The Portland Phoenix
June 20 - 27, 2002


Nobody is immune

An ongoing national shortage of childhood and adult vaccines is beginning to dissipate in Maine, but the crisis isn’t over yet. The feds and Big Pharma are poised to make some major decisions about the future of the industry — if they chose wisely, we may never know how bad things could have become.

By Jess Kilby

On December 21, 2001, workers from the state Bureau of Health swept into a small, rural town (the Bureau won’t say which one) near Bangor to help control an outbreak of chicken pox that had started two months earlier among the town’s high school population. Maine, like the rest of the country, was just beginning to feel the impact of an unprecedented shortage of the chicken pox vaccine, and it was a scramble to get the 120 doses of Varivax from the sole producer, Merck & Co., that were needed to bring local doctors’ supplies up from zero. The Centers for Disease Control arrived in January to try to figure out what was going on.

When all was said and done, 89 kids from the high school, middle school, and elementary school came down with the pox. There were no fatalities, though the risk to the town’s youth was real: In people over the age of 15, the effects of chicken pox can be much more severe. The threat is even greater for pregnant women: babies born to mothers who have had chicken pox just before or during the delivery can develop high fever and other complications.

Even so, the notion of calling in the Bureau of Health and the CDC for such an incident may seem absurd to those of us who grew up in the era before the chicken pox vaccine was introduced (in 1995). We itched, we scratched, we bear our scars proudly.

But what if it had been an outbreak of diphtheria, tetanus, or whooping cough? Measles, mumps, or rubella? Haemophilus influenzae — more commonly known as Hib? We rarely give a thought to these devastating diseases anymore, thanks in large part to an immensely successful nationwide effort to immunize against such scourges. However, the vaccines for every single one of these diseases — as well as some adult vaccines like influenza and tetanus — have experienced critical shortages over the past six to 24 months, forcing the CDC to ration doses and revise its recommended immunization schedules.

This trend of shortages is troubling for several reasons, but mostly because it reveals our quasi-socialized national immunization program for what it is: a disaster waiting to happen.

Safety in numbers

When the CDC got word last winter that an onslaught of vaccine shortages was on its way, the agency recommended to doctors that they defer certain shots along the traditional immunization schedule, so there would be enough vaccine to give all kids the crucial first few shots in each series. Deferred shots would be administered when national supplies were replenished.

But not all doctors heeded the CDC’s recommendations, including some here in Maine.

We passed along these recommendations about deferred doses to providers, and we know that some providers in the state started following them,” says Lisa Tuttle, director of the Bureau of Health’s immunization program, “but we also know that other providers in the state didn’t.”

Tuttle says her agency continued ordering vaccines to keep up with provider demand, until the CDC started rationing doses. Now the state can only work with what it’s got — which makes it harder to correct for providers’ actions before the rationing.

“If a provider runs out of doses,” she says, “We’re trying to determine if they’re deferring the appropriate doses or not, because they should have enough to meet those really important [early] doses.”

Some vaccine supplies will be coming back to normal in Maine within the next few weeks, while others may take until the end of the year. A few shortages never really affected the state. (See sidebar: Vaccine supplies in Maine, this page.) But providers and officials in the health-care field admit that even temporary vaccine shortages can have long-term effects on everybody’s health, especially when intermittent shortages are expected to continue — which seems to be the general expectation.

“The supplies are certainly coming back,” says Dr. Chris Stenberg, a pediatrician with Maine Medical Center’s Barbara Bush Children’s Hospital. “Do I expect that we’ll continue to be stocked all the way through the summer? I think we’re still going to see some times where some of them drop out.”

Others in the field are a bit less nonchalant with their predictions. Dr. Paul Offit, an infectious disease expert at the Children’s Hospital of Philadelphia, told the New Republic last week that “it’s only going to get worse.”

“These shortages speak to a bigger problem,” he said, “which is that at some level there is a slight crumbling of the infrastructure.”

Such a crumbling of the vaccine infrastructure could eventually lead to the loss of our most precious commodity: herd immunity. It works just like it sounds: If at least 85 to 90 percent of the population is immunized against a particular disease, an unvaccinated person who becomes infected is unlikely to spread that disease, for lack of fellow carriers. But when immunization levels start to drop, diseases spread quicker than you can say “George W. Bush promised there would be a smallpox vaccine with my name on it.”

Health officials have assured the public that the CDC’s deferred-dose schedule still gives children the short-term immunity they need. The tricky part is getting kids back in for those crucial booster shots when supplies return to normal, and making sure doctors currently have enough doses on hand to administer the most essential shots.

