEPHENSON. Yes, they did comply with the contractual terms regarding the expenditures from the advance payment.

    Mr. JONES. So in other words, if BioPort has the dollars and they determine that they need to spend those monies on painting an office or buying furniture and things like that, then they can do that.

    Ms. STEPHENSON. Under the terms and conditions at that point in time, yes, they could have. But understanding that the contracting officer was approving all expenditures from the advance payment prior to the expenditure having been made, so there was some sort of control in place by the Army to ensure that these were the type expenditures the Army wanted to pay for before BioPort expended the funds.

    Mr. JONES. Mr. Chairman, I want to yield back to you my time, but I might want to come back with several questions.

    Mr. BUYER. That is fine. I have several. Thank you, Mr. Jones.

    Let me go back to the original question I had with you, Dr. Zoon.

    I am concerned about the interruption, that is what I am trying to work through. If you, representing the FDA, say that we recognize that it is a breach of labeling, okay? And that it is a breach of the protocol, I suppose, but we are willing to recognize that it might be okay and we are going to work with DOD, now, I guess I am not used to the FDA talking like that because that sounds very capricious and the FDA does not make capricious or arbitrary decisions. The facts are stubborn things and you go by the methodology and the analysis and that is why you drive others crazy, because you are stubborn. But that is what we like.
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    The citizens of the Nation like that because those facts are so stubborn. So I am curious as to why there would be sort of a laissez faire answer.

    So my senses tell me that in your consultations and perhaps partnership with DOD that there is some form of comfort level that I should be assured that perhaps things are not as bad at BioPort as the headlines make it out to be, that they are further along in their approval processes than what is being led to believe, and that many of these ''what if'' scenarios that we try to work through is sort of moot because this is going to be behind us, at worst, in the next 12 months. Please respond.

    Dr. ZOON. Well, there are multiple issues there, so I will try to address them one by one.

    Clearly, we are hardlined in terms of what the issues are, what the data is. This is—in terms of my response to you on DOD, this is a very unusual circumstance and my understanding based on the information that I was presented on what DOD's proposed policy is was that there is every intention to give these individuals the full series of six shots plus annual boosters.

    The question arises if there is not enough vaccine, what does one do and what are the options? Clearly, this is something that has recently occurred. We, again, still believe that the six shots, according to the labeling, is what is approved and what should be given. But under these extreme situations, we believe that a normal interruption which does occur in normal vaccination procedures can in general be viewed as acceptable practice. It does not mean that FDA approves of that process or that action. It means we do not object based on the conditions currently faced by DOD with the shortage situation. And as I have discussed with Admiral Clinton, I think we are going to need to sit down and talk about the types of data that needs to be generated.
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    We also have certain information available to us that clearly we have been told that only those at the highest risk will continue to be immunized to make sure that they get the full six shots, which is important because we do not want to put people, even though it is not our decision, but clearly I am a citizen of this country and I care about the men and women in uniform and I do not want them to be at unnecessary risk.

    So from that point of view, I think there is a big agreement on what the outcome is of this. The question is how to deal with a very complex, difficult situation where you have a shortage and manage it that benefits the entire situation and processes that both the FDA and the DOD independently have to make certain decisions upon.

    Now, with respect to manufacturing, there is no double standard here. We are holding BioPort and its former self, Michigan, in accordance with the regulations and the standards outlined by the FDA. They need to meet all those criteria.

    They need to produce safe and effective vaccine by all the criteria that FDA have and have approved in their license and we will continue to monitor that with vigor, both with respect to the lots that they release, their supplements, as well as the adverse event reporting with respect to the vaccines and our surveillance inspection. So I think we—we understand our role being the watchdog, making sure that standards are met, but I think when we have certain difficult situations and how we deal with these things, I think one has to look at the total database and try to make an effective good decision within our regulations and proceed from there.

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    Mr. BUYER. I think the American people respect and expect you to be tough and just because the Department of Defense has gotten themselves in a pickle does not necessarily mean that you have to go soft because we do not want you to go soft.

    Dr. ZOON. We are not.

