KAI RYSSDAL: Big pharmaceutical companies are spending more on research and development and getting less out of it. A report by the General Accounting office this week showed annual R&D spending jumped almost 150 percent by 2004. But new drug applications to the FDA rose at just a quarter the pace.
That's a lesson California-based VaxGen might want to take to heart. VaxGen makes an anthrax vaccine. That's all it makes. And today the federal goverment scrapped a $900 million deal with the company. Because VaxGen failed to meet the deadline to start human clinical trials.
Helen Palmer reports from the Marketplace Health Desk at WGBH it's not just the vaccine that's in trouble but the whole bio-defense program it's part of, Project Bioshield.
HELEN PALMER: Vax-Gen's working on a modern therapy to replace the current 1950's era anthrax vaccine. It ran into problems with its shelf-life. The government gave it extensions on delivery, twice. But when VaxGen missed this latest deadline, federal officials pulled the plug. Too soon, says VaxGen's Lance Ignon.
LANCE IGNON: We believe that with the appropriate commitment from the U.S. government we could have overcome that challenge and delivered a modern anthrax vaccine for civilian biodefense.
Ignon says VaxGen tried everything to get the government to help them work through the problems, with no success. So now VaxGen's out the $175 million they've spent on the vaccine: they don't get paid 'til they deliver. Bioterrror expert Tom Inglesby says VaxGen's problems underline deeper failures in national biodefense.
TOM INGLESBY: There are not enough people; there's not enough money. It's basically not a program up to defending the country against bioterror attacks.
Inglesby says the the biodefense program relies on small untested companies like VaxGen because major drug companies won't bid. Major legislation signed into law yesterday might help. It creates a special agency with more fluid funding to develop therapies for bioterror and pandemic diseases. But Inglesby's not confinced there's enough cash.
INGLESBY: The amount of money authorized is relatively small, and I think industry is relatively underwhelmed with what government's put on the table so far.
Meantime, VaxGen's putting a brave face on things. But the company will take some persuading before it bids for another government contract.
In Boston, I'm Helen Palmer for Marketplace.