[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




          THE STATE OF READINESS FOR THE 2005-2006 FLU SEASON

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 4, 2005

                               __________

                           Serial No. 109-79

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

        David Cavicke, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

              Subcommittee on Oversight and Investigations

                    ED WHITFIELD, Kentucky, Chairman

CLIFF STEARNS, Florida               BART STUPAK, Michigan
CHARLES W. ``CHIP'' PICKERING,         Ranking Member
Mississippi                          DIANA DeGETTE, Colorado
CHARLES F. BASS, New Hampshire       JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  JAY INSLEE, Washington
MIKE FERGUSON, New Jersey            TAMMY BALDWIN, Wisconsin
MICHAEL C. BURGESS, Texas            HENRY A. WAXMAN, California
MARSHA BLACKBURN, Tennessee          JOHN D. DINGELL, Michigan,
JOE BARTON, Texas,                     (Ex Officio)
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Gellin, Bruce G., Director, National Vaccine Program, 
      Department of Health and Human Services....................    14
    Gerberding, Julie Louise, Director, Centers for Disease 
      Control and Prevention.....................................    10
    Goodman, Jesse L., Director, Center for Biologics Evaluation 
      and Research, Food and Drug Administration.................    20

                                 (iii)



 
          THE STATE OF READINESS FOR THE 2005-2006 FLU SEASON

                              ----------                              


                         WEDNESDAY, MAY 4, 2005

                  House of Representatives,
                  Committee on Energy and Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:21 p.m., in 
room 2123, Rayburn House Office Building, Hon. Ed Whitfield 
(chairman) presiding.
    Members present: Representatives Whitfield, Stearns, 
Ferguson, Burgess, Blackburn, Barton (ex officio), Stupak, 
DeGette, Schakowsky, Inslee, and Baldwin.
    Staff present: Anthony Cooke, majority counsel; Alan 
Slobodin, majority counsel; Mark Paoletta, chief counsel; 
Clayton Matheson, research assistant; Chad Grant, clerk; Edith 
Holleman, minority counsel; Voncille Hines, minority research 
assistant; and Chris Knauer, minority investigator.
    Mr. Whitfield. I would like to bring this hearing to order, 
and I would like to apologize in advance to the witnesses that 
we were a little late. We had a vote on the floor. But we are 
excited about your being here today. We look forward to your 
testimony on the state of readiness for the 2005-2006 flu 
season.
    At this time, as chairman, I will do my opening statement, 
and we will go through the subcommittee, and then we will get 
right to your testimony.
    On October 5 of last year, one of our Nation's two largest 
suppliers of influenza vaccine informed the American public 
that it would be unable to provide any of the 46 to 48 million 
doses it had planned. Overnight, the expected supply of flu 
vaccine in the U.S. was cut nearly in half. Almost immediately 
there were news reports of imminent delays and shortages that 
could deprive millions of Americans who needed and wanted flu 
shots from getting them. Elderly people, parents of young 
children, adults with chronic illnesses, and countless other 
Americans panicked and flocked to local doctors' offices, 
healthcare clinics, and pharmacies to obtain the vaccine before 
it ran out. Fortunately, the flu season proved to be a 
relatively mild one, and coordination among HHS, the remaining 
manufacturers and the public turned the concern of a national 
shortage into a matter of some local and regional surpluses.
    In light of last year, this committee must carefully 
monitor preparations for the 2005-2006 flu season.
    First, we need to look closely at the goals and strategies 
behind our preparations for this season. We need a realistic 
assessment of the manufacturers' capabilities and the vaccine 
doses they should produce, and we must then plan accordingly. 
Specifically, we must ensure FDA's focus on efforts to confirm 
the entry, or reentry, of all available manufacturers into the 
vaccine market; and we must be certain the U.S. is prepared for 
all contingencies in which one or more of the producers of flu 
vaccine fail to achieve the necessary license or suffer from 
sterility or quality control problems that prevent distribution 
of their vaccine.
    Second, we must take advantage of this opportunity to 
consider the manner in which we communicate important flu and 
vaccination information to the public. This past year, the 
American people listened to the media's troubling portrayals of 
the shortage, and they panicked. Everywhere in the U.S., 
including my home district as well as others throughout the 
country, worried people rushed to their doctors, rushed to 
their pharmacists, where they all too often were either forced 
to linger in long lines or were even turned away. It is 
essential that our Nation's vaccine policymakers persistently 
endeavor to communicate clearly and concisely accurate and up-
to-date information to the American people so that flu seasons 
are never characterized by unnecessary concern or confusion.
    I welcome today's witnesses and look forward to their 
testimony. I hope this hearing will leave all of us with a more 
complete understanding of what to expect for the 2005-2006 flu 
season and more confidence in how our Nation's public health 
stakeholders will manage the flu manufacture and vaccination 
process.
    With that, at this time I would like to welcome and 
introduce Mr. Bart Stupak, the ranking minority member, for his 
opening statement.
    Mr. Stupak. Thank you, Mr. Chairman; and thank you for 
holding this hearing.
    Last year we had a very difficult flu season. In October, 
just as most people were thinking about getting their flu 
vaccine, the Centers for Disease Control was gearing up for 
their vaccine education program, and the Nation learned that it 
would only receive one-half of the 80 to 85 million doses of 
flu vaccine that it was counting on. Because of sterility 
problems in the manufacturing process, Chiron was not able to 
produce any of the 46 million doses it had promised. If you 
were not elderly, not very young, not disabled, or not with a 
compromised immune system, you were asked to step aside and let 
the more medically needy have their vaccine.
    Americans did step aside, but the distribution to the 
medically needy was haphazard. Some nursing homes, for example, 
had trouble getting vaccine doses. Elderly persons lined up in 
the morning at clinics only to find there were not enough doses 
to go around. Health care providers struggled to make value 
judgments about who in the high-risk populations, including 
themselves, should get the limited number of vaccines. In 
Michigan, for example, there were only 2 million doses of flu 
vaccine available for 3.4 million high-risk individuals.
    There are many questions about why the United States had so 
few suppliers. By January, however, after one manufacturer 
produced extra vaccine, there were available doses but not 
enough customers. Approximately 3.5 million doses out of the 60 
million were discarded.
    We are now preparing for the next flu season. At this point 
we have no more suppliers than we did a year ago. Sanofi is 
planning to produce 50 to 60 million doses, and MedImmune will 
produce another 3 million of the FluMist. Chiron hopes to 
produce 25 to 30 million doses but has not yet been approved to 
do so. Glaxo may enter the market with 10 million doses but has 
not yet filed for a license. If all goes well, that would 
provide 93 to 103 million doses, or 9 to 21 percent more doses 
than this country has ever used. If these vaccine promises are 
not fulfilled, we will have approximately the same amount that 
we had last year or maybe even less.
    Today I am interested in knowing what changes have been 
made in the distribution and education system so that this year 
the medically needy are served quickly and efficiently and 
there is no waste of vaccine because populations have been 
discouraged to receive their flu vaccine.
    I also want to know why the drug companies are raising 
their prices by 17 percent, citing market demand, and whether 
this increased cost will discourage use.
    In addition, I remain concerned that the Department of 
Health and Human Services now seems to be relying on only one 
domestic manufacturer to produce extra vaccine and to develop 
new methods to manufacture flu vaccine. If anything goes wrong 
with this domestic supplier, like it did at Chiron, America 
will be in serious trouble.
    There has been concern about our flu vaccine policy for 
some time. Two years ago, several members of this committee 
sent a letter asking for a hearing on our flu vaccine policy. 
Flu kills 35,000 people per year even without a shortage. I 
look forward to hearing from the witnesses today about their 
agency's plan to ensure an adequate supply and appropriate 
distribution of this life-saving vaccine.
    In addition, Mr. Chairman, I am sorry drug companies are 
not here to answer the questions about their intent and 
interests in meeting this Nation's needs. To get a complete 
picture of the situation, we need to hear directly from the 
manufacturers of the flu vaccine, and I look forward to such a 
hearing.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Mr. Whitfield. Thank you very much.
    We will be calling on opening statements in order of 
appearance at the committee. So at this time I would like to 
call on Mrs. Blackburn of Tennessee for her opening statement.
    Mrs. Blackburn. Thank you, Mr. Chairman; and I want to 
thank our guests who are with us today for taking the time to 
be here. I will waive my statement and reserve the time for 
questions.
    Mr. Whitfield. Mrs. Blackburn waives her opening statement.
    At this time, I recognize Ms. DeGette of Colorado.
    Ms. DeGette. Thank you very much, Mr. Chairman, for holding 
this hearing. I would ask unanimous consent to put my full 
statement in the record.
    Mr. Whitfield. Without objection.
    Ms. DeGette. I commend the chairman for having the hearing. 
I also think we need some follow-up hearings on an issue that 
has been of great concern to me, and that is the avian flu, 
which isn't really the topic for today, but I think it is the 
kind of the elephant in the room, if you will, because--and I 
see our witnesses nodding in agreement. So I hope we can do 
that.
    But, with respect to today's topic, I am concerned, like my 
colleagues, about our system for flu vaccine production. We 
have three manufacturers committed to supplying the U.S. with 
flu vaccine, but there have been concerns for many years that 
our system doesn't adequately support these manufacturers; and, 
also, the danger exists that the yearly destruction of unused 
flu vaccine creates a disincentive for innovation and adequate 
supply.
    Last year, Colorado, my State, was among the first States 
hit by the flu strain known as Fujian A, which was not included 
in the 2004 flu vaccine. This flu strain for unknown reasons 
disproportionately affected children and caused at least 11 
deaths last year. We need to do better, and I hope that the 
witnesses today can improve our understanding of the public 
health issues and also describe the technological advances in 
virus identification and antiviral production, because, as we 
all know, the flu vaccine for any given year may not actually 
cover all the viruses that go around. And, finally, I would 
like the witnesses to talk about how prepared the U.S. is for a 
flu pandemic, not just avian flu but any flu.
    In late 2002, the SARS virus disrupted travel and tourism 
and claimed the lives of many people. Now, I know the World 
Health Organization has established a global monitoring system 
to track influenza outbreaks, but the cost of complying with 
this system is certainly too much for the world's poorer 
nations where some of these viruses originate. I hope the 
witnesses will talk about the adequacy of the surveillance 
system and also our Nation's ability to cope with the pandemic.
    It is my understanding that countries like Japan, Finland, 
and Australia are stockpiling antiviral treatments against 
pandemic flu for about a quarter of their population. Our 
stockpile in the U.S. is only about 1 percent of the 
population. So I would hope that we can talk about that as well 
as the other issues raised by the ranking member, the chairman, 
and others.
    With that, Mr. Chairman, I yield back the balance of my 
time.
    [The prepared statement of Hon. Diana DeGette follows:]
Prepared Statement of Hon. Diana DeGette, a Representative in Congress 
                       from the State of Wyoming
    Flu related spending by the Department of Health and Human Services 
has risen almost sevenfold over the past 5 years. While for some 
individuals a flu infection is merely a few days sick in bed, for other 
more vulnerable populations, the flu can cause serious illness and even 
death. Even with all the advances of 21st century medicine, 30,000 
Americans die from flu or flu-related illnesses each year. In some 
studies, vaccination against flu has shown to provide protection to 
between 70 and 90 percent of healthy adults. Unfortunately, some of our 
vulnerable populations, including health workers, have dismal rates of 
vaccination. We must do better.
    I commend the Chairman for holding this hearing and agree that we 
need to examine this important issue now, before the next crisis. It is 
my understanding that many of the flu vaccine manufacturing has begun 
this month in preparation for next year's flu season. I hope that 
today's hearing will provide insights that will improve our readiness.
    Like many of my colleagues, I remain concerned about the United 
States system for flu vaccine production. We have at least 3 
manufacturers committed to supplying the U.S. with flu vaccine, but 
there have been concerns for many years that our system does not 
adequately support these manufacturers. Additionally, the danger exists 
that the yearly destruction of unused flu vaccine creates a 
disincentive for innovation and adequate supply.
    Last year, Colorado was among the first states hit by the flu 
strain known as Fujian A, which was not included in the 2004 flu 
vaccine. This flu strain, for unknown reasons, disproportionately 
affected children, and caused at least 11 deaths of children last year. 
We clearly need to do better. I hope that the three witnesses here with 
us today will improve our understanding of this public health issue and 
describe the technological advances in virus identification and 
antiviral production.
    In addition to concerns about flu vaccine supply, I hope that our 
three expert witnesses will also comment on how prepared the U.S. is 
for a flu pandemic.
    In late 2002, the SARS virus disrupted travel and tourism and 
claimed the lives of many people. I know that the World Health 
Organization has established a global monitoring system to track 
influenza outbreaks, but the cost of complying with the system is 
certainly too much for the world's poorer nations. I hope that the 
witnesses will comment about the adequacy of this surveillance system 
and our nation's ability to cope with an outbreak. It is my 
understanding that countries such as Japan, Finland and Australia are 
stockpiling antiviral treatments against pandemic flu for up to one 
quarter of their nations' population. The U.S. stockpile is maintained 
for only 1 percent of our population. We may need to reexamine this 
strategy.
    Many experts have stated that in addition to surveillance, we need 
a reliable and flexible vaccine production system. Last year, the 
license suspension of the Chiron company's vaccine manufacturing plant 
in the U.K. was a wake up call to all of us. In addition to a 
``shortage'' of supply, we also were faced with educating the public 
about appropriate distribution and recipients. I hope that the 
witnesses will help us understand what went wrong last year and what 
lessons were learned.
    This hearing continues this Committee's examination of FDA's 
ability to protect the public's health. It is my understanding that 
there may be inadequate funding for FDA inspectors to travel overseas 
and scrutinize manufacturing facilities. I hope that Dr. Goodman from 
FDA's Center for Biologics Evaluation and Research will describe these 
current challenges. Drug safety has been of great interest to me and 
this Committee for a number of years, and the situation at the Chiron 
plant is only one example of our concerns being realized. We clearly 
must take steps to ensure that history is not repeated.