    Mr. BUYER. Because we want you to be tough on them. At some point—and here is where I am at a loss, so I will be very careful because I will show my ignorance quickly. I am not a doctor. When you take vaccines and you build up the antigens and then there is a decay and you take another shot and it builds up a little higher and then there is a decay and you take another, decay, at some point, though, if we have a force out there—I know we are going back, I hate to be redundant, but we have a force out there that we are going to manage at risk and we are going to leave them with their one, two and three-shot regimes and they may not even pass back into the wicket of Korea or the Middle East. So would there be a period of interruption that is just too long that the FDA would recommend starting a series over from the beginning?

    Dr. ZOON. Sir, we have no information to recommend that. One of the reasons—in terms of designing the information that we would look at with DOD is looking at the time of interruption and looking at immunogenicity levels following different levels of interruption.

    Mr. BUYER. Is it because it has not been tested?

    Dr. ZOON. Right now in FDA, we have limited information. Primarily, the strongest information that we have on less than the required six shots, the strongest is animal data. Recently, DOD submitted some data on a pilot study that they have done with an altered schedule, but it is a very small study.
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    As DOD mentioned in their testimony, they are planning to do, in accordance with the Centers for Disease Control, a larger study which has been designed that they are planning to submit but have not yet submitted to the FDA for an altered dosing regimen as well as a route of injection. So there is lots of information that we hope to get in the near future. But, again, probably right now, the strongest information we have with respect to immunogenicity and protections from primate data that have been done with less than the full six doses of vaccine.

    Mr. BUYER. I said earlier I like to plan at worst case scenarios. I met with and recommended to DOD that they actually do that kind of study and I am hopeful that in your consultations as the FDA with DOD that you work with them to make sure that we pull out those guinea pigs and we actually test them in alternate regimes so we can have a knowledge base to prepare us for worst case scenario.

    Dr. ZOON. Yes, sir.

    Mr. BUYER. I think that would be very helpful for us.

    Dr. ZOON. Yes, sir.

    Mr. BUYER. In your statement, you comment on the fact that the current vaccine protects against at least three strains of anthrax that are not the same strain from which the vaccine was made. All three of these strains have been considered by some to be vaccine resistent.
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    Dr. ZOON. Right.

    Mr. BUYER. You then state that ''The Department of Defense has committed to submit a new data to FDA under an existing investigational new drug (IND).''

    Questions. Why would this be an investigational use of a drug, and does this have any implications for DOD's current use of the vaccine?

    Dr. ZOON. The animal data that was referred to in my testimony was developed by Dr. Friedlander, who is part of DOD. That information was published in the Journal of the American Medical Association, but that was summary information.

    The original data is being prepared right now and DOD has committed to submit that data. The normal way that data is submitted is to a regulatory submission and, in this case, they will submit it to an investigational new drug application which are ongoing for the agencies—which they have an ongoing IND for. It is a vehicle in which they officially submit information into the agency. That information then will be reviewed by our reviewers. So it is just a mechanism to get the information in to the agency. It is not—that information does not impact on the licensed vaccine.

    Mr. BUYER. Okay. You also indicate that the FDA has made many recommendations to BioPort to steer them in the right direction to achieve approval of their license supplemental application. In your opinion, has BioPort always been responsive to those recommendations and are you aware of any significant recommendations made by the FDA inspectors that BioPort has failed to implement?
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    Dr. ZOON. Well, as I said, they have made progress. They have not implemented all the recommendations yet, so they are still working on that. The agency has had numerous meetings with BioPort and a number of their personnel and we have sat down to describe what our expectations are.

    We have provided them information in areas if they had specific questions on what we meant by certain things, so to try to provide as much information and clarity to the expectations for them with regard to outstanding issues.

    So as I said earlier, I think they have made progress, but they have not completed all their strategic compliance plan and they are continuing in that as well as continuing to address the questions that we have had with regard to their BLA supplement.

    Mr. BUYER. Have you met with any of the consultants that now have been hired to assist BioPort, hired by DOD?

    Dr. ZOON. We meet every four to six weeks with DOD and BioPort. At at least the last several meetings I have been at, a number of consultants from BioPort have attended those meetings.

    Mr. BUYER. Is that productive? I mean—

    Dr. ZOON. Yes, I think that in general—

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    Mr. BUYER. For BioPort?

    Dr. ZOON. Yes, I think it is productive. Issues are put out on the table and discussed very overtly. If there are necessary follow-ups, we will have breakout meetings after a larger meeting so that technical expertise could be shared between like parties from FDA and BioPort in order to make sure that information is properly transmitted and understood and where appropriate DOD has been involved.

