[Senate Hearing 107-97]
[From the U.S. Government Publishing Office]
S. Hrg. 107-97
THE VACCINE VACUUM: WHAT CAN BE DONE TO PROTECT SENIORS?
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
PORTLAND, OR
__________
MAY 30, 2001
__________
Serial No. 107-7
Printed for the use of the Special Committee on Aging
U.S. GOVERNMENT PRINTING OFFICE
74-367 WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington,
DC. 20402
SPECIAL COMMITTEE ON AGING
LARRY CRAIG, Idaho, Chairman
JAMES M. JEFFORDS, Vermont JOHN B. BREAUX, Louisiana
CONRAD BURNS, Montana HARRY REID, Nevada
RICHARD SHELBY, Alabama HERB KOHL, Wisconsin
RICK SANTORUM, Pennsylvania RUSSELL D. FEINGOLD, Wisconsin
SUSAN COLLINS, Maine RON WYDEN, Oregon
MIKE ENZI, Wyoming EVAN BAYH, Indiana
TIM HUTCHINSON, Arkansas BLANCHE L. LINCOLN, Arkansas
PETER G. FITZGERALD, Illinois THOMAS R. CARPER, Delaware
JOHN ENSIGN, Nevada DEBBIE STABENOW, Michigan
JEAN CARNAHAN, Missouri
Lupe Wissel, Staff Director
Michelle Easton, Minority Staff Director
(ii)
C O N T E N T S
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Page
Opening statement of Senator Ron Wyden........................... 1
Panel I
Mary Keene, Portland, OR......................................... 03
Panel II
Janet Heinrich, Dr. PH, RN, Director, Health Care--Public Health
Issues, U.S. General Accounting Office, Washington, DC......... 6
John Sattenspiel, M.D., Salem, OR................................ 57
Stephen Allred, Nurse Practioner, Owner and General Manager,
GetAFluShot.Com, Clackamas, OR................................. 62
Panel III
Keiji Fukuda, M.D., Chief, Epidemiology and Surveillance Section,
Influenza Branch, National Center for Infectious Diseases,
Centers for Disease Control and Prevention, Atlanta, GA........ 71
Sanford Kaufman, Director of Public Policy, Aventis Pasteur,
Swiftwater, PA................................................. 85
Matthew J. Rowan, President and CEO, Health Industry Distributors
Association, Alexandria, VA.................................... 90
Steve Skoronski, President and CEO, Associated Medical Products,
Indianapolis, IN............................................... 102
Grant Higginson, M.D., MPH, State of Oregon Health Officer,
Portland, OR................................................... 111
APPENDIX
Statement of Rep. Gary A. Condit................................. 133
Letter from GAO.................................................. 134
Background on Influenza and Vaccine Manufacturing and
Distribution in the U.S........................................ 137
Letter from Aventis Pasteur...................................... 153
OMPRO's written comments......................................... 155
(iii)
THE VACCINE VACUUM: WHAT CAN BE DONE TO PROTECT SENIORS?
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WEDNESDAY, MAY 30, 2001
U.S. Senate,
Special Committee on Aging,
Portland, OR
The committee met, pursuant to notice, at 9:30 a.m., in the
Metro Regional Building, 600 N.E. Grand Avenue, Portland, OR,
Hon. Ron Wyden, presiding.
OPENING STATEMENT OF SENATOR RON WYDEN
Senator Wyden. The Senate Special Committee on Aging will
come to order, and it is a pleasure to be home and have a
chance to examine some critically important issues to senior
citizens in our communities this morning. I especially want to
express my gratitude to Senator Larry Craig and Senator Breaux.
The Senate Aging Committee has always worked in an intensity
bipartisan way on the critical issues involving this country's
senior citizens. I'm very pleased that two good friends of
mine, Larry Craig and John Breaux, constitute the leadership of
our Select Committee on Aging. We are very fortunate to have
their staffs represented here today, which is yet an indication
that Senator Craig and Senator Breaux are especially concerned
about this issue. I want to express my appreciation to the
Committee and to Senator Craig and Senator Breaux for their
leadership.
I want to begin with an announcement this morning. Today, I
was able to talk with the Secretary of Health and Human
Services, Tommy Thompson, and we discussed the flu shortage
issue and the problems that we have experienced in this
country. He shares my view that it is time to put in place a
system that really works for senior citizens and communities
across this country.
Fortunately, it was possible to dodge the bullet last
winter due to a variety of circumstances that we will discuss
this morning, but that is not always going to be the case. It
is unacceptable, in my view, that a dose of vaccine becomes a
rare privilege in this country and that there would be a hit
and miss system where many vulnerable people simply end up
going without this essential healthcare services.
So, this morning, I asked Secretary Thompson to create
within the next 60 days, a plan to insure that we do not have a
shortage this winter or in the days ahead. The Federal
Government has been studying this issue for long enough. The
Federal Government has been examining this kind of question now
for more than a decade. I asked Secretary Thompson to bring
together industry, particularly the manufacturers and
distributors, State health specialists, consumer groups, work
with the bipartisan leadership of the Senate Aging Committee,
Senator Craig, and Senator Breaux, and to put in place a plan
to insure that there will not be shortages of this critical
needed health service in the future.
The Secretary, to his credit, agreed to my request. So,
what will happen now within 60 days, we will have an effort
underway to insure that we do not have these shortages in the
future. It will be a bipartisan effort working under the
auspices of the Secretary, but with Senator Craig and Senator
Breaux and other interested senators involving health
specialists at the State level, consumer groups. We are going
to get a system in place so we do not have to have our seniors
and our communities and families at risk this winter. We will
not have to have a hit and miss system that leaves vulnerable
people behind and uncertain about where to turn to get
assistance.
I want to make sure that it is understood that I think that
Secretary Thompson moving so quickly deserves great credit, and
it is certainly a statement on the part of the Secretary and
the administration that they want to work with the Congress and
not repeat the problems of last winter. I am very appreciative
of the Secretary's response.
Suffice it to say, last year, this country was lucky. It
was a light year for the flu. Had there been a true epidemic,
it is my view that there would have been real tragedies across
this country. The flu vaccine is absolutely basic to protecting
the health of seniors and other high risk patients, and it is
critical that access be assured to this vaccine. In a sense,
last year's shortage was more than a wake-up call. It was a
real alarm bell making it clear that now is the time to get
serious about this issue. That is why Secretary Thompson's
willingness this morning to turn this problem around over the
next 60 days is welcome.
We are going to examine this morning, a number of issues,
the congressional watchdog office, the General Accounting
Office at the request of a number of us in the Congress
particularly, including myself, have put together an excellent
set of recommendations going to be discussing what the Federal
Government's role should be in distributing flu vaccines to
seniors and other high risk patients.
Suffice it to say, given the Secretary's agreement with me
this morning and with his willingness to work with the
bipartisan leadership of the Aging Committee, I am particularly
hopeful that our witnesses will give us suggestions of what
they would like to see in this plan that is going to be
designed over the next 60 days to deal with this issue.
Given the openness and responsiveness of the Secretary--put
a special kind of focus on trying to get those ideas and
suggestions.
Finally, I want to thank the good folks at Metro. We may
have Mr. Bragden and others here, but they are allowing us to
use this beautiful facility for this morning's hearing, and we
appreciate that. And why don't we go now to our witnesses
beginning with Mary Keene of Portland?
STATEMENT OF MARY KEENE, PORTLAND, OR
Ms. Keene. Good morning.
Senator Wyden. Ms. Keene, welcome. And we'll put your
complete statement into the hearing record in its entirety, and
you just speak in any way that you feel comfortable. And we
sure appreciate your coming and anxious to hear from you.
Ms. Keene. It is an honor to be here. I would like to
thank----
Senator Wyden. Why don't you pull that microphone down just
a little bit? Perfect.
Ms. Keene. There?
Senator Wyden. Perfect.
Ms. Keene. It's fine?
Senator Wyden. You are doing better than perfect.
Ms. Keene. Good morning again. I would like to thank
Chairman Craig and Senator Wyden for inviting me to give my
testimony this morning in front of the U.S. Special Committee
on Aging.
My name is Mary Keene. I am 67 years old. I am currently
living in Portland, OR as a retired senior citizen. I also
spend my days volunteering at Loaves and Fishes serving meals
to the elderly. My experience with receiving a flu shot this
past flu season was frustrating, and it left me without a flu
shot in 2000.
This past September, I planned to attend an annual Loaves
and Fishes Flu Shot Fair. Because of the vaccine shortage, the
doctors who were participating canceled a prearrangement event
because he ran out of the flu vaccine. That meant I and many
other senior citizens were left without this important vaccine.
Since I had a doctor's appointment for my annual physical
checkup in December, I believed I could get a vaccination then.
Unfortunately, my doctor's receptionist told me I could not
have a flu shot because I was not in high risk category. I
believe that I was in a high risk population because I am a
senior citizen.
After visiting the doctors, I decided to stop by the local
Fred Meyer's, a grocery store that was also sponsoring a flu
shot fair. I stood in line for 40 minutes. When I reached the
front of the line, the vaccine was completely out. I also went
to another grocery store chain, Safeway, a couple of days
later, and they ran out as well. Because of my early
experience, I gave up on getting a flu shot altogether.
Senator, I do not want to gamble with my health in the
future. I was fortunate this past year that I was not sick with
the flu, but I did get sick. I hate to think of all the senior
citizens like me who were unable to get a flu shot and did get
sick. I hope that you do something to help ensure that I
receive a flu shot this coming year. Taking the necessary
preventing measures like the flu vaccine is important to me and
other seniors like myself.
Thank you, Senator Wyden and Committee staff for looking
into this issue. Mary Keene, senior citizen.
[The prepared statement of Ms. Keene follows:]
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Senator Wyden. Well, thank you very much for an excellent
statement. I gather from what you said is that what happened
last year was you and other senior citizens basically had to
traipse all over town--you went to your doctors' office, you
went to grocery stores, you went to various programs trying to
find the flu vaccine. In a lot of instances even after
traipsing all over town, you couldn't figure out how to get it,
and at some point, everybody just gives up in frustration. Is
that a fair account of what happened?
Ms. Keene. Yes.
Senator Wyden. Your sense is that a lot of seniors had the
same sort of experience? You started with your doctor's office;
is that right? The first visit you made was to your doctor's
office?
Ms. Keene. Right. Yes, sir.
Senator Wyden. Your doctor essentially didn't know where
else to turn, I mean, given the fact that the doctor ran out?
What did he say you ought to do?
Ms. Keene. My doctor?
Senator Wyden. Yes.
Ms. Keene. She went to her receptionist, like I said in my
testimony, and the receptionist said that I could not really
have it because they were keeping whatever vaccine they had
left for the higher risk patients.
Senator Wyden. I see. So, they actually had some vaccine
there?
Ms. Keene. Yes.
Senator Wyden. And your physician, in effect, said, You
know, Mary, we would like to be able to help you, but we have
got to hang on to it for higher risk people. And then she
said--at least the physician and the receptionist--they said,
``Sorry. You are going to have to go somewhere else.'' Ms.
Keene. Well, they didn't put it that I would have to go
somewhere else. I just proceeded to try to get it somewhere
else.
Senator Wyden. I guess what I was looking for--I mean, it
just seems to me that the chain of distribution with respect to
flu vaccine breaks down at every single stage of the process.