    Mr. Whitfield. Thank you very much.
    At this time, I would recognize Dr. Burgess for his opening 
statement.
    Mr. Burgess. Mr. Chairman, thank you for calling this 
important hearing on public health readiness and how it relates 
to influenza outbreaks. You know, we have to work with our 
public health agencies to ensure access to adequate supplies of 
vaccines are present but at the same time work with the 
manufacturers to make certain that they have the ability to 
produce flu vaccine.
    Some of the concerns I have regarding the vaccine 
availability aren't with today's focus on the flu vaccine 
supply. Many people have forgotten that since 2000 we have also 
had shortages of vaccine that protect against eight childhood 
diseases. The flu vaccine shortage was only symptomatic of the 
broader vaccine supply problem: There are only a handful of 
manufacturers making vaccines for Americans. Three 
manufacturers had licensed products for flu vaccines last year, 
many childhood vaccines have only one manufacturer, and none 
have more than two manufacturers, increasing the risk of 
shortages.
    The question comes up as to why there are so few 
manufacturers. Certainly the vaccine business is complex in its 
development, complex in its manufacturing, and certainly 
complex because of the regulatory challenges, many of which 
Congress has imposed upon it. Obviously, that all adds to the 
cost. Vaccines, however, are a fairly low-margin business, and 
again that may be partly our responsibility as well because 
there are some price controls on vaccines.
    Then, finally, vaccines have one of the greatest liability 
burdens of any medical product; and the statute of limitations, 
particularly for childhood vaccines, is incredibly long. We 
need to address the overall issue of vaccines supply in this 
country, and I encourage the country to take up the broader 
issue of ensuring a stable supply for all vaccines this year.
    I yield back.
    Mr. Whitfield. Thank you very much.
    At this time, I recognize Ms. Schakowsky for her opening 
statement.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Thirty thousand people die annually from the flu virus, 
hundreds of thousands of others end up in the hospital, and no 
American should again be asked to compromise their health 
because of the failures of the Bush administration to provide 
sufficient doses of the flu vaccine.
    Last October, we learned that we would have only half the 
expected supply of influenza vaccine for the fall and winter 
flu season. When the Food and Drug Administration was told of 
contamination at the Chiron facility, one the largest flu 
vaccine producers, it failed to act in a meaningful way to 
address the problem, which was secure additional vaccine 
supplies elsewhere. We saw price gouges appear out of the 
woodwork to profit from a public health crisis; and we saw many 
who would normally seek a vaccination, those at greater risks 
of contracting the flu, foregoing shots.
    Had the FDA taken the appropriate course of action, last 
year's vaccine shortage and perhaps unnecessary sickness and 
loss of lives in the United States may have been avoided. None 
of these problems occurred in other countries where the 
government plays a far greater role in assuring affordable 
access to health care. In fact, in Canada there was adequate 
flu vaccine supply to sell to those Americans who were close 
enough to the border to go across for a shot.
    Last fall, Illinois Governor Rod Blagojevich, a leader in 
the fight for affordable prescription drugs, including 
prescription drug reimportation, acted to secure additional 
vaccine supplies for the most vulnerable people in our State. 
Although in a hearing we held last November the FDA indicated 
to me that it planned to provide a decision within 2 or 3 weeks 
of that time as to whether Illinois would be allowed to bring 
vaccines into the country, Governor Blagojevich is still 
awaiting FDA authorization.
    So I want to know why, 5 months later, Illinois still has 
not received a response from the FDA; and I want to know why, 
given the fact that we are still entirely relying on foreign 
sources to meet our flu vaccine needs, the Bush administration 
is still adamantly blocking Illinois' reimportation efforts of 
other life-saving medications. The FDA allowed politics to 
trump personal health when it undermined Governor Blagojevich's 
effort to address a serious health crisis. Why would a Federal 
agency stall an emergency situation like the one we faced last 
fall? The answer can only be because of their fear that 
Governor Blagojevich's success in importing flu vaccine would 
provide validation for his efforts to import prescription drugs 
for the people of Illinois.
    Today, the Wall Street Journal highlights how many doctors, 
pharmacists, and hospitals across the U.S. already fear another 
major shortage of flu shots. The Vice President of Amerinet, 
Inc., a health care purchasing group of St. Louis, termed the 
shortage in order of, ``a feeding frenzy.'' Manufacturers are 
already charging at least 17 percent more for the flu shots, 
reflecting this rush for advanced orders. According to the Wall 
Street Journal, this, ``shows that the vaccine production 
infrastructure remains nearly as fragile and outdated as it was 
before last year's crisis.''
    We should learn from mistakes made last year. I would like 
to hear from the witnesses today what concrete actions the 
administration is taking to ensure that this same fiasco will 
not happen again. I want to hear what changes have been made to 
our flu vaccine infrastructure since last year.
    It is clear that we need better cooperation and information 
sharing not only between the manufacturers and distributors but 
also with the regulatory agencies of other countries where the 
manufacturing plants are located. Because we are still clearly 
relying on foreign sources to meet our flu vaccine needs, we 
need to improve monitoring of and communication with those 
sources. I would like to see how the FDA and CDC will work with 
the State and local health officials, manufacturers, and the 
public to improve distribution of available supply; and I want 
to hear how it is that, after news of massive shortages, we 
actually ended up with regional surpluses of the flu vaccine. 
That fact is especially troubling because it means that many of 
those who needed the vaccine but couldn't get it could have 
avoided unnecessary illness.
    At last year's hearing I questioned the Bush 
administration's attitude toward vaccine accessibility. I was 
disturbed by Vice President Cheney's explanation that vaccine 
production just isn't profitable enough for private companies, 
and I will ask the same question: Are the administration's 
concerns for the high profits of the pharmaceutical companies 
to take precedence over the health of the American people?
    I want to be able to assure my constituents that there will 
not be a shortage of flu vaccine in Illinois this fall, and I 
hope this committee will be made aware in advance and in real 
time of the status of flu vaccine production at the labs with 
which we contract so that the 2005-2006 flu season will not be 
a relapse of last year's problems.
    Thank you, Mr. Chairman.
    Mr. Whitfield. Thank you.
    At this time, I will recognize the chairman of the Energy 
and Commerce Committee, Mr. Barton of Texas, for his opening 
statement.
    Chairman Barton. Thank you, Mr. Chairman; and I am going to 
submit my formal statement for the record.
    I just want to briefly say I appreciate you holding this 
hearing. I look forward to our panelists. We don't want to have 
happen next year what happened this year. It was very 
disconcerting to go from there was a big shortage and we were 
rationing flu vaccinations to, later in the season, if you 
wanted one, come in and get it. So we have a lot of issues.
    But I guess the bottom line issue is going to be, are we 
prepared for next year and will every American who wants a flu 
vaccination next year be able to get one? I hope we get an 
answer to that in the hearing today.
    With that, Mr. Chairman, I would yield back.
    [The prepared statement of Hon. Joe Barton follows:]
 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce
    It's hardly seems like the flu season is past. But it is and it was 
one of the most publicized ever. In just six months, it all starts 
again. Millions of Americans will want a flu vaccination come this fall 
and I think I can promise you that many are wondering right now whether 
their vaccine will be available.
    Last year, men and women in this country, many of them elderly, 
stood in long December lines to get a flu vaccination when production 
problems shut down the Chiron plant in Liverpool, England.
    Almost immediately after the supply was interrupted, this Committee 
held a hearing to try to determine what happened and how it could be 
prevented in future seasons. Well, the future is upon us--vaccine 
manufacture for the 2005-2006 flu season is well underway. We've 
invited here today three representatives from the Department of Health 
and Human Services to answer some simple questions: Are we ready? How 
are we doing?
    Let me be more specific. How many doses of flu vaccine do we expect 
to need for the coming season and how many do we anticipate from the 
companies manufacturing for the American market? When have we last 
checked the progress of these manufacturers and what issues are 
outstanding?
    Looking back to the problems of last year, what are the specific 
changes made to our flu vaccine policy and practice? Has FDA cleared up 
its communication problems with the MHRA? What is the status of efforts 
to introduce more vaccine manufacturers into the U.S. market? What 
plans and contingencies do we have in place so we aren't caught flat-
footed in the event of another production failure like we experienced 
last year?
    Finally, while I recognize the complexities and uncertainties of 
flu vaccine manufacture and distribution, I hope HHS can better 
communicate to the American people the important information about 
influenza and immunization. Last year, people heard warnings about 
shortages then news of surplus. And each day more stories appear in the 
press about the threats of deadly flu strains. People are worried about 
the flu and whether their shots will be there in the fall. HHS must 
keep them up to date with straightforward, clear, and measured 
information.
    I want to thank Mr. Whitfield for holding this important hearing. 
And I look forward to today's testimony on the state of preparedness 
for flu.

