Smallpox drug costs millions, stokes debate

Donald G. McNeil Jr. / New York Times News Service /

Published Mar 13, 2013 at 05:00AM

The United States government is buying enough of a new smallpox medicine to treat 2 million people in the event of a bioterrorism attack, and took delivery of the first shipment of it last week. But the purchase has set off a debate about the lucrative contract, with some experts saying the government is buying too much of the drug at too high a price.

A small company, Siga Technologies, developed the drug in recent years. Whether the $463 million order is a boondoggle or a bargain depends on which expert is talking. The deal will transform the finances of Siga, which is controlled by Ronald Perelman, a billionaire financier, philanthropist and takeover specialist.

Smallpox was eradicated by 1980 and the only known remaining virus is in government laboratories in the United States and Russia.

But there have long been rumors of renegade stocks that could be sprayed in airports or sports stadiums. Experts say the virus could also be re-engineered into existence in a sophisticated genetics lab.

As part of its efforts to prepare for a possible bioterrorism attack, the government is paying more than $200 for each course of treatment.

Siga argues that the price is a fair return on years of investment.

And Robin Robinson, director of the Biomedical Advanced Research and Development Authority, part of the Department of Health and Human Services, the overseer of the contract for the drug, Arestvyr, defended the size of the order and the price paid. He said that 2 million doses was the amount analysts predicted would be needed to contain a smallpox outbreak in a large city and that the whole country would require 12 million, along with vaccines.

The price, he said, was arrived at through federal purchasing guidelines and was “fair and reasonable” compared with the price of other commercial antiviral drugs, which he said ranged from $108 to $7,364.

But when stockpiling a smallpox drug was first proposed in 2001 after the Sept. 11 and anthrax attacks, it was expected to cost only $5 to $10 per course, said Dr. Donald Henderson, who led a government advisory panel on biodefense in the wake of those attacks. Henderson was a leader in the eradication of smallpox in the 1960s and is now at the Center for Biosecurity at the University of Pittsburgh Medical Center.

Dr. Richard Ebright, a bioweapons expert at Rutgers University, said there was little need for so much Arestvyr, since the country has raised its stockpile of smallpox vaccine to 300 million doses now, up from only 15 million in 2001.

“Is it appropriate to stockpile it? Absolutely,” he said. “Is it appropriate to stockpile 2 million doses? Absolutely not. Twenty thousand seems like the right number.”

Vaccines are normally given before an infection to prevent a disease, while antivirals are given after virus infections, to treat them. Smallpox has such a long incubation period that the vaccine can prevent disease even if it is given as late as three days after infection. Arestvyr may also prevent infection if given early enough, but that has not been proven.

Dr. Eric Rose, the president of Siga and a vice president of Perelman’s holding company, MacAndrews & Forbes, acknowledged that the drug cost little to make, but said the price being charged for a patented drug was a bargain compared with AIDS antiretrovirals that cost $20,000 a year and cancer drugs that cost more than $100,000 a year.

Asked about the size of the purchase, he compared it with a flu drug. “There are 80 million courses of Tamiflu in the strategic national stockpile,” he said. “Smallpox is just as contagious and has 30 times the mortality. By measures like that, I’d say 2 million is on the low end.”

He also said that Perelman had invested $80 million in the company through years of research with no sales. Without a profit potential, no company would take up smallpox, Ebola and other lethal but very rare diseases, he said.

And Dr. Isaac Weisfuse, who was formerly head of pandemic planning for the New York City health department and is now Siga’s medical policy director, said that plans calling for tens of millions Americans to be vaccinated within days of a major smallpox outbreak were unrealistic and that Arestvyr could save lives.

Arestvyr — which until November was known as ST-246 or tecovirimat — prevents the virus from forming the double outer envelope that lets it break out of the first cells it infects and spread throughout the body. A 14-day course can be taken in combination with smallpox vaccine, offering double protection, which Henderson called “quite amazing.”

Arestvyr is not approved by the Food and Drug Administration except for use in emergencies.