    Mr. BUYER. Ms. Stephenson, your audits of DOD's contract relationship with BioPort were highly critical of some of BioPort's spending decisions and at least questioned some of the DOD's decisions regarding the extraordinary contract relief. Mr. Jones sort of touched on this. Are you aware of any other similar arrangement between the Department and a sole source provider?

    Ms. STEPHENSON. There are sole source providers with contracts with the Department of Defense where that is a very normal process.

    Mr. BUYER. That we have extended extraordinary contract relief to?

    Ms. STEPHENSON. I am not aware. I am not aware of that. But I would like to—

    Mr. BUYER. If there were, would you be?

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    Ms. STEPHENSON. If there had been, would I be aware of that? No, not necessarily.

    Mr. BUYER. Why?

    Ms. STEPHENSON. Because extraordinary contractual relief is done at the contractor level. The DCAA individuals that would be knowledgeable of that, if they were requested to perform an audit, would be the field offices that would have been requested to do that audit. I may or may not be aware of what those are.

    Mr. BUYER. I will ask this question. If you are not qualified to answer it, state so and I will move on. Is BioPort a financially viable entity?

    Ms. STEPHENSON. At this point in time, our opinion that we had in our report at February 4, 2000 still stands. We believe that there is substantial doubt that BioPort will continue as a going concern without continued financial assistance from the Government or private sources.

    Mr. BUYER. So when Mr. Jones continues to say not only here but publicly that DOD keeps propping up BioPort, he is accurate.

    Ms. STEPHENSON. At this point in time, we are the only entity with a contract with BioPort, so through that, we are paying for BioPort's expenditures.

    Mr. BUYER. Mr. Jones, you are now recognized.
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    Mr. JONES. Thank you, Mr. Chairman. Just a couple of questions.

    Dr. Zoon, did you know the employees when the State of Michigan owned this operation? As an FDA employee, did you have a relationship, meaning a professional relationship, with the existing plant that was owned by the State of Michigan? I forgot the name of it.

    Dr. ZOON. Well, there were several previous owners of the Michigan facility. The first was Michigan Department of Public Health. Then that changed to Michigan Biologic Products Institute and subsequently that has been followed by BioPort.

    Mr. JONES. All right. Before BioPort bought the entity, had they been approved by FDA for whatever? Did they have FDA approval, the Michigan plant?

    Dr. ZOON. I want to make sure I answer your question. If you could just state it again. If BioPort—

    Mr. JONES. In other words, did BioPort buy from the State of Michigan the business which is the stocks of batches of vaccine? At the point that BioPort bought from Michigan what they bought, was it approved or not approved by FDA?

    Dr. ZOON. Okay. When BioPort took over or bought Michigan, they took over the plant, the stocks, everything and FDA then had to re-issue a license to BioPort which requires a certain amount of review and oversight.

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    Mr. JONES. Okay. But prior to BioPort buying the plant, was the plant approved by FDA?

    Dr. ZOON. Yes.

    Mr. JONES. Okay. So they buy the plant, BioPort, then when you go back for the review to see if they should be approved or not approved by FDA, they do not meet approval.

    Dr. ZOON. Well, at that time, the Michigan Biologic Products Institute was under a notice of Intent to Revoke and while Michigan still owned it, their production, as I had mentioned earlier, had stopped for vaccines. But the answer to your question is BioPort took over ownership of the whole facility, production, personnel, stocks, everything, and responsibilities incurred by Michigan when they took over that operation.

    Mr. JONES. I had a conversation with a State Representative from Michigan, Lynn Boher, a year ago when I got involved with this issue and, of course, they had hearings, as you probably know, this is not going to take but just a moment, to the Chairman, but they had hearings, they were very concerned about how all this came together and it certainly has nothing to do with the FDA, but I guess I am somewhat concerned that how this whole thing came together because when you really come down to it, which I think is the tragedy of all this, is that we have men and women in uniform that feel that they are being used as guinea pigs and I think that is a tragedy.

