The Pox--And Obama Crony Socialism

On occasion, The Los Angeles Times abandons its duties as a propaganda machine for the left wing of the Democratic Party and returns to old-fashioned investigative reporting. In an article this weekend, The Times exposed another example of Obama administration dealing from the bottom of the deck. You will now be safe from smallpox, courtesy of a vaccine produced by Friends of Obama at an initial cost of a mere $433 million.

The last reported case of smallpox occurring naturally in the world was in 1977 in Somalia. In the United States, it was 1949. But being good boy scouts, the slogan of the Obama administration is semper paratus (always ready). And ready it is. Never mind that the US government already has a supply of vaccine sufficient for every man, woman and child in America (and then some) at approximately $3 per dose. The proven vaccine can be stored effectively for decades.

Nevertheless, the Obama administration felt it vitally necessary to spend the taxpayers' money to develop a vaccine that will cost closer to $255 per dose, cannot be tested for ethical reasons unless and until there is a smallpox outbreak, can be stored for only three years or less, and has only theoretical advantages over the tried and true vaccine already in storage and easily manufactured.

So why now, why this particular disease, and why this vaccine? I'm sure you've already guessed the answer, but I'll tell you anyway. The experimental vaccine will be produced by Siga Technologies, Inc. Siga is owned and operated by majority shareholder and megabillionaire Ronald O. Perelman. Perelman is one of the Democratic Party's major contributors, and put together beaucoup bucks for Obama in 2008. How much ya wanna bet he's planning now on doing the same thing in 2012?

The research and development on the drug has already been done and paid for from the profits from the corporation. The cash influx from the gummint would be nothing more than a shot in the arm (sorry) for the production of the vaccine. A little over a year ago, Siga's demands of the government were being stalled by Department of Health and Human Services (HHS) contracting specialists. First, the contract was changed from a competitive race to a no-bid contract with only one applicant--Siga. Not enough for them though. Perelman and his representatives went to the president to complain about the recalcitrance of the HHS to accept Siga's terms. Shortly thereafter, the government's lead negotiator was replaced.

The theory of the drug is good, even if the price isn't. The current vaccine is 100% effective for persons diagnosed with smallpox so long as it is treated within four days of the diagnosis. The new vaccine would allegedly extend that deadline by a few days, maybe. But the new drug can't be tested because the only way to be sure would be to infect a person with smallpox and wait five or six days to treat it. That violates ethical and legal standards. There is no proof either way that animal testing would translate into effective treatment on humans.

The only known smallpox viruses existing today are stored in high security areas in the former Soviet Union and the United States. They simply no longer occur in nature as far as scientists know. Given the Swiss cheese nature of bioweapons labs in Russia, one would think that this is preparation for a rogue nation getting its hands on the virus and using it as a weapon of mass destruction. But smallpox is easily "weaponized" and little research has been done in either nation to enhance or mutate the virus to make it more deadly.

This possibility was carefully thought out during the Bush II administration. Says Dr. Donald A. Henderson: "We've already got a vaccine that I hope we never have to use--but how much more do we need? The bottom line is we have plenty of vaccine and a limited amount of money." In case you haven't heard of Dr. Henderson, he is the epidemiologist who supervised the worldwide eradication of smallpox for the World Health Organization and was later the organizer of US biodefense for George W. Bush.

Dr. Thomas M. Mack of the University of Southern California's Keck School of Medicine has hands-on experience with a smallpox outbreak in Pakistan. He calls the Siga stockpile proposal "a waste of time and money." Many respected medical authorities and epidemiologists have their eyes wide open concerning the threat of an intentional outbreak of smallpox. But they are scientists, not hysterics or Obama cronies. Their conclusion is that the material threat of such an attack ranges from low to nearly inevitable. But the vast majority agree there is no medical evidence of any kind to justify producing a vaccine that is untested when the threat could be turned back with the existing vaccine.