Ms. Keene. Right.
Senator Wyden. There you are. You want it from your doctor.
And I'm sure your doctor was a good person. She would have
liked to have given it to you, but she had to reserve it for
other people. So the next thing you did is ask yourself ``Well,
can they give me a place where I can get it?'' And apparently,
they couldn't do that. Then, you went to one grocery store, and
they weren't able to give it to you. And then by your
testimony, which is very good, you went to another grocery
store, and they couldn't give it to you. So, it was like here
in our hometown, the whole distribution system seems to have
broken down; is that right?
Ms. Keene. Right.
Senator Wyden. OK. Well, I guess the only other question
is, how did you learn about the system at the outset? Did you
get information from senior programs and the like, or did you
just say to yourself, ``I know I ought to go to my doctor's
office on my own.'' How did you first learn about the
availability of----
Ms. Keene. Flu shots?
Senator Wyden. Yes.
Ms. Keene. We had an activity coordinator who arranged for
we seniors at the center to get the shot. She prearranged with
a doctor who was supposed to come in, and he ran out of--she
said--she came in and told us one day that he would not be
here. He had to cancel because he didn't come in.
Senator Wyden. Well, this is very helpful because what you
have said now is the breakdown with respect to your access to
the physicians was both at the senior center where you thought
somebody was going to come, and then that person couldn't get
the vaccine and it also was a problem in the doctor's office
because they said, ``Mary, we can't give it to you because we
have to save it for higher risk individuals.'' This is exactly
what we're going to try to correct in the next 60 days because
I just don't think folks like yourself who are active members
of our community and volunteering in senior programs should be
subject to this kind of treatment. You ought to be able to go
to one place and be able to get access to a vaccination and
that would be that. That may be too logical for the Federal
Government at this point, but we're going to sure try to change
it. And the Democrats and the Republicans are going to work
together, and we are going to get it done.
Ms. Keene. Thank you.
Senator Wyden. Anything else you would like to add?
Ms. Keene. Not that I know of.
Senator Wyden. All right.
You said it very well.
Ms. Keene. I believe I said everything that needed to be
said.
Senator Wyden. And you said it very well, and I thank you
for coming.
Ms. Keene. Thank you very much. Thank you, staff.
Senator Wyden. OK. Our next panel, Janet Heinrich with the
General Accounting Office, John Sattenspiel, M.D., Salem, OR,
Stephen Allred, GetAFluShot.com, Clackamas, OR.
Welcome to all of you. And Janet, always good to see you
and know about the fine work that you all do there at the GAO
and welcome to Oregon. Why don't we begin with you, and we'll
put your prepared statement into the record. And if you would
summarize your principle views, that would be great.
Ms. Heinrich. Thank you.
STATEMENT OF JANET HEINRICH, DIRECTOR, HEALTH CARE-PUBLIC
HEALTH ISSUES, U.S. GENERAL ACCOUNTING OFFICE, WASHINGTON,
DC
Ms. Heinrich. Thank you, Senator Wyden. I am pleased to be
here today to discuss problems from a national perspective that
occurred last fall with shortages of influenza vaccine. These
problems could repeat themselves in the future. I'm here to
report on some steps that could help better prepare for future
shortages.
You asked us to examine reasons for delays in production
and distribution and pricing of the 2000/2001 flu vaccine. I
will also address approaches Federal agencies could take to
prepare for future disruptions in vaccine supply. My comments
are highlights from a recently released report on the flu
vaccine and supply problems.
In Oregon, as in the rest of the Nation, influenza and
pneumonia rank as the fifth leading cause of death among
persons 65 and over. People are encouraged to obtain a flu shot
each fall to protect against the disease. Producing the vaccine
is a complex process that takes at least 6 to 8 months for
manufacturers to produce. Each year's vaccine changes the
strains of the virus to better protect against the expected
varieties circulating that season.
Last fall, two manufacturers had unanticipated problems
growing one of the two new strains introduced in the vaccine.
Also, two of the four manufacturers producing vaccine, shut
down parts of their facilities because of FDA concerns about
good manufacturing practices. One of those did not reopen. Now,
only three companies, two in the U.S. and one in the United
Kingdom, produced the vaccine used in the United States.
Because of these problems, only about 28 million doses were
available by the end of October. Seventy-eight million were
expected. Companies experienced problems in production to
varying degrees. So, when a health care provider received
vaccine depended on which manufacturer's vaccine it ordered.
For example, health departments and other public entities in 36
States, including Oregon, banded together under a group
purchasing contract and ordered about 2.6 million doses from
the manufacturer, as it turns out, experienced the greatest
delays from production difficulties. These entities then, these
public organizations, did not receive most of their vaccine
until mid to late December. Because supply was limited,
distributors and others who had supplies of the vaccine had the
ability and the economic incentive to sell their supplies to
the highest bidder rather than filling lower priced orders that
they had already received.
Those who purchased vaccine in the fall had to pay much
higher prices. For example, a physician group ordered the
vaccine at $2.87 per dose in April. When none arrived in
November, the provider approached another distributor and
purchased vaccine at the escalating prices of $8.80, $10.80 and
ultimately, $12.80 per dose.
Demand for the vaccine dropped as additional vaccine became
available after the expected flu season passed. Roughly, one-
third of the total distribution was delivered in December or
later. Because of the waning demand, manufacturers and
distributors reported ultimately having more vaccine than they
could sell. In a typical year, there is enough vaccine
available in the fall to give a flu shot to anyone who wants
one. However, when the supply is not sufficient, there is no
mechanism currently in place to establish priorities and
distribute flu vaccine first to high risk individuals.
CDC took some steps to try to manage the anticipated
vaccine delay by issuing recommendations for first vaccinating
high risk groups such as persons age 65 and over and those with
chronic health conditions. Several States took actions to
ensure that high risk groups obtain flu shots. A few States
have explicit requirements to offer the vaccine to nursing home
residents, while others developed collaborative coalitions
among provider groups. These efforts to target high risk groups
were not always successful. The timing of some mass
immunization campaigns upset physicians and public health
officials because grocery stores were offering flu shots to
anyone when they were unable to obtain vaccine for their high
risk patients. Manufacturers and distributors told us that it
was difficult to determine which of their customers should
receive priority, nor did they have plans in place to
prioritize deliveries. As a result, they made partial shipments
to all customers as one way to ensure that all providers had
some vaccine. Others shipped vaccine only to nursing homes or
first to nursing homes where those could be identified and to
physicians offices.
We need to recognize that flu vaccine production and
distribution are private sector responsibilities and that the
Department of Health and Human Services has no authority to
control flu vaccine production and distribution. Working within
these constraints, we believe it would be helpful for the
Health and Human Services agencies to take some additional
actions. For example, CDC needs to continue to provide
leadership in organizing and supporting efforts to bring
together all interested parties to formulate voluntary
guidelines for vaccine distribution in the event of another
shortage.
CDC can concentrate greater efforts on education and
outreach to members of the public and providers focusing on the
value of being immunized past November.
Finally, while vaccine against pneumococcal disease is not
a substitute for the annual flu shot, CDC and the Health Care
Financing Administration should collaborate to increase
vaccination rates for these diseases in adults 65 and over and
for other high risk groups.
This concludes my remarks, Senator Wyden. And I am happy to
answer any questions you may have.
[The prepared statement of Ms. Heinrich follows:]
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Senator Wyden. Thank you. Thank you very much. And as
always, we really appreciate your good work at GAO. I'll have
some questions in a moment.
Dr. Sattenspiel.
STATEMENT OF JOHN SATTENSPIEL, M.D., SALEM, OR
Dr. Sattenspiel. Thank you. My name is John Sattenspiel. I
am a family physician, and I am here on behalf of the Oregon
Medical Association and the Oregon Academy of Family
Physicians.
I would like to thank you for asking me to appear before
this body, and I appreciate the opportunity to share with you
my perspective on the matter of influenza vaccine availability
during the 2000/2001 flu season.
By way of background, I am in a four-physician family
practice group. We are located in Salem, OR. During the fall
and early winter of 2000/2001, our practice was responsible for
the primary care of approximately 9,000 patients. The number in
my statement is actually an error. It's about 18 percent where
high risk over age 65, and probably another 5 percent or so
with other high risk conditions.
Prior to the start of the immunization season, sometime
around February of the year 2000, we placed an order for our
usual quantity of vaccine with our local distributor at a
quoted price of $3.95 per dose. In early October, we learned
that our distributor would not be able to provide us with any
vaccine whatsoever. Fortunately, we were able to round up
vaccine from a national distributor and were able to obtain
about two-thirds of the vaccine that we needed at a price of
$4.67 per dose.
Due to the limited quantity of the vaccine that we
received, we initially restricted the use of the vaccine to
members of high risk groups and our office staff. This
situation then lasted until around mid-December when we
received enough additional vaccine to then offer immunization
to all of our patients who desired it.
We are very fortunate because this year's flu season was
extremely mild, and in the end, we did have adequate supply of
vaccine. Perhaps the most difficult aspect of the shortage from
my perspective was the confusion and the uncertainty among my
staff and the public about how best to deal with the situation.
Early in the season, many of my high risk patients were
quite nervous about being able to receive their vaccinations.
Many of the media reports that they had seen made it seem as if
only a very fortunate few would have access to the vaccine. It
took some doing for my office staff to reassure them that we
were prioritizing our use of the supply that we had and that
our supply would be sufficient to allow us to vaccinate them at
the appropriate time.
I would like to come back to that, if I could. Later in the
season, some of my more public-minded patients called for
advice when their employers offered immunization to their
employees, most of whom were in low-risk groups. Because it
rapidly became clear that the shortage was more apparent than
real and especially in light of the mild flu season, we were
then able to advise them to accept the vaccine, if desired.
I recently attended the OAFP's Annual Scientific Assembly.
During that organization's Congress of Members, a resolution
addressing broader issues of vaccine and pharmaceutical
shortages was debated. In the course of that debate, I polled
some of my colleagues about their experiences with vaccine
supply issues. I received only one reply, and that was from a
physician in solo practice in Newberg who reported that his
supplier too had canceled his order due to lack of supply. He
was able to obtain a supply from another distributor, but again
at a much higher price. He reported that when he looked into
the matter, the only answer as to why his original order had
been canceled, and he was only able to obtain it at a higher
price was that the initial supply had been snapped up by large
commercial organizations that were using vaccines for marketing
purposes. This was the only report, however, that I heard of
that nature, and I have no corroboration of its facts.
In summary then, this year the matter seems to have been a
temporary glitch in the vaccine distribution system that was
fortunately resolved relatively quickly, and more fortunately
occurred in the context of a very mild influenza season. My
major concern is that this episode clearly uncovered that our
system of allocated vaccines will be woefully short of adequate
in the circumstances where there is a genuine shortage of
vaccine and/or a more severe influenza season. In the future,
it will be important for the system to have some mechanisms in
place to assure that those who are responsible for high risk
patients will have access to limited vaccine supplies and that
those who have vaccines to administer will take care to deliver
it to the most appropriate patients.
[The prepared statement of Dr. Sattenspiel follows:]
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Senator Wyden. Doctor, thank you.
Mr. Allred.