    And after sitting here for six or seven hours and I appreciate again the Chairman calling this, I am even more convinced that contractually, Ms. Stephenson, from day one that DOD made a terrible mistake. I am sorry I cannot dispute, I cannot even agree to the fact that whether the threat of anthrax being used was going to happen today or two years from now, but the way this thing has come together and knowing the FDA—I have read some of your reports, and knowing that we have spent this kind of money and we have a program that is faltering, somebody really should be up here in front of this panel—I am not talking about you two ladies—and put under oath because I am just amazed—and I am not—I do not have a great business background, but I have been in business and I am just amazed that the Federal Government—and I am not faulting you as an individual, but how this arrangement has been put together, to me in a way is somewhat mind boggling.
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    I am not even talking about the need of whether we need the vaccine or not, but just the business aspect of this and the fact that the Federal Government is responsible and the Department of Defense is responsible for putting together this contract. Because, to me, it is—what you are seeing is that it—you do not have to produce anything, all you have to do is to say that we are buying this company from the State of Michigan and all of a sudden we are going to be advanced $45 million, $50 million dollars to keep your doors open. And I know that is our concern as Members of Congress, that is our responsibility, not yours, but I am just going to say in closing my comments that I have just been amazed by this whole issue and I am not even talking about whether the shot is necessary and all this, I am not even—because Mr. Buyer today did not want that to be part of this discussion, but from a business standpoint, from an FDA standpoint, I have just been amazed with how this whole thing has been handled.

    Again, I want to thank both you ladies for being here and you have been very helpful.

    Last question, Dr. Zoon, is for you. I just want to make sure I have fully understood. When FDA determines that a batch is not suitable to be used, does the FDA go back, whether it is BioPort or another plant, to see how they discarded that bad batch? How do you know it has been discarded?

    Dr. ZOON. When we do our inspections, those records are checked and the disposition of lots that do not pass will be examined.

    Mr. JONES. Is there any way that you can physically be assured—and, again, I am not talking about BioPort, can you absolutely be assured that the company disposed of the bad lot?
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    Dr. ZOON. Well, that is what we would check on inspection. We check the records, generally. If there is a need, we can look at where the lot was stored and check for its disposition on an inspection. So we can do it several ways.

    Mr. JONES. Mr. Chairman, I believe that does it for me.

    Mr. BUYER. Thank you. Mr. Shays.

    Mr. SHAYS. Good afternoon. Ms. Zoon, on page 18 of your testimony, you summarize FDA's investigational observations of the BioPort facility, observations made a year and a half ago after the facility had committed to a strategic plan to achieve compliance with good manufacturing practices. How significant are these findings?

    Dr. ZOON. Yes. Some of them clearly, as you know, sir, were quite significant and clearly required both Michigan and later on BioPort to develop a strategic compliance plan in response to the notice of intent to revoke that the agency issued. As I mentioned in my testimony, they have made progress in achieving compliance with their strategic compliance plan, but they have not completed that, getting completely in compliance with it at this time.

    Mr. SHAYS. How significant is the lack of process validation? I would like you to describe the process, the time and the potential costs involved validating a process like the one used to make the anthrax vaccine.

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    Dr. ZOON. Process validation is very important. Process validation deals with establishing documented evidence that you can make the product consistently with the quality and purity that the specifications then when tested rely on. So this is important in many ways.

    Often testing the end product does not allow you to have a sense of the total confidence in the good manufacturing practice and process validation is very important in making sure that you are in compliance with good manufacturing practices.

    Mr. SHAYS. And, finally, what has been FDA's recent experience with other vaccine manufacturers who have tried to bring older processes into compliance with modern standards and practices?

    Dr. ZOON. Well, FDA has had a fair amount of experience. As you know, good manufacturing processes has a little C before it which stands for current. And so this is an evolving area in good manufacturing, so there is always a continuous and ongoing assessment of what constitutes good manufacturing practices. So this is an ongoing process and it is not stagnant, we work with all our manufacturers to achieve this level of compliance and there are cases where there are deficiencies and then the agency has a responsibility and oversight to make sure that those particular institutions come into conformance with good manufacturing practices.

    Mr. SHAYS. I said that was my last question, but let me just verify one other point.

    It is my understanding that this 1950s technology vaccine requires a dedicated plant, that you cannot produce other vaccines in this plant, unlike modern techniques with a recombinant where you would be able to produce more and different vaccines in the same plant. Is that correct?
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    Dr. ZOON. That is my understanding, sir. Yes.

