Emergent BioSolutions will be in the spotlight today during a House Select Subcommittee Meeting on the Corona Virus Crisis, today at 10:30 am. It can be watched here.
Hybrid Hearing on “Examining Emergent BioSolutions’ Failure to Protect Public Health and Public Funds”
Below, I provide the backstory aka checkered past of this company.
DOD created a plan to vaccinate its service-members against many biowarfare threat agents in the 1990s. At the time, of the bioterrorism vaccines that were being considered, only anthrax and smallpox vaccines had licenses. Anthrax vaccine was chosen to initiate the program in March of 1998.
The first 2 million doses of anthrax vaccine came from a stockpile that had been made for the US army by Michigan’s state vaccine lab (Michigan Biologics Products Institute). What became known in November 1997, after the FDA performed an inspection, was that most of the army’s 11 million dose stockpile of anthrax vaccine, stored at the Michigan lab, was multiply expired, had been redated, and was contaminated, with visible bacterial and fungal growth in some of the lots. FDA immediately shut down the anthrax vaccine factory, and quarantined 9 million of the 11 million existing doses. Unfortunately, FDA allowed the Defense Department to use 2 million doses, which it did over the next two years.
The Conclusions from FDA’s 1998 and 1999 inspection reports of the facility can be read here.
The Michigan state lab was a massive affair with many buildings on a campus in downtown Lansing. It produced a large variety of vaccines and blood products for the state of Michigan. However, over the years the state had not made the required repairs and updates. After the 1997 FDA inspection, Michigan had to repair the place or close it. Michigan decided to sell, and looked for a buyer.
The former head of the Joint Chiefs of Staff, Admiral William Crowe, heard about the sale. He had come to know the el Hibri family when he was Ambassador to the UK. The el Hibri’s had purchased anthrax vaccine from the UK government laboratory at Porton Down just before the Gulf War, and resold it to the Saudi government at a 100x markup.
Crowe and the el Hibri family joined with several of the lab’s officials, and the newly formed group purchased the lab. The purchase price was about 19 million dollars. Admiral Crowe was given a 13% share in exchange for his role as Chairman of the Board, risking none of his own funds. Much of the cost was later paid by the transfer of vaccines to the state of Michigan.
The new company, formed in the first half of 1998, was named Bioport. It chose to focus on its sales of anthrax vaccine to the Army. However, the new company was deeply concerned about potential liability for the lab’s products. The purchase was delayed until the Secretary of the Army signed an indemnification for injuries that might result from use of anthrax vaccine in soldiers, and it also indemnified the company against claims if the vaccine failed to provide the expected protection against anthrax. The state of Michigan had also been indemnified by the Army to produce the vaccine. But from its 1970 licensure until 1998, almost all the anthrax vaccine had only been used in animal experiments.
After FDA had shuttered the anthrax vaccine plant for manufacturing defects, the Army paid to bulldoze and then rebuild the factory in 1999. But even after it was rebuilt, FDA withheld its approval, and the plant lay idle.
Meantime, the 2 million doses that FDA had failed to quarantine were injected into 500,000 military service-members between 1998 and 2001. Many thousands became ill. An official report on the program, quoting unnamed government officials, claimed that 1-2% of recipients had developed permanent disabilities. The military vaccinations were mandatory, and refusers were punished with a court martial or loss of a month’s pay and performance of extra duties. Nonetheless, seeing the injuries sustained by their colleagues, many refused.
In 2001, the anthrax vaccine label, a legal document that describes what is known about the product, listed the CDC’s definition of Gulf War syndrome as a possible adverse effect of the vaccine. (It has been removed from the current label.)
Five Congressional hearings were held throughout 1999 on different aspects of the anthrax vaccine program by the House Committee on Government Reform and National Security (now known as the House Committee on Oversight and Reform). Additional hearings held by other Congressional committees also touched on the vaccine program. The Government Reform and National Security Committee wrote up its findings in a report titled Unproven Force Protection. Its June 30, 1999 hearing dealt specifically with Bioport and its sole source contracts.
