1615 M Street, NW, Suite 740 · Washington, DC 20036 Phone: 410.467.2907 · layton@rti.org · www.rti.org

1. Office of the Assistant Secretary for Planning and Evaluation (ASPE) Influenza Vaccine Project: Understanding the Dynamics of Influenza Vaccine Supply and Demand Presented to National Vaccine Advisory Committee Washington, DC February 8, 2006 Presented by Christine M. Layton, PhD, MPH 1615 M Street, NW, Suite 740 · Washington, DC 20036Phone: 410.467.2907 · layton@rti.org · www.rti.org RTI International is a trade name of Research Triangle Institute.

2. Purpose of Project • To provide policy makers and other decision makers information about influenza vaccine issues that: • Summarizes current issues • Is in a useful format • Not to address pandemic or avian influenza concerns.

3. Summary of Project: Understanding the Dynamics of Influenza Vaccine Supply and Demand • Annotated bibliography • Key informant interviews • Issue brief subject areas • Influenza vaccine overview • Influenza vaccine purchasing and distribution • Influenza vaccine manufacturing • Influenza vaccine economics • Influenza vaccine demand

4. Annotated Bibliography • Collecting various sources of information • Peer-reviewed journals • Expert reports, e.g., IOM • “Fugitive” literature • Web sites • Conference abstracts • Print media, i.e., newspapers

5. Key Informant Interviews • 30 interviews with representatives of • Vaccine manufacturers • Vaccine distributors • Community immunizers • Federal public health officials • State public health officials • Others (i.e., academicians)

6. Issue Brief: Overview • Summarize influenza vaccine supply issues • Summarize other issue briefs • Provide case studies for previous influenza seasons 1999-2005

7. Influenza Vaccine is Unique Pharmaceuticals Biologics Vaccines Influenza Vaccine

8. Summary of 1999-2005 Influenza Seasons Sources: CDC, 1999b; CDC, 2000b; CDC, 2001a; CDC, 2001c; CDC, 2002a; CDC, 2002b; CDC, 2002c; CDC, 2003a; CDC, 2003b; CDC, 2004a; CDC, 2004c; CDC, 2004d; CDC, 2004f; CDC, 2005b; FDA, 2001.

9. Influenza Vaccine Purchasers • Purchasers • Wholesalers • Immunization Providers • Private healthcare providers • Community immunizers • State and federal governments

10. U.S.-Licensed Influenza Vaccines for 2005–2006 a In 2004, Sanofi merged with Aventis Pasteur to create the Sanofi Aventis Group. The vaccine division of the Sanofi Aventis Group changed its name to Sanofi Pasteur. b FluMist is approved for use among those 5 to 49 years of age who are otherwise healthy and not pregnant. Source: CDC, 2005c.

11. Influenza Vaccine Distribution • Distributors • Manufacturers (direct) • Wholesalers (indirect) • Distribution dependent on manufacturers’ choice

12. Manufacturers ManufacturerA ManufacturerB ManufacturerC Wholesalers Wholesaler1 Wholesaler2 Wholesaler3 Wholesaler4 Purchasers Chain Pharmacies IndependentPharmacies Large Purchaserse.g., MMCAP Hospital Pharmacies MilitaryDoD/VA Providers LHDs VNAs Physicians Clinics Mass Immunizers Hospitals/ERs US Influenza Vaccine Distribution Pathways DoD = U.S. Department of Defense; ERs = emergency rooms; LHDs = local health departments; MMCAP = Minnesota Multi-State Contracting Alliance for Pharmacy; VA = U.S. Department of Veterans Affairs; VNAs = Visiting Nurse Associations

13. Influenza Vaccine Purchase and Distribution Solutions • Improvements in: • vaccine supply • uniformity of distribution and vaccine tracking • infrastructure • support for public health in general

14. Influenza Vaccine: Manufacturing • Brief Biology of Influenza and History of Influenza Vaccination • Influenza Vaccine Manufacturing 101 • Manufacturer Decision Making

15. Influenza Vaccine Manufacturing Process

16. Major U.S. Vaccine Manufacturers in 1980 and 2002 a In 2004, Sanofi merged with Aventis Pasteur to create the Sanofi Aventis Group. The vaccine division of the Sanofi Aventis Group changed its name to Sanofi Pasteur. Source: Shaw, 2004