Back to the Siga negotiations. The Obamists talk constantly about greedy capitalists and windfall profits. But during the Siga negotiations, the lead government negotiator (later replaced), Dr. Richard J. Hatchett of the biodefense preparedness unit, said Siga's projected profit was 180% and called it "outrageous." In an e-mail, an HHS employee of long standing informed Hatchett that no government contracting officer would sign a three-digit profit percentage. That employee had apparently never met an Obama appointee.

Perelman saw the potential profits of biodefense products early on. He invested heavily in Siga back when Bush signed a bill entitled Project BioShield which set aside $5.6 billion for the development and stockpiling of medications to counter bioterrorism in the wake of 9-11. Unlike the liberals, I believe that an investor is entitled to profits from his successful ventures. But most of the products were to combat new threats with new vaccines. Weaponized anthrax was only one among many. Smallpox was not one of the bio-diseases contemplated by the act.

It's important to remember that regarding this particular smallpox vaccine, many of the traditional norms are being ignored. First, R&D is already complete. Second, where billions of the taxpayers' dollars are going to be spent, the bidding is often competitive even if the bidders are limited to established biochemical firms. Finally, unlike contracts in general, this no-bid contract for one single vaccine is between Siga and only one client--the US government. This would not be very unusual if it weren't for the fact that it is highly questionable that the vaccine is or will be necessary.

Until the Obama administration intervened, the only thing being negotiated was the price, which the government negotiators considered too high. Therefore, this discussion is not about no-bid contracts, but rather about this particular no-bid contract and the machinations which went on determining the final price.

Perelman was questioned about his influence on the president and the sudden change in government negotiators. Perelman and his companies ponied up $607,550 to federal campaigns in 2008 and 2010. 65% went to Democratic candidates. More significantly, Perelman donated large sums to Obama PACs and the maximum legal donation to Obama's election committee. He also donated $50,000 to Obama's coronation inauguration.

Perelman's representative gave an entirely non-responsive answer to the question: "Mr. Perelman did nothing more than to exercise his right as a citizen to support candidates he believes in." But most donors don't get the royal treatment at the White House, followed by a major change in the contract staff reviewing that donor's proposed agreement with the government.

But that ain't all, folks. In October of 2010, when the government determined to set aside as much as $2.6 billion for ST-246 (the proposed name for the vaccine), Siga announced that it would be the provider, even though that was not true. Siga's stock prices went through the roof. But the terms of the proposed federal contract required that there be competitive bidding and that the winning bidder be a small business with no more than 500 employees. Chimerix Inc. of North Carolina had entered a bid, and objected that Siga was too big to qualify. Officials at the Small Business Administration agreed.

Shortly thereafter, Obama administration officials intervened and took the contract proposal off the table. It then moved to block all companies except Siga from bidding on the second offering of the contract. The administration was required by law to make a finding to support its switch from open bidding to no-bid. Its conclusion was that the action was necessary because an antiviral against smallpox was needed within five years and Siga was the only company able to meet that timetable. Like Solyndra and renewable energy, I suppose. Chimerix objected, without success even after HHS contracting officer Brian Goodger called the administration's conclusion "a stretch."

The Food and Drug Administration expressed extreme doubts that it would even approve ST-246 for use on humans. Despite the jury-rigged approval of HHS, the drug may not be produced without approval by the FDA. Says Robert G. Kosko Jr. at the FDA's antiviral products division, there is "no clear regulatory path for approving antiviral drugs for smallpox which creates uncertainty surrounding proof of effectiveness of ST-246." Sounds like there may be another White House visit from Perelman followed by some staff changes at FDA.

Siga thought it had the exclusive contract for the vaccine and the much more valuable replenishment and expansion contracts. But sensing trouble in crony paradise, the Obama administration learned of proposed legal action by Chimerix (the original unsuccessful bidder) and dropped Siga's exclusivity for future production. That means that Siga's stock-enhancing figure of $2.6 billion has been reduced to the price of production of the first batch only--$433 million. That still ain't chicken feed, and you can be assured that Perelman hasn't taken his last trip to the White House.