    Mr. Whitfield. Thank you, Mr. Chairman.
    At this time I would recognize Ms. Baldwin for her opening 
statement.
    Ms. Baldwin. Thank you, Mr. Chairman; and thank you to the 
witnesses who are testifying before us today.
    Like many of my colleagues, I was distressed by the series 
of events last fall that led to the U.S. Having a severe 
vaccine shortage. We ended up being pretty lucky, but we 
certainly shouldn't have to be relying on luck to ensure the 
health and well-being of Americans.
    Preparing a flu vaccination strategy certainly seems to be 
as much an art as it is a science. I understand the challenges 
that we face in predicting which flu strains will be most 
prevalent during the upcoming flu season and needing to prepare 
the necessary vaccines months and months in advance, but I am 
also interested in ways that we can strengthen this line of 
defense for the health of Americans, either through changing 
the actual vaccine production methods or changing the way that 
we communicate and coordinate with other countries and vaccine 
makers.
    I am interested in hearing from our panel of experts today, 
and specifically I am interested in knowing what are the 
lessons learned from last year's experiences and how their 
various agencies are moving forward to ensure that we have a 
reliable flu vaccine supply. As Dr. Burgess mentioned in his 
opening statement, I also share his interest in ensuring that 
we have a reliable supply of other vital childhood 
vaccinations. Thank you for being here today.
    Mr. Chairman, thank you for holding this hearing, and I 
look forward to our discussion.
    Mr. Whitfield. Thank you.
    At this time, I will recognize the gentleman from New 
Jersey, Mr. Ferguson, for his opening statement.
    Mr. Ferguson. Thank you, Mr. Chairman.
    I appreciate our panelists for being here today. We thank 
you very much.
    We certainly have seen some major problems in the supply of 
flu vaccine; and we certainly, as others have already said, 
don't want a repeat of last year's problem. We know from 
history that when we have seen severe flu problems literally 
hundreds of thousands, millions of people can lose their lives. 
Tens of thousands of people die in a typical flu season when 
there is no vaccine problem, so certainly if there is a 
shortage that exacerbates that problem. I am certainly 
interested in the avian flu and some of the other issues that 
have been described here, and I look forward to getting into 
some of those issues when we have time for questioning.
    I would only say it has been raised here in our opening 
statements the topic of bringing in vaccines from Canada, and 
perhaps that might be a model for bringing in drugs from Canada 
or other countries on a broader scale. I would only suggest 
that if we want to see similar problems that we have seen with 
the flu vaccine, if we want to see similar problems in the 
broader drug supply, let us start bringing in drugs from all 
sorts of other countries.
    Some have suggested, well, let us only bring in--why don't 
we only import drugs from Canada and forget the health and 
safety standards, the very high standards that we have here in 
this country? Of course, that is a bit of a red herring. Canada 
can't possibly make and manufacture and supply all the drugs 
that they use and supply all the Americans who want to get 
their drugs from Canada as well, whether it is the State of 
Illinois or anybody else. Canada has simply become a post 
office, not a manufacturer of drugs; and it has become common 
knowledge that if you go across the border into Canada you are 
not necessarily buying Canadian drugs, you are buying drugs 
from South Africa or China or India or the Czech Republic or 
any one of a host of other countries that don't have close to 
the health and safety standards that we have in our country or 
even that Canada has in their own country.
    So I would suggest that if we want to cripple the companies 
and the industry that are making these drugs, these life-saving 
cures and medications in the first place, let us not use the 
vaccine situation as the example of where we should go.
    One of the problems, certainly one of the reasons we are 
seeing such severe problems with the vaccine situation is 
because we have driven manufacturers out of the business. We 
have created an environment through our action in the Congress 
and through other circumstances whereby companies just don't 
find it sensible any longer to be in the business. If we want 
to go that route for all medications, I would suggest, great, 
let us just start importing drugs from other countries and not 
worry about the health and safety standards, because that is 
exactly where it is going to lead.
    Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. Thank you.
    As you all are aware, this is an oversight investigation 
subcommittee, and it is our custom to take testimony under 
oath. And I would like to ask each of you--and before I ask 
you, I do want to introduce all of you.
    First of all, we have with us today Dr. Julie Gerberding, 
who is the Director for the Centers for Disease Control and 
Prevention; and we welcome you. In addition, we have Dr. Bruce 
Gellin, who is the Director of the National Vaccine Program 
Office at the Department of Health and Human Services; and then 
we have Dr. Jesse Goodman, the Director of the Center for 
Biologics, Evaluation and Research at the Food and Drug 
Administration.
    We do welcome all of you. We look forward to your 
testimony, your expertise.
    As I stated, we do take testimony under oath; and I would 
ask you, do you have any objection to testifying under oath 
this afternoon?
    I would also advise you that, under the rules of the House 
and the rules of the committee, you are entitled to be advised 
by counsel at these hearings. Do you desire today to be advised 
by counsel during your testimony?
    Okay, in that case, if you would please rise and raise your 
right hand, I would like to swear you in.
    [Witnesses sworn.]
    Mr. Whitfield. You are now under oath, and we look forward 
to your testimony.
    Dr. Gerberding, we will start with your testimony.

  TESTIMONY OF JULIE LOUISE GERBERDING, DIRECTOR, CENTERS FOR 
  DISEASE CONTROL AND PREVENTION; BRUCE G. GELLIN, DIRECTOR, 
   NATIONAL VACCINE PROGRAM, DEPARTMENT OF HEALTH AND HUMAN 
SERVICES; AND JESSE L. GOODMAN, DIRECTOR, CENTER FOR BIOLOGICS 
     EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION

    Ms. Gerberding. Thank you.
    I thank the subcommittee for having this hearing. I think 
this is a critical time for us to keep a strong focus on 
influenza, and I appreciate your helping us do that from the 
congressional perspective. I can assure you we are doing that 
at the Department of Health and Human Services. Secretary 
Leavitt is having the Department leaders meet every day on this 
subject, so we are looking forward to giving you a perspective 
on how we are preparing for the fall.
    I wanted to start with a graphic that I think illustrates 
one of the most important principles about influenza--on the 
next graphic, please--and that is the fact that the virus 
itself is so unbelievably unpredictable. This is kind of a time 
line of influenza as it has evolved over the last century. Each 
one of those arrows is the beginning of the appearance of a new 
strain of flu, and each circle represents a pandemic that 
started when a new strain appeared. So, in the last 100 years, 
three times we have had major international pandemics as H1, 
H2, and H3 appeared in the world and caused devastating 
outbreaks. That is a very difficult event to predict.
    Up in the right-hand corner of this graphic are the little 
mini appearances of the avian isolates. And, of course, as you 
mentioned, right now we are very concerned about avian 
influenza in Asia, and we would look forward to being able to 
update you on that topic.
    But the point of all of this is that we don't know in any 
given flu season whether this will be a pandemic year, a mild 
season, when it will start, how long it will go, when it will 
peak, how severe it will be, how many people will be affected, 
will it be worse in adults or children. There is absolutely no 
certainty about the strain or the characteristics of the flu 
season on any given year, and that is a challenge for all of 
us, even if we didn't have to face additional challenges.
    But on my second graphic I have illustrated the outcome of 
this past season. In the yellow bars here, the figures for the 
coverage of the high-risk populations are presented. In the far 
left graph is the comparison from this past year to the year 
before and the number of young infants that were immunized. And 
you can see that, despite our vaccine shortage, we were able to 
achieve about a 50 percent immunization of that age group. This 
is the first year that recommendation was made for those 
children.
    In the high-risk adults, those adults who have other 
medical conditions, our immunization rates were not quite as 
good as they were the year before. Among adults over 65, they 
were very close to the year before but not quite the same. 
Among health care workers, they were not quite the same. But, 
overall, despite having 50 percent of the vaccine we predicted, 
we came pretty close to achieving the immunization coverage 
rates that we would have normally achieved in a year where we 
had plenty of vaccine.
    That is not a success, but it represents an effort of 
hundreds and hundreds of people around the country as well as 
the government and the private sector to really at a late date 
make the doses that we did have available to as many of the 
high-risk people as we can. And of course this illustrates that 
it is not just the virus that is unpredictable, it is the 
vaccine supply that is unpredictable, and it is the demand for 
vaccine that is unpredictable as well.
    So what are we doing about the vaccine supply? Well, the 
first thing we are doing is buying lots of vaccine. Since 2004, 
CDC's dollar investment in vaccines for flu has gone up by $118 
million. In the President's proposed budget for fiscal year 
2006, that would include $30 million for an insurance policy to 
buy monovalent vaccine as a reserve if something goes awry with 
one of the other manufacturers as well as the 20 million 
purchase of vaccine for distribution to the States on top of 
what is included in the Vaccines for Children program.
    We are also providing a fair purchase price for this 
vaccine. We think it is a good thing that over the last decade 
the price paid for flu has gone from pennies to a price that 
allows manufacturers to receive a fair reimbursement; and, 
also, our government, through our Medicare and Medicaid 
services, are reimbursing providers appropriately for providing 
vaccine.
    We are also planning scenarios. We will start the flu 
season with a focus on high-risk people because we want the flu 
shot in their arms first. Then, if the supply comes forward as 
we are hopeful it will, we will be able to expand in to people 
who have less risk from flu complications and ultimately into 
healthy people as the season unfolds. But we will start the 
season this way, with a clear message that that is the CDC's 
priority. But people will have to understand, just as is true 
in any year, the communication about flu does change as the 
season progresses. We find out where it is peaking, we find out 
if it is severe, we find out where vaccine supplies are short, 
and we have to adjust our message as we go forward. We want 
people to anticipate that and to expect that they will have to 
pay attention, because the message will evolve.
    I see there are many other steps and progress that I will 
let my colleagues present to you, but, again, I just wanted to 
say that we are very pleased that the committee is interested, 
and we will do everything we can to keep you updated on all of 
these unpredictabilities as we go forward and do as much as we 
can to take the uncertainty out of the system. Thank you.
    [The prepared statement of Julie L. Gerberding follows:]
   Prepared Statement of Julie L. Gerberding, Director, Centers for 
  Disease Control and Prevention, U.S. Department of Health and Human 
                                Services
    Mr. Chairman and members of the Committee, I am pleased to be here 
today to update you on the Centers for Disease Control and Prevention's 
(CDC) efforts to address the influenza vaccine supply status and our 
planning for the 2005-06 influenza season. We faced unprecedented 
challenges during the 2004-2005 influenza season. Due to tremendous 
collaboration among our public health and private sector partners, our 
collective ability to modify and enhance our response strategy as 
circumstances changed, and the cooperation of the public, I am pleased 
to report that we have been successful in our effort to promote and 
protect the public's health. We learned valuable lessons from the 2004-
2005 influenza season that are enhancing our planning efforts for the 
upcoming influenza season.
    Vaccination is the primary strategy for protecting people who are 
at greatest risk of serious complications and death from influenza. In 
the face of this season's influenza vaccine supply shortage, CDC, state 
and local public health officials, vaccine manufacturers and 
distributors initiated extraordinary partnership activities to address 
this public health challenge. For example, sanofi pasteur (formerly 
Aventis Pasteur) provided access to vaccine distribution information to 
aid in the allocation of the available vaccine supply to those people 
most in need this season. State and local public health officials also 
worked closely with CDC to ensure equitable distribution of vaccine to 
those areas with the greatest need And we must not forget the important 
service of immunization providers on the front lines in doctors' 
offices, health clinics, grocery stores, and pharmacies working to 
prioritize, deliver, and administer vaccine so that it reaches high-
risk individuals. Together, we found new and effective ways to address 
the sudden, late emergence of a substantial influenza vaccine shortage 
that had never before occurred.
    Despite the challenges presented by the unexpected shortage of 
influenza vaccine, CDC immediately responded by changing 
recommendations to focus vaccine efforts and then began monitoring the 
results of those changes. State specific flu vaccination data for 
adults and children were rapidly collected and reported on an ongoing 
basis from November 2004 through February 2005. CDC's Behavioral Risk 
Factor Surveillance System reported that 62.7 percent of Americans 65 
years of age and older reported being vaccinated for influenza between 
September 2004 and January 2005. This coverage is comparable to the 
percentage of older Americans vaccinated in previous years without 
supply shortages. So, many at-risk older Americans were vaccinated as a 
result of effective work of state and local health departments and the 
cooperation of younger, healthier Americans who ``stepped aside'' to 
allow the older and more vulnerable populations to receive vaccine. In 
addition, through January of 2005, 48.4 percent of young children 
(between 6 and 23 months of age) were vaccinated. This marked the 
highest vaccination coverage rate in response to a first-time 
recommendation of a new vaccine for children.
             preparations for the 2005-06 influenza season
    As we prepare for the 2005-2006 influenza season, we are 
incorporating into the planning process successful strategies used this 
past year. For example, our budget request reflects the need to 
strengthen the influenza vaccine supply. Another example is the 
inclusion of our state and local public health partners and the vaccine 
manufacturers in the planning process for the next influenza season. 
Another partnership is the National Influenza Summit, which is 
cosponsored by the American Medical Association (AMA) and CDC and has 
been meeting annually since 2001. The Summit brings together 
stakeholders to discuss issues of concern regarding the annual 
influenza season, including vaccine supply. Additionally, throughout 
the year Summit partners continue to collaborate to address barriers to 
increased influenza vaccinations. This year the Summit will be held May 
10-11 in Chicago.
    The best strategy for influenza prevention and control both during 
annual outbreaks and during a pandemic is vaccination. However, the 
vaccine manufacturing system in the United States is fragile. 
Currently, there are only three influenza vaccine manufacturers 
producing vaccines for the US market, and only one of those 
manufacturers produces its vaccine entirely in the United States.
    Anticipating and planning for the next influenza season is an 
enormous and complex challenge, involving numerous public health and 
private sector entities. The production of influenza vaccine is a 
lengthy and complicated process. Six to nine months before the 
influenza season begins, manufacturers must predict demand and decide 
the amount of the vaccine to produce. Moreover, the onset of the 
influenza season, its severity and duration, as well as the potential 
public demand for vaccine are highly unpredictable from year to year.
    CDC has already begun its planning efforts for the 2005-06 
influenza season in anticipation of continued challenges in meeting the 
nation's vaccine supply needs. We have established a planning team that 
meets almost weekly. The team consists of staff from across CDC, as 
well representatives from state and local public health agencies with 
input from the National Vaccine Program Office and the Food and Drug 
Administration.
    To date, CDC has:

 Developed possible scenarios for vaccine supply for the coming 
        season, including the possible disruption of production among 
        the current influenza vaccine manufacturers for the U.S. 
        market, the re-entry of Chiron into the market, and the entry 
        of additional influenza vaccine manufacturers into the U.S. 
        market;
 Worked with the Advisory Committee on Immunization Practices (ACIP) 
        to develop more refined vaccination priority plans that can be 
        used should there be another critical vaccine shortage;
 Met with U.S.-licensed and other vaccine manufacturers to discuss 
        their plans for the next season, including production 
        estimates, and distribution strategies and anticipated time 
        lines for vaccine availability; and
 Worked with sanofi pasteur and other prospective manufacturers and 
        distributors so that, during the prebooking process, customers 
        indicate both the total amount of vaccine they need, assuming 
        an adequate supply, and the number of doses needed to vaccinate 
        high priority groups in the event of supply limitations.
    In addition, CDC is:

 Pursuing a vaccine contracting strategy that addresses routine 
        influenza vaccine purchase and stockpile purchase. We recently 
        signed contracts for 3.5 million doses maximum of sanofi 
        pasteur thimerosal-free vaccine, three million doses maximum of 
        sanofi pasteur multi-dose vials and one million doses of 
        MedImmune's FluMist. The stockpile doses are being negotiated 
        now that we have the contracts. The bulk purchase solicitation 
        is pending.
 Monitoring antigen-sparing studies designed to determine if reduced 
        vaccine dosages can provide sufficient immunity against 
        influenza, thereby allowing for the protection of more persons 
        with fewer doses of vaccine.
 Developing infection control strategies to prevent the spread of 
        influenza.
 Drafting a written plan highlighting key activities that state and 
        local public health agencies should consider to prepare for the 
        upcoming season. This plan is currently being reviewed by our 
        partners, and we hope to have it finalized before the end of 
        summer 2005. This will be complemented with a list of key 
        activities CDC will undertake.
 Preparing communication strategies with appropriate messages to 
        respond to the fluctuations in supply and demand anticipated 
        throughout the season.
 Developing and implementing a plan to evaluate the season.
    These comprehensive planning efforts are intended to support the 
achievement of important public health objectives, including increasing 
the domestic production of influenza vaccine, increasing demand for 
vaccine among persons indicated for annual influenza vaccination, and 
increasing vaccination coverage, particularly among persons in high-
risk groups, so that we can protect and improve the public's health.
                               conclusion
    Influenza is a serious public health threat, taking the lives of 
about 36,000 Americans each year and hospitalizing on average more than 
200,000 each year. For this reason, it is imperative that we continue 
to refine and improve our capacity to meet any challenges that arise in 
terms of vaccine supply, seasonal severity, or other unusual 
circumstances. We are applying the lessons learned from the challenging 
experiences of the 2004-05 influenza season for this upcoming season 
and have established a mechanism to continue to improve and learn in an 
effort to assure our nation's citizens are protected from this disease.
    Thank you for focusing attention on this important public health 
issue and for the opportunity to provide an update on our current 
efforts. CDC is committed to protecting and promoting health for all 
Americans, preventing disease and disability through public health 
research and public outreach, and supporting important public health 
interventions, including vaccination. We appreciate your interest in 
this issue and your support of CDC's efforts to protect the public's 
health.
    I will be happy to answer any questions.

    Mr. Whitfield. Thank you, Dr. Gerberding.
    At this time we recognize Dr. Gellin for his opening 
statement.

                  TESTIMONY OF BRUCE G. GELLIN

    Mr. Gellin. Thank you very much, Mr. Chairman and members 
of the committee.
    I am Dr. Bruce Gellin. I'm the Director of the National 
Vaccine Program Office of the Department of Health and Human 
Services. I am glad to have the opportunity to speak to you 
today about the U.S. influenza vaccination program and the role 
of the National Vaccine Program Office, NVPO, in strengthening 
the U.S. Influenza vaccine supply.
    The NVPO was established in 1988 and has responsibility for 
coordinating and ensuring collaboration among the many Federal 
agencies involved in vaccine and immunization activities. We 
accomplish this by communicating and coordinating with our HHS 
agencies as well as with the Department of Defense and the U.S. 
International Agency for International Development, and through 
our National Vaccine Advisory Committee The development, 
production, and delivery of influenza vaccine every year 
underscores the complexities of vaccine production itself. 
Because they involve living organisms, developing and producing 
vaccines poses different challenges than the development and 
manufacture of drugs.
    In the United States, as with many other countries, the 
protection of the population through vaccination depends on 
vaccines produced by private companies for profit as well as 
for public good. U.S. vaccine manufacturers are faced with 
substantial challenges, including the costs and uncertainties 
of developing new products, limited returns on investment for 
vaccines compared with pharmaceutical products, a regulatory 
environment that has very high standards for safety and 
effectiveness, concerns about liability issues and, for 
influenza vaccine, variable demands from one season to the 
next.
    Consequently, the number of companies that produce licensed 
vaccines for the U.S. Market is small. Each type of vaccine is 
made by a limited number of suppliers, as you have already 
commented upon; and, in many cases, a single manufacturer 
supplies vaccines that we rely on.
    Producing the flu vaccine has additional challenges. It is 
a vaccine that has to be redesigned and produced every year and 
delivered on time to tens of millions of people who desire it 
over a several month period in the fall in advance of the 
annual flu season. We all witnessed the fragility of the system 
last year when one of our two large manufacturers could not 
supply vaccine to the market. In recent years, we have also 
seen both surges in demand and delays in the delivery of 
influenza vaccine creating mismatches between vaccine 
availability and enhanced demand, resulting in these de facto 
shortages.
    While we are optimistic that an increased number of 
manufacturers are now interested in the U.S. influenza vaccine 
market, presently only three companies are licensed to sell flu 
vaccine in the U.S. Two produce an inactivated influenza 
vaccine, and a third produces a live-attenuated vaccine that is 
delivered by nasal spray.
    All U.S.-licensed vaccines are developed from viruses that 
are grown in eggs in a process that is unique for influenza 
vaccine. In a collaborative effort, both CDC and FDA contribute 
to the influenza vaccine manufacturing every year by providing 
the vaccine companies with vaccine reference strains, the so-
called seed viruses, as the starting point for a large-scale 
manufacturing.
    In addition, FDA supplies reagents that set standards for 
the manufacturers that determine the vaccine's potency. The 
number of vaccine doses produced is limited by the capacity of 
the manufacturers' production facilities, the availability of 
eggs, the yield of virus growth in the eggs, and the length of 
time the manufacturing continues into the season. Although it 
is possible for production to continue beyond the summer and 
into the fall, there is a substantial risk that late-season 
vaccine will go unused since the later vaccine is produced, the 
later it will be available to clinics.
    Companies need to plan the amount of vaccine that they will 
produce well in advance of the flu season so they can secure 
the needed egg supply in which the vaccine viruses are grown. 
Production of annual flu vaccines takes about 6 to 9 months, 
and any disruption in the production schedule for any reason 
may lead to a delay in the availability of the vaccine.
    Influenza vaccine supply issues are also critical for 
pandemic influenza preparedness since the pandemic vaccine 
supply is directly related to existing influenza vaccine 
manufacturing capacity. Many experts believe that the risk of a 
flu pandemic or a global epidemic is higher now than it has 
been in the past because of the spread of avian influenza in 
wild and domestic bird species across Asia. Since January 2004, 
89 people, mostly young and otherwise healthy, have been 
confirmed by the World Health Organization to have been 
infected with the H5N1 virus, and 52 of them have died. And we 
heard of a new case reporting a death from Cambodia just this 
morning from the World Health Organization. The people who died 
were known to have died of this infection. We are concerned 
that should this virus develop the capacity to be easily 
transmitted among humans, either through a mutation or mixing 
genes with a human flu virus, a pandemic could result.
    Ensuring the ability to meet current annual demand for flu 
vaccine, to improve prevention of influenza disease, and to 
prepare for a pandemic all require strengthening the flu 
vaccine supply in the U.S. Building on the response to the flu 
vaccine shortage last year, NIH and FDA have worked to 
facilitate the clinical evaluation of a flu vaccine produced by 
GlaxoSmithKline and to expeditiously develop the data base 
necessary to allow the company to apply for FDA approval in the 
coming influenza season.
    Several additional HHS flu vaccine initiatives have been 
put in place to address our pandemic preparedness needs and 
will also help to achieve our annual influenza prevention goal. 
The objective of these initiatives are to secure and expand the 
U.S. influenza vaccine supply, diversify production methods, 
and establish emergency surge capacity. To support these 
activities, HHS received $50 million in fiscal year 2004 and 
$99 million in fiscal year 2005. The President's fiscal year 
2006 budget includes an additional $120 million to further 
strengthen this component of overall pandemic influenza vaccine 
preparedness.
    To enhance our Nation's ability to produce influenza 
vaccine at any time during the year, we issued a contract with 
Sanofi-Pasteur of Swiftwater, Pennsylvania, for $41 million. 
This has allowed the company to change the way it manages eggs, 
and they have already begun to change its flock management 
strategy to ensure that eggs are available year-round for the 
vaccine.
    Diversification of flu vaccine production methods will also 
help to strengthen our system. Cell culture technology is a 
well-established vaccine production method for other vaccines 
such as the inactivated poliovirus, and two companies have 
registered their cell culture flu technology in Europe. This 
technology does not require eggs as a substrate, thereby 
avoiding the vulnerabilities associated with an egg-based 
production system.
    Secretary Leavitt announced last month that HHS issued a 5-
year contract to Sanofi-Pasteur for $97.1 million to develop 
cell culture influenza vaccine technology and conduct clinical 
trials with the goal of obtaining an FDA license for such a 
vaccine. Under this advanced development contract, the company 
has also committed to develop a plan to manufacture this 
vaccine at a U.S.-based facility that has the capacity to 
manufacture 300 million doses of monovalent vaccine over a 1-
year period.
    We have three additional areas where we believe strategic 
investments will move us toward achieving the annual and 
pandemic influenza supply goals. In addition to providing 
support for cell-based vaccines, we hope to further diversify 
vaccine technology by supporting recombinant pandemic influenza 
vaccines. We also are going to invest in production technology 
that will increase the efficiency of manufacturing and planing 
to support research and development of strategies that will 
stretch the number of vaccine doses produced by decreasing the 
amount of flu virus antigen that is needed in each dose.
    While these are only the first steps toward the development 
of an expanded, diversified, and strengthened influenza vaccine 
supply, the U.S. is leading the global effort to develop 
vaccines and vaccine technologies to meet this challenge.
    Thank you for your attention to this topic, and I look 
forward to your questions. Thank you.
    [The prepared statement of Bruce G. Gellin follows:]
   Prepared Statement of Bruce G. Gellin, Director, National Vaccine 
  Program Office, Office of Public Health and Science, Office of the 
  Assistant Secretary for Health, U.S. Department of Health and Human 
                                Services
    Chairman and members of the Committee, I am Dr. Bruce Gellin and I 
am the Director of the National Vaccine Program Office of the 
Department of Health and Human Services. I am pleased to appear before 
you today to discuss the U.S. influenza vaccination program and the 
role of the National Vaccine Program Office (NVPO) in strengthening 
U.S. influenza vaccine supply.
    The National Vaccine Program Office was established in 1988 to 
improve prevention of disease through vaccination and to improve 
prevention of vaccine associated adverse events. NVPO has 
responsibility for coordinating and ensuring collaboration among the 
many federal agencies involved in vaccine and immunization activities. 
We have addressed this mission by communicating and coordinating with 
HHS' agencies, the Department of Defense and the US Agency for 
International Development, and through the National Vaccine Advisory 
Committee.
    NVPO's mission is to:

 Coordinate and integrate activities of all Federal agencies involved 
        in immunization efforts;
 Ensure that these agencies collaborate, so that immunization 
        activities are carried out in an efficient, consistent, and 
        timely manner;
 Develop and implement strategies for achieving the highest possible 
        level of prevention of human diseases through immunization and 
        the highest possible level of prevention of adverse reactions 
        to vaccines; and
 Ensure that minimal gaps occur in Federal planning of vaccine and 
        immunization activities.
    The development, production and delivery of influenza vaccine every 
year underscores the complexities of vaccine production. Because they 
involve living organisms, developing and producing vaccines poses 
different challenges than drugs. In the United States, the protection 
of the population through vaccination depends on vaccines produced by 
private companies for profit as well as for public good.
    U.S. Vaccine manufacturers are faced with substantial challenges 
including the costs and uncertainties in developing new products, 
limited returns on investment for vaccines compared with other 
pharmaceutical products, a regulatory environment that has high 
standards for safety and effectiveness, concerns about liability 
issues, and variable demand from one influenza season to the next. 
Consequently, the number of companies that produce licensed vaccines 
for the U.S. market is small and each type of vaccine is made by a 
limited number of suppliers. In many cases vaccines that we rely on in 
the U.S. are supplied by a single manufacturer.
    Producing influenza vaccine has additional challenges. It is a 
vaccine that has to be redesigned and produced each year and delivered 
on-time to provide protection to tens of millions of people over a 
several month period in the fall in advance of the annual influenza 
season. The fragility of this system was clearly documented during the 
past influenza season, when one of the two large influenza vaccine 
manufacturers could not supply vaccine to the U.S. market. Recent years 
also have seen surges in demand and delays in the delivery of influenza 
vaccine creating mismatches between vaccine availability and enhanced 
demand resulting in de facto shortages.
    While we are optimistic that an increased number of manufacturers 
are interested in the U.S. influenza vaccine market by, presently only 
three companies are licensed to sell influenza vaccine in the U.S.; two 
produce inactivated influenza vaccine while the third produces a live-
attenuated vaccine that is delivered by nasal spray. All U.S. licensed 
influenza vaccines are developed from viruses that are grown in 
embryonated eggs in a process unique for influenza vaccine. Because of 
the tight time lines to produce influenza vaccine, the influenza 
vaccine manufacturers begin production of the following season's 
vaccine even before the FDA's Vaccine and Related Biological Products 
Advisory Committee meets in mid-February to review global influenza 
surveillance data and officially select the components--the virus 
strains--that are projected to be the predominant strains circulating 
in the U.S. during the following season. Both CDC and FDA contribute to 
influenza vaccine manufacturing by providing vaccine companies with 
vaccine reference strains--so-called ``seed viruses''--as the starting 
point for large scale manufacturing In a rotating fashion, each of the 
three vaccine virus strains selected for the following year's vaccine 
composition are adapted to grow in eggs and are injected separately 
into millions of fertilized eggs, which are subsequently incubated to 
allow the influenza virus to grow. These egg-grown viruses are 
subsequently inactivated, purified, tested for potency, blended into 
the trivalent vaccine, and filled into syringes or vials. The number of 
influenza vaccine doses produced is limited by the capacity of the 
production facilities, the availability of embryonated eggs, the yield 
of influenza virus from each egg, and the length of time that 
manufacturing continues. Companies need to plan the amount of vaccine 
they will produce well in advance of the influenza season so that they 
can secure the needed egg supply in which vaccine viruses are grown. 
Production of annual influenza vaccines, which contain three different 
influenza viruses, takes about six to nine months. Any disruption of 
the production schedule may lead to a delay in vaccine availability. 
Annual variation in the timing and severity of influenza outbreaks has 
resulted in significant fluctuations in demand for vaccine so that in 
some years supply is tight while in others, millions of vaccine doses 
go unused. Although it is possible for production to continue beyond 
the summer and into the fall, there is a substantial risk that late-
season vaccine will go unused since the later vaccine is produced; the 
later it will be available to the clinics. Traditionally there has been 
little interest in ``late season'' vaccination--which in the United 
States is around Thanksgiving. .
    Thus, the current fragility in influenza vaccine supply largely is 
related to:

 A limited number of U.S.-licensed manufacturers
 Uncertainty regarding annual demand and the ability to sell all 
        vaccine produced
 An inability to stockpile trivalent vaccine for longer than a year 
        due to annual changes in the influenza viruses that circulate 
        and cause disease such that vaccine not used in one season is 
        generally not useful the following year
 A solely egg-based production system that has limited flexibility and 
        surge capacity
 Financial and other barriers, to development and U.S. licensure of 
        new influenza vaccines, and
 Limited interest by most of the public and health care community in 
        providing ``late season'' vaccination
    The limitations and disruptions of influenza vaccine supply also 
must be put within the context of continued high rates of mortality and 
morbidity each year from influenza disease and the need to improve our 
prevention program. In 2004, Acting Assistant Secretary for Health, Dr. 
Beato, asked the National Vaccine Advisory Committee (NVAC) to assess 
the influenza prevention program and to make recommendations on how 
this program could be improved. NVAC recommendations to strengthen 
influenza disease prevention included:

 Improving our understanding of influenza vaccine demand--and why so 
        many of those for whom annual influenza vaccine is recommended 
        do not get vaccinated (e.g., persons > 65 years of age, 
        pregnant women and even health care workers),
 Reviewing the evidence that would support further expansion of the 
        groups recommended for annual vaccination;
 Implementing systems to better track the burden of influenza illness 
        and the effectiveness of the vaccination program; and,
 Conducting a thorough review of the Department's influenza research 
        program to identify gaps, and strengthening of cross-Department 
        collaboration.
    A sufficient and secure influenza vaccine supply is a prerequisite 
if we are to implement these recommendations and improve influenza 
disease prevention by increasing vaccination coverage and expanding 
groups recommended for vaccination.
    Influenza vaccine supply issues also are critical for pandemic 
influenza preparedness since the pandemic vaccine supply is directly 
related to existing influenza vaccine manufacturing capacity. Many 
experts believe that the risk of an influenza pandemic--or global 
epidemic--is higher than it has ever been in the past because of the 
spread of avian H5N1 influenza in multiple wild and domestic bird 
species across much of Asia. Since January 2004, 88 people, mostly 
young and otherwise healthy, have been confirmed by the World Health 
Organization to have been infected with the H5N1 influenza virus, and 
nearly two out of three of people who are known to have been infected 
have died as a result of this infection. Should this virus develop the 
capacity to be easily transmitted among humans, either through a 
mutation or by mixing genes with a human influenza virus, a pandemic 
could result. Because H5 influenza viruses have not previously spread 
among people, the entire global population would be susceptible
    We are all keeping a watchful eye on the current situation in Asia 
while at the same time recognizing that, in recent years, there also 
have been outbreaks of avian influenza infections and sporadic human 
cases caused by other influenza virus subtypes originating in Europe 
and in Canada as well as in Asia. A pandemic can unpredictably occur, 
could be caused by an influenza subtype other than H5, and could 
originate in any country.
    Ensuring the ability to meet current annual demand for influenza 
vaccine, to improve the prevention of influenza disease, and to prepare 
for an influenza pandemic all require strengthening the influenza 
vaccine supply in the U.S. Building on the response to the influenza 
vaccine shortage in the 2004-05 season, NIH and FDA have worked to 
facilitate the clinical evaluation of an influenza vaccine produced by 
GSK and to expeditiously consider a licensure application such that 
this influenza vaccine may potentially be licensed for the upcoming 
season.
    Several additional HHS influenza vaccine supply initiatives have 
been put in place to address pandemic preparedness needs and will also 
help to achieve annual influenza prevention goals. The objectives of 
these initiatives are to secure and expand U.S. influenza vaccine 
supply, diversify production methods, and establish emergency surge 
capacity. To support these activities, HHS received $50 million in 
FY2004 and $99 million in FY2005. The President's Budget for FY2006 
includes an additional $120 million to further strengthen this 
component of the overall pandemic influenza preparedness efforts.
    Because influenza vaccine is produced to meet the seasonal demand 
in the fall, production also is seasonal and embryonated eggs have not 
been available to manufacturers year-round. To enhance our Nation's 
ability to produce influenza vaccine at any time during the year, HHS 
issued a five-year contract to Sanofi-Pasteur of Swiftwater, 
Pennsylvania, on September 30, 2004 for $40.1 million. Under this 
contract, Sanofi-Pasteur has already begun to change its flock 
management strategy to provide a secure, year-round supply of eggs 
suitable for influenza vaccine production at full manufacturing 
capacity. It also will increase the number of egg-laying flocks by 25% 
to provide contingency flocks in case of an emergency. These eggs may 
be used to support additional production of annual influenza vaccine in 
the event of a vaccine shortage with the doses being delivered later in 
the fall.
    Diversification of influenza vaccine production methods also will 
help strengthen the system. Cell culture technology is a well-
established vaccine production method for other vaccines such as the 
inactivated poliovirus vaccine and two companies have registered their 
cell-culture based influenza vaccine technology in Europe. This 
production technology does not require eggs as a substrate for growth 
of vaccine virus, thereby avoiding the vulnerabilities associated with 
an egg-based production system. It also may be more amenable to surge 
capacity production when influenza vaccine supply needs to be expanded 
rapidly such as at the time of a pandemic. Additionally, cell culture 
technology uses a closed system that dramatically reduces the 
possibility for contamination. Finally, the new cell-based influenza 
vaccines provide an option for people who are allergic to eggs and 
therefore unable to receive the currently licensed vaccines.
    Secretary Leavitt announced last month that the Department of 
Health and Human Services issued a five-year contract on March 31, 2005 
to Sanofi-Pasteur for $97.1 million to develop cell culture influenza 
vaccine technology and conduct clinical trials, with the goal of 
obtaining an FDA license for this vaccine. Under this advanced 
development contract, the company also has committed to develop a plan 
to manufacture this vaccine at a U.S.-based facility with a capacity to 
manufacture 300 million doses of monovalent pandemic vaccine over a one 
year period.
    These important steps to strengthen our national influenza vaccine 
supply through assuring the egg-supply and diversifying and expanding 
production capacity will be followed this year by additional measures 
to increase influenza vaccine production capacity and expand the number 
of influenza vaccine doses made using that capacity. Supported by the 
pandemic influenza vaccine initiative in the FY 2006 budget request for 
$120 M, we posted synopses of three additional areas where we believe 
strategic investments move us toward achieving annual and pandemic 
influenza vaccine supply goals in the March 17, 2005 edition of 
FedBizOpps. On April 29, 2005, the first of these requests for 
proposals was posted, providing support for the development of cell-
culture based and recombinant pandemic influenza vaccines. This 
contract, which we hope will lead to the licensure and U.S. production 
of a next generation influenza vaccine, will further increase 
production capacity and diversification of the manufacturing base.
    Whereas building new influenza vaccine production facilities is an 
intermediate approach to expand the influenza vaccine supply, other 
strategies are more short term and expand the current vaccine capacity 
by increasing the efficiency with which influenza vaccine doses are 
produced. Influenza vaccine is manufactured in a series of steps--
developing an influenza virus master seed for vaccine production, 
inoculating the virus into eggs, growing, harvesting, purifying, 
splitting, formulating, and filling it into vials or syringes. 
Improving efficiency at any step in this process can increase the 
eventual yield and number of vaccine doses produced. A second RFP will 
be issued this spring and will support improvements of the 
manufacturing process to increase overall influenza vaccine production 
at current manufacturing facilities.
    The third RFP that will be issued is to provide support for 
research and development, leading to licensure of strategies that will 
stretch the number of vaccine doses produced by decreasing the amount 
of influenza virus antigen that is needed in each dose. The concept 
underlying these ``dose-stretching'' strategies is that by changing 
either the influenza vaccine or the way it's administered, you may be 
able to improve the immune response to vaccination and provide 
protection while using less of the vaccine antigen. By using less 
antigen in each vaccine dose, the number of doses that can be made at 
any level of production capacity would be significantly increased. The 
two most promising antigen-sparing approaches are either to add an 
adjuvant--a substance that stimulates the immune response to a vaccine 
formulation, or administering the vaccine into the skin (similar to the 
approach used in a skin test for Tb) where large numbers of immune 
cells are located. Both strategies have been evaluated in clinical 
trials and have the potential to expand influenza vaccine supply 
several-fold.
    The increases in the FY 2006 President's Budget request will 
support ongoing activities to ensure that the Nation will have an 
adequate influenza vaccine supply to respond better to yearly epidemics 
and to influenza pandemics. While issuing the requests for proposals 
and completing the contracts is only the first step toward the 
development of an expanded, diversified, and strengthened influenza 
vaccine supply, the U.S. is leading the global effort to develop 
vaccines and vaccine technologies to meet this challenge.
    Thank you for your attention to my remarks this morning--and more 
importantly to the attention that you have paid to the prevention and 
control of annual and pandemic influenza.
    I would be happy to answer any questions from the Committee.

