(FORTUNE Magazine) – Eliav Barr has popped the champagne. After a decade of development, his team at Merck has just finished presenting the clinical-trial results on the company's cervical cancer vaccine, Gardasil, to an enthusiastic audience of doctors in San Francisco. It's a medical milestone--the first cancer vaccine ever. The results show an unprecedented 100% efficacy in fighting the dominant strains of the virus that causes cervical cancer, a scourge that is the second-biggest cancer killer of women worldwide. The story is on every TV network and on the front pages of newspapers nationwide. If Merck gets Gardasil to market in the U.S. next year as planned, not only might it become a blockbuster--with a rival vaccine from GlaxoSmithKline, it is projected to spawn an $8-billion-a-year global market by 2010--it could also help lift the stigma that's haunted Merck since the debacle of Vioxx. Says Barr, the head of clinical development for the vaccine: "This is it. This is the Holy Grail."

Some 3,000 miles away in Washington, D.C., however, a man named Tony Perkins doesn't see it that way. Perkins is president of the Family Research Council, a Christian organization that describes itself as a champion of "marriage and family as the foundation of civilization, the seedbed of virtue." He is so critical of cervical cancer vaccines that he has no intention of inoculating his 13-year-old daughter, who the drug companies say would be a prime candidate. The reason: The human papilloma virus, or HPV, which causes cervical cancer, is in most cases transmitted through sexual intercourse. If his daughter were to get the shots, Perkins believes she would be more inclined to have sex outside marriage. "It sends the wrong message," says Perkins. "Our concern is that this vaccine will be marketed to a segment of the population that should be getting a message about abstinence."

It's too soon to tell how strong a stand the Christian right will take. It could simply counsel believers to avoid vaccination. Or it could actively try to prevent mass inoculation--blocking its acceptance by doctors and insurers and its funding by state and federal entitlement programs. Some cancer survivors have trouble understanding how there could be any debate. Diane Kae was diagnosed with cervical cancer two years ago in Philadelphia. She still has hearing loss and digestive troubles from the chemotherapy and radiation she went through to defeat her illness. It all could have been avoided if the vaccines had been available when she was young. "If someone else's life doesn't have to be changed the way mine has, that would be a blessing," says Kae, 54, who has been married and divorced twice. "No matter how chaste your daughters are, there is still a risk of them getting the disease. Why would you want them to go through that?"

Although the Merck and Glaxo vaccines are still a year from the market, already they are at the center of a brewing storm over cost, social class, family values, and women's health. Analysts argue over whether they will be cost effective, given that the U.S. already has a $6 billion program of screening and treatment based on Pap smears, the cancer test that most women in developed countries undergo regularly and that the vaccines would not replace. Conservatives view the vaccines as morally corrosive. And the drug companies see them as much needed new sources of profit and prestige.

Given the high efficacy and safety shown in Merck and Glaxo trials thus far, it seems almost certain that the FDA will approve the vaccines next year. But their fate from that point--whether they will become widely available in the U.S., whether they will succeed commercially at all--depends not on the market, as you might expect. Instead it rests with a little-known but hugely powerful government group known as the Advisory Committee on Immunization Practices, or ACIP. Attached to the Centers for Disease Control, the ACIP makes up the national list of recommended immunizations--setting the standard for doctors, insurers, and public funding of vaccinations. Its mandate is to weigh medical need, cost effectiveness, and public attitudes in arriving at a decision about a vaccine. The Bush administration has already appointed one ACIP member from the ranks of the Christian right. So in the case of cervical cancer, the committee is the stage on which a modern drama of health and morality will ultimately play out.

No one disputes the need for a cure. Cervical cancer kills 270,000 women a year worldwide, 80% of them in developing countries, with 30% in India alone. In the U.S. this year, the CDC estimates that 3,710 will die of the disease, most of them black, Hispanic, or poor. About 10,000 women will get cervical cancer and recover after difficult treatment like Kae's. If the vaccines are widely administered, especially to girls before they become sexually active (the median age for first-time sex in the U.S. is 15), chances are that cervical cancer could be reduced to a relatively minor threat. And if the vaccines succeed in the U.S., the profits they generate will likely help the drug companies make them available faster in the developing world. It all comes down to what the ACIP decides.

When Merck and Glaxo began working on cancer vaccines a decade ago, they never thought that something so revolutionary would come to fruition so soon. A German virologist named Harald zur Hausen first linked HPV with cervical cancer in 1975. His theories were discounted for years, until new research tools enabled better detection of viral DNA. By the early '90s, clinicians began to accept that HPV was the sole cause of cervical cancer. If a woman had HPV and abnormalities on Pap smears, she was aggressively treated, sometimes with procedures that hurt her ability to bear children. Researchers later understood that only a few strains of HPV actually cause cancer--of more than 100 viral types, just seven account for 90% of the cancers. Others cause only warts or do nothing. Yet all are highly contagious--transmitted by skin-to-skin contact, not just intercourse--so condoms aren't effective. "You can just have genital touching using a finger or toys or whatever," says Eliav Barr at Merck.

