April 2004
Assuring Vaccine Supply

The vaccine market has long been dominated by a public health community determined to provide mass vaccination at very low prices. The market has also been plagued by alarming shortages: the flu vaccine in the 2003-2004 flu season and childhood vaccines several times in recent years. At an April 15 AEI conference, four experts offered their perspectives on how to improve vaccine supply, emphasizing the roles of the industry, the medical community, the Centers for Disease Control and Prevention, and the Food and Drug Administration.

Philip Hosbach
Aventis Pasteur

Policies that aim to secure the supply of vaccines should involve pharmaceutical industry expertise from the outset. Vaccine manufacturers understand the development process and its requisite time frames, and are in constant contact with physicians, so they are uniquely positioned to gauge how providers would respond to new policies. While the Center for Disease Control's National Vaccine Advisory Committee (NVAC) has historically included an industry representative, the Advisory Committee on Immunization Practices has no longer included manufacturers as full participants in its working groups. Nonetheless, there have been positive developments in establishing a dialogue between industry and government on vaccine production and distribution. In 2003, Aventis Pasteur advised the Centers for Disease Control and Prevention (CDC) on the late-season surge in demand for flu vaccine so that remaining doses could be distributed to those most in need. Another example of collaborative policymaking was the April 2004 influenza summit, which brought together experts from various sectors to collaborate on vaccine policy development.

Vaccine manufacturers face three major challenges in assuring the vaccine supply: communication and coordination with government; current good manufacturing practices (cGMP) in the emerging regulatory environment; and ensuring adequate stockpiles of vaccines.

Some post-licensing regulations, like those that require larger clinical trials, significantly extend product development timelines. Drug approval processes are complicated and lengthy, underscoring the need to increase funding to the Center for Biologics Evaluation and Research (CBER). The absence of industry input in the regulatory framework also has serious consequences. In 1999, the CDC urged manufacturers to reduce preservatives in childhood vaccines, favoring single-dose packages over multi-dose vials. However, the recommendations were made without industry consultation and without any knowledge of a feasible time frame for implementation. As a result, the switch to preservative-free vaccines reduced vaccine supply that year by 25 percent. Industry input in crafting these new guidelines would have recognized the time necessary to transition and avoided the disruption in supply.

Manufacturers must also be involved in defining cGMPs and process validation requirements. Obtaining approval for a new manufacturing facility can be lengthy, taking on average one or two years. In fact, Aventis recently disassembled a building in Sweden and shipped it in parts to the United States to avoid the delays associated with approving a new one. All processes, including simple tasks like cleaning vials, undergo a lengthy review for approval. The validation of processes themselves and of new product licenses must be accelerated to promote vaccine development.
 
Stockpiles of routine vaccines are imperative to secure their supply. Even though Congress has appropriated the funds to build these stockpiles, recent Securities and Exchange Commission (SEC) accounting regulations governing revenues from stockpiles discourage manufacturers from doing so. In the interest of public health, the SEC should recognize the vaccine industry as an exception to these rules.

Legislators must fully engage industry expertise in developing vaccines policies. This partnership will be strengthened by standardizing industry involvement in advisory bodies. To this end, manufacturers should accept responsibility for developing an industry code of conduct.

Stephen Cochi
Centers for Disease Control and Prevention

The vaccine market consisted of approximately 226 million doses in 2002; two-thirds of these were used for children. While children are inoculated against a range of illnesses, including DTaP, polio, and MMR, adults are generally immunized solely against influenza. Fifty-seven percent of childhood vaccines are funded publicly through a mix of the Vaccines for Children Program (VFC), immunization grants, and state programs.

The highly publicized vaccine shortages of 2002 began in 2000 with the decreased availability of the tetanus-diphtheria vaccine (Td). The Td manufacturer exited the market, triggering shortages of several conjugate vaccines that affected both public and private vaccine purchasers, most providers, and many children.

It is important to dispel the myth that vaccine shortages are necessarily linked to their prices. Vaccines with high federal contract prices have experienced supply disruptions, just as vaccines with low contract prices have maintained steady supplies.

Despite the widespread media attention that vaccine shortages have received in recent years, supply problems have existed for decades. Because they are biological products, vaccine development is longer and more complex than the average drug development. Their regulation is also different-the safety standard is especially high because vaccine recipients are healthy. For these reasons, vaccines are less attractive as an investment.

Vaccine shortages are caused by various factors-immediate and specific causes, as well as underlying issues. Direct determinants include manufacturer decisions to abruptly stop production, an unanticipated manufacturing problem, and difficulties complying with cGMPs. Other contributing factors do not necessarily trigger vaccine shortages, but they affect the fundamental working of the market. For example, society undervalues preventive measures as compared to curative interventions. The complexity and cost of vaccine development and small number of manufacturers also contribute to supply disruptions. In response to vaccine shortages, the CDC has issued interim Advisory Committee on Immunization Practices (ACIP) recommendations, monitored inventories and distribution, and built stockpiles.

While shortages in recent years have not measurably affected insurance coverage of vaccines, they have caused delays in timely access to age-appropriate childhood vaccines. In 2002, the General Accounting Office (GAO) issued a report with recommendations for executive action to assure the vaccine supply. First, the CDC should develop strategies to expand the national stockpile program to newer vaccines. In addition, the Food and Drug Administration (FDA) should distribute compliance guidelines to all manufacturers and revise its fast-track and priority-review guidelines for new and promising therapies.

The National Vaccine Advisory Committee (NVAC)-the body that advises the Department of Health and Human Services on immunization policies-also issued its own recommendations in 2003. Among the strategies NVAC proposes for immediate implementation are increasing funding to enlarge the national vaccine stockpile program, bolstering support for FDA's CBER, requiring advance notice from manufacturers planning to stop production of a vaccine, and launching a campaign to educate the public on the safety, efficacy, and benefits of vaccination. Other NVAC recommendations require further study. They include evaluating incentives to manufacturers to develop new vaccines and maintain their supply, and streamlining the regulatory processes.