    Mr. SHAYS. Thank you very much.

    Mr. BUYER. The Secretary (de Leon) had testified regarding a request for proposal for a second source manufacturer and indicated that since they would share a license that if they found that individual or company that it could take up to two to four years. Is that accurate, for FDA approval?

    Dr. ZOON. That is accurate. There are a number of mechanisms that are available. One is additional contracting arrangements, one is divided manufacture, another is shared manufacture and then there is a completely independent entity. So depending on the nature of the arrangement, time frames can vary for each of those particular arrangements. So I guess to answer your question, the specifics would actually determine the length of time, but there are a variety of options in which one can work. But two to four years is not an unreasonable period.

    Mr. BUYER. I had a conversation with the Secretary and General West as we were discussing the potency test and they had mentioned that the guinea pigs that were used, they chose guinea pigs based on weight and then you tested the lot. And we had this discussion of, well, if you choose a guinea pig just based on weight, you really do not know the age of the pig. We do not send juveniles into combat, so we immunize adults, so why don't we do a potency test based on the age of guinea pigs as opposed to selecting them only by weight and we run a second test, potency test, on that lot? Good science? Bad science?
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    Dr. ZOON. Well, one can look at different variables. This is a test to assess a measure of the potency and so one standardizes the test based on scientific principles, so generally one controls for the dose per weight of an animal and that has been the general practice in doing many of these testings. You are looking at different variables when you start triaging animals based on age and you are asking different scientific questions.

    Mr. BUYER. I guess the key is mature immune systems, would it not be?

    Dr. ZOON. Yes.

    Mr. BUYER. I am not a doc here, but—

    Dr. ZOON. Yes. The immune system and the stage in which an animal is or how old an animal is could affect its immune system, depending on the type of vaccine it is. With respect to polysaccharide vaccines, that is a critical element that you would need. This is not a polysaccharide vaccine, so this would be less critical with respect to that variable.

    Mr. BUYER. All right. So you are saying my recommendation does not make sense.

    Dr. ZOON. Well, I am saying that—

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    Mr. BUYER. I can take it.

    Dr. ZOON. Well, I am saying in this case, it is probably less significant.

    Mr. BUYER. That is why I am not a doctor. Does anyone have anything else?

    [No response.]

    Mr. BUYER. I think the events that have taken place here, there is a good story and the FDA—you get beaten up a lot out there, but there is a good story here and the good story is that not only the American people who send their sons and daughters to serve in the military and we call them our most precious asset, can extend their trust and confidence in an agency that is doing its job and that is the good story and we thank you for your service. Thank you, ladies. You are excused.

    Our third panel witness today is Mr. Fuad El-Hibri, President and Chief Executive Officer of BioPort Corporation.

    Sir, we thank you for your patience. You have been here all day. You have had ample opportunity to listen to all levels of criticisms and all types of things, so we are eager to hear your testimony. We appreciate you being here today.

    I am not going to limit you to five minutes. You have been here all day and we will permit you to put whatever statement, comments, rebuttal that you may have into the record. I think that is extremely important and it is also fair handed.
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    Mr. EL-HIBRI. Thank you very much, Mr. Chairman.

    Mr. BUYER. And, sir, you are now recognized.


    Mr. EL-HIBRI. Chairman Buyer and distinguished members of the Subcommittee, my name is Fuad El-Hibri and I am the Chief Executive Officer of BioPort Corporation.

    I am pleased to discuss from BioPort's point of view the procurement activities related to the anthrax vaccine by the Department of Defense, along with the efforts of BioPort to receive approval from FDA for the renovation of our facility.

    Joining me are Dr. Robert Myers, our chief scientific officer, behind me here and Mr. Roger Kramer, our chief financial officer.

    Our mission is to meet the national security needs by supplying anthrax vaccine to AVIP. BioPort has one customer, the Department of Defense, and one product, anthrax vaccine. We have terminated plasma production and temporarily suspended rabies production to focus full-time effort on creating assured production of anthrax vaccine.
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    When BioPort bought the Michigan facility, we knew that we were taking over an uncertain venture with an aging physical plant that had never before operated in a commercial environment. As it turns out, we have encountered challenges with obtaining FDA certification of our renovated facility that are substantially beyond what we had anticipated.