Despite this, Bioport has been very successful. Although the Pentagon was considering an end to the anthrax vaccine program in the summer of 2001, the sudden appearance of the anthrax letters after the September 11, 2001 attacks breathed new life into the vaccine program and turned Bioport’s fortunes around. DHHS Secretary Tommy Thompson announced in November 2001 that the anthrax vaccine plant would finally receive an FDA approval and begin production. At the end of January 2002 that is what happened.
But that was not the end of Bioport’s problems. Soldiers challenged the legality of the vaccine’s license in federal court. It was learned that while there had been efficacy testing of an earlier version of the vaccine, the current vaccine formulation had never undergone either efficacy or safety testing in a clinical trial. Aware of this major omission, FDA had withheld the issuing of a “final rule and order” for the anthrax vaccine for over thirty years.
The soldiers prevailed on the legal issues, and First District Court Judge Emmett Sullivan rescinded the vaccine license in 2004, based on the company’s failure to prove efficacy or meet basic FDA standards for licensure.
Unwilling to bow to judicial authority, the Defense Department rolled out a backup plan. A new regulatory authority had just been created, the Emergency Use Authorization (EUA). An EUA was slapped on the unlicensed anthrax vaccine, and DOD quickly restarted its mandatory vaccinations. It was openly acknowledged that there was no emergency: the issuing of an EUA required either an emergency or the potential for an emergency.
The attorneys for the soldiers took the case back to court, and Judge Sullivan ruled that even if an experimental medical product received an EUA, it was still investigational and could not be mandated. The law required that EUA products be offered with informed consent. To receive an EUA product, the recipient must be apprised of the risks and benefits of the product, be informed of alternatives to the product, and no coercion in any form could be applied. Ergo, no mandate.
FDA waited about 18 months, and then issued a full license for Bioport’s anthrax vaccine, although there were still no efficacy data. FDA instead claimed that a 1950’s era trial of a very different anthrax vaccine was sufficient for licensure, even though that trial failed to show benefit against inhalation anthrax.
When the soldiers and their attorneys challenged the FDA’s licensing decision in court, the next judge ruled in favor of FDA on the basis of “deference”—meaning that FDA could ignore its own regulations when making a determination on safety and efficacy, with or without acceptable data. In 2006 mandatory vaccination restarted.
Bioport then shed its old skin in an attempt to leave its baggage behind. It renamed itself Emergent BioSolutions. Its vaccine had been renamed BioThrax.
Emergent BioSolutions (EBS) then branched out, buying other companies, primarily those making other sole source biodefense products. The military continued to mandate anthrax and (in 2003) smallpox vaccines for service-members. Eventually EBS purchased the smallpox company as well, and the cholera and typhoid vaccines used in the US.
A 2010 report on Emergent BioSolutions, written by Scott Lilly for the Center for American Progress, was titled, “Getting Rich off Uncle Sucker.” It revealed 300% profit margins, unique for a government contractor.
The company’s business plan was to rely on insiders to sell sole source biodefense products to the US government, most of which were stockpiled and never used–inking contracts with multiple federal agencies, including CDC, DOD, NIAID, the State Department, ASPR and BARDA.
In 2012 EBS got one of three DHHS contracts to house a so-called Center for Innovation in Advanced Development and Manufacturing (CIADM) that could be used to produce pandemic or biodefense products in the event of emergencies. With this grant EBS purchased and expanded what became its Bayview factory in Baltimore. The CIADM contract essentially guaranteed Emergent a big role in any future pandemic response.
Emergent acquired the maker of Narcan nasal spray, the opioid overdose antidote. Soon FDA began recommending to prescribers that they write a Narcan script whenever they wrote a narcotic script, just in case. States started buying large quantities for free distribution. Sales rose 600% after EBS bought the company.