STATEMENT OF STEPHEN ALLRED, NURSE PRACTITIONER, OWNER AND
GENERAL MANAGER OF GETAFLUSHOT.COM
Mr. Allred. I am Nurse Practitioner Steve Allred with
GetAFluShot.com. Senator Wyden, I want to thank you for the
opportunity to speak before this committee hearing on the flu
vaccine shortage that occurred this past fall.
My company, GetAFluShot.com, received 50,000 doses of
influenza vaccine from General Injectables and Vaccine the week
of October 16. This represented our entire pre-book order with
the company. GetAFluShot.com has a 9-year history of purchasing
vaccine through this company. We paid the pre-book price that
had been agreed to the previous spring.
I have made some revisions on the percentage changes from
the original document to correct them. This price was 65
percent higher than we had paid the previous year for flu
vaccine. In September, this company advised us that additional
flu vaccine, if and when available, would be increased another
64 percent. We purchased no more vaccine through that company
last season.
We did receive an additional 30,000 doses of flu vaccine in
November and December from two other wholesalers who we had
also pre-booked flu vaccine through them the previous spring.
Both wholesalers honored their pre-book price which is similar
to what we paid GIV.
In September and October, we were contacted by several
other wholesalers previously unknown to us. These wholesalers
offered immediate shipments of flu vaccine for prices ranging
from $70 to $130 per ten-dose vial. As the committee is aware,
these prices exceeded the Medicare reimbursement rate.
Purchasing vaccine at these prices would have made it
impossible for us to service Medicare recipients. We did not
purchase any vaccine through them.
GetAFluShot.com is a mass provider of flu vaccinations
having administered more than 66,000 flu shots in Oregon,
Washington and Idaho this past season. As professional
healthcare providers, we break down access barriers bringing
adult immunizations to the people. GetAFluShot.com provides
immunizations in senior centers, retirement facilities, adult
foster homes, churches, grocery stores and the workplace.
One item that I would like to add to the statement,
Senator, is that in most counties that we went to throughout
Oregon and Washington, county health departments contacted us
to be able to send their high risk patients to the clinics that
we were operating in their county. Most of our services are
provided in grocery stores. The major grocery chains that we
work with include Thriftway, Sentry, Red Apple, Rosauers,
Supervalu, and Zupan's. These grocery stores donate space to
host flu shot clinics and receive no revenue from this
community service. In fact, busy flu clinics disrupted regular
activities and cost stores sales numerous times this past
season. GetAFluShot.com made every effort to comply with the
Center for Disease Control's recommendations to prioritize
service to seniors and the medically needy. Copies of the
guidelines were posted at clinic sites and distributed to those
in lines. Our guidelines were also posted at our web site,
GetAFluShot.com. We relied upon self-policing, what we found to
be a very effective policy. It was regularly reported that
people took themselves out of line, sometimes after being there
for an hour, with some comments to the effect, ``I can wait
until next month for my shot.''
Unfortunately, it was also observed that several people who
were high risk but not elderly deferred their own flu shots,
apparently out of confusion. GetAFluShot.com also deferred the
majority of business vaccinations until the supply issues
resolved. I am a strong believer in voluntary guidelines. A
mandatory priority system would require us to obtain
documentation from everyone not obviously over the age of 64.
Many diabetics, asthmatics, and those with cardiac disease
would be dissuaded from obtaining needed protection from the
potentially deadly complications of influenza. Our staff,
already working at capacity, would be further strained and
perceived as adversarial rather than supportive.
The decision to honor the CDC guidelines was not without
cost to our company. In a typical year, 25 percent of our flu
shots are provided to Medicare recipients. During the shortage
this past season, this increased to 42 percent Medicare's
reimbursement rate is significantly lower than the retail
price. Deferring employee vaccinations cost us contracts both
last season and for seasons to come. We continued offering
immunization clinics through mid-January. Unfortunately, many
did not obtain flu shots once they were available. Our company
finished this season with approximately 14,000 unused doses of
flu vaccine. Without the limitations of the priority system
that we voluntarily put into place, we could have easily
administered all of those flu shots and more.
Our wholesalers are advising us of the probability
of another 79 percent increase in the wholesale price of flu
vaccine for the 2001/2002 season. This means that
GetAFluShot.com and others will be paying up to three times the
price paid for flu vaccine 2 years ago in 1999. We were forced
to raise the price for flu shots this past year. The public
understood, and there were few complaints. Medicare
reimbursement rates also were increased retroactively, we were
notified, in April to adjust to the increased wholesale cost.
Medicare reimbursement rates will again need to be adjusted for
this coming season.
Again, I appreciate the opportunity to speak before the
committee, and I will gladly answer any questions, Senator
Wyden.
[The prepared statement of Mr. Allred follows:]
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Senator Wyden. Well, thank you all. It's very helpful to
have your testimony. And let me ask you a few questions.
The Oregon Medical Association, in a letter to me at the
end of last year, described the current system for distributing
flu vaccine as ``chaotic'' and ``irrational.'' Would any of you
three disagree with that assessment?
Ms. Heinrich. I think one of the things that we have to
remember, Senator Wyden, is that when we have enough vaccine,
the system seems to be working quite well. We're able to--in a
very short period of time--provide vaccine to a lot of people
across this whole country. The problem is that when you have a
shortage, and you have these multiple approaches for
distribution, the system does appear to be chaotic, and in
fact, we found that it really depended on which manufacturer
and which manufacturer was working with which distributors was
a key factor on when you would get your vaccine. So, in fact,
some people really did have vaccine available relatively early
in the season, not as early as usually, but they had it in
October. But there were also existing contracts so that mass
immunizers; as we heard, were able to obtain a limited supply
of vaccine relatively early as well. What it meant is that
there were many providers serving high risk groups that could
not find easy access to the vaccine.
Senator Wyden. I think I am going to record that as a
``yes'' answer to my question that it's chaotic and irrational
with the important qualifier that you have made, which is that
it applies when there is a shortage. I think it is fair to say
that experts agree when you have got a boatload of vaccine
available for all concerned, you can deal with pretty much
any situation. Although we'll need to get to the price
question that Mr. Allred mentioned in a moment. I appreciate
your thoughtful answer.
Did you want to add anything?
Dr. Sattenspiel. I would simply echo those comments with
the statement that I think, in large measure, the public health
policy in regards to vaccine is very clear, and in most of our
offices with apologies to Ms. Keene who had difficulty getting
her vaccine when she was clearly high risk, most of our offices
generally do a pretty good job of identifying high risk
patients and prioritizing our use of our vaccine, but what
happens in between the clear policy and the actual delivery in
our offices is truly chaotic.
Senator Wyden. Do you want to add anything to that, Mr.
Allred?
Mr. Allred. The only comment to add is that it was an
extremely chaotic season for us and for others.
Senator Wyden. The one thing you all didn't get into is
this matter of trying to turn this around in the next 60 days,
because I feel very strongly that after all of this study and
after all of these reports, we have got an opportunity now with
the Secretary who said this morning and wants to work on a
bipartisan basis with this committee that he wants to turn this
around that this has festered long enough.
So, let us take a minute, and each one of you sort of
pretend that you are sitting there with the Secretary, and
Senator Craig, and Senator Breaux, and our committee, and
health experts, and consumers and the like. Tell us what you
want to see in that plan that we are going to try to turn
around quickly to prevent this from happening again.
Janet, why don't you start?
Ms. Heinrich. Well, first of all, you do have to have a
plan in place when there are shortages. And it does seem to me
that, as we've said in our report, that if there was progress
on the development of a plan for a influenza pandemic that
would really pave the way for some of the agreements and the
collaborative efforts that have to occur.
It's also terribly important that we learn from this past
year and really understand what educational efforts worked as
we tried to educate both the public, and the providers.
The other thing that I would stress is that whatever
systems you put in place, we still have to depend on people at
the State and local level to carry these activities out, and
that means that you have to have collaboration. You have to
have the knowledge of all the different players involved and
that varies from State to State.
The other thing that I think would be very interesting for
the group to focus on as they think about developing this plan
is what I would call a natural experiment that occurred last
year. We had many States doing many very effective
interventions to make sure that the groups that are at risk did
receive the vaccine, and I think there are a lot of valuable
lessons there to be learned.
Senator Wyden. So, I want to see if I can distill out as
concretely as possible what you want to see in the plan. You
want a public education component?
Ms. Heinrich. Yes.
Senator Wyden. You want a lead role for the States?
Ms. Heinrich. Yes.
Senator Wyden. Lead role for the States. What else?
Ms. Heinrich. I think that at the Federal level that we
have to have strong leadership, and it seems natural that that
be the CDC in terms of being the group that says we understand
that there is going to be a shortage, and this is the plan that
we will follow. These are the guidelines that we have all
agreed to.
Senator Wyden. So you want to see CDC be the Federal agency
to drive this effort to turn this around?
Now, I think it would also be helpful to know whether GAO
thinks that the Department of Health and Human Services and
CDC, of course, has enough authority under current law to put
in place what needs to be done, or does the U.S. Congress need
to pass varied and sundry additional laws?
Ms. Heinrich. We have struggled with that issue as we've
examined the current law. Our legal counsel, at the U.S.
General Accounting Office in reviewing those laws, stated to us
that there appeared to be adequate authority in a time of
emergency. I guess, the issue is when does the Secretary decide
that there is an emergency?
I think that what we heard from the Department of Health
and Human Services and the Centers for Disease Control is that
they wanted to review that authority much more carefully to
make sure that they indeed had the authority that they would
need to take an action to essentially manage the supply of a
vaccine.
Senator Wyden. One last question for all of you at GAO. Did
it turn out in your inquiry that there were problems with
contracts being broken with respect to vaccine? We're talking
about manufacturers breaking contracts or distributors breaking
contracts for physicians and other providers. Was that a
problem in your inquiry? And, if so, how would you incorporate
it into this 60-day effort to turn this around?
Ms. Heinrich. What we found very interesting, Senator
Wyden, is that there were contracts--it's hard to say that they
were broken because there was flexibility on the side of the
purchaser, the provider, as well as flexibility on the side of
the person that was distributing the vaccine, be it the
manufacturer or the distributor. And it was really quite
amazing for us to find out that many providers, be they
physician groups, public health agencies, were told rather
precipitously that the vaccine that they had ordered early on
would not be delivered, or they were told----
Senator Wyden. Who told them that?
Ms. Heinrich. The distributors, or they were told that
there would be a significant cutback in the amount of vaccine
that would be available to them, even though they had these
early orders and early agreements.
In some cases we found that the distributors would come
back and say, ``But we can offer you 'X' percent of what you
want at a higher rate.'' But it's hard to say that the contract
was broken because there was no guarantee of delivery or price.
Instead there was flexibility built in at both ends. For
example, in some arrangements, if you don't use the vaccine as
a provider, you can send it back.
Senator Wyden. I think this is an important issue because
clearly, you have got to have enough flexibility to deal with
real world circumstances. But at the same time, if you are
going to have any predictability in planning capability, you
can't have people going off and sort of saying, ``Fine, you
know, we thought we were going to do this, but we have decided
to do something else.'' So, I am going to examine that issue
some more.
Anything else you want to see in the 60-day effort to turn
this around?
Ms. Heinrich. I don't think so at this time, but we'll
certainly think about it and get back to you.
Senator Wyden. OK. I'm going to hold the record open for
each of the groups here today to give us their ideas and
suggestions on what should go into this 60-day effort. I mean,
if we are going to do this and do it effectively, we are going
to have to move fast.
