Federal review of $433-million contract for smallpox drug requested

A Senate subcommittee chairwoman is calling for a federal review of the Obama administration’s award of a $433-million sole-source contract for an experimental smallpox drug.

Sen. Claire McCaskill (D-Mo.), in a news release issued Wednesday by her subcommittee, said that she has asked the inspector general of the Department of Health and Human Services to investigate.

McCaskill’s news release cited “serious questions” about the contract, noting that it had first been intended for only a small business and that, ultimately, it was awarded without competition to a larger company. McCaskill heads the subcommittee on contracting oversight, part of the Senate Committee on Homeland Security and Governmental Reforms.

The $433-million contract, finalized in the spring, calls for New York-based Siga Technologies Inc. to deliver 1.7 million treatment courses of its antiviral pill within five years. The drug, called ST-246, has yet to be approved by the Food and Drug Administration.

McCaskill, in a letter this week to health Inspector General Daniel J. Levinson, said that Siga’s product “is reported to be more expensive and has a shorter shelf-life” than the nation’s standard smallpox vaccine. McCaskill’s letter referred to a report by the Los Angeles Times on Nov. 13, which revealed unusual steps taken in awarding the biodefense contract to Siga, whose controlling shareholder is Ronald O. Perelman, a longtime Democratic Party donor.

The article reported that, after Siga’s chief executive complained on April 6 about the government’s “approach to profit” in discussing the price to be paid for ST-246, a presidential appointee, Dr. Nicole Lurie, assured him that her department’s most senior procurement official would take over the negotiations.

The article also pointed out that, because of ethical restraints that prohibit infecting human volunteers against smallpox, no one knows whether the new drug would work in patients.

Siga, in a written statement Wednesday, said that a review of the $433-million contract would show it was “fair and reasonable” and was “negotiated and executed in good faith in accordance with all applicable law to address an important national security need.”

Lurie and other Health and Human Services officials have said the contract was awarded to Siga based strictly on merit. A department spokeswoman said late Wednesday, “We believe the award is based on sound science and is in accord with federal procurement rules.”

david.willman@latimes.com