Federal Central Planners (and Cronies) Spent Hundreds of Millions of Strategic National Stockpile Funds on Emergent’s Outdated, Marginal Anthrax Vaccine, Leaving N95 Masks Unfunded

(p. 1) WASHINGTON — A year ago, President Donald J. Trump declared a national emergency, promising a wartime footing to combat the coronavirus. But as Covid-19 spread unchecked, sending thousands of dying people to the hospital, desperate pleas for protective masks and other medical supplies went unanswered.

Health workers resorted to wearing trash bags. Fearful hospital officials turned away sick patients. Governors complained about being left in the lurch. Today the shortage of basic supplies, alongside inadequate testing and the slow vaccine rollout, stands as a symbol of the broken federal response to a worldwide calamity that has killed more than a half-million Americans.

Explanations about what went wrong have devolved into partisan finger pointing, with Mr. Trump blaming the Obama administration for leaving the cupboard bare, and Democrats in Congress accusing Mr. Trump of negligence.

An investigation by The New York Times found a hidden explanation: Government purchases for the Strategic National Stockpile, the country’s emergency medical reserve where such equipment is kept, have largely been driven by the demands and financial interests of a handful of biotech firms that have specialized in products that address terrorist threats rather than infectious disease.

Chief among them is Emergent BioSolutions, a Maryland-based company now manufacturing Covid-19 vaccines for AstraZeneca and Johnson & Johnson. Last year, as the pandemic raced across the country, the government paid Emergent $626 million for products that included vaccines to fight an entirely different threat: a terrorist attack using anthrax.

Throughout most of the last decade, the government has spent nearly half of the stockpile’s half-billion-dollar annual budget on the company’s anthrax vaccines, The Times found. That left the government with less money to buy supplies needed in a pandemic, despite repeatedly being advised to do so.

Under normal circumstances, Emergent’s relationship with the federal stockpile would be of little public interest — an obscure contractor in an obscure corner of the federal bureaucracy applying the standard tools of Washington, like well-connected lobbyists and campaign contributions, to create a business heavily dependent on taxpayer dollars.

Security concerns, moreover, keep most information about (p. 18) stockpile purchases under wraps. Details about the contracts and inventory are rarely made public, and even the storage locations are secret.

But with the stockpile now infamous for what it doesn’t have, The Times penetrated this clandestine world by examining more than 40,000 pages of documents, some previously undisclosed, and interviewing more than 60 people with inside knowledge of the stockpile.

Former Emergent employees, government contractors, members of Congress, biodefense experts and current and former officials from agencies that oversee the stockpile described a deeply dysfunctional system that contributed to the shocking shortages last year. Their accounts were confirmed by federal budget and contracting records, agency planning documents, court filings, corporate disclosures and transcripts of congressional hearings and investor presentations.

. . .

The fates of Emergent and the Strategic National Stockpile have been intertwined almost from the start. Both trace their origins to the final years of the Clinton administration, and both were transformed in 2001 by the Sept. 11 attacks and the subsequent anthrax attacks, when letters containing the deadly bacteria were sent to members of Congress and the media.

The two have been locked ever since in what an Emergent executive once told investors was “a very symbiotic dance.”

. . .

. . . Emergent’s anthrax vaccine was not the government’s first choice. It was more than 30 years old and plagued by manufacturing challenges and complaints about side effects. Officials instead backed a company named VaxGen, which was developing a vaccine using newer technology licensed from the military.

Emergent’s successful campaign against VaxGen — deploying a battalion of lobbyists, publicly attacking its rival and warning that it might cease production of its own vaccine if the government didn’t buy it — established its formidable reputation. By 2006, VaxGen had lost its contract and the government had turned to Emergent to supply BioThrax.

“They were totally feared by everybody,” Dr. Philip Russell, a top health official in the administration of President George W. Bush, said in an interview. He said that he clashed with Emergent when he backed VaxGen, and that his reputation came under attack, which was documented by The Times in 2006. (Dr. Russell died this January.)

. . .

(p. 19) The company in 1998 agreed to charge the government an average of about $3.35 per dose, documents show. By 2010, the price had risen to about $28, according to financial disclosures and statements by Emergent executives, and now it is about $30. Over the past 15 years, the company recorded a gross profit margin of about 75 percent for the vaccine, in an arrangement that one Emergent vice president called a “monopoly.”

“It is a very, very good business,” the vice president for investor relations, Robert G. Burrows, said in a 2010 presentation.

Dr. Ali S. Khan, who ran the C.D.C. office managing the stockpile until 2014, said bluntly: “We overpaid.”

. . .

One afternoon in October 2010, Wall Street investors gathered at the Millennium Broadway Hotel in Manhattan for a presentation by Mr. Burrows. He shared with them a secret number: 75 million.

That was how many BioThrax doses the government had committed to stockpiling, and it was the backbone of Emergent’s thriving business.

. . .

Emergent’s vaccine, given in three doses, would be useful for emergency workers and others who might risk extended exposure to the spores. But for the general public, it would be an added precaution, multiple health officials said. “The best approach toward anthrax is antimicrobial therapy,” Dr. Anthony S. Fauci, the government’s top infectious-disease expert, told Congress as early as 2007.

