How to shore up nation’s vaccine supply

March 2002

WASHINGTON, D.C. — It took years to build an immunization system capable of delivering routine vaccination. The system was solid and effective: disease incidence dropped dramatically as coverage rates rose to record levels, averaging about 90% for most vaccines. Lately, however, the foundation of this network has started to crack and the distribution system is threatened to the point that some people are being denied vaccine simply because physicians cannot obtain sufficient supplies.

Physicians, public health officials, pharmaceutical manufacturers and others are trying to determine what went wrong in hopes of shoring up the foundation and preventing further shortages.

It is unclear exactly where to place the blame. “We’ve dealt with a series of ignoble rumors attributing shortages to industry to get more money for their product to shuffle money into the private rather than the public side,” said Louis Cooper, MD, professor of pediatrics at Columbia University. This is not the case, he added, the causes are more complex.

Déjà vu

Before vaccines, diseases such as diphtheria, pertussis and measles were rampant in America. In 1900, 120 out of every 1,000 infants died from preventable diseases before the age of 18 months. Since the introduction of vaccines against these diseases, the disease incidence has dropped by 99%.

Smallpox has been eradicated and the world is on the verge of eradicating polio. Measles has been eliminated as an endemic disease in the Western Hemisphere. Haemophilus influenzae type b (Hib) disease, once a leading killer of children, is almost nonexistent in the United States, and there has been a 78% drop in cases of chickenpox.

Despite these gains, public opinion of the value of vaccines remains inconsistent. Maintaining public confidence in vaccination has been a struggle.

The vaccine supply was seriously threatened in the 1980s when parents began vocalizing concerns about vaccines causing serious adverse events. Litigation against vaccine makers forced some manufacturers to temporarily leave the market, causing a supply crisis.

Most of the litigation was against manufacturers of diphtheria-tetanus-whole cell pertussis (DTP) vaccines. Parents claimed that DTP caused seizures and brain damage in their children. Although these claims could not be proved, manufacturers left the market rather than face prolonged litigation.

In 1986, Congress stepped in enacting the National Childhood Vaccine Injury Act, which created the Vaccine Injury Compensation Program (VICP). The act streamlined and simplified a “no fault” system for compensating those who may have been injured by routine childhood vaccines.

The program is funded through an excise tax of 75 cents for every disease prevented by a vaccine. This money finances the compensation. The program has been so successful that litigation against the companies has decreased, and the fund has $1.7 billion.

What caused the shortages?

The vaccine community now faces a new challenge. Shortages have once again rattled the nation’s supply, although for a different reason. This has opened the door for new outbreaks and the reemergence of diseases.

There is no single reason why shortages have occurred for eight different vaccines from various manufacturers. But this problem began when two manufacturers dropped production of all tetanus-containing products.

The first to stop production was North American Vaccine Co., which made a diphtheria-tetanus-acellular pertussis (DTaP) vaccine called Certiva. Although it only had a small part of the market share, the move put one crack in the foundation. Then Wyeth Lederle Vaccines opted to end production of all tetanus-containing products. This left Aventis Pasteur and GlaxoSmithKline to cover the entire U.S. market.

For some vaccines, such as for measles-mumps-rubella (MMR, M-M-R II, Merck), there is only one manufacturer. So far, there is a manufacturer for each vaccine in the childhood schedule, according to Walter Orenstein, MD, director of the CDC’s National Immunization Program. But it would take only a single manufacturer to discontinue production to lose the vaccine supply for MMR, PCV7, varicella, inactivated polio and meningococcus. In addition, yellow fever and anthrax are proprietary vaccines. Complicating this dilemma is that manufacturers are not required to give advance notice when they intend to stop production of a vaccine, so the government may not have time to react.

The cost of doing business

Vaccines are high-risk, high-cost products. Boyd Clark, former chair and CEO of Aviron said his company spent more than $700 million trying to bring a cold-adapted, intranasal influenza vaccine (Flumist) through licensure, even though the technology was developed in NIH laboratories in 1967 and numerous clinical trials were run before Aviron acquired the product in 1995. As of this year, the product still has not gained approval from the FDA.

