JIM LEHRER: The flu vaccine story. Susan Dentzer of our health unit begins. The unit's a partnership with the Henry J. Kaiser Family Foundation.
HEALTH WORKER: We will call your number when we're ready.
SUSAN DENTZER: There were long lines this week for flu shots following news of a major disruption in the flu vaccine supply.
SUSAN GRAHAM: It is important for us to get our flu shots because my husband happens to be diabetic and that is even more important, and we are both over 80 years old.
JEFFREY NASH, Camden County Government, N.J.: We urge seniors to come out, importantly seniors, because it is going to be a bad flu season.
SUSAN DENTZER: At a congressional hearing today, lawmakers said they were shocked that British regulators blocked shipment of about half the flu vaccine destined for the U.S. The British acted this week after one major manufacturer acknowledged that some stocks of its vaccine had been contaminated with bacteria, probably through human error.
REP. HENRY WAXMAN: In late August, the flu vaccine manufacturer Chiron, which has a manufacturing facility in Great Britain, announced that there were potential contamination problems with several million doses. While the company was assuring the public that the problem was under control and while FDA was reviewing the company's investigation, British regulators sent a team of inspectors that shut the plant down. In the United States, public health officials appeared to have been taken completely by surprise.
SUSAN DENTZER: Last year a record 87 million Americans were vaccinated against the flu, a disease that contributes to about 36,000 US deaths each year. Now fewer than 60 million doses of vaccine are likely to be available for this year's flu season, so lawmakers today pressed government health officials about what the impact would be.
REP. PAUL KANJORSKI: We could say that because we're only going to have half the dosage, the likelihood is we may suffer 18,000 additional deaths, or at least 5,000 or something. We're going to have people really die, and as many or more people than died in the World Trade Center.
DR. JULIE GERBERDING: Every year, even with an adequate vaccine supply, people die from flu because we don't get everybody who needs vaccine treated.
REP. PAUL KANJORSKI: Doctor, are any more people likely to die in the United States because of this contamination that otherwise wouldn't have died if we had adequate vaccination capacity?
DR. JULIE GERBERDING: I don't know, but I'm worried about it.
SUSAN DENTZER: Lawmakers also struggled to understand how the US had gotten to the point where only two manufacturers-- Chiron and Pennsylvania-based Aventis Pasteur-- have licenses to produce injectable flu vaccine for the US A third manufacturer, Maryland- based Medimmune, makes an inhalable vaccine but says it will produce only about two million doses this year.
REP. TOM DAVIS: This year's vaccine shortage starkly underscores the need to ensure that adequate production capabilities exist. We're not here today to point fingers, but we go into today's hearing already concluding that the current system is flawed.
SUSAN DENTZER: Government officials explained that much of the problem was linked to the complex economics of the vaccine market, where erratic demand for vaccines often produces erratic supply.
DR. ANTHONY FAUCI: If you look at the climate of how we look at vaccine development, it's a very risky business for a company to get involved-- risky because of the profit margin, risky because you're dealing with biologics. And biologics are much more difficult to predict the success of it. And then there's the issue of the use of the vaccine, which is used once or twice or three times in a person's lifetime, as opposed to the other possibility of the same company developing a blockbuster drug. And then finally it's the issue of pricing, and how our culture views how much is one is willing to pay for a vaccine.
SUSAN DENTZER: Government officials said today they see no chance that the British decision will be reversed. Meanwhile, they said they were proceeding with plans to make sure the existing vaccine supplies would be distributed around the country to those most at risk.
RAY SUAREZ: For a closer look at some of the key questions posed by the vaccine shortage, I'm joined by two experts in the field: Dr. Greg Poland is director of the Vaccine Research Center at the Mayo Clinic in Rochester, Minnesota. He's also a member of the Federal Advisory Committee for Immunization Practices. And Dr. Anthony Fauci is director of the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health. He testified at today's hearing.
We asked representatives of the Pharmaceutical Industry Association to join us; they declined.