And the sense given that, you know, the time line and the
prospect of the Congress going out for the summer and like,
that is what it is going to take. Could you get us your
recommendations for the 60-day effort within 2 weeks?
Ms. Heinrich. Sure. We would be happy to do that.
Senator Wyden. We will hold the record open. That will be
transmitted to the Senators Craig and Breaux through the Aging
Committee, which will be involved in this effort with Secretary
Thompson.
Very good. All right. Mr. Sattenspiel.
Dr. Sattenspiel. Great. Thank you.
To finish up on the issue of contracts, in my office, we
submit purchase orders, and I don't believe that they would
really constitute the type of contract that could be
necessarily considered broken. They simply were not filled.
Clearly, from the discussion, I think that the first thing
that is absolutely crucial in terms of addressing the issue is
to make sure that we have adequate supply of vaccine. As has
already been testified to by the GAO, the system worked when
the supply is adequate. And clearly that, to me, is going to be
the No. 1 issue.
The thing that got to me is the issue and the confusion
that was arranged in terms of timing. Influenza vaccine has
become a marketing tool for some of our larger chains of
pharmacies and other organizations, and as such, sometimes it
seemed to us that there was almost a race, if you will, to see
who can do influenza clinics first for their patients. And as
the CDC, I am sure would be happy to testify, that's not
appropriate. Vaccines should be given at the appropriate time
based upon the disease that you are trying to treat.
With influenza, the ideal time probably is not before mid-
October and can extend into late November, even December,
depending upon when the flu season starts. But when we have
companies that are beginning to advertise and promote flu
clinics beginning in September, and then we start having news
reports that talk about shortages so that people may not get
their vaccine if they want it, I think that combination was
very volatile and really did lead to at least some minor
degrees of hysteria among my patients.
Senator Wyden. So, you would like to see in this effort
that we would undertake a process to ensure the information got
out in a way that was fair to all parties and didn't produce
this kind of, you know, semi-hysteria----
Dr. Sattenspiel. Absolutely.
Senator Wyden [continuing.] About how you would you get it
and would give some parties an advantage?
Dr. Sattenspiel. An effort to coordinate among those people
who are providing public flu clinics, whether they are public
organizations or private organizations or what have you, any
effort that would coordinate their activities so that they are
done according to an appropriate calendar as opposed to
according to a marketing calendar would, in my mind, be very
helpful.
And then finally, from a standpoint of myself, and my
office, and my colleagues, I think making sure that the vaccine
supplies that are available at times of shortage do have a
clear and easy pathway into my office. I do a lot of flu
vaccinations. I think my colleagues overall, while the public
clinics play a very important role, I believe the majority of
vaccination are still provided in private physician offices.
So, any system that does not recognize that and does not ensure
that we get adequate supplies into our offices is going to fail
in the long run.
Senator Wyden. Well, we'll keep this record open for 2
weeks, and I invite you and the Oregon Medical Association, and
of course, the parent of all the State medical associations,
the American Medical Association, to give us your ideas and
suggestions. We would like it within 2 weeks so that we can
move quickly.
Dr. Sattenspiel. Thank you.
Senator Wyden. Mr. Allred.
Mr. Allred. Yes, Senator, I have several thoughts on some
issues that could help turn around the problem. One of the
things that has been suggested and discussed at some of the
national immunization conferences is the question of who is
licensed to manufacture vaccine.
As you are aware, we lost one manufacturer last year. We
are now down to three. It is my understanding, I do not have
direct knowledge--this is secondhand information, but it is my
understanding that there are a number of pharmaceutical
companies who would like to be licensed by the FDA to be able
to produce flu vaccine rather than it being controlled by only
three manufacturers in the country. I would like to see that
system looked at to find out what the bottleneck is as to why
other reputable pharmaceuticals are not able to get license to
produce it. Let's increase the supply for everyone.
Senator Wyden. That is a good suggestion, and we may not be
able to have a perfect answer for that in 60 days, but we can
sure get started looking into that. That is a very constructive
suggestion.
Mr. Allred. Thank you, Senator. Another issue that I am
concerned about is the rate Medicare reimbursement. It is my
understanding that the reimbursement rate is set in the spring
based upon what they anticipate the wholesale price to be. In
fact, when we were giving vaccinations, as I said, 42 percent
of our vaccinations are Medicare recipients last year, we were
very concerned about the reimbursement rate which was
previously set. We were told that there would be no
adjustments. As I mentioned, there was retroactively. We went
out and we vaccinated these people because, as healthcare
providers, we know the priorities, who needed to receive it. It
could be a matter of life and death with seniors. However, if
the reimbursement rate is not adequate to cover the cost of
providing the service, that is a serious detriment. I could see
why some other organizations might have been attempted to not
prioritize to seniors because of the low reimbursement rate.
Senator Wyden. And you are saying that the Medicare
reimbursement rate is a problem now even before that 79 percent
potential increase that you have heard discussed kicks in?
Mr. Allred. Absolutely, Senator.
Senator Wyden. Well, we will definitely follow-up on that,
as well. We have the good fortune of having Senators Craig and
Breaux being influential Members of the Senate Finance
Committee which deals with these issues. So, we are well
positioned to look into that one as well.
Mr. Allred. Thank you, Senator.
Senator Wyden. It has been an excellent panel. Anything you
would like to add further? All right, we will excuse you at
this time.
Senator Wyden. Our next panel consists of Dr. Keiji Fukuda,
M.D., National Center for Infectious Diseases, CDC; Sanford
Kaufman, Director of Public Policy at Aventis Pasteur; Matthew
J. Rowan, President and CEO of the Health Industry Distributors
Association; Steven Skoronski, President and CEO of the
Associated Medical Products in Indianapolis, IN; and Grant
Higginson, M.D., MPH, State of Oregon Health Officer, Portland,
OR.
Gentlemen, we welcome you. It's going to be a long panel.
If you can, try to keep your prepared remarks to about a half
an hour or, excuse me, about 5 minutes or thereabouts so we
will have plenty of time for questions.
I would like to ask you, as I have with our other panel
members, I would like you to put a special focus on this matter
that Secretary Thompson and I talked about this morning. I
think we had a very exciting opportunity extended to us by the
Secretary to have a chance to, through his offices working with
the Aging Committee on a bipartisan basis, to mobilize over the
next 60 days to turn this around. So, I know that constitutes
some revisions you may have to make in your prepared remarks.
We are going to make them a part of the record in their
entirety. If you would, put a special focus on your ideas and
suggestions on what could be done here over the next 60 days to
mobilize and prevent this problem from happening again.
Dr. Fukuda, welcome. I had a chance to work with the
Centers for Disease Control in a number of instances over the
years. I think you know I wrote the fertility clinic statute
that you all administer very well. And we welcome you and
appreciate the good work that you do.
STATEMENT OF KEIJI FUKUDA, M.D., CHIEF, EPIDEMIOLOGY AND
SURVEILLANCE SECTION, INFLUENZA BRANCH, NATIONAL CENTER FOR
INFECTIOUS DISEASES, CENTERS FOR DISEASE CONTROL AND
PREVENTION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, ATLANTA,
GA
Dr. Fukuda. Thank you. Good morning, Senator Wyden. I am
Dr. Keiji Fukuda from the Centers for Disease Control and
Prevention.
Influenza is a major public health problem in the United
States which disproportionately harms the elderly and
chronically ill. Influenza vaccine is the best tool to protect
people from this disease. In an average influenza season,
vaccination of each one million persons over the age of 65
years will prevent approximately 900 deaths and 1,300
hospitalizations.
In 2000/2001, influenza vaccine delay was severe and
unusual. In other seasons, the system for providing and
distributing influenza vaccine has successfully met the
country's vast influenza vaccine needs, and in recent years,
has provided between 70 to 80 million vaccine doses annually.
Influenza vaccine is produced and distributed primarily in
the private sector. CDC recommends use of the vaccine through a
deliberative process involving guidance from the Advisory
Committee on Immunization Practices, ACIP. Each year, ACIP
issues recommendations identifying which groups of individuals
are at highest risk for developing complications from flu, and
optimal timeframes for administering vaccine. The viral strains
in the vaccine are updated annually based on information
collected through a global public health surveillance system
and through the closely coordinated work conducted by the Food
and Drug Administration, CDC, and other public health
organizations.
The manufacturers then produce very large amounts of
influenza vaccine and work with distributors to get the
supplies to providers within very tight timeframes. The
complexity, fragility, scope, and time pressures make the
production and distribution of influenza vaccine a unique
product.
When difficulties in growing or processing the vaccine
strains or other manufacturing issues delay vaccine
distribution, CDC can take steps to minimize the effects, but
cannot solve the entire problem.
Last year, it became clear by June that flu vaccine delays
and shortages were possible. CDC undertook a number of
activities such as mounting an education and media campaign
which encouraged people at high risk of complications to seek a
flu shot early and which encouraged healthy people 50 to 64
years to seek flu shots in December or later. As insurance
against the possibility of a severe shortage, CDC contracted
with one manufacturer to extend their production period and
produce up to nine million additional doses of flu vaccine.
Despite these initiatives, many persons, including those at
high risk and providers experienced serious delays in obtaining
vaccine.
This year, three manufacturers will produce influenza
vaccine for the U.S., and they have estimated that up to 84
million vaccine doses may be available. However, these
estimates are subject to change and not until much later this
year will it be possible to know with certainty how much or
when vaccine may be available.
In general, CDC agrees with the GAO report and concurs that
the purchase, distribution and administration of flu vaccine
are mainly private sector responsibilities. Substantial efforts
have been made by the Department to address future influenza
immunization concerns. CDC continues to take a leadership role
in supporting efforts to address flu vaccination and is working
proactively with the FDA and other key public and private
sector partners to help ensure that high risk patients are
vaccinated in the event of a vaccine delay or shortage.
In March 2001, CDC and the American Medical Association
hosted a meeting with manufacturers, distributors, trade and
provider organizations, and public health officials to discuss
the need for contingency plans and to learn more about vaccine
production and distribution challenges.
CDC has asked States to develop contingency plans and has
provided written guidelines that assist them in planning. CDC
has sent letters to the healthcare provider organizations
serving high risk populations, including nursing homes and
specialty physicians and is working with the Health Care
Financing Administration to remind providers participating in
Medicare reimbursement plans to order vaccine now and to
immunize high risk patients at the earliest possible time.
ACIP has extended the optimal influenza vaccination period
to the end of November. Mr. Chairman, it was an unusual year
for flu vaccination. CDC and its partners undertook steps to
minimize the effect of the delays, but we must anticipate that
future supply problems could occur again and could be more
severe. Long-term solutions are needed including increased
routine collaborations between State and local health officials
and private sector vaccine distributors and providers.
CDC will continue to work closely with its public and
private sector partners and will provide more information about
the flu vaccine supply as the season progresses.
Thank you again for your interest in this important public
health problem. I will be happy to respond to any questions you
may have.
[The prepared statement of Dr. Fukuda follows:]
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Senator Wyden. I will have some, you can be sure of that.
Mr. Kaufman, welcome.
STATEMENT OF SANFORD KAUFMAN, DIRECTOR OF PUBLIC POLICY,
AVENTIS PASTEUR, SWIFTWATER, PA
Mr. Kaufman. Thank you, Senator Wyden. My name is Sanford
Kaufman. I am Director for Public Policy for Aventis Pasteur.
