Sen. Claire McCaskill, a Missouri Democrat, has asked The Department of Health and Human Services (HHS) to review the Obama administration’s award of a $443 million sole-source contract to a company owned by a major Democratic donor.
The Los Angeles Times reported earlier this month that the Obama administration has taken unusual steps to procure an experimental smallpox vaccine from a company owned by a major Democratic donor despite concerns from some experts that such a drug was unnecessary and would not be effective.
Citing “serious questions” about the contract, the Los Angeles Times reported that McCaskill has asked the inspector general of HHS to investigate. McCaskill is the chair of the Senate Subcommittee on Contracting and Oversight.
The New York-based Siga Technologies was awarded a contract in May to deliver 1.7 million doses of an antiviral pill called ST-246. It was the only company asked to submit a proposal, and the price tag of $255 a dose is well above what government specialists said was reasonable. When a contracting specialists at HHS was resistant to pay so much, the company complained and the lead negotiator was replaced.
Ronald Perelman, a billionaire and longtime Democratic Party donor, owns Siga Technologies. After the government put a renewed emphasis on protecting the nation from chemical and biological attacks in the wake of September 11, 2001, Perelman bought a controlling stake in Siga through his holding company.
A year after Perelman’s investment, in 2004, President George W. Bush signed Project BioShield, a $5.6 billion, ten-year program to stockpile medications in the event of such an attack.
ST-246, the company’s most promising new compound, was purchased from a Pennsylvania company two months later. It then began lobbying heavily for U.S. government contracts.
Starting in 2005, Siga spent $800,000 on three separate lobbying firms. Representatives of the company told the Los Angeles Times that they lobbied only “generally” for biodefense spending, and that, “Neither Siga nor anyone else on Siga’s behalf ever lobbied anyone to get this contract.”
Siga also hired Andrew Stern — the former Service Employees International Union president and a frequent White House visitor — to their board last year.
Perelman and his holding company partners donated a combined $607,550 to federal campaigns during the last two elections, the paper reported. Sixty-five percent went to Democrats, while Perelman donated another $50,000 to Obama’s inauguration.
In October 2010, Siga announced it had been awarded a multi-billion dollar contract to develop ST-246, despite the fact that the contract stipulated only a small business could be the winning bidder. A smaller company protested, and in response, the Obama Administration blocked everyone except Siga from bidding for a second offering of the contract.
The government’s justification for only talking to Siga was that an antiviral was needed within five years, and Siga was the only company who could do it. That justification troubled some HHS officials, one of whom called it “a stretch” in an internal email obtained by the paper. As much as $115 million in taxpayer money had already been spent developing the drug, which had not been approved by the FDA.
The FDA is skeptical ST-246 can ever be approved for use in humans, in part because there’s no way to guage its effectiveness short of exposing people to virus. The United States and Russia are the only two nations to have stockpiles of smallpox, a highly lethal virus that was all but eradicated in the 1970s. The last American case was in 1949.
McCaskill is the first senator to call for a review into the purchase of ST-246. In a statement released Wendesday, Siga said a review would show its contract was “negotiated and executed in good faith in accordance with all applicable law to address an important national security need.”