    The three major challenges are the following:

    1. Obtaining FDA certification. Validating the complex manufacturing processes of the vaccine to meet FDA requirements has taken more time and effort than was originally projected.

    2. Overcoming delays in renovations. At the time of the acquisition, the anthrax facility was already under renovation with an aggressive schedule. Unforeseen delays of several months in completing the renovation and the unexpected requirement of validating the manufacturing process have resulted in delayed revenues and increased costs.

    3. Changing the organizational culture. The culture prior to privatization was that of a state bureaucracy where no effective performance standards existed to ensure accountability throughout the organization.

    The regulatory challenges we have experienced are not unique to BioPort. Vaccine manufacturers face high capital costs, limited market potential and significant regulatory requirements. Indeed, recent reports about the possibility of shortages in the supply of flu vaccine demonstrate the difficulties faced by other vaccine manufacturers. It is no accident that every major pharmaceutical company has avoided the defense vaccine business to date.
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    The future of BioPort depends on our ability to obtain release of anthrax vaccine doses for DOD use. This is possible in two ways. The first is the release of doses from our new facility and this depends on FDA approval of our renovation. The second is the release of doses from the stockpile owned by DOD previously manufactured by Michigan.

    So let us talk about the first item, facility certification. We have made significant progress towards achieving our goal by reaching a better understanding with FDA on the scope of process validation required to achieve certification. We have been aided in this effort by implementing integrated project teaming with DOD.

    These accomplishments have been made possible by the creation of departments and functions that the state-run institute did not have, including regulatory affairs, compliance, project management, finance and others.

    We have recruited 14 senior managers with substantial industry experience at the FDA and at companies such as Pharmacia & Upjohn, Glaxo Wellcome, Bristol Myers Squibb, North American Vaccines, Aviron and Baxter. We are working diligently to get facility certification by the end of the year.

    Next, we have the lots in the stockpile. The release of these lots previously manufactured by Michigan requires that each lot pass BioPort's stringent internal tests for safety, purity and potency. We regret to report that we have not been able to resolve all of the outstanding issues with these doses. We will continue to work hard to address the concerns of FDA, DOD and our internal quality personnel.
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    I would like to make clear that every dose released will continue to be safe, pure and effective. To support this commitment, we have agreed with DOD on the following two contract changes:

    1. Suspension of payments under our production contract. While meeting FDA requirements of process validation, we should not be paid as though we were in production.

    2. Amendment to our renovation contract. Because process validation is a continuation of the renovation effort, BioPort has agreed that it will not earn a dollar of profit while under renovation.

    With these contract changes, BioPort will continue to pursue FDA certification in the most expeditious manner. With that certification, we will be able to assure DOD's supply of the most critical element of our country's bio defense strategy.

    In conclusion, let me state that everyone at BioPort remains committed to producing a safe, pure and effective vaccine that meets FDA standards and requirements of DOD.

    Thank you.

    [The prepared statement of Mr. El-Hibri can be found in the Appendix.]

    Mr. BUYER. Sir, as we understand it, BioPort just recently started conducting these pre-release vaccine purity tests that you talked about on lots of vaccine owned by the Department of Defense. For how many of these lots has BioPort been responsible for potency testing?
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    Mr. EL-HIBRI. We have been looking very carefully at each and every lot within the stockpile that belongs to DOD and that is currently being maintained by BioPort. Some lots have potency issues, some lots have femoral issues, some lots have compliance issues. On those lots that have potency issues, we are in a situation right now where our potency test, which is a complex bioassay is not performing to its normal standard.

    So we have put a team together that includes experts from all over the world with vaccines, with bioassays, with even anthrax vaccine, to help us identify the problems and correct the problems that we currently are experiencing with the potency test itself.

    Therefore, if you refer to the four lots that the Department of Defense was counting on, there are around 800,000 doses which really only had one issue which is the potency test associated with the release of those lots. We regret to say that our potency test is not performing reliably right now.

    We believe that it is not a question of the potency of the vaccine, it is a question that our test right now is not performing well.

    Mr. BUYER. Which means what? Which means if you came up with a different type of test—you mean you are looking for a different type of validation test? Has the FDA recommended something—I mean, I came up with mine and they thought I was a little crazy, I guess. Do you have a different idea?

