Magazine article Insight on the News

Why BioPort Got a Shot in the Arm

Magazine article Insight on the News

Why BioPort Got a Shot in the Arm

Article excerpt

Allegations of ethical misconduct surround the start-up company that has become a multimillion-dollar supplier of anthrax vaccine to the Pentagon.

Coming seemingly from nowhere, the Lansing, Mich.-based biotech company in its first year of existence landed a multimillion-dollar contract for perhaps the greatest weapon ever employed by the military: an anthrax vaccine. But it hasn't come easily. Rocked by allegations of ethical misconduct, financial chaos and dangerously sloppy management practices involving two former Michigan lab directors who were hired by BioPort Corp., the company now finds itself the target of a federal probe.

Republican Rep. Walter Jones Jr. of North Carolina, a member of the House Armed Services Committee, requested the Defense Department's, or DOD's, inspector general to investigate the Pentagon's financial relationship with BioPort. "I believe we have a skunk," Jones tells Insight. "I just can't find out where the odor is."

The federal probe comes on the heels of the Pentagon announcing it doubled the sole-source contract to purchase the vaccine, from $25.7 million to $49.8 million, in an effort to help stabilize the financially troubled company. Under the new contract, BioPort will provide about 2.3 million fewer doses than previously requested, for a total of about 5.3 million doses. The Pentagon says the expected deliveries still will be enough to administer the vaccine to all those who need it.

But the terms of the deal are raising questions: The Pentagon also agreed to advance BioPort $18.7 million to cover its debts. BioPort claimed unless the Pentagon paid the up-front money, military authorities would not have enough vaccine to inoculate all 2.4 million U.S. troops.

Jones calls the $18.7 million advance disturbing. "Why is the taxpayer doing it, if it is not mandated?" he asks.

In a letter Jones sent to DOD Inspector General Donald Mancuso, he says, "While I understand the need to revisit contracts between the government and its suppliers, I am increasingly concerned about the nature of the relationship between DOD and BioPort Corporation.... [D]espite serious questions regarding the overall viability of BioPort, the federal government has chosen to more than double the value of its existing contract.

"If a company is to be the sole producer of a vaccine for every member of our armed forces, it is imperative that every aspect of the relationship with that company be sound," Jones continued. "Failure to follow that principle jeopardizes the health and safety of the men and women in our military, as well as that of their families."

Jones cited recent congressional testimony from the Government Accounting Office that BioPort is having financial difficulties, along with a DOD audit that indicated "substantial doubt that BioPort will be able to continue performing its contract."

The financial mess BioPort finds itself in also has caught the eye of the state of Michigan. Officials there wonder whether BioPort can make an $8.7 million payment by Sept. 4, according to a source familiar with the deal that turned the former state-owned lab over to BioPort for a total price tag of about $24 million.

The advance funds from the Pentagon cannot be used to make the Sept. 4 payment under the terms of the contract signed with the state. BioPort says it has every intention of making its payment deadline as it has on its previous payments. The only technical violation reported against the company is that BioPort has yet to honor product commitments to the state. Part of the state deal called for BioPort to provide rabies vaccine and plasma derivatives. But because BioPort has yet to get Food and Drug Administration, or FDA, approval to run their new lab, they haven't been able to provide the rabies vaccine. Even if BioPort fails to make the Sept. 4 payment, Michigan likely would grant an extension because, as one employee says, "The state doesn't want the bricks back. …

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