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Contract Management: Observations on DOD's Financial Relationship with the Anthrax Vaccine Manufacturer


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From the 1970s until 1998, DOD had been procuring the anthrax vaccine from a biologic facility owned by the State of Michigan. The facility, first known as the Biologic Products Division of the Michigan Department of Public Health and later as the Michigan Biologic Products Institute, is the only biologic facility in the country licensed by the Food and Drug Administration (FDA) to produce the vaccine. In 1997, FDA identified numerous manufacturing problems that could have led to the revocation of the facilitys license. In response to concerns about the potential loss of anthrax vaccine production, DOD began funding renovation efforts. Production facilities were shut down in early 1998. Later, in the summer of 1998, the State of Michigan sold the facility to the BioPort Corporation for $25 million. The company paid $3.25 million in cash, securing $12.15 million in notes payable to the State of Michigan, and agreeing to pay $9.6 million based on other obligations, including a percentage of future sales. The contracts DOD had with the State of Michigan facility were transferred to BioPort.



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