Because HPV is so easily transmitted, researchers believe that 80% of all sexually active people in the U.S. will carry the virus at some point in their lives, with 20 million women and men affected at any one time. Unlike many other viruses, HPV doesn't enter the bloodstream, so it doesn't provoke a strong immune response. Nonetheless, the body defeats most HPV infections as effectively as it does ordinary colds; only a small percentage of women develop the persistent infections necessary to cause cancer. To protect a population as a virus circulates, public health experts generally want to vaccinate anyone who is likely to be exposed.

Both the Merck and Glaxo vaccines are based on the protein shell of the virus. So far, clinical studies have shown that when women are injected with an empty shell, they develop a high level of antibodies that prevent the virus from ever taking hold. Both companies' vaccines protect against the two most common cancer-related strains, HPV 16 and 18, which cause more than two-thirds of the cancer cases. But Merck has thrown in two more variants that cause genital warts, HPV 6 and 11, in hopes of doubling its potential market by enticing men to get inoculated too. The companies now are engaged in the large, Phase 3 studies that directly precede seeking FDA approval. Merck says it will file with the FDA in the fourth quarter of this year--Glaxo says it will be a few months behind.

Meanwhile, the ACIP drama has already begun. As FORTUNE went to press, Barr was scheduled to present his team's stunning results at a late-October ACIP meeting, one of only three public meetings the committee holds each year. A working group has been gathering research on HPV in the population, but "we certainly don't have a recommendation yet" on the vaccines, says Janet Gilsdorf, a University of Michigan physician who is the subcommittee chief. Merck is hoping that the ACIP will be so impressed that it will begin to view mass inoculation favorably--just as this June, the committee recommended that 11- and 12-year-olds get a newly licensed tetanus, diphtheria, and whooping cough vaccine in place of the old tetanus-diphtheria shots. Ages 11 and 12 are also the natural time to administer the HPV vaccine, says Merck, before children are likely to have had sex and when they routinely get assessed for catch-up shots for chicken pox, measles, mumps, and other diseases.

ACIP approval isn't binding, but most states look to its recommendations to mandate what vaccines children must get before entering school. The committee votes separately on whether to recommend federal funding, and its support also virtually guarantees state funding, insurance reimbursement, and--crucially--coverage of the manufacturers under a federally funded liability-insurance program if a vaccine turns out to have deadly side effects. "What the committee comes out with is what the doctors will rely on," says John Salamone, head of the National Italian American Foundation, who until June 30 served as the consumer representative on the ACIP. "That means the government will also buy the vaccine. You notice you never see a vaccine advertised? That's because they don't have to. It is a great business."

But if the ACIP doesn't give its blessing, a vaccine can fail. In 1999, Smith-Kline, now part of Glaxo, didn't get a full ACIP recommendation for a Lyme disease inoculation, partly because its medical efficacy was questionable. "So the uptake of the vaccine wasn't very good," says Larry Pickering, the ACIP's executive secretary in Atlanta. After attempting to market it directly to patients and doctors, the company pulled the product.

The ACIP's deliberations on the dual cervical cancer vaccines promise to be contentious. The committee has 15 appointees, all public-health doctors and academics except for the single consumer representative. To help ensure that conservative views are articulated, one of the Bush appointees is Reginald Finger, a public-health doctor named to the ACIP in 2003. Until September he was also the medical-issues analyst at Focus on the Family, the influential Colorado Springs, Colo., Christian advocacy group run by Dr. James Dobson.

Merck expects Finger to be the point man for family-values advocates. So it has been lobbying him hard, says Finger, in hopes of heading off a controversy over teen sex that could torpedo Gardasil. Finger says he had many meetings at Focus with Merck representatives. "We have a cordial relationship, but I've made no deal" with Merck, he says. He adds that he's leaning toward putting the HPV vaccines on the national list, but not necessarily voting for federal funding or pushing the states to require them. That would fall short of what Merck wants. "I have a lot of different feelings about the vaccine," Finger says. "The objective is to prevent as much cervical cancer as possible without crossing bioethical or moral lines." (The company confirms that it is talking to Finger, but says it talks to a lot of experts about Gardasil and won't discuss details.)

A Focus spokesperson says the group hasn't taken a position on the vaccines yet; it will convene a meeting to discuss the subject in early November. A priority, according to Finger, will be for Focus to align itself with the three other groups that have medical expertise and preach abstinence--the Medical Institute for Human Sexuality, the Christian Medical & Dental Associations, and the Physicians Consortium. Focus also will consult with Perkins's Family Research Council, which split off from Focus in 1992. The FRC predicts a grassroots uproar among Bush's "value voters" if the ACIP recommends mass inoculation for preteens. "The vaccine is associated with sexual activity," says Pia de Solenni, who heads women's issues at the FRC, "and the family groups want families making that decision." She wouldn't vaccinate her own daughter, if she had one, she says.