Under the Trump administration, retired Air Force Colonel, physician and biodefense consultant Robert Kadlec was appointed to the position of Assistant Secretary of DHHS for Preparedness and Emergency Response (aka ASPR). Kadlec had also been a consultant and business partner of EBS’ founder and chairman Fuad el-Hibri. Kadlec had omitted this information from the required disclosures for Senate confirmation. Once confirmed as Assistant Secretary, Kadlec was able to transfer responsibility for the National Strategic Stockpile (containing the US stockpiles of pandemic remedies, masks and equipment) from the CDC to his own agency. Kadlec then gave multiple sweetheart deals to EBS, until the value of EBS’ contracts with ASPR exceeded those of every other contractor.
ASPR Kadlec was blamed for cancelling a federal contract to make N95 masks while buying more and more anthrax and smallpox vaccines, pre-Covid.
Covid-19 presented a huge opportunity for Emergent BioSolutions. EBS received $628 million from DHHS to retool its CIADM factory. It inked additional contracts with the Astra-Zeneca, Johnson and Johnson, Novavax, Providence Therapeutics and VaxArt companies to provide bulk manufacturing of their vaccines in its Baltimore facilities. Altogether its pandemic contracts were worth about $1.5 Billion. It was slated to manufacture 9 separate medical products to address Covid-19, all designed by other companies.
But there were serious potential problems.
While it had a storied Board of former federal officials, Emergent BioSolutions had never brought a single product to market. Its expertise was in contracting and acquisitions, not production. It had a history of production failures, and had demanded that the federal government bail the company out, or else the sole source products the company provided would become unavailable. Some of this was detailed in the Congressional report Unproven Force Protection. Entering the pandemic, EBS was still making the same mistakes it had been guilty of twenty years earlier:
- EBS sold and continues to sell nerve gas auto-injectors to federal agencies which have been defective and are not licensed. According to the law, these products can neither be produced in the US nor sold here. Instead, Emergent manufactures them in Germany and restricts its sales to US embassies overseas.
- In July 2020, the Soligenix company requested arbitration against Emergent BioSolutions, claiming a loss of $19 million, because EBS had manufactured its experimental ricin vaccine, used in a human trial, which failed to meet specifications.
EBS did not have an active workforce in Baltimore. On September 30, EBS held an online job fair which it titled “Warp Speed Careers Event.” The event sought to recruit 300 employees. Yet EBS had begun inking vaccine contracts 5 months earlier, and could have hired and trained a workforce that was ready to go when FDA gave it the go-ahead. Instead, doing things on the cheap, EBS hired late, failed to provide adequate training to its employees, and experienced a spectacular series of production failures. Many millions of doses of its Johnson and Johnson and its Astra-Zeneca Covid vaccines had to be dumped. J and J missed its 20 million dose quota for the end of March, and FDA, despite repeated inspections, would not give the plant an authorization so its products could be used.
Despite this, somehow millions of doses produced in the unauthorized plant were shipped to Canada, the European Union, South Africa and Mexico. The EU, at least, used the product. How did that occur? We don’t know. Did any get distributed in the US? We can’t be sure none did.
On April 4, 2021, EBS announced it would receive an additional $23 million from DHHS for new equipment to use in the manufacture of Johnson and Johnson’s Covid-19 vaccine.
As of last week, EBS was facing another lawsuit from its shareholders, and its stock price had fallen to $60 from the peak on February 12 of $125 per share. However, Emergent CEO Robert Kramer exercised his stock options in January and February, near the stock’s peak, earning himself over $7 million dollars in profit.
In summary, EBS, despite considerable manufacturing shortcomings, has been extremely successful at obtaining government contracts and earning huge profits. But its products have repeatedly been unreliable. The company has managed to turn failures into success, especially when its products, like civilian stockpiles of anthrax and smallpox vaccine, and nerve gas auto-injectors, are stockpiled but not used.
The public has only gradually been learning that the vaccines it thought were being produced by huge Pharma companies Astra-Zeneca and Johnson and Johnson were in fact being manufactured by the anthrax vaccine company, Emergent BioSolutions. How did it come to pass that the federal government, and these established pharmaceutical companies, bet the farm on EBS’ production of Covid-19 vaccines?