Drug makers seek protection

"We won't do it without indemnification," said Len Lavenda, a spokesman for Sanofi Pasteur, the vaccine arm of Sanofi-Aventis SA.

But some insist immunizing drug companies won't be enough to spark interest in a field fraught with an uncertain pricing structure. Unlike drugs for conditions such as cholesterol and high blood pressure, which have guaranteed markets, medicines for pandemics will only be used sporadically, if at all.

The government adds to the pricing pressure. The Centers for Disease Control and Prevention buys 55 percent of the recommended childhood vaccines and pays substantially less than the private sector, so some experts suspect payments for pandemic treatments will be less than generous.

When anthrax fears surfaced after the Sept. 11 attacks, the U.S. government threatened to break the patent covering Cipro, an antibiotic made by Bayer AG. And Roche Holding Ltd. has already been under tremendous pressure to lower the cost of its Tamiflu, which is believed to be effective against bird flu, and give others permission to make it.

"Companies are worried about low prices," said Frank Sloan, professor of health policy, law and management at Duke University.

"They are worried they won't recoup their research and development costs," he said. "That is the real problem."

In a statement, Senator Edward Kennedy, D-Mass., called the attempts to indemnify companies "a sweetheart deal for the drug industry."

A spokesman for Burr said his bill contains provisions to compensate people hurt from treatments through government funds and that companies will only be indemnified when the product is used in a pandemic, not for a general medical problem.

The drug industry insists such moves are crucial. In a pandemic, a vaccine may be approved without the same level of testing that would be normally required and given to virtually all Americans.

"This is 300 million plaintiffs you are talking about," said John Clerici, a lawyer who represents Sanofi and other companies. "If they get anything, they'll blame it on the vaccine."

Sheltering drug companies from lawsuits isn't without precedent. Acambis PLC was protected to make an Anthrax vaccine and the manufacturers of swine flu vaccines were given the same treatment back in the 1970s.

Individuals seriously harmed by vaccines the U.S. government recommends for children are paid through a federal pool funded by a tax on inoculations. But Lavenda said lawyers are seeking ways to collect damages from companies instead of the government fund.

Chris Viehbacher, president of GlaxoSmithKline PLC's U.S. pharmaceuticals business, estimates the industry has spent $200 million preparing itself for lawsuits over a vaccine preservative in children' s vaccines.

Lavenda said the issue of immunity from lawsuits must be cleared before other negotiations can begin on issues such as price.

Lobbyists and pharmaceutical executives said the main force pushing for indemnity is not the drug industry, but the Biotechnology Industry Organization, a trade group. BIO declined comment, but lobbyists and analysts suggested its members are far more interested in pandemic medicines than drug companies.

"Biotech companies are more amenable to working in new areas. They are startups," said Christopher Milne, assistant director at the Tufts Center for the Study of Drug Development. "Big pharmaceutical companies are resistant to getting heavily involved where the government is paying. They remember the Cipro incident."

Generex Biotechnology Corp. recently hired a lobbying firm to help it get government contracts to develop its bird flu vaccine.

Anna Gluskin, Generex's chairwoman, CEO and president, said she isn't worried about lawsuits because the company's vaccine is made from synthetic proteins, which she maintains is a safer manufacturing process.

Some pharmaceutical companies have chosen to develop a vaccine for bird flu. Sanofi Pasteur has a government contract to produce 8,000 doses of an experimental vaccine, but it has received indemnity from lawsuits. Glaxo said it will start a small trial in Europe during the first quarter of next year, and discussions with regulators haven't progressed enough to have included the indemnity issue.

Viehbacher said any company which successfully creates a vaccine would have leverage over the government. Vaccine production is complicated, so breaking a patent wouldn't guarantee supply, he said.

Vaccines are proving they can be blockbusters. Prevnar, Wyeth's children's pneumococcal vaccine, revenues total over $1 billion. Analysts say vaccines against human papilloma virus, a sexually transmitted disease that is a major cause of cervical cancer, could be big sellers for Merck & Co. and Glaxo who are each developing one.

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U.S. Senators with up to $13.4 million in pharmaceutical holdings increased the value of their stock portfolios last night when they approved an amendment to the defense appropriations bill that immunizes drug makers from accountability to the public when they sell dangerous drugs and other products, according to the Foundation for Taxpayer and Consumer Rights (FTCR).
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