    Mr. EL-HIBRI. The bioassay involves several elements. It involves the challenge organisms, i.e., the anthrax spores, it involves different dilutions, it involves operators and it involves guinea pigs and, in general, animal husbandry. We are looking at all the different elements that affect the bioassay to ensure that we can bring it back to where it can perform reliably.
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    Mr. BUYER. Let me yield to Mr. Jones.

    Mr. JONES. Mr. El-Hibri, I am certain that you are—I have read enough to know you are a very successful businessman and I guess I really would like to know, when you determined that you wanted to buy from the State of Michigan this operation, I am sure you met with Dr. Myers and some of the people that have worked with the state-owned operation.

    Did you have any idea that you were getting yourself into such a complex, involved business and that it would take you so long to get FDA approval? I mean, because I know you are extremely successful and I compliment you for that.

    Mr. EL-HIBRI. Thank you, sir.

    Mr. JONES. Did you have any idea?

    Mr. EL-HIBRI. I truthfully did not expect the scope and number of challenges that we have faced in the last year and a half since acquisition.

    Mr. JONES. I do not guess we have time, but, Dr. Myers, who had the experience with the Michigan-owned plant, I guess what I am a little bit amazed at is that did this take any private capital to get into this business?

    Mr. EL-HIBRI. Sir, it did. Initially, we put up several million dollars in cash as part of the acquisition of the facility. We subsequently put in another million and a half dollars of private equity to fund payroll, just as we were running out before the request for the contractual relief.
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    Mr. JONES. Let me ask you, basically, what could you tell the Committee your monthly payroll is? Because you have 14 senior managers, I believe you said in your testimony, and I am certain that they are needed and necessary if you are going to get FDA approval. What would your monthly payroll be?

    Mr. EL-HIBRI. Our monthly payroll is approximately $800,000, $900,000 dollars. That is just what is paid. That is not including the payroll burden, you know, the taxes on top of that and benefits and all of that.

    Mr. JONES. How many people are actually in addition to these 14 senior managers employed by BioPort?

    Mr. EL-HIBRI. I am sorry, I cannot hear you, sir. Could you repeat that, please?

    Mr. JONES. How many employees do you have at BioPort?

    Mr. EL-HIBRI. We have currently about 217.

    Mr. JONES. Two hundred seventeen? Okay. When you negotiated your contract with the Department of Defense, when you finalized that contractual agreement and you basically said to the Department of Defense we will sell you this anthrax at—I think the figure was used earlier today at $2 per vaccine, you as a successful businessman, I mean, even though you were dealing with the Department of Defense and this is your only client, only relationship, which I understand, but did you feel that you could make money at $2, by charging $2 per vaccine?
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    Mr. EL-HIBRI. No. At $2, we would not be making money. We were counting on private sales. We were counting on the other two product lines contributing towards the revenues of the company. Plus, we submitted to DOD, if I remember correctly, a price significantly higher than that as part of our negotiations immediately after we acquired the facility.

    You see, Mr. Jones, if I may just explain one very important point and that is that when we acquired the facility, we did not have a lot of information. The State (of Michigan) maintains books in a different way and the whole data room was just one cabinet which had very little information.

    Now, what we wanted to enter into was a cost-plus agreement, cost-plus arrangement, so that we would charge the Government all allowable costs and maybe with a small profit margin or fee on top of that and would proceed onward. However, it was physically not possible to do that because there exists a regulation, as I understand it, that if you are sole source and you do not have an accounting system, a contract accounting system, you have to go fixed price.

    And then when we started negotiations with respect to the fixed price, and I wanted to build in contingencies and delay and risk factors, I was not allowed to do that because that is not allowable. So we basically used a cost-plus approach but entered into a fixed price.

    And, incidently, if we would have had a cost-plus approach from the beginning, we would have never had to go back to request extraordinary relief. It was just a function of having fixed the wrong price. And we take some fault, too, for that. I mean, the Government negotiated very hard to a $4.36 price for the first year, actually, the first year was more like $7.90, second year $4.36, and then the third year about $2.30.
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    Mr. JONES. Let me ask you, again, you mentioned in one of your answers that you were hoping, I guess, in time that you would have the private market to sell the vaccine to. I guess that maybe if BioPort should become successful and you can make a small profit, whatever it might be, that you would hope to expand your sales maybe internationally. I am just asking, would that be part of your program, to sell products?