    Mr. Whitfield. Thank you.
    Dr. Goodman, you are recognized for 5 minutes.

                  TESTIMONY OF JESSE L. GOODMAN

    Mr. Goodman. Thank you, Mr. Chairman.
    Mr. Chairman and members of the committee, I am Jesse 
Goodman. I am the Director of the Center for Biologics, 
Evaluation and Research for the FDA. I am also an infectious 
disease physician. I appreciate the opportunity to update you 
on our readiness efforts for the 2005 and 2006 and future flu 
seasons, and I am actually pleased to report continuing 
progress. I also want to assure the American public and 
yourselves that the safety, effectiveness, and availability of 
vaccines are among FDA's highest priorities.
    Talking first about last season, flu vaccine is highly 
cost-effective and beneficial to the public, as many of you 
have emphasized. However, also, as we have emphasized in 
previous testimony, flu vaccine manufacturing is particularly 
complex and challenging, and the market is also very fragile, 
in part because of our successes. Increases in demand have been 
coupled by a decline in the number of manufacturers. As Dr. 
Burgess happened to mention also, this is something that we see 
in other sectors of the vaccine industry.
    As you know, in October 2004, the British regulatory 
agency, the MHRA, suspended the license of Chiron, and FDA also 
concluded that the safety of the vaccine Chiron produced for 
2004 could not be assured.
    Now, I want to say that as soon as we learned this, really 
within hours, FDA worked with great urgency and in close 
collaboration with HHS and CDC and other components and with 
the private sector. We engaged them very quickly, and we 
obtained 5 million additional doses of U.S.-licensed vaccine, 
and this increased the supply last year to 61 million doses.
    We were still concerned that needs could outstrip supply, 
particularly if we had a significant flu season, so we sought 
additional vaccine licensed in other countries with quality 
regulatory agencies that might be made available as 
investigational new drugs urgently. FDA immediately sent teams 
to the facilities of such potential sponsors. Our staff 
carefully evaluated their manufacturing processes and reviewed 
a large volume of manufacturing clinical data, and this was all 
done within just a few weeks. These efforts resulted in INDs 
that could have permitted the use of approximately 4 million 
doses of GlaxoSmithKline's vaccine and 1 million doses from 
Berna Biotech if they were needed.
    The interactions with these and, in fact, other 
manufacturers have provided valuable information that is 
helping us now. They have stimulated interest in a number of 
companies in pursuing U.S. Licensure, and this is at least one 
constructive outcome of the challenges we all faced last year. 
I am very proud of the efforts and accomplishments of more than 
50 FDA professionals as well as many HHS colleagues in working 
collaboratively for long hours on these challenges.
    Well, what are we doing going forward? We, too, the last 
thing we want to see is this problem recur, whether it is this 
year or the future years, and we need to work both for this 
year and for future years. We are doing everything we can to 
improve flu vaccine for this coming season and in future years, 
and we are taking a dual-track approach.
    First, because Chiron's correction of its manufacturing 
processes is a major factor, FDA is doing all we can to 
facilitate that effort. As Ms. Schakowsky alluded to the 
problem of information sharing, agreements have been put in 
place with both Chiron and MHRA that have allowed full sharing 
of information, and this has been extremely productive. FDA and 
MHRA collaborative reviewed Chiron's remediation plans, and 
these are extensive plans, and are providing ongoing feedback 
as they are implemented and as manufacturing activities 
startup. So this is a very rich, interactive relationship.
    FDA and the MHRA, the British regulators, are working 
closely together and actively communicating also on 
inspectional activities. We accompanied MHRA on inspections of 
Chiron Liverpool in December of 2004 and again in February. We 
are continuing to coordinate with them on these inspectional 
efforts and plan a joint effort again right now; one is in the 
planning stages for the upcoming time period.
    As a result of a great deal of progress at the Liverpool 
facility, as most of you know, the British regulators, MHRA, 
lifted its license suspension on March 2, 2005, allowing Chiron 
to proceed with manufacturing. To get an updated overview of 
some of these ongoing efforts, last week I met with MHRA 
leadership in London and I also visited Chiron's Liverpool 
facility to meet with their senior leadership team onsite. 
Chiron reported to me on their progress and specifically their 
progress in addressing the issues of concern including changes 
made at their facility, changes in their manufacturing process, 
and improvements in their quality systems.
    Once Chiron has completed implementation of its key 
remediation measures and the critical stages of manufacturing 
are in full swing and can therefore be adequately evaluated, 
likely in the late spring or early summer, FDA will conduct its 
comprehensive inspection to assure that Chiron has adequately 
addressed its problems.
    It is too early to predict the final outcome of Chiron's 
remediation activities, but, nonetheless, I can say the company 
has made significant progress in a short time. However, there 
are great demands in applying the necessary changes that have 
been made to full-scale manufacturing in a very tight 
timeframe. So this is the challenge that remains.
    Because of this, and because of the long-term issues that 
we have all discussed, FDA is simultaneously working on a 
second track. That track aims to facilitate greater capacity 
and diversification, an issue raised by Ms. DeGette, in the 
U.S. influenza vaccine supply. It is important to emphasize, 
though, that the demand for vaccine--the demand for the vaccine 
and other economic issues are really the primary factors here 
that determine whether a manufacturer will seek and maintain a 
license in a country, including the U.S., the strength of the 
manufacturing infrastructure in the United States, and the 
amount of vaccine that a manufacturer will decide to produce.
    Some of the developments in those areas right now, Sanofi-
Pasteur, as you know, has indicated that it can produce the 
same or more doses of its vaccine for the coming flu season. 
MedImmune plans to produce a similar amount of vaccine and is 
also performing studies that, if successful, may allow future 
further use of its vaccine in future years in additional age 
groups.
    FDA, as Dr. Gellin mentioned, has informed manufacturers 
that it will consider new approaches to influenza vaccine 
licensing, such as accelerated approval based on surrogate 
markers like the antibody response that are likely to predict 
benefit. GlaxoSmithKline, as a result, has stated that in the 
near future it expects to submit a license application to FDA 
seeking accelerated approval of this influenza vaccine and 
that, if licensed, it should be able to supply 10 million doses 
for the 2005 to 2006 season.
    But also we have challenged ourselves to identify other 
lessons learned, something identified by Congresswoman Baldwin, 
from this past year's influenza season to do whatever we can 
from our end to help prevent similar future problems. One that 
many of you are aware of is that we are now conducting 
inspections of flu vaccine manufacturers on an annual basis. 
This can't solve all problems, we can't manufacture the vaccine 
for them, but what it may do is allow earlier recognition and 
intervention, and perhaps in a preventive mode, when problems 
occur. We have completed additional information-sharing 
agreements with numerous foreign regulatory agencies focusing 
on ones where flu and other critical vaccine information 
sharing is important.
    Finally, again mentioned by Dr. Gellin, in terms of the 
pandemic preparedness, we are extremely actively engaged with 
sponsors and manufacturers who are interested in developing new 
technologies, including cell-culture-based and recombinant 
vaccines. Although a lot of work remains to be done on these 
technologies, they provide important alternatives to egg-based 
production, and they may help reduce the time requirements and 
certain risks of contamination inherent in egg-based 
production.
    So, to conclude, we are doing everything we can in 
conjunction with other public health service agencies and 
industry to enhance the availability of flu vaccine both now 
and in the future. An adequate vaccine supply supplemented by 
effective antivirals can greatly decrease our vulnerability and 
provide protection against influenza. All the steps we have 
discussed will not only help protect Americans from flu every 
year but can help strengthen our infrastructure and its 
capacity and better prepare us for a pandemic, and we welcome 
the opportunity to work with you in Congress to accomplish 
these important health goals. So I thank you for having me to 
discuss this important issue, and I am happy to participate in 
answering your questions.
    Thank you.
    [The prepared statement of Jesse L. Goodman follows:]
Prepared Statement of Jesse L. Goodman, Director, Center for Biologics, 
Evaluation and Research, Food and Drug Administration, U.S. Department 
                      of Health and Human Services
                              introduction
    Mr. Chairman and members of the Committee, I am Dr. Jesse Goodman, 
Director of the Center for Biologics Evaluation and Research (CBER) at 
the Food and Drug Administration (FDA) and also a practicing infectious 
diseases specialist. I appreciate the opportunity to update you on 
FDA's recent and ongoing efforts, in collaboration with other 
Department of Health and Human Services (HHS) agencies and with the 
private sector, to address issues surrounding the influenza vaccine 
supply needs for the next flu season and to do what we can to help 
prevent the problems encountered last season from recurring. These 
efforts should also better prepare us for the next global influenza 
pandemic.
    FDA is responsible for the regulation and oversight of vaccines in 
the United States. Vaccines are among our most important and cost-
effective medical interventions, preventing disease in those who 
receive them and reducing the spread and risk of infections through our 
communities. I want to assure the American public that the safety, 
effectiveness and availability of vaccines are among FDA's highest 
priorities and that we work closely with DHHS, the Centers for Disease 
Control and Prevention (CDC) and the National Institutes of Health 
(NIH), as well as with manufacturers, in addressing this important area 
of public health preparedness.
                     the 2004-2005 influenza season
    As you know, influenza vaccine is unique because its active 
ingredients--the virus strains used to develop the vaccine--change 
almost every year. Therefore, manufacturers must produce tens of 
millions of doses of a new vaccine each year. While promising 
technologies such as cell culture and recombinant protein and DNA-based 
influenza vaccines are in the research and development stages and we 
are working with our HHS colleagues to advance their development, the 
most efficient vaccine production methods currently available involve 
the use of millions of live, non-sterile eggs to grow three different 
strains of influenza viruses annually. This is a complex process that 
spans several months during which manufacturers cultivate the 
appropriate strains to make the vaccine. These factors present an 
enormous challenge for manufacturers and create uncertainty for vaccine 
supply.
    Each year, FDA begins working with manufacturers at the earliest 
stages of vaccine development, and we continue to assist them 
throughout the production phase. We do this not only through our 
regulatory evaluations, but also by providing needed influenza strains 
and standards that can be used for efficient manufacturing. 
Specifically, we provide reagents to assure that the vaccine is potent 
and we further evaluate the vaccine through the use and review of 
laboratory tests that help assure the safety and efficacy of the 
vaccine. Throughout this process, FDA frequently discusses technical 
and manufacturing issues with manufacturers.
    Influenza vaccine is highly cost-effective and beneficial to the 
public. Over the last decade, health care providers, CDC and others 
have been very successful in expanding the number of Americans who 
receive the vaccine. However, as we have emphasized in previous 
Congressional testimony, the influenza vaccine market is very fragile 
because the increasing demand has been coupled with a decline in the 
number of U.S-based and U.S.-licensed manufacturers. Importantly, the 
market returns for producing this and many other vaccines are usually 
minimal, while the financial and other risks involved are great. 
Further, vaccine manufacturing requires careful and comprehensive 
controls, a complex and sometimes unpredictable manufacturing process 
and highly specialized facilities that can be expensive to maintain and 
update. For the 2004-2005 season, only three U.S. licensed 
manufacturers began production of influenza virus vaccine: Chiron 
Corporation and aventis pasteur produced inactivated vaccine, the form 
currently used for most high-risk individuals, while MedImmune, Inc. 
manufactured FluMist, a recently-approved, live, attenuated (weakened 
and safe) influenza vaccine.
    As you know, on October 5, 2004, the United Kingdom's Medicines and 
Healthcare products Regulatory Agency (MHRA) suspended Chiron's license 
to manufacture influenza vaccine due to good manufacturing practice 
deficiencies that led to sterility failures in filled vials of the 
vaccine. FDA and MHRA's review of Chiron's investigation of the root 
cause of the company's sterility failures and our own review and 
inspections of their facility pointed to problems that led FDA to the 
conclusion that the sterility, and therefore safety, of the vaccine 
Chiron produced for the 2004-2005 influenza season could not be 
assured.
Efforts to Obtain Additional Vaccine
    The loss of Chiron's planned contribution to the U.S. influenza 
vaccine supply posed serious challenges. FDA worked with urgency, 
aggressiveness and in close coordination with CDC and other components 
of HHS and the private sector to explore all viable options to secure 
additional doses. FDA worked with sanofi pasteur and MedImmune to 
secure approximately five million additional doses of U.S. licensed 
vaccine. Sanofi pasteur increased production to 58 million doses of 
Fluzone, and MedImmune scaled up to produce three million doses of 
FluMist. FluMist is currently recommended for healthy individuals 5 to 
49 years of age, and therefore provides an option for those who would 
not receive vaccine under CDC's priority guidelines, such as the U.S. 
military. Therefore, to expand further the supply of vaccine to those 
with the greatest need, then-Secretary Thompson, in cooperation with 
the Department of Defense, announced that the military would maximize 
its use of FluMist as a substitute for inactivated vaccine, making an 
additional 200,000 doses of injectable vaccine available to HHS for 
high-risk civilian populations. Because sanofi pasteur produces 
pediatric dosage forms of vaccine for the U.S. market, the supply of 
vaccine available for high-risk children was, fortunately, not reduced. 
Through these collaborative efforts, manufacturers increased the 
available supply of licensed influenza vaccine for the U.S. population 
to 61 million doses for this past influenza season, compared with 
approximately 83 million doses distributed in 2003-2004 and in 2002-
2003, 77 million doses in 2001-2002 and 70 million doses in 2000-2001.
    Because there was a concern that the need and demand could still 
outstrip supply, particularly if we faced a severe influenza season, we 
sought additional doses of vaccine that could be safely used in an 
emergency. Thus, in addition to enhancing the supplies of vaccine 
approved for use in the U.S., we were able to rapidly identify 
suppliers of approximately five million doses of additional vaccine, 
licensed in other countries, which could potentially be made available 
under an FDA investigational new drug (IND) application. With 
remarkable cooperation from several companies and from other regulatory 
agencies (including the Paul Ehrlich Institute, Germany; Therapeutic 
Goods Administration, Australia; Swiss Medic and Health Canada) FDA 
immediately sent inspectors and scientists to the manufacturing 
facilities of potential IND sponsors to evaluate their manufacturing 
processes. Coupled with these efforts, we also reviewed a large volume 
of manufacturing and clinical data, all within a few weeks. These 
efforts resulted in INDs that would have permitted the use of 
approximately four million doses from GlaxoSmithKline (GSK) and one 
million doses from Berna Biotech, had they been needed. HHS and FDA's 
coordinated interactions with these and other influenza vaccine 
manufacturers and regulatory agencies also provided valuable 
information and strengthened relationships that helped stimulate 
interest by additional influenza vaccine manufacturers to pursue U.S. 
licensure. This is one constructive outcome of the challenges we faced 
this past flu season. I am very proud of the efforts and 
accomplishments of more than 50 FDA employees, from multiple offices, 
as well as our HHS and CDC colleagues, working collaboratively for long 
hours to help meet this public health challenge.
Efforts to Enhance Antiviral and Pneumococcal Vaccine Supplies