“Clearly, it’s a concern,” Tuttle says. “Which is why we get so upset if we hear a provider is completely out of vaccine, and why we make sure we try to get doses from somewhere to get to that health care provider.”

Why is this happening?

While vaccination rates have steadily increased in America, the vaccine industry itself has been shrinking over the last two decades. Twenty years ago, there were 15 vaccine companies in the US. Today there are four major producers: Aventis Pasteur, GlaxoSmithKline, Merck, and Wyeth.

Compounding this attrition is the fact that, during the past two years, several of the big four biotechs have abruptly suspended or abandoned production of various vaccines. Had these companies discontinued the business of making pills or other non-biological drugs, we might not have been hit with the shortages that we’re experiencing today. But vaccines can take up to 11 months to make, and the companies that have been left to pick up the slack literally can’t make the doses fast enough. Especially if a company has become the sole producer of a particular vaccine.

This has been the case with the tetanus and flu vaccines, for example, which are produced exclusively by Aventis Pasteur. Merck is the sole manufacturer of the measles, mumps and rubella (MMR), and chicken pox vaccines. Wyeth Lederle is the only producer of the new pediatric pneumococcal vaccine Prevnar. Aventis and GlaxoSmithKline alone make the diphtheria, tetanus, and pertussis (DTaP) vaccine.

It’s been clearly established that the mass exodus from the vaccine market created the shortages we have today. But what triggered the exodus itself?

Money, of course. Pharmaceutical companies have come to view vaccines as a high-investment, low-return industry, for a number of reasons.

First, the drug companies were getting their pants sued off them back in the 1980s, by parents who claimed their children had developed all manner of negative side effects after being vaccinated. When besieged vaccine manufacturers threatened to quit the business altogether, the government created a special Vaccine Injury Compensation Fund for parents to sue instead. But many companies left the market anyway, and now manufacturers are getting edgy again as parents begin to line up with a new generation of complaints that aren’t covered by VCIF.

One such complaint links the mercury-based preservative thimerosal, used until recently in the packaging of multi-dose vaccine vials, to the development of autism. Though some say there’s a lack of conclusive evidence to support this claim, the Food and Drug Administration has nonetheless pressured vaccine manufacturers to remove the preservative from all vaccines.

Which brings us to the second factor in the high-investment, low-return equation, which is increased FDA involvement in vaccine production standards over the past few years, via a 1997 initiative called Team Biologics. The initiative brings together government scientists (the Center for Biologics Evaluation and Research) and government micro-managers (the Office of Regulatory Affairs) to ensure biological-drug makers are in compliance with a constantly evolving set of standards called Current Good Manufacturing Practices. The aim of enforcing CGMPs, aside from monitoring quality control, is to make sure biologics companies are always using the latest, greatest technology.

But some observers say the FDA doesn’t always consider the consequences of its actions when it throws its weight around. The recent removal of thimerosal from vaccines, for example, meant that manufacturers had to switch from multi-dose vials to single dose vials. When manufacturers made the switch, they experienced an unforeseen 25 percent loss in output. Why? Because each multi-dose vial had been topped off with a little extra vaccine, to ensure that providers could draw a full dose from the vial. That same amount of overfill had to be added to every single one-dose vial, prematurely depleting many vaccine supplies that manufacturers are still working to replenish.

“The FDA and the CDC need to think through a lot of their policy recommendations, with the realization that if there’s short lead time, to [first] understand what the supply implications might be, and [second] . . . decide, is the increased safety by removing thimerosal really worth the supply shortage?” says industry analyst David Webster, of the Pennsylvania-based Webster Consulting Group.

“[They] need to start making those trade-off decisions,” he says, “instead of just saying, ‘Well, removing thimerosal is good, so let’s do it.’ ”

Another instance that had a ripple effect across the vaccine industry was the $30 million FDA fine Wyeth-Ayerst was slapped with in October 2000, after the agency found multiple quality-control problems at Wyeth’s plants in Pearl River, NY and Marietta, PA. Though the FDA didn’t force Wyeth to halt production of any products because of the violations, the company dropped out of the tetanus and DTaP vaccine markets two months later, citing “business reasons.” Wyeth now produces just two vaccines on the CDC’s Vaccines for Children contract: a Hib vaccine called Hib TITER, and Prevnar, the CDC’s most expensive vaccine purchase at $45.99 per dose.