In recent years, increased focus on safety has necessitated larger clinical trials, which increases development costs. A persistent problem is that vaccines do not generate sufficient revenues to offset the rising costs of production, many manufacturers have told Infectious Disease News.

“It should be no surprise that when manufacturers find themselves holding low-margin products with increasing production costs, they opt out,” said Wayne Pisano, executive vice president in charge of North American business units for Aventis Pasteur.

Despite increased awareness of immunization issues by lawmakers, there is still a shortfall in funding allocated for vaccine development — most federal dollars for vaccine research are in AIDS vaccine development. In a 1993-1994 Mathematica Policy Research Study on Vaccine Supply, health economist Mark Pauly, PhD, of the University of Pennsylvania, concluded, “payment incentive policies were poorly matched to social objectives.”

Liability is another disincentive to vaccine producers to produce vaccines, added Pauly. Massive litigation in the 1970s and 1980s threatened the viability of vaccine manufacturers, and by 1984, two prominent DTP makers had stopped producing the product.

The Vaccine Injury Compensation Program (VICP) has reduced the number of lawsuits against vaccine manufacturers, but families are now finding ways to file lawsuits outside the system.

“The impact of these vaccine claims on vaccine supply through the manufacturers is great. Each case makes claims into the millions of dollars. Vaccine cases in the past that have gone to trial have been favorable for the manufacturers. However, all the cases present a significant risk of an emotionally based jury verdict, which at any one point and time could bankrupt a company,” according to Carl Greco, Esq., special counsel to Aventis Pasteur.

Another threat was the recent thimerosal scare that prompted the Public Health Service to recommend removal or reduction of the mercury-derived preservative from all vaccines. The change to reduced thimerosal-containing vaccines was seen by many as a way to improve the public perception of vaccine safety. To comply with the new standards, manufacturers had to upgrade facilities to make vaccines in single-dose vials that did not need the preservative. This upgrade took time and further pushed back tight production schedules.

The changeover also revealed hidden costs. According to Aventis Pasteur, maker of the DTaP vaccine Tripedia, while all vials have to be overfilled so providers can pull a full dose, the cumulative effect of switching from multidose to single dose vials greatly increases the amount of overfill. This results in significant product wastage and increased costs.

Regular upgrades to production facilities are mandated by Current Good Manufacturing Practices (CGMP) and can also impact vaccine production and supply. CGMPs compel vaccine makers to pay to keep current with dynamic regulatory standards – investment dollars that could otherwise be spent on developing new vaccines. According to Pisano, the effect of production facility upgrades can have a significant financial impact on already established products that may have been manufactured for decades.

A lengthy process

The production of biologic products is no simple task, said Pisano. The average production cycle for tetanus-diphtheria (Td), for example, is around 11 months. Growing and combining the toxoids takes 27-32 weeks, and testing for consistency and purity at FDA laboratories takes an additional 12-16 weeks.

“It is not a matter of opening a tap and pouring out vaccine,” said Pisano.

Once the vaccine comes to market, it becomes subject to unpredictable market forces. Just two years after the introduction of PCV7, immunization rates were already above 90%. By contrast, varicella vaccine was introduced to U.S. consumers in 1995, but varicella immunization rates in 2000 were just 67.8%, according to the CDC.

Interestingly, both vaccines are now in short supply, although for different reasons. Upgrading facilities to meet CGMP requirements forced Merck to temporarily stop production of varicella vaccine. Meanwhile, Wyeth also experienced regulatory problems in releasing some lots of PCV7 last August, but it was the tremendous demand for the product that most affected the supply.

How to prevent shortages?

The pricing structure of vaccines is also an issue. Shortages of most other products lead to an increase in price and eventually a decrease in demand. Vaccines are unique, according to the University of Pennsylvania’s Pauly, because they are expensive to produce, have a high risk for investment and sell for comparatively low prices.