Aventis Pasteur is one of the major vaccine manufacturers
in this country, and influenza vaccine is part of our
portfolio. And we appreciate greatly the opportunity to speak
here today. As you requested, my comments will be limited to
lessons learned from last year, our view on recommendations for
improving the current system, as well as, some recommendations
and steps we are putting into place for the upcoming year, as
well as, comments on the GAO Report.
The current public private distribution system delivers
most vaccine orders to customers within a period of 24 to 48
hours. This system relies on direct shipments from
manufacturers and a national network of wholesalers and
distributors.
The current state-of-the-art U.S. private sector influenza
distribution network exhibits unparalleled time-tested
efficiency, reliability, safety, and cost-effectiveness. The
existing infrastructure provides optimal flexibility for the
most expeditious delivery of vaccine to thousands of healthcare
providers. As was mentioned, about 80 percent of U.S. influenza
doses are distributed to private sector healthcare providers
with less than 20 percent being distributed by Federal, State
and local government. Private sector providers include
physicians offices, HMOs, food stores, chain drug stores, mass
merchandisers, independent pharmacies, hospitals, and
integrated health systems.
It's very important to note that the manufacturer,
distributors, and government agencies involved cannot
completely control how the end-user ultimately utilizes vaccine
supplies. Compliance with CDC recommendations must rely on
broad cooperation and extensive and persistent educational
efforts by medical professional societies, State and local
health departments, healthcare providers, and the general
public.
In an effort to ease any potential influenza supply
problems during the 2001/2002 influenza season, Aventis Pasteur
announced on February 13, 2001, that effective in 2001, our
company will begin shipping vaccines after Labor Day. Second,
all public and private sector customers will receive a partial
shipment of approximately 25 percent of their orders, which
should be adequate to immunize their high risk patients. This
will assure all of our customers have at least some product
early on and avoid a situation where some channels of
distribution have vaccines and others do not. To the extent
that these shipments may not be adequate for the provider's
high risk population, they can contact our company to obtain
additional quantities which we provide on a case-by-case basis.
The balance of all other customer orders will be shipped
thereafter between October and November as additional vaccine
lots are manufactured and released by the FDA.
Third, our company will implement a ``no return'' policy to
prevent providers and distributors from hoarding supplies or
hedging the market.
Finally, Aventis Pasteur will offer no guarantees or
penalties for designated shipping dates, thereby eliminating
any preferential treatment for one customer over another.
Additional lessons learned include the fact that the timing
of market demand was not consistent with the CDC's optimal time
to immunize. We are very pleased that government is making
significant efforts to extend the immunization season through
November.
We believe that one of the biggest lessons learned is that
there is a critical role for government in mounting extensive
professional education efforts during any vaccine delay or
shortage. It is extremely important to emphasize that the only
practical approach for addressing noncompliance is a greatly
expanded educational effort by governmental and healthcare
professional organizations. We are very pleased this effort is
being undertaken and is being endorsed by all members of the
vaccine enterprise.
Finally, regarding the GAO Report, I would like to first
commend the investigators from the GAO for conducting a most
thorough investigation in a most professional manner. Aventis
Pasteur believes that the recommendations provided in the GAO
Report are appropriate and should serve to assist in any future
vaccine delay or shortage. As mentioned earlier, we
wholeheartedly support the assessment and refinement of
outreach efforts to make them more effective in meeting the
challenge of educating the public and providers regarding the
appropriate prioritization of patients. Aventis Pasteur also
welcomes the opportunity to take part in any ongoing effort to
bring all stakeholders together in order to formulate and
refine voluntary guidelines for vaccine distribution,
especially as related to getting this vaccine to high risk
individuals first.
I'll be pleased to answer any questions.
[The prepared statement of Mr. Kaufman follows:]
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Senator Wyden. Thank you.
Mr. Rowan.
STATEMENT OF MATTHEW J. ROWAN, PRESIDENT AND CEO, HEALTH
INDUSTRY DISTRIBUTORS ASSOCIATION, ALEXANDRIA, VA
Mr. Rowan. Good morning, Senator Wyden. My name is Matthew
Rowan, and I am the President and CEO of the Health Industry
Distributors Association. I appreciate the opportunity this
morning to appear before your committee to discuss the causes
of the vaccine delays that occurred during this past flu
season, and I also look forward to informing you of the steps
the industry is taking to collaboratively develop contingency
plans with providers and the Centers for Disease Control and
Prevention, the CDC, to deal with any future supply disruption.
In most years, flu vaccine was forecast, manufactured and
distributed to providers at pre-book prices and administered to
millions of patients. To properly serve the public, the flu
vaccine system requires each entity in the production and
supply chain to be accurate and timely. It is important to note
that manufacturers directly deliver 50 percent of flu vaccine
to providers. Distributors account for the remaining 50
percent. In most seasons, in excess of 70 million patients are
inoculated over the span of just a few months. Only after the
2000/2001 flu season could we fully understand the weaknesses
in this producer to patient supply chain. The breakdown started
early with the delayed CDC forecast. This was followed by
production problems and subsequent confusion in the supply
chain about how to get vaccine to the high risk populations
that the CDC singled out for priority treatment.
During the last flu season, the vaccine supply was hampered
at every critical juncture. I can report to you three
conclusions based on HIDA members actual experience during the
past flu season. First, vaccine suppliers, whether they are
manufacturers or distributors, were left to guess which of
their customers served high risk populations. The CDC
recommendations gave doctors and providers precise direction on
which patients should receive treatment priority. However, the
same direction confused distributors. Distributors tracked
delivery information to healthcare facilities. They do not
typically maintain clinical information on provider's patient
make-up. Distributors can only guess at the mix of patients
treated by a particular healthcare facility they supply. While
some information may be deduced from the name on the address,
once the product is delivered, the provider determines each
individual patient's risk status.
Distributors report being unsure if CDC was recommending
supplying nursing homes first or physicians offices, which
dispense the largest quantity of flu vaccine. Among physician
offices, it was unclear which specialties were likely to treat
high risk patients. Also, in some areas of the country,
patients might get vaccinated at a clinic or hospital, while in
other places, they go to physician offices. People also get
shots at convenient, nonclinical settings such as chain stores,
community centers, libraries, schools, and at their work site.
Distributors have no control or role in these settings.
Second, the vast majority of distributors behaved ethically
in response to the delays.
In the 2000/2001 flu season, how much vaccine a provider
received and when it was received depended entirely on the
entity with which he or she booked their initial pre-order. The
general Accounting Office Report clearly documents that
manufacturers and distributors pursued different strategies to
comply with the CDC recommendation. According to the GAO
Report, some suppliers, both manufacturers and distributors,
chose to supply based on the initial order date and honoring
contracts with special delivery dates. Others chose to
partially supply their customers based on the amount of vaccine
they were able to obtain from manufacturers cutting the supply
by equal proportions to all customers. Many filled orders with
their existing customers first before supplying new customers
who did not pre-book their orders. Still others gave priority
to either physician offices or nursing facilities. These
separate supply strategies were the result of the confusion in
the supply chain. In some cases, supply strategies were also
altered mid-season.
This confusion is the most likely explanation of the often
quoted example of a physician who was unable to receive his
supply vaccine order only to find a flu clinic at a shopping
mall or other convenient location was fully supplied. A long-
term customer relationship is critical to a distributor's
financial performance. Most distributors would not engage in
price gouging simply because it's bad for business. They know
that is a sound business strategy to sell vaccines to their
long term customers who pre-book their orders for vaccines year
after year. These are the same customers who are likely to
purchase other medical supplies throughout the year and provide
a steady flow of orders. Giving up a steady customer for a one-
time profit is a losing business strategy for a distributor.
Despite this, many distributors reported damaged customer
relationships due to their inability to supply flu vaccine.
We know of numerous instances where HIDA members turned
down higher priced offers for vaccines from potential new
customers. These offers were denied because distributors wanted
to serve their existing customers or simply did not have the
vaccine to supply.
Third, HIDA members lost millions of dollars in contracted
sales because there was no vaccine for them to distribute
during the height of the inoculation season. Our members have
described to us numerous instances where they were unable to
fulfill existing contracts or pre-booked orders for vaccines
because they did not have the product available. This seems to
have been most pronounced for members who serve the physician
market.
Distribution is a low profit margin business. HIDA members
average a pre-tax profit of just 1.8 percent in 1999, which is
the most recent year we have figures for. This number reflects
the industry's high investment cost relative to revenue and
profit. An average-sized HIDA member distributor generates
gross revenues of $5 million dollars per year in total sales of
medical products. One of our members in this size category
reported losing $250,000 in pre-contracted vaccine orders that
he could not supply. This loss represents 5 percent of his
annual sales that would be very difficult for him to recover.
HIDA has concluded that the supply system is fundamentally
sound but needs greater communication and contingency planning.
We oppose suggestions that the CDC or State government should
take over distribution. In fact, some States looked into this
option in the mid-1990's and concluded that the distribution
system is a good and efficient one and should not be tampered
with. HIDA believes that the government, through the CDC, can
better serve the vaccine distribution system by advising
distributors on where priority distribution should occur and to
whom and by encouraging more manufacturers to enter the vaccine
production market.
In addition, CDC education and communication to the general
public about the expanded inoculation season and locations for
high risk patient inoculation are important priorities.
Based on the experiences from last year, HIDA recommends
the following steps be taken: first, the CDC lead and support
effort among various groups that are involved in distributing
and administering vaccines. This is the heart of our
recommendations to GAO. In fact, HIDA recently met with
officials from the CDC's National Immunization Program to
discuss establishing procedures that clearly define and
communicate which providers should have priority in receiving
vaccines should there be another delay; second, guidance on
treatment and supply priorities driven by physician
recommendations should be developed and communicated by CDC.
Distributors particularly need guidance that is based on
provider category, physician specialty, or facility type.
Instructions such as first treat high risk patients who are
seen by primary care physicians, that is internal medicine,
family practice, general practice, or who reside in nursing
homes would give suppliers guidance they can confidently act
upon.
Third, the CDC forecast must be released on schedule so
that time is built into the system for any manufacturing delays
that cannot always be predicted.
Fourth, the Department of Health and Human Services must
re-examine reimbursement levels for flu shots. We need to
attract more manufacturers to vaccine production. We simply
cannot expect the two or three manufacturers who still produce
flu vaccines to consistently meet the rising demand for a
product that health conscious consumers want at the same time
regardless of their actual risk.
Short of a major scientific advance in vaccine production,
additional manufacturing capacity is the only way to improve
production numbers. This will improve the system's ability to
respond to forecast changes or any unexpected manufacturing
delays.
Suppliers are in the business of supporting physicians and
nurses in what they do best: Providing patient care. In the
upcoming flu season, distribution will play a much less
significant role in delivering flu vaccines. Major domestic
manufacturers appear to be pursuing a direct-to-customer
approach that bypasses distributors, who in the past, delivered
approximately 50 percent of the flu vaccine supply. Early
reports are that prices will be double those of last year. It
remains to be seen how this new ``no distribution approach''
will impact healthcare providers and their access to the flu
vaccines they need to administer to the millions of patients
they serve.
Thank you again for inviting me to testify before your
committee.