Dr. Poland, during the recent decades when doctors have recommended that tens of millions of Americans get a flu shot every year, the number of suppliers shrank from more than two dozen to five. Why didn't steady demand create supply?
DR. GREG POLAND: Well, that's a very good question. I think the problem has been the mismatch between demand and supply. Remember that the manufacturers make all of this vaccine, so to speak, at risk. They don't know whether they're going to sell the vaccine that they make. And, in fact, during that same time period, most manufacturers ended up throwing away between three million to as much as ten million doses of the vaccine.
RAY SUAREZ: But there have been shortages of one form or another four out of the last five flu seasons. It sounds like a pretty good business to be in, isn't it?
DR. GREG POLAND: Well, you would think so if you had a big enough market for the vaccine, if you could make enough profit on it to reinvest in the capital expenditures required to build and sustain a plant to manufacture the vaccine and if you could afford the regulatory processes that you have to get through in order to license that vaccine.
Let me just give you one example of the scale that we're talking about. Last year, Medimmune was able to get a license to market influenza vaccine as an intranasal spray in the United States. From start to the time that they marketed it, it cost them a billion dollars to get to that point.
Now, how long would it actually take them in the economics of the influenza vaccine to recover that investment? Most people would say they will not be able to recover in the time period before they would have to upgrade or replace the plant that they make it in.
So what's happened is just in the last handful of years we have gone from four manufacturers of injectable vaccine down to two manufacturers and now the entry of Medimmune with their non-injectable intranasal vaccine.
RAY SUAREZ: But, Dr. Fauci, why is it so hard to make back your money? In any number of other commodities if there's a shortage you have got ready manufacturers jumping in saying "okay, I'll start making this thing." What is it about flu vaccine that makes it so hard even for pharmaceutical companies to step in and say "okay, we'll try to address this shortage"?
DR. ANTHONY FAUCI: Well, there's a problem with the entire vaccine enterprise as it were, but Dr. Poland made very good points. It is extremely risky for companies to get involved, even if there's the perception that there's going to be shortages.
Well, as a matter of fact you had mentioned but last year there were 87 million doses were made even though there were a perception of being shortage, we used 83. Two years before, we had to throw away 12 million doses that weren't used.
So it is a situation where the vaccine companies have very few incentives to get involved. A, the profit margin is really quite low and they have the option, they say "should I get involved the in making a vaccine, a pharmaceutical company, or should I take my resources and go towards perhaps getting a blockbuster drug that someone will use everyday of their life and there will be a great profit?" -- as opposed to a vaccine which, as we just heard, it's really unpredictable. People would use it maybe one, two, three times in their life. It depends on the season, it depends on the perception.
And when you're dealing with a biologic, namely a vaccine, the risk in unexpected glitches like we're seeing now with Chiron is much greater than if you have a drug that's synthesized and done in a way almost like a factory output. Biologics are much, much more risky.
There are a number of reasons why the entire climate and environment of the vaccine industry is very fragile, as we've been saying.
RAY SUAREZ: Well, Dr. Poland, expand on that point. The loss of one manufacturer, Chiron, took 48 million doses out of the system. But we're hearing that it's difficult for somebody to just step forward and start rolling it out. Why? What is it that's so hard about a flu vaccine?
DR. GREG POLAND: I think a number of things. As Dr. Fauci was commenting, one unique aspect of influenza vaccine is that, in essence, manufacturers are developing three new vaccines every year, two different a components and one b component. They make all of that vaccine at risk. They do not know if they are going to have a market to sell that in. The expenditures from a capital point of view in the plants are huge, as I suggested before. And I think it's a lesser problem, but they've also had liability exposure.
One of the things that we could do here is for government incentives to be put in place to both sustain interest of the manufacturers that are in the market right now and to attract new manufacturers. And perhaps we'll have the time to discuss that.
RAY SUAREZ: Well, government incentives, is that just another way of saying a subsidy to guarantee a revenue stream for a producer so there won't be so much risk in making it?