Vaccine Name	Reason
DT, Td, tetanus toxoids	One manufacturer dropped production.
DTaP	Tetanus toxoids shortage due to manufacturer dropping production.
Pneumococcal conjugate	Rapid implementation; Good Manufacturing Practice Issues; grantee funding shortages.
Varicella	Good Manufacturing Practice Issues.
MMR	Good Manufacturing Practice Issues.
Hib (Merck)	Good Manufacturing Practice Issues.
Hep B-Hib (Merck)	Good Manufacturing Practice Issues.
Influenza	In 2000, difficulty in production. In 2001, one manufacturer dropped production; uneven distribution.

“Something that makes the vaccine supply system complex is that basically the production lines have to be set up and approved, and the capacity predetermined, before it is known how much will be supplied, or maybe even before it is known what price will be charged,” said Pauly.

This complicated economic model results in a decreased interest in producing vaccines. In 1967, there were 26 vaccine manufacturers in the U.S. market. But by 1980 there were 17, and now there are only 12 in 2002.

One solution may be to add manufacturers to the market. However, when more manufacturers enter the same market, there is less market share to offset the fixed costs of production, infrastructure and employees. That means fewer profits and less incentive to manufacturer vaccine.

An alternative, according to Martin Myers, MD, outgoing director of the National Vaccine Program Office, is to introduce tax incentives into the system to stimulate interest in lower profit, high-need vaccines. The incentives could also offset the expense of meeting CGMPs.

“Good manufacturing protocols aren’t going away, but they are a financial burden,” said Myers. “We need to figure out a way to get manufacturers to meet our common objectives.”

Financial incentives, though, do not directly address availability shortfalls. To counteract temporary disruptions in supply in 1983, the CDC began stockpiling many vaccines used in the routine immunization schedule. Merck recently tapped the MMR stockpile to help address a shortage. The stockpile has been drawn down at least 11 times since creation in 1983 for various reasons, according to the CDC’s Orenstein.

Expanding the stockpiles would be difficult, according to Thomas Zink, MD, vice president of immunization practices and scientific affairs at GlaxoSmithKline. Production facilities are already at full capacity in many instances, so simply buying excess doses would not be feasible.

“I am worried that the stockpile idea is a little out of bloom. We have some issues where obviously we have drawn tremendously, and there are going to be some real short-term pains for a long-term gain,” he said.

More importantly, said Zink, without proper infrastructure, vaccine stockpiles are useless. If the product cannot be distributed quickly to the physicians who need it, then stockpiles are just wasted resources. “You could stockpile all day, but if you don’t have an infrastructure to distribute this stuff in a rapid fashion, especially with bioterrorism threats, then you are just kidding yourself,” said Zink.

Vaccine stockpiles are not a stand-alone solution to supply problems. Instead, they are a safety net for unforeseen supply disruptions and for bridging the gap during changes in recommendations.

Unpredictability of the market seems to be a common theme in the vaccine supply problems. Whether the growing cost of production or the uncertainty of licensure, these factors, at least peripherally, affect a manufacturer’s decision to enter or stay in the business of making vaccines.

The Prescription Drug User Fee Act of 1992 apportioned funds for product reviews and set timetables for review of new applications. When the act was updated by the Food and Drug Modernization Act in 1997, lawmakers added fast tracking and set priorities for FDA collaboration with other regulatory agencies, including globalization of regulatory standards.

FDA activities have already improved the regulatory process, said William Egan, PhD, deputy director in the office of Vaccines Research and Review at the FDA. Stepped up laboratory programs, including improved vaccine lot testing for sterility, potency and consistency, have sped up some licensure activities. New assays for acellular pertussis, for example, accelerated licensure by almost a year, he said.

But there is more to be done to make the business of vaccines more attractive to manufacturers, added Egan.

More government intervention

Last year, an Institute of Medicine report called for the creation of a National Vaccine Authority to set national policy and to oversee the creation of new vaccines. However, government involvement has been widely criticized by many.