    Mr. EL-HIBRI. Oh, absolutely. And I have been witness of that before. I was associated with a company in England that produces anthrax vaccine and we actually sold vaccines to the Middle East, to friendly countries in the Middle East, subject to all export regulations and all that and were able to make a decent profit on the sales to foreign governments. And as witness also in the early stages when we still had a few doses available, we were able to sell to the Canadian government at a significantly higher price.

    Mr. JONES. Do you own interest in that British company?

    Mr. EL-HIBRI. Not any more, sir, but I did prior to acquiring the Michigan facility.

    Mr. JONES. When you left or relinquished your ownership in that company, were your sales holding up fairly well or were you beginning to see a decline in the purchasing of the vaccine?

    Mr. EL-HIBRI. The problem, sir, was that Kaymar, the manufacturer in England, underwent a renovation of their facility and they stopped producing about three years ago, just about the same time as Michigan. And they still have not received their approval of the renovated facility either.
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    Mr. JONES. Let me ask you and then I will yield back to the Chairman, but if you are not approved by FDA in the next six or seven months, I would think—I am certainly not trying to put words in your mouth, but I would think that you would reconsider where you are and what the future might hold. Is that safe for me to make that assumption?

    Mr. EL-HIBRI. It is safe, sir. You know, our interest, of course, is to stay in business and ultimately make a profit, but it is also to work with the Government and meet very important national security needs.

    So in six months—and, quite frankly, we are totally at the mercy of the Department of Defense. If they were tomorrow to stop our contract, which they can, we would immediately—you know, within a few months, go out of business because our only product is the anthrax vaccine and our only client is the Department of Defense.

    However, in six months, if the DOD would come and approach us, I would like to evaluate together with DOD as to how close we are to getting licensure because I do know that the alternatives are also costly and they are also time consuming and if there is a true wish by the Government and by Congress to continue with this AVIP program, then we should at least—we will try to do our best in trying to get there as quickly as possible.

    Mr. BUYER. Mr. Shays.

    Mr. SHAYS. We have six minutes left to vote, so I will yield.

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    Mr. BUYER. Why don't you go ahead and ask your questions and we will have them put on the record.

    Mr. SHAYS. Thank you. I want to know how many doses, the number of lots you have stockpiled. I want to know in the new plant how many lots produced, how much has been paid for those lots, because this is unusual, that you are producing more lots than you need for certification, and all usable current lot release—

    I would just say for the record, Mr. Chairman, this company has always been up front and open with us. I just question the competence of the operation. I would like those numbers. I will write this down and give it for the record before it closes and if you would produce it to us. But one thing I will say for you, sir, and Mr. Myers and others, you have always been responsive to all our questions. I just feel kind of like DOD is between a rock and a hard place right at the moment.

    Thank you, Mr. Chairman.

    Mr. BUYER. Thank you. What we are going to try to do, we have three votes and rather than try to come back and leave you sitting here for 45 minutes, the only other question I would like you to respond to, you do not have to do it right now, is now that the Department of Defense is seeking another manufacturer of the vaccine with whom you will share a license to produce anthrax vaccine potentially, I want to know what effect that is going to have on BioPort. You just talked about, ''Gee, if I could do cost-plus,'' well, maybe you can do cost-plus now.

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    Mr. EL-HIBRI. Yes, we can.

    Mr. BUYER. See what I mean?

    Mr. EL-HIBRI. Yes.

    Mr. BUYER. So we would like to know from your perspective what are those effects and what that means for you. And do you see enough market out there to support two manufacturing facilities here in the United States?

    [The information referred to can be found in the Appendix.]

    Mr. EL-HIBRI. When you look at most vaccines that are produced today and many of them are sole source, so whether there is a market for more than one supplier, I do not know, but to answer your question briefly, we will cooperate fully with the Department of Defense in helping another manufacturer get there as quickly as possible.

    Mr. BUYER. Thank you for coming today. We appreciate it.

    Mr. EL-HIBRI. Thank you, sir.

    Mr. BUYER. Thank you.

    This concludes the hearing.

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    [Whereupon, at 3:25 p.m., the Subcommittee was adjourned.]


July 13, 2000
[This information is pending.]