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The H1N1 “swine” flu pandemic illustrated critical gaps in response capability that the public health and homeland security sectors had warned about for years. Among them: the United States relies almost entirely on foreign suppliers for influenza vaccines and, perhaps as important, production of vaccines for a novel disease strain can take as long as six months.

The gaps have their roots not only in science but also economics. While demand for seasonal flu vaccine is reliable, companies can’t profit from developing the science and capacity to quickly create and manufacture medicines for as-yet unknown diseases.

“There hasn’t been an incentive for vaccine manufacturers or drug manufacturers to get involved in this work that’s critical for national security,” says Colonel Randall Larsen (USAF-ret.), executive director of the bipartisan WMD Terrorism Research Center, formerly the Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism (WMD commission).

To close the gap, the U.S. Department of Health and Human Services (HHS) wants to reinvent the country’s medical countermeasures enterprise, from new doctrines for regulatory approvals to nimble, domestic manufacturing capability developed in partnership with the private sector, according to the findings of the agency’s Public Health Emergency Medical Countermeasures Enterprise Review.

To spur scientific innovations that might cut vaccine delivery times by weeks or even months, HHS wants to borrow a model that bore fruit for another federal agency, the CIA. To seed information innovation, the CIA formed what would eventually be known as In-Q-Tel, an independent, agency-funded venture capital management corporation that invests in unclassified work at promising technology firms.

By all accounts In-Q-Tel has been a success for the agency, the public, and its corporate beneficiaries. Among the company’s investments was satellite image management firm Keyhole, which since its acquisition is known as Google Earth. More recently, enterprise risk management firm ArcSight of Cupertino, California, another In-Q-Tel beneficiary, was purchased by Hewlett-Packard for $1.5 billion.

Drug and biodefense experts anticipate similar benefits could result from a publicly funded venture capital enterprise that invested in high-risk, high-reward research. Mahmud Hassan, director of the Pharmaceutical Management MBA Program at Rutgers University, called the fund concept an “outstanding idea.”

Andrew Elwell, assistant editor with market intelligence firm VB/Research agreed, adding that private investment in biotechnology has dropped in recent months, from $371 million in the third quarter of 2009 to $87 million in the second quarter of 2010.

Other review recommendations include establishment of Centers for Innovation in Advanced Development and Manufacturing, essentially domestic manufacturing operations that could involve both the private sector and the U.S. Department of Defense.

The review recommends identification of at least three vaccine development techniques beyond egg-based cultures, which are used currently, and cell-based cultures, which are under development. The WMD commission has recommended research into virus-like particles and recombinant vaccines, both of which would mimic viruses to trick the immune system into response. The U.S. Defense Advanced Research Project Agency, meanwhile, recently contracted with Canadian firm Medicago Inc. for research involving growing vaccines in tobacco plants.

Next steps required for implementation of HHS’s plans include establishment of a five-year plan and authorizing legislation from Congress, says Dr. George Korch, senior medical advisor to the agency’s assistant secretary for preparedness and response.

@ Read the HHS agency report