Which lands us on the doorstep of the final factor in this mobius strip of an equation: Manufactures often have a hard time recouping their hidden costs when vaccines go to market. Keeping up with the FDA, whether the agency’s policies are on-target or misguided, is a pricey endeavor for biotechs. And research and development for new vaccines also comes at a cost, as is reflected in Prevnar’s hefty price tag. But the CDC, which buys 60 percent of the childhood vaccines made in America, is generally able to use its bulk-buying power to command lower than market-value prices for many vaccines. It buys the flu vaccine for as little as $5.53 per dose, for example, and the rubella vaccine for $6.54 per dose. Group purchasers for hospitals and doctors typically land similar deals, and manufacturers lament that these prices are driving them out of business.

“We think that the trend has been to drive prices down, and the value of vaccines in underappreciated in this country,” says Aventis Pasteur spokesman Len Lavenda. “And as a result, manufacturers have been unable to obtain pricing that provides a sufficient incentive to expand and make the necessary investments to stay in the business.”

“[The CDC] has been quite aggressive in keeping competitive bidding situations,” he adds. “And when you have one large buyer, that tends to keep pressure — regardless of what the product is, just based on economics — that buyer has a lot of clout over pricing.”

ýhis may be the truth for some of the lower-priced vaccines, but it’s worth noting that Aventis Pasteur’s DTaP/Hib combo goes for $23.40 a pop on the CDC’s contract, and Merck’s chicken pox (varicella) vaccine fetches a healthy $41.44 per dose. Moreover, industry analyst Webster says manufacturers could be doing more to protect their bottom line.

“There’s a big idea that manufactures have no control over pricing, and that it’s a highly regulated industry, and that, in fact, is not true at all,” he says. “Manufacturers actually have a lot of discretion and power to set price — particularly of pediatric vaccines.”

Webster says manufacturers do themselves a disservice by signing multi-year, fixed-price contracts with their buyers.

“It’s a very standard practice . . .” he says. “And if you set it at one or two dollars a dose and then all of a sudden your costs change because you have to upgrade a manufacturing facility, it makes it very hard for you to adjust your prices upward in the marketplace to take account of those additional costs.”

Lavenda says he’s “never heard that recommendation before.”

“So I don’t think we have a position on that,” he says. “I’ll raise that with our people.”

Lavenda says Aventis Pastuer’s primary concern is being kept in the loop on policy making.

“The most important consideration for us is that changes in policy, or changes in regulation, need to be made in consultation with manufacturers,” he explains. “If changes are made too quickly, before industry has time to implement them, then we will experience shortages. If these decisions are made by giving industry an opportunity to present their views and their perspectives on these changes, and then those changes are made in a realistic time frame, then we think a lot of the difficulties that we’ve been experiencing recently will not reoccur.”

Unfortunately, according to Lavenda, this is not happening.

“Our feeling is [that] recently [the FDA and the CDC] have gone in the other direction. They have moved to exclude manufacturers from the consultation process, from the decision-making process — and we think that is not a good trend.”

Doling out the doses

America’s approach to vaccinating its children is quintessentially American: buy the product from private industry and use public funds to distribute it among the most needy. The CDC’s Vaccines for Children program gives each state a per-child entitlement with which to buy vaccines off the CDC’s contract; to qualify, a child must be uninsured, insured by a company that doesn’t cover immunizations, Native American, Alaskan, or enrolled in Medicaid. States can also buy off the CDC contract with Section 317 funds, which are approved each year by Congress, and with their own cash.

In most states, only kids who qualify for VFC entitlements get all their vaccines for free. Everybody else goes through their insurance companies. Maine, however, is one of 10 “universal” states, which means it uses Section 317 and state funds to cover all children, regardless of whether they’re insured. In return, the state gets a small kickback from HMOs and private insurers.

Before the CDC put Prevnar on its list of universally recommended vaccines this year, there were 15 universal states. The five-state drop-off is a direct result of adding such an expensive vaccine to the list; those previously universal states now have what the CDC calls a “two-tiered” system, where everything but Prevnar is covered for all children.

“Prevnar was one of the big killers of universal states,” Tuttle says.

Maine so far has been able to hang on to its universal status, but Tuttle is concerned about the future.

“Maine is really committed to being able to continue [being universal],” she says, “so what we need to look at are strategies to keep making sure we have adequate funding . . . to do that.”

Ironically, the vaccine that killed the universal state is the one that’s been the least available, and is predicted to be in shortage the longest. Producers Wyeth Lederle were as floored as everybody else when the CDC picked up Prevnar; they had nowhere near the number of doses needed to meet an instantaneous nationwide demand.

A policy debate

What has happened with Prevnar is a microcosm of the entire vaccine industry: high-priced products will keep manufacturers in the game, but the proliferation of expensive vaccines could make it difficult for us to maintain the near-universal levels of immunization that we need to keep diseases at bay.