So government officials started asking: Did the stockpile need so much of the vaccine?

The government already had part of the answer. Health officials had hired the disaster-preparedness firm I.E.M. to calculate how much benefit the vaccine provided. In an analysis published in 2007, the firm determined that giving antibiotics immediately after a large outdoor anthrax attack was likely to reduce serious illnesses by more than 80 percent. Administering the vaccine would then cut serious illnesses only by an additional 4 percent.

. . .

The Times found that the origin of the 75-million-dose goal was not scientific analysis or intelligence gathering.

“A bunch of people, including myself, were sitting in a room and asking what kind of attack might happen,” said Dr. Kenneth Bernard, a top biodefense adviser to Mr. Bush, recalling a meeting in the months after the 2001 attacks.

“And somebody said, ‘Well, I can’t imagine anyone attacking more than three cities at once,’” he said. “So we took the population of a major U.S. city and multiplied by three.”

The three cities combined, they figured, would have about 25 million people, each needing the three-dose regimen. The 75 million goal, according to Dr. Bernard and another official involved in the decision, was meant as a rough starting point that would be reassessed.

. . .

(p. 20) The guaranteed market provided to Emergent has been largely unavailable to companies selling protective gear and other products intended for an outbreak like the coronavirus pandemic.

Companies that make respirator masks, for example, have been unable to match anthrax on the list of the stockpile’s highest priorities, interviews and documents show.

One business, American Medical Depot, pitched a reusable mask to the stockpile in 2016. Federal officials expressed interest but said there was no money, according to a former company executive.

“They knew that this was a solution for a problem,” said the former executive, Akhil Agrawal. “I just don’t know that the problem was prioritized high enough to get the funding.”

Last April, as health care workers pleaded for protective gear, American Medical Depot’s masks became an urgent priority, and the government placed an order for 10 million. But by summer, while the company was facing manufacturing challenges from the pandemic, the deal fell through.

And a plan five years earlier to create an emergency supply of N95 respirators was simply not funded. A team of experts had proposed buying tens of millions of the masks to fill the gap during an outbreak until domestic manufacturing could ramp up, according to five officials involved in the assessment, which has not been previously disclosed.

The masks were supposed to be purchased with money left over after the stockpile acquired higher-priority items. But that never happened. Even the N95s distributed to states and hospitals during the H1N1 outbreak in 2009 were not replaced. By the time the novel coronavirus emerged, the stockpile had only 12 million of the respirators. The stockpile has since set a goal of amassing 300 million.

Dr. Kadlec, the Trump administration official overseeing the stockpile, said he used the previous administration’s mask recommendation to raise alarms as early as 2018.

“Holy smokes, we’re in arrears,” he said, recalling his message to the White House budget office. He requested additional funding to buy masks but was refused, he said, and he was unwilling to free up money by reducing the supply of anthrax vaccines.

. . .

For more than 30 years, the government had been encouraging the development of a BioThrax replacement. In 2002, the Institute of Medicine had concluded that an alternative based on more modern technology was “urgently needed.” By 2019, there were three leading candidates, including one made by Emergent, known as AV7909.

On the surface, Emergent’s vaccine looked similar to those of its competitor. Early research indicated that all three options guarded against anthrax with two doses.

But Emergent’s candidate was hardly the breakthrough the government was seeking, former health officials said. AV7909 was essentially an enhanced version of BioThrax. The competitors were using more modern technology that could produce doses more rapidly and consistently, and were promising significant cost savings for the stockpile.

. . .

The election of Mr. Trump as president was good news for Emergent.

. . .

Dr. Kadlec had also previously worked as a consultant for Emergent, as reported earlier by The Washington Post. In an interview with The Times, Dr. Kadlec said he was paid “several thousand dollars a month” in 2013 and 2014 to speak at international conferences about biodefense products.

. . .

A key decision landed before Dr. Kadlec’s office in 2019: whether to purchase large amounts of Emergent’s new, unlicensed anthrax vaccine. While the details of the contract were handled by Dr. Bright’s agency, his boss, Dr. Kadlec, said he made the final call.

That July, the government made the announcement Emergent had been banking on, committing to buying millions of doses. Separately, it said it would stop funding Emergent’s competitors.

For the full story, see:

Chris Hamby and Sheryl Gay Stolberg. “U.S. Stockpiled Anthrax Vaccine but Neglected Needs for a Virus.” The New York Times, First Section (Sun., March 7, 2021): 1, & 18-20.

(Note: ellipses added.)

(Note: the online version of the story was updated May [sic] 18, 2021, and has the title “How One Firm Put an ‘Extraordinary Burden’ on the U.S.’s Troubled Stockpile.” The online verson says that the title of the print version was “Preparing for Bioterror, Neglecting Virus Threat.” But the title of my National Edition print version was “U.S. Stockpiled Anthrax Vaccine but Neglected Needs for a Virus.”)

See also the accompanying article that details a long list of Democratic and Republican cronies who at one time worked in government and at another time worked for Emergent, or received significant fees or gifts from Emergent:

Stolberg, Sheryl Gay, and Chris Hamby. “Revolving Cast of Influencers.” The New York Times, First Section (Sun., March 7, 2021): 19.

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