    Following the loss of the Chiron vaccine, FDA also contacted 
manufacturers worldwide in an effort to identify additional supplies of 
antiviral medications that could be used, if needed, for treatment of 
millions of influenza cases and for prevention in high-risk individuals 
in epidemic settings.
    Serious morbidity and mortality from influenza is often due to the 
complication of bacterial pneumonia. In particular, pneumococcal 
pneumonia is one of the most common serious complications of influenza 
in high-risk individuals. This complication is preventable through use 
of an inexpensive, yet underutilized, pneumococcal vaccine. The 
influenza vaccine shortage provided an impetus to increase the 
availability of vaccine against pneumonia. In cooperation with HHS, 
Merck & Company tripled its production of its pneumococcal 
polysaccharide vaccine from 6 million to more than 17 million doses. 
The beneficial effects of pneumococcal vaccine last for five to ten 
years, and CDC and other public health agencies strongly encourage its 
use.
                    plans for 2005 and future years
    At the same time that we have addressed the past year's shortage by 
facilitating the availability of additional vaccine, antivirals, and 
pneumococcal vaccine, we are doing everything we can to help improve 
supply for future years. We are applying a dual-track strategy.
    First, the most important single factor that will affect the status 
of the U.S. influenza vaccine supply for the coming year will be 
whether Chiron can correct its manufacturing problems at the Liverpool 
facility and supply vaccine for the U.S. market. To succeed, Chiron 
must implement extensive improvements needed to satisfy both FDA and 
the U.K. regulatory authority. We have come a long way since October 5, 
2004, when MHRA could not legally communicate with FDA about its 
pending enforcement action.
    After MHRA's suspension of Chiron's license to manufacture 
influenza virus vaccine at the Liverpool facility, Chiron gave MHRA and 
FDA permission to discuss information that could not otherwise be 
shared. This arrangement allowed free exchange of information as the 
company initiated efforts to address the problems at Liverpool. Then, 
on February 14, 2005, FDA signed a general information-sharing 
agreement with MHRA that, among other things, permits advance 
communication on important issues and not limited to Chiron's influenza 
vaccines. Chiron developed an extremely comprehensive remediation plan 
which has been undergoing implementation during recent months. FDA and 
MHRA reviewed and provided extensive input on this plan and the Agency 
continues to provide extensive feedback to both Chiron and MHRA.
    FDA and MHRA are also working together and actively communicating 
on inspectional activities. For example, FDA accompanied MHRA on 
inspections of the Chiron Liverpool facility in December 2004 and 
February 2005, and has had very frequent interactions with both Chiron 
and MHRA concerning implementation of the remediation plan and start up 
of manufacturing activities. As a result of progress in the Liverpool 
facility, MHRA lifted its license suspension on March 2, 2005, which 
has allowed Chiron to proceed with manufacturing plans. FDA is 
continuing to interact intensively with both MHRA and Chiron as the 
company further institutes its remediation plan and begins to gear up 
for manufacturing.
    FDA will continue to coordinate with and accompany MHRA on future 
inspections--one of which is currently in the planning stage. FDA will 
continue to provide MHRA and Chiron with feedback and information. Once 
Chiron has implemented all key remediation measures and critical stages 
of manufacturing are in full swing (likely in late Spring or early 
Summer), FDA will conduct a complete and comprehensive inspection of 
Chiron's Liverpool facility to verify that Chiron has adequately 
addressed its problems. Our continuing interactions with Chiron 
indicate the significant progress that has been made in a short period 
of time, but it is also clear that full scale manufacturing and all its 
associated challenges remain and will require continuing intensive 
efforts that will need to succeed under very tight time frames. Only 
after passing MHRA and FDA inspections will Chiron be able to provide 
vaccine for the U.S. market. Chiron's vaccine will have to meet all 
FDA-required standards, including sterility and other safety testing, 
prior to distribution to the public. While it is too early to predict 
the outcome of Chiron's remediation activities, Chiron is making 
continuing progress toward its goal of being able to supply vaccine for 
the US market for the upcoming season.
    While working hard to facilitate Chiron's efforts to correct its 
manufacturing problems, FDA is also working on a second track to 
improve preparedness for this and future influenza seasons and 
facilitate greater overall capacity and diversification of the U.S. 
influenza vaccine supply. It is important to recognize, however, that 
demand for vaccine and other economic factors are, and will, remain the 
primary factors that determine 1) whether a manufacturer will seek and 
maintain licensure, 2) the strength of the manufacturing infrastructure 
in the U.S., and 3) the amount of vaccine that manufacturers produce 
for the U.S. market. These factors also apply to other vaccines and the 
U.S. vaccine supply infrastructure in general. CDC and FDA are working 
to encourage extending vaccination throughout the flu season, including 
January and February. If such demand exists, manufacturers can increase 
total doses available by producing vaccine that becomes available 
during these months. Because influenza cases usually continue or peak 
well after the November-December time period when most people seek 
immunization, continuing vaccination is beneficial to recipients and 
should be encouraged.
    MedImmune is performing studies that, if successful, may support 
future use of its vaccine in additional age groups. MedImmune has also 
stated that, if successful, it should be able to produce additional 
vaccine to support those needs. Sanofi pasteur has indicated that it 
has the capability to produce the same or more doses of Fluzone for the 
2005-2006 influenza season as it did in 2004-2005. Greater influenza 
vaccine production capacity and an increase in vaccination rates are 
also critical for improving our preparedness for a global pandemic. In 
the event of a pandemic, we would need the capacity to rapidly produce 
a new vaccine and make it available to all who need it.
    While greater production by currently-licensed manufacturers will 
enable us to meet some of these needs, recent events highlight the 
potential benefits of having more U.S.-licensed manufacturers. In 
recognition of this, FDA has been doing everything possible to 
stimulate interested foreign-licensed manufacturers to provide or, 
where needed, develop the safety and effectiveness data required for 
U.S. licensure. FDA has interacted constructively with several 
interested firms in this regard. FDA has informed manufacturers that it 
is willing to consider new approaches to influenza vaccine licensing, 
such as accelerated approval based on likely surrogate markers (e.g. 
the degree of antibody response to the vaccine), followed by post-
licensure clinical effectiveness evaluation. The National Institute of 
Allergy and Infectious Diseases (NIAID) supported clinical studies of 
GSK's influenza vaccine. Thanks in part to that research, GSK has 
stated that it expects to submit the needed data to FDA to seek 
accelerated approval of its influenza vaccine for the U.S. market in 
the near future. GSK has stated that if its vaccine is licensed, it 
expects to be able to supply 10 million doses of vaccine in time for 
the 2005-6 season. ID Biomedical of Canada has also indicated interest 
in seeking accelerated approval for its influenza vaccine. It has 
stated that it expects to complete needed studies and submit a license 
application in 2006 and that, if licensed, vaccine would potentially be 
available in time for the 2006-7 season.
    So, in preparation for the upcoming influenza season, we are 
continuing to do everything we can to facilitate both Chiron's 
remediation and GSK's licensure efforts so that these vaccines can 
potentially be available to help meet the 2005-6 flu season's needs. In 
either case, potential difficulties should become apparent during the 
summer. If it becomes necessary to obtain additional vaccine for use 
under an IND, the experience and relationships built this year through 
reviewing and obtaining vaccines licensed by other regulatory 
authorities will be helpful.
                       other important activities
    We have challenged ourselves to identify other lessons learned from 
this past year's influenza season and to examine how we can use our 
recent experience to help prevent similar problems in the future. For 
example, as I previously mentioned, we have identified the need to 
allow free flow of information between FDA and our international 
regulatory counterparts, and vice versa. We committed to do so and have 
now completed confidentiality commitments that allow such information 
sharing with regulatory agencies in the UK, Australia, Canada, the 
European Commission, Japan, Mexico, Switzerland, Singapore, and South 
Africa. We are also in final negotiations on an agreement with New 
Zealand. We are undertaking discussions with several additional 
European countries where vaccine manufacturing important to U.S. public 
health takes place. In addition, we are continuing to inventory foreign 
manufacturing to identify any additional information-sharing needs. We 
also plan to seek agreements with other national regulatory authorities 
where necessary. These commitments will help assure that legal barriers 
do not inhibit critical communication between these agencies and FDA.
    As in past years, FDA will work closely with CDC, WHO and others to 
develop materials for standardization and evaluation of influenza 
vaccine for the 2005-2006 flu season. FDA will continue to identify and 
evaluate influenza virus strains suitable for manufacturing purposes 
and provide to manufacturers the high growth reassortant viruses they 
need to help to facilitate efficient, timely and adequate production of 
vaccine.
    Recent events highlight the importance of FDA's technical support 
for the U.S. and global vaccine manufacturing infrastructure and the 
need for manufacturers to invest in more efficient, reliable and modern 
methods for producing influenza vaccine. With adequate supply and 
widespread immunization, we will be more likely to meet the challenge 
of annual influenza epidemics and future pandemics.
    CBER has also initiated a vulnerability analysis of foreign 
manufacturing of U.S. licensed products that are critical to U.S. 
public health. This analysis will include other vaccines and help to 
identify areas where consideration of actions to support supply may be 
needed, such as stockpiling or seeking additional licensed 
manufacturers. In addition, in the hope that more vaccines can be 
licensed and available to multiple regions of the world, FDA has been 
working with our foreign regulatory counterparts and with manufacturers 
to enhance international communication with the goal of more efficient 
product development. We are also encouraging development of scientific 
and regulatory standards for safety, potency and effectiveness that 
will help achieve these goals. FDA serves as a designated Collaborating 
Center of the World Health Organization (WHO), and we work closely with 
our sister agencies at HHS and WHO on pandemic preparedness and 
responding to other emerging infectious diseases.
    Under FDA's Critical Path initiative, we are working 
collaboratively with HHS agencies and the private sector to facilitate 
the rapid development, evaluation and availability of medical products 
and related manufacturing, safety and effectiveness standards. The 
rapid development and implementation of a West Nile Virus screening 
test for the blood supply provides a good example of the effectiveness 
of this type of a collaborative public-private approach to meet the 
threat of emerging infections.
    To help manufacturers overcome challenges such as the problems 
Chiron is experiencing, FDA, under its current Good Manufacturing 
Practice for the 21st Century initiative, is working with industry to 
encourage the use of advanced technologies, quality systems and risk-
based approaches that build quality into the manufacturing process. FDA 
is also using the same quality systems and risk-based approaches to 
modernize its manufacturing-related regulatory responsibilities. 
Recognizing that clarity and quality in vaccine GMPs is of increasing 
importance, CBER has planned increasing outreach in this area for the 
coming months, including international workshops and meetings.
    The experiences of the past six months have taught us important 
lessons about manufacturing and inspectional activities with respect to 
influenza vaccine. The annual changes in the flu vaccine and the 
increased dependence on a smaller number of manufacturers highlight the 
risks of unexpected manufacturing difficulties. For these reasons, in 
2005 and the future, we plan to inspect influenza vaccine manufacturers 
annually. Further, while FDA has always interacted extensively with 
influenza vaccine manufacturers throughout the vaccine production 
cycle, we plan additional interactions, including foreign regulatory 
agencies where appropriate, based on findings or events that raise 
concerns.
                         pandemic preparedness
    HHS is working to help transform the influenza marketplace and 
reinvigorate the influenza vaccine infrastructure by investing in 
promising new technologies, securing additional licensed vaccines and 
medicines and preparing stronger response plans and capacity. 
Furthermore, the lessons we have learned and insights gained from 
recent experiences with influenza vaccine are critical in preparing for 
an influenza pandemic. This is something that FDA and others in the 
public health community are very concerned about, given the eventual 
likelihood of a pandemic and the recent outbreaks of avian influenza in 
Asia. More widespread vaccination during periods between pandemics not 
only has direct health benefits but also will increase vaccine 
production capacity and help America and the global community better 
prepare for an influenza pandemic.
    As part of HHS' efforts to support pandemic preparedness, NIAID 
contracted for the production of pilot lots of potential pandemic 
vaccines from two licensed U.S. manufacturers. HHS contracted for the 
production of two million doses of vaccine against H5N1 avian flu, the 
influenza type of current concern in Southeast Asia. NIAID recently 
initiated critical clinical studies of the first H5N1 vaccine under 
INDs that FDA oversees, and both agencies will be working together to 
evaluate the results. While much work remains, these steps to produce 
and evaluate pandemic influenza vaccines are a critical component of 
our preparedness efforts. They will inform us about the needed dosing 
and schedule of pandemic vaccine and help pave the way for evaluation 
and potential licensure and broader use of a vaccine against avian flu 
if needed.
    In addition, NIH and FDA support studies to develop vaccine 
strategies that could lead to longer-lived immunity and the production 
of an immune response that could potentially allow one year's vaccine 
to better provide immunity for multiple flu seasons. FDA is actively 
engaged with sponsors and manufacturers interested in developing new 
technologies for influenza vaccine manufacture, including cell-culture 
based and recombinant vaccines. FDA has extensive experience in 
overseeing the development and licensure of cell-culture based and 
recombinant vaccines including those for prevention of other infectious 
diseases, such as chicken pox, polio, rubella, and hepatitis A and B.
    FDA's goal is to support a process to produce pandemic influenza 
vaccine in the shortest amount of time possible and protect the largest 
number of people, using a vaccine that is safe, effective and easy to 
deliver. The full details of the draft Pandemic Influenza Preparedness 
and Response Plan are located on the HHS website at: http://
www.dhhs.gov/nvpo/pandemicplan/annex5.pdf. Through all these efforts, 
and with enhanced global surveillance by CDC and its partners, we have 
the unique opportunity to effectively intervene and potentially blunt a 
global pandemic, should one occur.
                               conclusion
    HHS has proposed spending of $439 million Department-wide on 
influenza related activities in the FY 2006 President's Budget. This 
amount is an increase of $397 million over the FY 2001 level of $42 
million, and represents the Administration's commitment to addressing 
this important public health concern.
    Although we may never completely prevent influenza outbreaks, we 
can greatly decrease our vulnerability and provide protection against 
influenza with a robust vaccine supply supplemented by effective 
antivirals. FDA recognizes the need to continue to work with multiple 
partners, including manufacturers, to increase supply and to support 
progress toward more modern, dependable methods of production. All of 
the steps we have discussed will not only help protect Americans from 
flu every year but will help prepare us for future influenza seasons or 
in the event that a pandemic strikes. We welcome the opportunity to 
work with Congress to accomplish these important public health goals.
    Once again, thank you for inviting me to testify on this very 
important issue.
    I am happy to respond to your questions.