[The prepared statement of Mr. Rowan follows:]
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Senator Wyden. Thank you. Anything you would like to add,
Mr. Skoronski.
STATEMENT OF STEVE SKORONSKI, PRESIDENT AND CEO, ASSOCIATED
MEDICAL PRODUCTS, INDIANAPOLIS, IN
Mr. Skoronski. No. I believe Matt's testimony covered the
specifics to this particular issue. My testimony dealt more
with the broader and general issues in medical practice
distribution. I suspect the written testimony will probably
cover what you are looking for there.
[The prepared statement of Mr. Skoronski follows:]
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Senator Wyden. Well, extra points for brevity and candor,
and I appreciate it.
We will have some questions here in a moment.
Dr. Higginson, welcome.
STATEMENT OF GRANT HIGGINSON, M.D., MPH, STATE OF OREGON HEALTH
OFFICER, PORTLAND, OR
Dr. Higginson. Thank you, Senator Wyden. For the record, my
name is Dr. Grant Higginson. I am the State Health Officer, and
the acting Administrator for the Oregon Health Division
Department of Human Services, which is the State's public
health agency. I am also here today representing ASTHO, the
State and Territorial Health Officials. And once again, thank
you for the opportunity to let me testify.
I am going to dispense with the background information I
provided in the testimony. I think that's been adequately
covered. I would like to get right into what the health
division's role is in coordinating flu vaccine programs. And as
you have already heard, by and large, the influenza vaccine is
primarily purchased, distributed and administrated through the
private sector.
The Oregon Health Division does have a role though, in
efforts around immunization for adult populations. We have one
adult immunization coordinator, and what she does is work with
local health departments, other local groups to try to ensure
that there is a coordinated effort at the local level to make
sure that adults are getting appropriately immunized.
In addition to that one coordinator, we also publish an
article in our Communicable Disease Summary Newsletter which is
sent to all healthcare providers which encourages them and
urges them to vaccinate the appropriate populations. We also
issue a press release every year, which again deals with the
influenza season and appropriate recommendations for who should
be immunized.
Last year, as you have heard, was an unusual year when the
Health Division was informed of expected delays in the
influenza vaccine, we learned about that in June and we
immediately started notifying and working with providers.
On September 15, we issued our first press release of this
season detailing the guidelines for vaccine recommendations and
notifying the public about the expected delay in vaccine
distribution.
On September 26, we actually came out with contingency
guidelines, and what they did was identify the high risk groups
for priority vaccination and urged collaboration among
providers and county health departments to share vaccine to
ensure that vaccine was available to high risk populations.
Long-term care facilities were also notified of the delays
by their affiliated organizations. On November 9, we then sent
another memo to all county health departments regarding the
vaccine supply, distribution delays and how to order additional
vaccines from a new CDC contract that they had with Aventis. In
late November, we actually purchased over 1,500 doses of
flu vaccine from the Oregon Health Sciences University. We
then surveyed our county health departments to see who was in
the most need for those immunizations, and we then distributed
them, who in turn distributed those to people serving high risk
populations.
In December, we also received an additional 700 doses from
the Public Employees Benefit Board, another 130 doses from the
University of Portland, and they were similarly distributed to
most needy populations through county health departments. I
would also like to note that a number of health systems and
hospitals at the local level also voluntarily distributed
vaccines through local health departments to needy population.
We also, in December, surveyed each county about the
availability of vaccine in their communities and encouraged
them to make information available through a 1-800 number on
where people could get that vaccination.
Then, our final press release of last flu season was on
December 13 where we announced that flu season had officially
arrived in Oregon and stated that vaccine supplies were now
near normal.
As you have heard from a number of other people, there were
problems that were experienced here in Oregon as were
experienced around the country. Many private providers and
county health departments simply had no vaccine available
during October and November when most people should have got
vaccinated, similar to what GAO has found, we did hear
anecdotes that vaccines were being inappropriately administered
in some grocery stores and other places where clinics were
provided. We did follow-up on some such reports. A number of
people were administering to appropriate populations; some were
not. Most of those people did appropriately respond to our
recommendations when we talked to them.
Unfortunately, as you have heard, by the time vaccine
supplies arrived, many of the providers had already had their
clinics scheduled. New clinics for immunizations were not
scheduled. And so, a lot of vaccine was left on the shelf.
And so from what I have presented, Oregon's Health
Division's role during the 2000 vaccine season of flu vaccine
season really was one of information broker. We issued
recommendations, prioritized vaccination of high risk patients.
However, I should note here that while we made those
recommendations, we did not have any authority to enforce those
recommendations. We won't know how well we've done with last
season or how poorly we have done until we get this year's
Behavioral Risk Factors Survey results in. That is something
that we will share with you when that data is available.
And as other people have said, I think we were very lucky
that we did have a mild to moderate flu season last year.
The current private system, in general, as a number of
people have said, usually does work well. I have been here in
Oregon now for 14 flu seasons. This is the first year we have
had a situation like we did last year.
It's important to keep in mind though that because the
vaccines have not been an issue in the past that we do need to
continue to encourage most people to be vaccinated. It is
important that not only the high risk people be vaccinated, but
that most people be vaccinated as well to curb this disease, if
possible. However, we have seen that while the current system
works fine in most circumstances, there are going to be times
when shortage of delays can have substantial detrimental
effects on providing vaccine to the most vulnerable
populations. Inadequate vaccine availability could have led to
significant increases in morbidity and mortality in Oregon if
we had seen the peak of the influenza season come earlier or
have seen a more virulent strain of the disease.
So, we do have a number of recommendations that I would
like to get on the record, and I do appreciate the opportunity
to have a couple of more weeks to get you more. And I will get
that information to ASTHO, as well as, to our people in our
program.
The first recommendation is that we think that CDC and the
FDA need to work with vaccine manufacturers so that we get the
earliest possible indications of expected vaccine. Availability
for us to plan for the season and any potential shortages is a
very important thing.
Second, CDC should work with manufacturers and large
distributors to ensure that in a situation of delayed or
shortage of vaccine, that those customers who are most likely
to vaccinate high risk persons would be served first, and from
our perspective, this should include public clinics, physician
practices, and nursing homes. It is unclear to me right now
whether or not that should be totally voluntary or whether or
not there should be some mandates. At the State level, we think
that it is important that State health agencies at least
consider gaining the authority to direct the distribution and
administration of vaccine during times of shortage or delays.
This is something that we actually have been working with our
legislature on during this session.
There is a House Bill, House Bill 3339 which I have
attached to my testimony that actually would give the State
Health Officer the authority to implement a vaccine education
and prioritization plan. It would allow the State Health
Officer to develop these guidelines for the distribution and
administration of vaccine, and it would also grant us authority
to mobilize public and private health resources to help with
that distribution and administration. It would also give us
some teeth in that it would allow us the ability to impose $500
civil penalty fines for people who knowingly failed to adhere
to those guidelines.
A fourth recommendation is, we think that Federal, State
and the local public health agencies should promote
persistently the value of vaccination, and that's not only just
the general public education, but vaccination later in the
season. If we do have delays, it is important that people know
that they can get vaccinated in December, and if the peak is in
January or February like we had this year, that that still
would do a lot of good.
NIH should be supported in completing their studies of the
half dose of influenza vaccine in healthy persons. It is
actually shown by NIH that that can be an effective preventive
measure as a way to stretch existing supplies of vaccine.
Another recommendation is that we think that Federal,
State, and local public health agencies could more actively
support efforts to reduce mortality and morbidity during the
influenza season by increasing the rates of vaccination against
pneumococcus. This is something again that you have heard from
a number of people, and I won't dwell any longer on that.
What people haven't, I think, specifically said, but I do
believe is inherent in a lot of recommendations is that more
Federal funding is needed. I think that both at the Federal
level, and from our perspective at the State level, to deal
with adult immunizations. We have an extensive immunization
program for childhood vaccinations. In fact, we have 35 staff
positions that are working on childhood immunizations. They do
things such as provide public education, work with local
communities to coordinate those efforts. While we have 35
people for childhood immunization, we only have one person
involved in adult immunizations. And we think that this is
really a disproportionate amount of funding and that more
funding should be provided to provide those same kind of levels
of service in planning, coordination, public education for the
adult population as well.
Then, just one final thought is that I think that thought
should be given at the national level to set standards for
adult immunizations. We need to make sure that providers and
insurers are using effective measures in protecting people
against influenza and pneumococcus.
And with that, I will close and be happy to answer any
questions.
[The prepared statement of Dr. Higginson follows:]
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Senator Wyden. Very good, thank you and an excellent panel.
Let me begin with you, Dr. Fukuda. What are the odds this
year that it's going to be like last year?
Dr. Fukuda. Do you mean in terms of the supply or in terms
of the----
Senator Wyden. The overall problem. What are the odds that
we are going to have seniors like Mary Keene traipsing all over
town trying figure out where to get this, and where to turn and
same sort of problem?
Dr. Fukuda. Well, it is difficult to give you really good
odds on what is going to happen. You have probably heard that
it is a very complex process getting vaccine made and out to
people. And it is possible for the system to breakdown at any
place. For example, the egg supply can be bad and so on.
And so, as I mentioned in my testimony, it is not really
going to be until later--probably toward the end of summer or
the early part of the fall that we really know what the picture
is going to be like. And that is the reality that we face every
year. We are never certain what the supply is going to be like
until well into the season.
Senator Wyden. No, I understand that. I think that we have
got a plan for good times and bad times alike. So, is it 50/50
that we are going to have another year this year like we had
last year, or 10 percent or what is your sense?
Dr. Fukuda. The information that we received from the
manufacturers tells us that their estimates are up to 84
million doses of vaccine. So far, the indications that we have
that the estimates are good, and we have not heard about any
production problem.
Senator Wyden. So, at this point then, you think that there
is a probability that we won't have another year like last
year?
Dr. Fukuda. Well, there is always that possibility yes.
Senator Wyden. I guess, you know, policymakers rely on
people like you so that you give us a sense of what we are
heading into. We have got to have a system that works for good
times as well as bad times. What you told me is you don't think
it is very likely that this upcoming year will be like last
year.
Dr. Fukuda. It is fair to say that right now it does not
look like there are any production problems. We do know that
there are ongoing discussions with one company and the FDA
about continuing good manufacturing practice issues. And I
think we all need to wait and see how those resolve. I think
that we are very mindful that what happened last year could
happen this year. It could happen the year afterwards. So, we
are really keen to push ahead with whatever things can be done
to strengthen the whole system.
Senator Wyden. But you don't think it is very likely at
this point?
Dr. Fukuda. It is possible, and I don't think I can go much
further than that. I don't think I can tell you it is 10
percent, or it is 50 percent, or it is 100 percent. I think
that it is possible. It is possible enough that we are
seriously pushing ahead with several efforts to make the supply
and distribution better. And I don't think I can prognosticate
more than that.
Senator Wyden. When do you think you will be able to tell
the public that we are not going to have another year like last
year? Is this going to be in September or August, or when do
you think you will be able to tell us?
Dr. Fukuda. Well, I think during the summer, if something
goes really bad, we are going to know about it. We are going to
be able to tell people. If things go along well, and we don't
hear about any significant problems, then I think it is again
really at the end of the summer or the early part of the fall
time before we can say that things look really pretty good.