In response to the GAO and NVAC recommendations, the CDC has completed a stockpile strategic plan and is developing operating procedures for the management of vaccine stockpiles. These efforts will be supported by $200 million in the federal government's 2004 budget.

William M. Egan
Food and Drug Administration

In considering ways to remedy vaccine shortages in the United States, a few facts deserve mention. The dynamics of shortages in developed countries are very different from those in developing countries. All vaccines have a long lead-time for their manufacture-one year, on average-so shortages cannot be immediately resolved by scaling up production. For economic reasons, manufacturers generally do not maintain large stockpiles as supply buffers. Even if there were incentives to do so, excess production capacity is not often present.

Shortages can be caused by manufacturing disruptions, unanticipated demands, or manufacturers leaving the market. The vaccine market is particularly vulnerable to production problems because of its reliance on a single or few manufacturers. Stockpiles are useful only if the vaccine reserves are ready to dispense, because problems can arise even in transferring the vaccines from the bulk production site into vials.

Coordinating vaccine supplies with seasonally changing demand requires precise timing. During the 2002-2003 flu season, twelve million doses of flu vaccine went unused at a significant cost to the manufacturer. The following year, the firm decreased flu vaccine production slightly, and demand unexpectedly surged, resulting in the highly publicized shortages.

Manufacturers often face incentives to exit the vaccine market derived from its instability, often-low profitability, and heavy regulation. Liability issues also discourage firms from manufacturing vaccines because a negative public perception of a vaccine would jeopardize their company image and entire business portfolio.

The developing world not only needs a totally different set of vaccines, but the economics governing their development and distribution are unlike those in the U.S. market. Counter-bioterrorism vaccines are also different, because the government both sponsors their development and purchases them for stockpiles. If the government secures a stockpile of a certain vaccine, the incentives to fund innovation for a better alternative decline.

Strategies to assure the vaccine supply ultimately confront the question of how many manufacturers we can afford to have. If we have one or few, we are more vulnerable to shortages. On the other hand, in an industry with many firms, each must assume the large overhead costs associated with vaccine development. This would raise their prices but decrease the likelihood of shortages, like an expensive insurance policy for vaccines.

Paul Offit
Children's Hospital of Philadelphia

A little known incident that occurred during the development of the polio vaccine fifty years ago illustrates some of the causes and potential solutions for current vaccine shortages. In the late 1940s and early 1950s, as many as twenty thousand children were paralyzed by polio each year, and between two and three thousand died of the disease. Public and private interest in developing a polio vaccine was fierce. In 1954, a polio vaccine developed by the National Foundation was given to 420,000 children in the largest clinical trial every conducted. By 1955, it was ready for distribution, and five companies contracted to sell it. Soon after, six new cases of polio were traced to one of the manufacturers-Cutter. In two out of eight lots of vaccine it had produced, Cutter had failed to kill the virus. Inadvertently inoculating patients with live poliovirus, Cutter caused the worst vaccine disaster in the history of the United States. Of 120,000 people that received the live virus, forty thousand developed abortive polio, 164 were permanently paralyzed, and ten were killed.

Melvin Beli, a powerful lawyer at the time, took the case of a young girl paralyzed by Cutter's botched vaccine. He sued Cutter for negligence and breach of an implied warrantee-that vaccines designed to prevent polio should not cause it. The trial showed that Cutter was not the only firm to produce a bad lot of polio vaccine. In fact, all five manufacturers had difficulty deactivating the virus because they lacked the facilities and methods necessary to scale up production to make millions of doses. The jury found that Cutter was not negligent but had breached an implied warrantee. The case was the birth of absolute liability for pharmaceutical companies. However, manufacturers have become liable not only for harm caused by their products but also for harm not caused by their products. In the 1960s and 1970s, Bendectin was marketed as an anti-nausea drug for pregnant women, but it was claimed that the drug caused birth defects. Even after twenty-eight separate studies that refuted the link, the manufacturer was forced to pay out millions of dollars in legal settlements. The ruling did not immediately hamper investment in new vaccines, and innovation continued unfettered until 1974, when a report by Kulenkampff and colleagues claimed that pertussis vaccine caused brain damage. Subsequent studies did not support the hypothesis, but the media continued to publicize the original claim. A flood of litigation drove the price of DTP (the combination vaccine with pertussis) from $0.17 to $11 per dose, and the number of pertussis manufacturers dropped from nine to one.

To protect companies from high litigation costs that discourage vaccine development, the National Vaccine Injury Compensation Program (NVICP) was created in 1986. It is funded by a federal excise tax on every vaccine dose-in some cases worth half the cost of its manufacture.

Incomplete protection against liability has significantly weakened the infrastructure of vaccine development. In 1957, twenty-six companies manufactured seven recommended childhood vaccines. Today, only four companies make twelve vaccines, making the market inflexible and vulnerable to shortages. Moreover, vaccine sales represent less than 5 percent of total sales for pharmaceutical companies, so research and development (R&D) has shifted away from vaccines to pharmaceuticals with large potential profits.

The National Foundation model is a promising approach to securing vaccine innovation. The "March of Dimes" pioneered fundraising for a polio vaccine using celebrity spokesmen, the "poster child," and dramatic films to raise $630 million between 1938 and 1962. The campaign took the risk out of investment in a polio vaccine by performing R&D up to the point of licensure. The International AIDS Vaccine Initiative and Gates Foundation are pursuing this strategy for the development of AIDS and malaria vaccines.

AEI research assistant Ximena Pinell prepared this summary.