17. Influenza Vaccines, Manufacturers, and Seasons during which each Vaccine Was Sold a Vaccine Adverse Event Reporting System (VAERS) data used in this table include manufacturer and trade name information taken only from specific incidence reports of vaccine adverse reactions. Data that did not specify specific influenza seasons were not used. b Influenza seasons 1993–1994 through 2000–2001 (CDC, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000). Influenza seasons 2001–2002 through 2004–2005 (FDA, 2005b). c Wyeth and MedImmune had a collaboration for the commercialization of FluMist for the 2003–2004 influenza season. The companies announced the dissolution of their collaboration in April 2004. d Parkedale Phamaceuticals, Inc., was ordered to discontinue production of influenza vaccine following a 2000 FDA inspection. e 1993–1994 trade name not available. Wyeth left the market after losing $50 million over the prior three influenza seasons; 2001–2002 was the worst season, during which the company lost $30 million and had 7 million doses of the vaccine that never sold (Ferguson, 2004). f In 2003, Chironacquired PowderJect as a wholly owned subsidiary. In 2001, PowderJect acquired Medeva—which had previously acquired Evans Medical Ltd.—and restored the Evans name to Evans Vaccines Ltd., a wholly owned subsidiary of PowderJect. Prior to this, Evans Medical Ltd. had acquired the vaccine business of Wellcome. For more information on company acquisitions and mergers, see Vaccine Identification Standards Initiative: Manufacturer Abbreviations (CDC, 2003). g On October 5, 2004, Chiron’s influenza vaccine plant was forced to cease production by government regulators due to contamination issues. h In 1999, Aventis Pasteur, Inc., obtained FluZone vaccine ownership from Connaught Laboratories, Inc. In 2004, Sanofi merged with Aventis Pasteur to create the Sanofi Aventis Group. The vaccine division of the Sanofi Aventis Group changed its name to Sanofi Pasteur.

18. Influenza Vaccine Production aLAIV

19. Influenza Vaccine Economics • The Influenza Vaccine Industry • Barriers to Entry • Vaccine Profits • Demand for Influenza Vaccine • Vaccine Supplier Decisions • Profit-Maximizing Decision Making • Uncertain Demand

20. Influenza Vaccine Economics: The Influenza Vaccine Industry • Barriers to Entry • “Sunk” costs (regulatory and licensing requirements) • FDA licensing fees ~$1M • Clinical trials ~$90M • Production facilities ~$100M • Vaccine Profits • Vaccine prices • Market size • Production costs • Investments in new technologies

21. Influenza Vaccine Economics: Vaccine Supplier Decisions • Profit-Maximizing Decision Making • Uncertain Demand • Pricing Decisions • Vaccine Distribution

22. Demand and Supply

23. Influenza Vaccine: Demand • Factors that Affect Demand: • Price of vaccination • Convenience • Knowledge of influenza’s impact • Severity and timing of influenza season • Demographics • Severity of previous year’s influenza season • Perception of need • Provider’s recommendation

24. Influenza Vaccine Doses Produced and Distributed for the U.S. Market 1999-2004

25. Influenza Vaccine: Demand • Stakeholders • Government (federal, state and local) • Academia • Health care providers • Community immunizers • Advocacy organizations • Health insurance companies • Vaccine industry (manufacturers, distributors) • Wholesalers • Professional societies • Consumers

26. Changes in ACIP Influenza Vaccination Target Groups: 1999–2000 through 2005–2006 Influenza Seasons a Those who will be in the second or third trimester of pregnancy during influenza season. As of 2004, annual vaccination was recommended for all pregnant women, if they were pregnant during influenza season. Sources: ACIP, 1999; ACIP, 2000; ACIP, 2001; Bridges, Fukuda, Uyeki, Cox, & Singleton, 2002; Bridges et al., 2003; CDC, 2005b; CDC, 2005c; Harper, Fukuda, Uyeki, Cox, & Bridges, 2004; Harper, Fukuda, Uyeki, Cox, & Bridges, 2005.

27. Site of Influenza Vaccination of Persons 65 Years of Age and Older 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1999 2002 2003 Year Traditional medical setting Nonmedical setting Health Department Other Source: Compiled from Behavioral Risk Factor Surveillance System survey data (Centers for Disease Control and Prevention [CDC], 1999, 2002, 2003).

28. Influenza Vaccine: Demand • Roles for Stakeholders • Federal Government • “The government sets the tone for private payers as well. Reimbursement done by Medicare, Medicaid, etc. kind of sets the tone for private payers, so adequate reimbursement to the physicians so that they don’t feel that it’s some sort of loss leader for them would be very encouraging.” (Former State Health Official and current academic)

29. Influenza Vaccine: Demand • Roles for Stakeholders (con’t) • State and Local Governments • Public clinics • Public information campaigns • Vaccine Manufacturers • Information/education of health care providers • Role of distributors and sales representatives?

30. Influenza Vaccine: Demand • Roles for Stakeholders (con’t) • Wholesalers • Promote immunization by customers (healthcare providers) • Professional organizations • Promote immunization by and among members

31. Influenza Vaccine: Demand “When’s the last time you saw an immunization message on Superbowl Sunday. If we had a public campaign we could forget ACIP recommendations. We create demand for $200 tennis shoes, why not a vaccine that could save your life? It’s nuts!” (Former state health official)

32. Strategies to Stabilize Influenza Vaccine Supply • Harmonize International Standards • Shorten FDA Approval Process for New Vaccines • Implement Purchase or Buy-Back Guarantees • Increase Demand • Create “Strategic Reserve” • Develop New Technologies

33. Unanswered Questions • Distribution challenges • Effect of legislation relating to: • Thimerosol • Vaccine distribution • Science-based interventions and program evaluation based on pre-defined measures

34. The Role of Public Health

35. Acknowledgements • Amy Nevel, MPH—ASPE Project officer • Key Informants • RTI Staff • Amanda Honeycutt, PhD—Economic analyst • Lucia Rojas Smith, DrPH, MPH—Research analyst • Nathan West, MPH—Project associate • Nancy Lenfestey, MHA—Project analyst • Tara Robinson, BA—Project assistant