Senator Wyden. Now, you heard me talk about my discussion
with the Secretary this morning.
Dr. Fukuda. Yes.
Senator Wyden. I really do want to bear down on getting
ideas of what you would like to see done in the next 60 days. I
am going to leave the record open, as I have done with
everybody else for the next 2 weeks, but what do you think
needs to be done in the next 60 days to increase the prospects
that we won't have our constituents like Ms. Keene traipsing
all over town trying to figure out what's going on?
Dr. Fukuda. Sure. Well, Senator, to be practical and
realistic about what can be done, I think there are three
things that really ought to be kept in mind and considered for
action. The first point as has been pointed out by many of the
speakers, is that the system is complicated but has worked well
in general. Last year was an unprecedented situation for the
United States. In general, this very complex system has done a
good job about getting the vaccine made, getting it out to
people.
Senator Wyden. The Oregon Medical Association says the
system is chaotic and irrational. These are not far out, wild-
eyed kind of people. I mean, these are folks on the front
lines, and they say it's chaotic and irrational.
Dr. Fukuda. Well, clearly, the past year did bring up some
severe issues, which we have to keep in context in the big
scope of things. The second point is that we have to think
about actions that we can do in the short-term and those that
need to be done in the long-term. Both are clearly needed. In
the short-term, I think it is clear that some of the things
which have to be done is that these private and public sector
discussions are needed--the kind that took place at the
American Medical Association Headquarters in March, those kinds
of discussions need to take place both at the local level and
at other meetings, such as the kind of meetings that you are
proposing with the Secretary. In these meetings, everyone needs
to understand how the system really does work, what are the
challenges, what are the real problems inherent in trying to
make an enormous amount of vaccine and getting it out to
people.
Another thing that we need to do a better job about is
education. The misinformation that Ms. Keene received she was
told that she is not at high risk, is a good example. We need
to do a better job of getting educational messages out there
such as, who is high risk? Who needs to get vaccine? We need to
make those messages accessible.
Again, I think that at CDC, the National Immunization
Program has really forged ahead in this area. It has been
holding focus group meetings trying to figure out what is the
best way to get information to people.
A third step is that contingency plans are going to be
needed for manufacturers, for distributors, for providers, and
for State health agencies. If we do come into another situation
like last year, how are you going to get vaccine to high risk
people? That is the big issue. The plans are likely going to
vary depending on who you are and where you are in the country
as to exactly what you ought to do, but those plans definitely
are needed.
Senator Wyden. But you believe then--I want to be clear on
this--that this effort that would be developed in 60 days ought
to lock-in some contingency plans?
Dr. Fukuda. They ought to push ahead with the contingency
plans. This kind of effort that you are talking about can be
very helpful in pushing forward those plans.
Now, these actions have mentioned are what can be done in
the relative short- and medium-term. But we really have to look
at some long-term issues also. One major issue is that we
really need to change behaviors in the country about how flu
vaccine is administered. We recommend giving vaccine in October
and November as the optimal time period because that gives
high-risk people the best chance of getting high risk people
vaccinated, but it is clear every year that there are a lot of
high risk people who don't get vaccinated in that time period.
It is also clear that in many years, influenza activity doesn't
substantially pick up until later than November. So, we must
teach physicians and recipients, it is OK for high-risk people
to get vaccinated after November if they weren't vaccinated
earlier.
The second major issue is vaccine supply. There used to be
seven vaccine manufacturers; we are now down to three. And this
is in the face of growing demand. As you know serving on the
Aging Committee, the population of elderly people is increasing
very rapidly in the United States. This is only going to drive
up demand. It is only going to increase the need for vaccine in
the future.
The third issue is that we really do need to improve our
ability to deliver vaccine to adults. This combination of
short-term approaches and long-term approaches will be needed
to have a realistic solutions for these sorts of vaccine
problems.
Senator Wyden. How do you all intend to use your web site?
I understand that you want to try to get information out
regularly to physicians. Is this going to start in August, or
when will you start this year so that providers can know what
place to turn to get information on how often they can
anticipate updating it?
Dr. Fukuda. Well, I believe that the National Immunization
Program has already begun these every 2 week updates. The
information is posted on the Internet, and is also sent out to
a wide variety of users in different organizations and to
providers. I believe that this will continue through the year.
Senator Wyden. How is CDC identifying the providers who
serve the high risk population?
Dr. Fukuda. This is a difficult problem. For some of it, it
is easy, you know, nursing homes, physicians who take care of
certain kinds of patients, patients with diabetes or heart
conditions. But what is more difficult is that there are a lot
of physicians who see a mix of patients out there, and there
are organizations who see a mix of patients out there. I think
that this issue is difficult to get at.
CDC has instituted a number of different surveys in attempt
to get information from providers and from healthcare
organizations about what kinds of patients they see, and also,
to try to evaluate what happened last season. So, those
attempts are ongoing right now.
Senator Wyden. How do you all work with the Health Care
Financing Administration in this area, and do you anticipate
any changes there?
Dr. Fukuda. Well, in this particular problem, the CDC has
been working closely with HCFA to get letters and information
out to those providers who work in the Medicare program, to
remind them about who should get vaccinated, and to remind them
to get their vaccine orders in now. And there have been ongoing
discussions about the pricing of flu vaccines. And we know that
this is a concern to providers, and it is an important issue.
These are ongoing areas of discussion with HCFA.
Senator Wyden. How do you all see the question of flu
stocking up to the issue of trying to increase the number of
seniors vaccinated against pneumonia? Clearly, there are
competing concerns here, and I would be curious what resources
are needed, and how do you go about coming up with an approach
to deal with flu vaccine shortages at a time when you are
trying to increase the number of seniors vaccinated against
pneumonia?
Dr. Fukuda. There are a couple of useful ways to look at
this. One is that a lot of the people who are at high risk for
flu are also at high risk for pneumonia. So, there are not
really competing issues here. These same groups of people need
to get both the pneumococcal vaccine and the influenza vaccine.
But I think another way to look at it is that if you have a
big, broad-based pyramid, there are many more influenza
vaccinations--or many more cases of influenza every year, and
these cases of influenza really set up a lot of people for
developing pneumococcal pneumonia and other pneumonias. So
influenza vaccine in many ways is a key to preventing these
pneumonias and other pneumococcal infections in addition to
getting a pneumococcal vaccine directly into people. We need
both, but there is this sort of pyramid in terms of what
precedes what.
Senator Wyden. All right. We are going to look forward to
getting your recommendations within 2 weeks, as well, and they
will be particularly important since--while there is vigorous
debate about what to do in this area, almost everybody seems to
think CDC ought to be driving Federal policies. You will have
that challenge to deal with, for sure.
Mr. Kaufman, same questions I asked Dr. Fukuda. What do you
think the prospects are for another year like last year with
respect to flu vaccines?
Mr. Kaufman. Well, without risking a percentage
directionally, I would say the probability is low that there
would be a repetition of last year. Last year was sort of a--as
we put it in some cases, almost a triple witching hour in that
the last strain that was named, it was named slightly late last
year--I believe the first week in April--also happened to be
the same strain that all manufacturers had a problem growing.
It was a low yielding strain which took some time before they
found the key to getting it to grow in the eggs, combined with
the fact that there were two manufacturers that had GNP
problems, with one of them totally walking away from the
market. So, that confluence of three events, I would say the
probability is low of a repetition. Combined with the fact that
this year, the yields, at least so far, seemed to be very good.
Senator Wyden. What role, if any, do you and other private
industry, you know, representatives feel that the government
should play here? That is really central to this debate. As you
know, the State Legislature and the Congress where some say the
government ought to step in under the following circumstances
and the like.
I would be curious what you and other private industry
representatives think ought to be the government role, if any,
during the kinds of problems we had last winter.
Mr. Kaufman. I think there very clearly is a government
role. And what evolved over the years was a disconnect between
market demand and when it was medically advisable to give the
shots. People were demanding that we ship them vaccines as
early as possible. Maybe it gave them a feeling of security
because now they had the vaccine in August or very early
September, which they would keep in their refrigerators for
their clinics which were going to be held in late September and
October.
I think what last year's problems brought into focus is the
fact that it was really needed that the market demand be
shifted to fit more with the optimal time to immunize. And I
think there have been steps taken for that. Several of the
speakers have referred to the AMA meeting that took place. This
year, the CDC already has begun to issue--I believe there may
have been something in the MMWR--already talking about the
optimal time to immunize, including through November, in fact,
into December.
Senator Wyden. What would you like to see go into this 60-
day push to try to ensure that we don't have another year like
last year?
Mr. Kaufman. First of all, I think that what I just
mentioned, the fact that there should be ongoing meetings as
there were last time where all of the stakeholders are brought
together where the CDC met with the AAFP, the AMA hosted the
meeting as a way that there could be early warning that we
could work with them.
I think that the hardest part of all of this is there is a
number of hard things. One of them is, it seems to us, at least
from where we sit as manufacturers, that all channels of
distribution, no matter where you look, have high risk
patients. It's very difficult not to ship, for example, a lot
has been talked about the supermarket chains. The best of our
information is that approximately 5 percent of the doses
distributed--a relatively small amount--ends up going into
these, what we call private access programs, these supermarket
types----
Senator Wyden. But that really isn't the appropriate
barometer. If 5 percent are engaged in activity that, in
effect, skews everything else that's going on because of all
the advertising and the hype and the like, it is really not
about, you know, 5 percent. It is about activity that can drive
the market and create chaos.
Mr. Kaufman. Well, and it got publicity way out of
proportion to the amount of doses that were there. I agree with
you. What I am saying is high risk people went there too. I
believe Mrs. Keene went there first. So, from a
manufacturer's----
Senator Wyden. She went to a doctor's office first.
Mr. Kaufman. I'm sorry. Doctor first and----
Senator Wyden. She tried to use a doctor twice. She tried
to use the doctor at her senior center, and she tried to use
the doctor in the office.
Mr. Kaufman. Right, but for whatever reason, high risk
people end up at the end of all these distribution chains. So,
guidance to us which has been mentioned--and I don't know how
they do that. But how do we know who to ship to? We have a very
efficient system there. How do we know--a better way to look at
it is, who not to ship to so as not to prevent people from
getting access?
Senator Wyden. All right. Mr. Rowan, with respect to your
membership, are there any, in your view, that are trying to
exploit this situation and jack up prices unreasonably?
Mr. Rowan. Not that we are aware of. I mean, I think from
the testimony earlier today, I think bears that out. If you
look at the earlier testimony from Dr. Sattenspiel--I believe
is how you pronounce his name--and Mr. Allred from
GetAFluShot.com is that these early--it is really a misnomer to
call them precontracted orders. They are actually pre-booked
orders that give flexibility to both sides, both the customer
and the distributor, or even in many cases, the manufacturer.
As both of those gentlemen earlier testified, they got
their orders, and they got them at the pre-booked price. The
reason anybody pre-books an order is to lock in the price.
Anybody who waits until the flu season is in full swing and
tries to make a purchase on the spot market is going to
experience somewhat higher prices. Again, the testimony earlier
bears that out that there were some modest price increases.
The bigger concern, I think, from our viewpoint is that
what are prices doing this year with many distributors,
particularly the small distributors who, more than likely,
serve smaller physician practices being cut out of the market,
we see prices--from our information--is that prices will
double. And so, you know, we get back to the reimbursement
issue. We get back to the issue of how do we deal with this as
a public health issue and access to healthcare for, you know,
70, 75, 77 million patients a year?
