The government said Thursday it is purchasing 75 million doses of a new generation anthrax vaccine (search) under an $877.5 million contract — the first awarded through a federal program to develop and stockpile antidotes to biological and chemical weapons.

The five-year contract with VaxGen Inc. (search) will provide enough vaccine to treat roughly 25 million people. The company expects to begin delivery by 2006. According to the contract, the first 25 million vaccine doses would be delivered within two years and the balance within three years, said Lance K. Gordon, the company's president.

The doses will be added to U.S. reserves to protect against a terrorist attack using anthrax spores.

VaxGen receives no payment until the vaccine is delivered, Health and Human Services Secretary Tommy Thompson (search) told reporters.

"The company is putting a lot at risk to be involved in this. But we also are doing a giant service to companies like VaxGen" by providing incentives to make the vaccines, Thompson said. "It is going to make America a lot safer."

President Bush signed the new program, called Project BioShield (search), into law on July 21 with the promise of spending $5.6 billion to develop remedies against possible bioweapons.

VaxGen of Brisbane, Calif., was one of two biotechnology company competing for the HHS contract to develop the new anthrax vaccine. The company still needs to obtain licensing from the Food and Drug Administration. The FDA will review the company's vaccine production and individual lot testing to ensure the anthrax vaccine is safe and effective.

The existing vaccine is manufactured by Lansing, Mich.-based BioPort Corp. for the Pentagon under a $245 million contract. In a statement, BioPort said HHS also had decided to include a minimum of 5 million doses of its vaccine in the national stockpile.

"We share Secretary Thompson's stated objective of securing a sufficient stockpile of safe and effective vaccines to protect the American public against a future bioterrorist attack," Bioport chief executive Bob Kramer said. "We believe the most meaningful way to achieve that important goal is for the national stockpile to include products from multiple suppliers, due to performance risks associated with any single product or single manufacturer."

In response to a federal judge's order in late October, the Pentagon halted the mandatory vaccinations for the military — six shots spaced over 18 months.

The military would decide for itself whether to switch to the VaxGen product, but could not use it before the product is licensed, an HHS spokesman said.

VaxGen's product is expected to require no more than three shots. The latest technology uses a purified recombinant protein to coax the body's immune system to produce antibodies to battle anthrax toxins. Laboratory, animal research has confirmed the vaccine is effective and clinical trials involving 580 people have shown its safety in humans.

Gordon, VaxGen's president, said immune responses will be monitored to ensure they exceed what is needed to protect against anthrax. Studies also will confirm how long the stockpiled vaccine would remain effective.

VaxGen already has received $20.9 million from the National Institute Allergy and Infectious Diseases to take its anthrax vaccine candidate into early stage clinical trials. The product leverages a decade of research, including work by the Department of Defense.

Last October, the company received $80.3 million to continue clinical trials, test the vaccine in animals and make 3 million doses.