A National Vaccine Authority would be redundant, many experts claim, because the Advisory Committee on Immunization Practices (ACIP), the AAP and the American Academy of Family Physicians (AAFP) already set recommendations for vaccine use. In addition, the National Vaccine Advisory Committee (NVAC) suggests policy changes to lawmakers and the Department of Health and Human Services.

“I am worried that there are just so many talented chefs that we are going to spoil the broth, and I am hopeful that we don’t add another one with the National Vaccine Authority,” said Zink. “Pretty soon it is just alphabet soup, and I am concerned that is more distracting than productive.”

The idea of government actually producing vaccine also has some problems. Any vaccine made by the government would still be subject to the same market forces and regulatory requirements experienced by private industry, and there is nothing to stop a government plant from having the same production difficulties. Government involvement in production would require substantial capitol investment in the creation of manufacturing facilities, money that would have to be reinvested annually to comply with regulatory requirements. “From a government perspective, if they want to invest in new vaccines, those investments have to be long term, and the commitment needs to be long term, otherwise they’re not going to be successful,” said Peter Paradiso, PhD, vice president of scientific affairs and research strategy at Wyeth Lederle Vaccines.

Nevertheless, if the National Vaccine Authority were given autonomous power and adequate funding, it could establish vaccine priorities. Government-run or government-contracted production facilities would mean more manufacturers and the possibility for more vaccines on the market.

Strategy	Why	How
Increasing financial incentives	Vaccines are costly to develop.	Tax incentives for low-profit margin vaccines and/or plant upgrades. Paying to develop vaccines.
Streamlining the regulatory process	Difficulty in obtaining licensure detrimental to development; pricey.	Global harmonization of regulatory process; improving testing and lot release protocols.
Establishing government-directed programs	National security necessitates certain vaccines with low-profit potential. To increase the number of vaccine manufacturers.	Either a National Vaccine Authority or government-operated production.
Utilizing vaccine stockpiles	To smooth over transitions in policy and to have stores ready for shortage situation (last resort supply).	Gradual build-up of supplies through surplus buying.
Increasing liability protection	During the 1980s, lawsuits drove manufacturers away from the market.	Reforming the Vaccine Injury Compensation Program.

Government involvement may be warranted in older vaccine markets without a high potential for profit and for vaccines necessary for national security. But questions remain as to what role government should play in vaccines. Would the government be able to garner tax dollars and public support for the production of vaccines in the face of growing public skepticism? Would the government be subject to the same liability as private market manufacturers? Or, would government-made vaccines come under increased scrutiny if they were perceived as unsafe?

Liability is a complex issue and increased protection could make vaccine development more attractive to investors and pharmaceutical companies. Lawsuits outside the VICP threaten public confidence and the viability of manufacturers.

However, reforms to the VICP would not have a direct effect on vaccine production. Lower risk could mean more private investment, but would not solve problems associated with production, licensure and regulation.

Additionally, the need for liability reforms begs the inevitable question: why do manufacturers need additional protection? More importantly, if vaccines are beneficial to public health, why is there reluctance on the part of the public to pay for and receive vaccinations?

Manufacturers are confident that all current production problems will be resolved by the end of this year, and the CDC anticipates returning to the full childhood immunization schedule by the first quarter of 2003. However, the vaccine manufacturers and the CDC cannot say with confidence that vaccine shortages will not occur again.

So, while public health officials busy themselves fixing the current shortage problems, they cannot lose sight of the ultimate goal: a consistent and uninterrupted supply of vaccines. “Immunization is one of the most effective prevention measures we have,” said the CDC’s Orenstein. “It is dependent on an adequate supply, and we have clearly seen over the past year that our supplies are vulnerable. There is no clear single reason for supply problems, so the solutions needed are multifaceted. We need both short-term and long-term solutions.”

For more information:

• Dr. Orenstein and Dr. Cooper have no direct financial interest in the products mentioned in this article, nor are they paid consultants for any companies mentioned.
• Infectious Diseases in Children could not confirm whether Dr. Pauly has a direct financial interest in the products mentioned in this article or if he is a paid consultant for any companies mentioned.