This could prove especially true if the FDA’s push for the continuous application of cutting-edge technology in the biological drug industry manifests itself as a slew of high-priced replacements for our old vaccines. Private insurers may drop immunization coverage as costs rise, increasing the rolls of VFC-eligible children. At the same time, government funds will be spread even thinner by pricey new vaccines. The trend towards creating combination vaccines like DTaP and MMR might shrink costs a little bit, as children would need fewer shots overall, but who’s to say new combination vaccines won’t be exponentially more expensive than lone-gun Prevnar?

Fear not. (Or maybe just a little.) You can’t sneeze these days without spraying a fine sheen of your potentially infected spittle on a policy analyst who’s studying the situation. Organizations that are on the task include the General Accounting Office (the investigative arm of Congress), the National Vaccine Advisory Committee (part of the CDC), and the Institute of Medicine (a member of the nonprofit Academy of Sciences). Members of the vaccine industry have also testified before the Senate and other policy makers on the matter.

The GAO won’t say a word about its investigation until the agency issues a final report some time this summer, but proposals from everybody else have run the policy gamut.

NVAC wants to bolster the industry by offering incentives, though it’s still unclear what those incentives might be. Everything from tax breaks to assistance with research and development to increased protection from liability has been suggested. Lance Rodewald, director of the Immunization Services Division at the CDC, says NVAC is weighing the options carefully.

“We do know that well-done incentives can work, but a poorly done incentive can have unintended consequences, and so NVAC really has been constituted to figure out what the best incentives are,” he explains.

“One of the suggestions is to get an advisory group or a scientific group that can get the required expertise to come up with the best possible incentives,” he says. “And so there’s been some consideration of asking the Institute of Medicine to convene a panel of experts, that would obviously include economists and industry representatives, to figure out what would be the optimum incentive.”

Though the IOS may be called upon to help craft NVAC’s policy proposal, the Institute has already issued its own proposal — and it couldn’t be more ideologically different than NVAC’s market-based approach.

Since 1993, the IOS has been advocating for the creation of a National Vaccine Authority; after September 11 and the subsequent anthrax attacks, the agency has dusted off its pitch with not a little bit of we-told-you-so.

The IOS envisions the NVA as an agency that would oversee and occasionally assist with the production of vaccines that are crucial to public health but aren’t particularly profitable. It would participate in research and development; help small, private biotech companies make and test lots of new vaccines; and engage in full-scale vaccine production if needed.

It’s unlikely that the NVA will get very far, however. Both the CDC and industry oppose it.

“We’re not very enthusiastic about this for routinely recommended vaccines,” Rodewald says. “Now, that may be a little bit different for some of the more unusual vaccines or orphan vaccines, but for the routinely recommended ones — I mean, a government plant would have to go through all the same hoops that a private plant would have to go through in order to be regulated. And some of the private companies and the manufacturing capacity would probably go away if there was competition from the government, and that may further destabilize the amount of vaccine production capacity that the US has.”

Wayne Pisano, executive vice president of Aventis Pasteur North America, delivered virtually the same message at a National Vaccine Advisory Committee meeting convened in February.

“We do not believe that a National Vaccine Authority will contribute to stabilization and, in fact, might contribute to destabilization by acting as a disincentive and barrier to market entry,” he told policy makers. “If the government enters the vaccine manufacturing business, industry may ultimately be unable to compete with a subsidized operation. The result is, potentially, the withdrawal of private manufacturers from the US market and the loss of innovation and timely introduction of new products into the US.”

Apart from opposing plans for a national vaccine authority, Pisano used his speech — which he reiterated in part at a June 12 hearing before the Senate Committee on Governmental Affairs — to make 10 specific policy suggestions of his own.

Some of Pisano’s ideas are a bit suspect, particularly one that suggests industry representatives be restored to full participation in the CDC’s Working Groups immunization policy meetings — a practice that was discontinued due to obvious conflicts of interest. Other proposals are merely self-serving, as they’re little more than solicitations for government contract work. But a few of Pisano’s ideas have merit, particularly those that deal with increased communication between industry and government and one which calls for equitable standards of performance between the industry and those who inspect it. Others, like the expansion of the Vaccine Injury Compensation Program, may require the scrutiny of NVAC’s appointed analysts before any clear conclusions can be drawn.

Whether any of these ideas will be implemented is hard to say. The GAO’s report, due by the end of July, should give some indication of where the government will be moving on the issue. However, the number of agencies involved and the economic interests of the pharmaceutical companies may bog down any policy-making that might alleviate the situation, despite the fact that this is a very real public health issue. The next few months will reveal just how serious our government is about protecting its citizens.

In the meantime, don’t sneeze.

Jess Kilby can be reached at jkilby@phx.com.

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