Profits of Fear

From CNN:

President Bush announced Tuesday that he would ask Congress for $7.1 billion in emergency funding to prepare the country for a possible flu pandemic.

He also said he will ask Congress to pass legislation that would limit legal liability of vaccine makers to encourage more to enter the market. At present, the United States is home to one vaccine producer

The plan also calls for spending $1 billion to stockpile antiviral drugs -- such as Tamiflu and Relenza -- to protect first-responders and $583 million for "pandemic preparedness," that would include $100 million for states to make plans.

And from CNN Money:

The prospect of a bird flu outbreak may be panicking people around the globe, but it's proving to be very good news for Defense Secretary Donald Rumsfeld and other politically connected investors in Gilead Sciences, the California biotech company that owns the rights to Tamiflu, the influenza remedy that's now the most-sought after drug in the world.



Rumsfeld served as Gilead (Research)'s chairman from 1997 until he joined the Bush administration in 2001, and he still holds a Gilead stake valued at between $5 million and $25 million, according to federal financial disclosures filed by Rumsfeld.

The forms don't reveal the exact number of shares Rumsfeld owns, but in the past six months fears of a pandemic and the ensuing scramble for Tamiflu have sent Gilead's stock from $35 to $47. That's made the Pentagon chief, already one of the wealthiest members of the Bush cabinet, at least $1 million richer.

Rumsfeld isn't the only political heavyweight benefiting from demand for Tamiflu, which is manufactured and marketed by Swiss pharma giant Roche. (Gilead receives a royalty from Roche equaling about 10% of sales.) Former Secretary of State George Shultz, who is on Gilead's board, has sold more than $7 million worth of Gilead since the beginning of 2005.




Another board member is the wife of former California Gov. Pete Wilson.




"I don't know of any biotech company that's so politically well-connected," says analyst Andrew McDonald of Think Equity Partners in San Francisco.