"This isn't as much about morality as it is about good medicine," says Hal Wallis, a Dallas ob/gyn who heads the Physicians Consortium. "If you don't want to suffer these diseases, you need to abstain, and when you find a partner, stick with that partner." Gary Rose, CEO of the Medical Institute, says his group won't take a position until after it convenes its own panel of experts on Nov. 2. But the Institute has always maintained that abstinence before marriage and fidelity within marriage is the best recipe for good sexual health. How much Finger and his allies will influence the ACIP's decision isn't clear. But at the very least, other committee members are likely to take into account the family-values viewpoint. "These other voices I am sure we will hear, and we will listen to them," says Gilsdorf.

With Merck lobbying the abstinence groups, Glaxo has been pushing cost effectiveness. "The economic advantages of this vaccine are very easy to demonstrate," says CEO J.P. Garnier. The company argues that because the vaccines will cut the number of abnormal Pap smears and consequent follow-up treatment, the U.S. could cut its $6 billion annual screening and treatment costs by some 40%, or $2.4 billion. That saving more than pays for the $1 billion or so a year Glaxo and Merck hope to charge for the vaccines (Garnier says a course of treatment, which consists of three shots, will cost between $150 and $450). Still, the vaccines won't eliminate Pap smears. Because they protect only against the most common strains of HPV, women will still need to be tested for infection with others.

The ACIP has twice scheduled, then postponed, a discussion on cost effectiveness, which now probably won't occur until February. Herschel Lawson, an epidemiologist in the division of cancer prevention and control at the CDC, says the issue will be enormously tricky: "A lot depends on the data available and the many assumptions that need to be made to assess various health states and outcomes." The ACIP also will take into account indirect benefits, such as reduced anxiety from false positives on Pap tests. "A vaccine doesn't have to save money to be worth recommending," says Lauri Markowitz, a CDC epidemiologist who is the principal staff member advising the ACIP on the vaccines.

With all this doubt swirling, the ACIP could well straddle the fence. That's what happened after the FDA first licensed the vaccine for hepatitis B, another sexually transmitted disease, in 1982. The ACIP recommended it only for high-risk groups such as intravenous drug users, gays, and health-care workers--a strategy that didn't make a dent in disease statistics. Finally, in 1991, the ACIP changed its mind and advised doctors to inoculate newborns as well. Only then did the national incidence of hepatitis B infections begin to decline.

Neither the drug companies nor liberal groups such as Planned Parenthood want the ACIP to get timid about HPV. "The conservatives are going to turn this into a larger issue than it needs to be," says Vanessa Cullins, vice president for medical affairs at Planned Parenthood. It hopes federal funding will be available so it can administer the vaccine at its 850 health-care sites. "This isn't about morality, it is about public health," adds Cullins. Glaxo's CEO is even more blunt: "Getting the vaccine is an IQ test. You should get it. It's that simple."

If the drug companies are to pull off their medical miracle, though, they know they will have to win over conservatives one at a time. In July, FORTUNE went on the road with David Hager, a Lexington, Ky., ob/gyn who gives talks on HPV on behalf of the abstinence-preaching Medical Institute. Lately Merck has enlisted him as an advisor in exchange for picking up some of his travel expenses. "I've come under criticism for supporting the HPV vaccines," says Hager. "Some conservative groups are trying to sabotage them." The day before he was scheduled to give an HPV talk organized by the National Abstinence Clearinghouse, Leslie Unruh, the group's leader, threatened to cancel it. "I personally object to vaccinating children against a disease that is 100% preventable with proper sexual behavior," she says. Nonetheless, she decided to leave the schedule intact.

So a few days after the Fourth of July, Hager shows up to talk HPV in front of 70 or so abstinence educators at a "Teens and Sex" conference given by Unruh's group in Indianapolis. The meeting is being funded by the Department of Health and Human Resources. Eagerly awaiting his talk is Cathy St. John, a nurse who is the education coordinator for Making Abstinence Possible, a sex-education outfit in Cincinnati. Will giving the vaccine to a young girl "give her more of a predilection of having the casual sex she sees on TV?" wonders St. John, a blond, middle-aged woman in a pink twinset with matching shoes and handbag, who deplores the lifestyle portrayed on shows such as Sex and the City. Hager's talk makes it clear that he doesn't believe that. "I don't think a vaccine allows people to be sexually active," he tells the crowd. "If you knew there was a vaccine for AIDS, would you be opposed to it?"

Afterward, St. John seems persuaded. "He gave me a different way to look at it," she says. "But I don't think it changes the primary way of prevention. Which is abstinence."

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