DR. GREG POLAND: Well, I think that's part of it. And it doesn't have to be a direct financial subsidy. For example, some ideas that have been surfaced might be to extend the patent on intellectual property. The other possibility would be to incentivize manufacturers by doing things like providing platform technology for them.
An example of that would be right now the very labor-intensive and expensive way that influenza vaccine is made involves the use of millions of chicken eggs. They literally have to be examined -- hand examined by a human in order to make this vaccine. There are cell culture base techniques for which the NIH, as a matter of fact, has devoted resources, but wouldn't it be wonderful if the government could, as one example, assume the cost of developing that platform technology to a certain point and then handing it off to manufacturers?
RAY SUAREZ: For the purpose of tonight's conversation, you're speaking for the government.
DR. ANTHONY FAUCI: Well, it's a very good point and that's exactly what we're doing. There are a number of wise that we can incentivize. There's some regulatory relief, there are guaranteed purchases, there are the tax reliefs that Dr. Poland talks about.
But the developmental helping is important, and that's what the NIH does and has been doing for some time now. And that is developing methodologies and sharing them and translating them to the industry so that they don't have to take upon themselves to develop it.
The one point that was just made is a critical point. The vicissitudes of having a tenuous process of chickens to hundreds of millions of eggs to growing the virus, to making the vaccine, it's something that if you started off, it goes in sequence so that if you get to point "C" and you have a glitch, you have to start all the way over again to point "A."
That's the reason why we cannot turn on a dime now and make up for the 50 plus million doses that we've lost from Chiron.
If you have a different system that's more flexible, more predictable, and sounder like a cell culture technique, which means instead of growing in the eggs you grow it in a cell culture that you have direct control over of revving it up, revving it down, doing a surge capacity that you don't have with the eggs.
Those are the kind of technological advances that the government is trying to help out by translating that to the industry so they can utilize it and not have to make their own investment to do that.
RAY SUAREZ: Well, if we're talking about something that is both important for the public health, talking about 36,000 deaths in the United States, 100,000 hospitalizations --
DR. ANTHONY FAUCI: Two hundred thousand.
RAY SUAREZ: -- and something that the private sector seems not to want to do, how come the government doesn't just do it?
DR. ANTHONY FAUCI: Well, that's a very good point that comes on and off the table over the years. It's an issue that we keep addressing.
Would bit feasible for the government to actually take over and become a vaccine manufacturer? There are a number of problems with that concept, although it might sound attractive to some.
One of them is that the expertise of the development of vaccines is soundly in the companies. Rather than take it over, we need to think of creative ways of partnering with industry better in a way that's beneficial to both.
The other thing is that you'll find yourself in a difficult situation since the government is the regulator that you'd have a clear conflict of regulating the thing that you're doing. So that's going to be a problem.
So rather than try and develop a whole new concept of taking it over, there are many, many ways that we can partner more strongly and share responsibilities with the industry.
We discussed this at the congressional hearing today, and I think we're going to be hearing more of that.
RAY SUAREZ: Well, Dr. Poland, before we go, given that this season is what it is now and you're going to have many millions of fewer doses than you need, who's on the must-immunize list for the rest of the winter?
DR. GREG POLAND: Well, I think the top priorities have been well outlined by the Advisory Committee on Immunization Practices, which advises the CDC. This includes children 6 to 23 months old, the parents and siblings, household contacts and caregivers of children zero to six months old, pregnant women, people over the age of 65, people between the age of 2 and 64 years who have chronic medical conditions that place them at risk for morbidity and mortality; health care workers who have direct patient care contact; and children who are on chronic aspirin therapy. Those are the individuals that really have to get the vaccine. And I might add, we're really asking the American public to do something we haven't done before and that is to put those groups I've just outlined ahead of themselves, to allow those at greatest risk to get this life-saving vaccine.
RAY SUAREZ: Dr. Poland, Dr. Fauci gentlemen, thank you both.
DR. ANTHONY FAUCI: Thank you.
DR. GREG POLAND: Thank you, Ray.