Again, our information is that most of our small
distributors had no vaccine to distribute at any price, pre-
booked or otherwise.
Senator Wyden. So, you were surprised at what we heard
about today?
Mr. Rowan. Well, I do want to follow with the testimony
from the GAO earlier. I would be surprised if there was a pre-
booked order, and then there was a subsequent offer for--we
can't fulfill that pre-booked order, but we have this supply at
a higher price. I think more than likely, the vast majority of
providers and distributors had an experience much like what Mr.
Allred and Dr. Sattenspiel earlier testified to.
Again, I think in the instance of Mr. Allred who was
approached by unscrupulous wholesalers--don't know who they
are, but I believe he did the right thing in turning away that
offer--spurning that offer.
Senator Wyden. I guess the one thing we know now is there
are predictions for big price hikes next year.
Mr. Rowan. Right.
Senator Wyden. I mean, you have said it, and you are
representing an industry standpoint. Mr. Allred said it. Who is
raising the prices, the manufacturers or distributors? Who is
raising the prices?
Mr. Rowan. My estimation of that would be at the
manufacturer level. Again, the distributors largely are being
cut out of the market in the 2001-2002 flu season that--our
understanding anyway--is that wholesale orders are not being
accepted----
Senator Wyden. I would give you----
Mr. Rowan [continuing.] By domestic manufacturers.
Senator Wyden [continuing.] Equal time on that, Mr.
Kaufman.
Mr. Kaufman. I was hoping you would.
Senator Wyden. The distributors say that the manufacturers
are raising the prices, and now I want to hear from you with--
Mary Keene ought to know that she is going to get a reasonably
priced vaccine that she can get access to, and she is not going
to be so much interested in who is pointing the finger at who.
But the distributors said it was the manufacturers. Now, the
manufacturers ought to have a chance to respond.
Mr. Kaufman. I could speak for our price. And our price
that was announced--I can't give you the exact date, but the
pre-book price on flu vaccine last year--this year--current
vaccine was $5.00 a dose. I believe the vaccine was priced in
the three--you may be able to help me--but in the $3.00, $3.50
price for a number of years from about 1992 up to around 1998,
1999. There was a small increase then. And now, we have
increased the price to $5.00 a dose. It is not a doubling of
the price. I think, quite frankly, there are those who would
still argue that it is an undervalued vaccine.
This may not be a popular statement, but one of the vaccine
manufacturers is based in the U.K. The reason, we believe, that
they do not make more vaccine available in this country--and I
think they make available somewhere in the neighborhood of 10
to 15 million doses only--is because they find it much more
profitable to sell the vaccine at a considerably higher price
in Europe.
So, we, as a manufacturer--and again, I only speak for
Aventis Pasteur--have raised the price for a number of reasons.
One of which is the cost of compliance--and this is, in no way,
a complaint, but Team Biologics at Ceber has raised the bar
considerably in what it takes to be a GNP compliant. And I
think that was evident with what happened with two other
manufacturers last year. And second, we are investing
considerable money to increase our capacity to fermenters, I
believe, require----
Senator Wyden. So, you are going to raise prices how much
next year?
Mr. Kaufman. It's at $5.00 a dose.
Senator Wyden. From?
Mr. Kaufman. I can't swear. I believe in the high threes,
$3.80 or $3.90. Somewhere in there. I could send you the exact
price.
Senator Wyden. Yeah, I would like to have that.
Mr. Kaufman. It is somewhere in that neighborhood, but it
is certainly not doubled.
Senator Wyden. Mr. Rowan, what role, if any, do you think
the Federal Government should take in times of shortage with
respect to distribution?
Mr. Rowan. Well, I think they should take the same role
that they take in any sort of emergency situation. If you liken
it to what FEMA does in terms of having contingency plans in
place for non-standard events, whether the CDC seems to be a
logical place to centralize some of this contingency planning.
You asked earlier, you know, was the situation chaotic and
irrational as characterized by the Oregon Medical Association.
I would agree that it was probably chaotic, but I think it was
rational in the sense that everybody thought they were doing
the right thing. The one piece that was missing last year that
I think should be addressed in the contingency plan is that all
entities in the supply chain need to recognize that they are
part of something bigger than what goes on in just their
factory or just their warehouse or just their doctor's office.
And to that end, I think that the role that the government and
the CDC should play is one of education. Educating the patients
to educate whether they are high risk so that they know. To
educate them to the expanded flu season. We have providers that
need that education. We heard earlier today that a particular
place--a customer contact point is the receptionist at a
doctor's office. That is an individual that needs to know the
specifics of the CDC recommendations, in particular.
Suppliers need direction and education. If again, specific
to the facility so that we position doctors and nurses to do
what they do best, which is assess a patient's risk status and
make a diagnosis and administer a flu shot, if it is
appropriate.
I think another thing we heard today is that apparently we
need to educate the CEOs of Wal-Mart and Target and Safeway.
They need to understand that flu shots are not a marketing
vehicle, that it is a public health issue and that they
shouldn't be trying to attract customers at inappropriate times
of the year that go against the CDC recommendation.
So, I think the CDC, as an educational role is key, and it
is critical.
Senator Wyden. Well, you know, again without belaboring
this, it doesn't sound very rational to me when our docs who
are on the front lines--I'm just paraphrasing this letter from
the Oregon Medical Association--the docs on the front lines
can't get vaccine. The public health departments can't get it.
And then, we have got various kinds of, you know, private
entrepreneurs spending weeks giving people various kinds of
deals. Then we run short. That doesn't strike me as a rational
system, folks.
I am telling you, over the next 60 days, I'm going to do my
best to shake it up and turn this around because this isn't
working very well. For those of you in the private sector, I
would submit to you that this is an invitation from the
Secretary and now from the bipartisan leadership of the Aging
Committee to move aggressively. This issue has been studied now
for a full decade, and yet, you know, my constituents--and I'm
not the only Member of Congress who faced this--found
themselves last winter traipsing all over town from doctor's
office to doctor's office trying to figure out what to do and
how to get this done. In a country as strong and as good as
ours, it is unacceptable to me that getting a dose of flu
vaccine ought to be a rare privilege that you secure only after
you have navigated through a health system that is, at best
cumbersome and characterized by professionals as chaotic and
irrational.
Mr. Rowan. I agree with that 100 percent and look forward
to being a resource for you in your committee work moving
forward----
Senator Wyden. OK. The only other question I had for you,
Dr. Higginson. What else would you like CDC to be working on,
particularly in this effort over the next 60 days? I share your
view that State health departments ought to be in a position to
play a key role in trying to deal with potential shortages.
Tell us what you think over the next 60 days ought to be done.
Dr. Higginson. Right. And Senator, one thing I already
mentioned is, I do think they need to be working with the
manufacturers to give us at the earliest time, you know, what
the forecast for flu vaccine looks like so we can start
planning for contingencies early on, if we need to.
I think that CDC definitely needs to be very actively
involved in these discussions with the manufacturers, with you
over this next 60-day period to try to figure out what exactly
is needed. And again, I think just summarizing what a lot of
people have said is, I think that there is really two things we
are were looking at here. One is, what happens in a normal
year. And most of the time, things do work well, and the system
does work. And I think I have heard things from the
distributors today and from the manufacturers that they are
willing to work to tweak that system that usually works to make
it even better.
But I do think that we do have to plan for contingencies
for bad years. I mean, we are going to have bad years. There is
going to be a pandemic 1 day, and which is going to be a very
bad year. And for those contingencies, I think some real effort
needs to be put into what has to happen when things go bad.
Some people said that it was a chaotic system last year. The
way I see it is that there was a non-system. When things went
bad, there simply was not a system to deal with how are you
going to distribute the vaccine appropriately, and how are you
going to get the right people to the vaccine? Those are the
issues that I really think need to be worked on. And I think
that there are rules that both at the Federal level and the
State level. The Federal level, I really don't know so much
about what you have in way of authority around the distribution
of vaccines.
Senator Wyden. The General Accounting Office does. The
Federal Government doesn't seem to need much additional
existing authority. They have the authority to do it.
Dr. Higginson. And I do know down on the State level that
it is something that we are working on already. I think that it
would be good if the CDC and the Department of Health and Human
Services was to get out the message to State health departments
that this is something that they should seriously consider and
start at the State level developing contingency plans at same
time that you are developing them at the Federal level.
Senator Wyden. Well, the Federal level, it seems to me--and
this is what we have heard today--is going to have to make sure
that the States play a leading role. This is not going to be
Federal Government goes off and has a little discussion with
itself, and then waits for the States to do it. The Federal
Government ought to, under this important and significant offer
from the new Secretary of Health and Human Services, have all
of you from the State health departments at the table and walk
away after 60 days with a plan that has you all play a leading
role in the effort to ensure that this doesn't happen again.
I will let all of you go, but to me, I mean, the measure of
success this time is going to be real simple, and that is, are
there going to have to be more hearings in another year to plow
over the same ground? I think what we want to do with a
Secretary of Health and Human Services who has moved today to
make it clear that he wants to be part of a solution,
bipartisan leadership with Senator Craig and Senator Breaux. We
want to make sure that we are not having hearings like this
again in another year. It's just that simple.
Unless you all would like to add anything further, we are
going to excuse you at this time.
Dr. Higginson. Well, the other thing I would like to add--I
said this already--I do think that resources is an issue. We
have talked a lot about the need for public education. We
talked a lot about the need for developing web sites and 1-800
numbers so that people do know where vaccines are available in
a time of shortages. We have talked about local planning, the
need for coordination with local providers and public health
agencies and others who are actually providing the vaccine.
That all does cost money. There is some infrastructure dollars
that are needed to support adult immunizations the way that we
support childhood immunizations at this time.
Senator Wyden. Well, I am prepared to see additional
resources devoted to this, but I will tell you, I don't think
this is primarily an issue of resources. I think this is a
question of political will, and whether we are going to step in
and say, enough. This has been studied for years and years. We
have had meetings now for years and years. And it is time to
make the tough calls about how we are going to come up with a
plan to deal with the problems that we had last winter. If, out
of this, a bunch of recommendations to spend more money--I
think that is going to miss the point. I think what we have
seen there is a lot more to this than throwing money at it. It
may take some additional dollars for Medicare reimbursement.
What this is going to take is some clearheaded thinking about
how to keep the kinds of problems we saw last year from
developing. I'm not sure all that is about money.
Any other comments from our witnesses?
Dr. Fukuda. Just one more comment, Senator, to address some
of the issues brought up by Dr. Higginson. We would all really
like to have those early forecasts about when a problem is
coming down the road. But again, I think everyone needs to
realize that last year, we didn't know there was a problem
until pretty late into the season. That is what made it partly
so difficult to deal with. It is just a reality of the flu
vaccination supply situation that things can go wrong pretty
late into the year. So, though we would love to know early on
we often do not.
Senator Wyden. The point is, however, we now need to come
up with a system so that if you don't know until late that you
have got a problem, you have developed a system to deal with it
if the problem takes place. That is what we don't have. And we
are going to get after it.
All right. Anything else you all would like to add?
The Aging Committee is adjourned.
[Whereupon, at 11:37 a.m., the committee was adjourned.]
A P P E N D I X
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