Project BioShield, the federal reserve fund created by Congress in 2004 to establish a $5.6 billion market for the development and production of drugs that could bioterror threats, has about $4.1 billion left to spend as of one year ago, according to a new report on the program prepared by the Department of Health and Human Services (HHS).

So far, $1.9 billion remains to be spent from fiscal year 2004 through 2008 appropriations and another $2.2 billion is available between fiscal years 2009 and 2013, says the report, Project BioShield: Annual Report to Congress, August 2006-July 2007. Nearly $900 million of the unobligated funding stems from the termination of a contract in December 2006 with VaxGen [VXGN] for the development and delivery of a next-generation anthrax vaccine (Defense Daily, Dec. 21, 2006).

Since then, HHS, which oversees Project BioShield, has awarded additional contracts for existing anthrax therapies as well as a potential $1.6 billion contract to Denmark’s Bavarian Nordic for next-generation smallpox vaccine. As of the reporting period covered in the HHS report, $500 million had been obligated for the MVA smallpox vaccine.

In fiscal year 2008, HHS expects to award a new contract for a next-generation anthrax vaccine, another for the advanced development of anthrax anti-toxins, and others for smallpox antiviral agents, novel antibiotic formulations, and radiological/nuclear medical countermeasures, the report says.