    Mr. Whitfield. Thank you very much for your testimony.
    I will start the questioning period here.
    First of all, we are dealing with a very complex issue, 
when you consider the limited capacity, because I guess we only 
have two or three manufacturers that are licensed to sell in 
the U.S., the availability of embryonated eggs is limited, the 
yield of the influenza virus from each egg, and trying to 
determine the best guess of the three strains that should be 
intermixed to meet the needs for the following year.
    I would like to ask you initially, you each represent three 
different departments in HHS. So, as you plan--could you 
explain to me briefly how you interact with each other? And is 
there a lead agency that, if something goes wrong, that the 
Secretary of HHS could come to this agency and say, I am 
holding you responsible because you are the lead agency in this 
projection? Could any of you--would each of you address the 
interrelationship between your departments on this issue?
    Ms. Gerberding. I think it would be fair to say that, 
collectively, HHS is accountable for this problem, but we each 
have specific responsibilities.
    From a CDC perspective, it is our responsibility to 
identify strains that are emerging in this year's flu season at 
the end of the season that would best predict the vaccine 
strains that should be included in the following season. So we 
have the responsibility for getting those isolates, for 
characterizing them, for developing the seed virus that can be 
used for vaccine, and then getting that to the FDA and to the 
manufacturers in time for them to work on getting the 
production started.
    Mr. Whitfield. So you simply identify the strains and 
provide the seed virus?
    Ms. Gerberding. Correct.
    Mr. Whitfield. And then the vaccine policy?
    Mr. Gellin. The National Vaccine Program Office, as I 
mentioned, was established in 1988 to do exactly as you 
suggested, was to keep the arms and legs of the Department of 
Health and Human Services going in the same direction on 
vaccine and immunization issues. I am in the Secretary's 
Office, and it is my job to keep everybody connected on this, 
recognizing that there are different missions of the different 
agencies of the Department. Missing from this table is NIH, who 
has another piece of this, and their research and development 
piece plays into this as well as broader issues about the 
future of influenza vaccine.
    Mr. Whitfield. Then FDA, I am assuming it is your 
responsibility to make sure that the product is safe.
    Mr. Goodman. Yes. Our primary responsibility is to meet the 
expectation of you and the American people that it is safe and 
effective and consistently and properly manufactured.
    I will say, on flu vaccine, we go a good bit beyond that, 
as Bruce mentioned, in terms of providing strains from our 
laboratories, providing the reagents to the manufacturers to 
help them in manufacturing. Also, in the recent year, in 
response to this public health problem, trying to do what we 
can to facilitate additional people entering the market.
    Mr. Whitfield. Now, last year when Chiron had their problem 
and we lost all of their dosages of vaccine, I understand that 
there was some constraints on obtaining information from the 
MHRA. Could someone explain to me specifically what the problem 
was?
    Mr. Goodman. Well, MHRA viewed that under their laws for 
their regulatory body they could not inform anyone of their 
impending regulatory action until they took that action. So in 
fact they told us subsequently that they did not make the 
decision to suspend Chiron's license until October 4, the day 
before; and then all the rest is history. But they said 
subsequently that they felt like they could not inform us or 
any other regulatory body, WHO or others, until they had 
actually taken the action. So the steps we have taken are 
executing a high-level information-sharing agreement between 
MHRA and the FDA.
    I will say we recognize that, if this problem occurred in 
vaccines, it could occur in other areas. So this is a rather 
global agreement between the agencies; and it has already been 
used, for example, by our drug center for sharing information 
about drug safety.
    Mr. Whitfield. So, prior to October 5, FDA had no idea that 
there was a problem at Chiron?
    Mr. Goodman. Oh, no, we knew there was a problem at Chiron. 
But the issue is that we did not know--of course, as I said, 
MHRA said they didn't make a decision to suspend the license 
until October 4. But we did not know of that decision or that 
that was on the map. We were working and receiving information 
about their contamination problem and their interpretation of 
that.
    Mr. Whitfield. Recognizing that there is a multitude of new 
sources in the U.S., there was quite a bit of confusion among 
the public last year as a result of this shortage. I would like 
for each of you to give your views on the way in which the 
media or your Department handled communications to the public 
concerning the Chiron situation and whether you see any room 
for improvement in the way it was handled last year.
    Ms. Gerberding. I certainly think there is room for 
improvement. The challenge that we faced was starting out the 
flu season expecting to have the most-ever vaccine. So, in 
order to use it, we worked real hard to encourage the broadest 
number of people to seek vaccination, and that is what they 
were doing until October 5 when suddenly we had to backtrack 
and start delivering a very different message about only the 
highest-risked people getting vaccinated first.
    Every year, whether we have an ample supply or not, we have 
a terrible time getting people to get vaccinated after 
Christmas; and we typically plan for a late season push. This 
year, flu actually peaked in late February. There was time for 
people in many communities to get vaccinated in January, and 
yet we simply could not get that done in many communities.
    So what we are doing now is working on the science of 
communication, working with people trying to understand what do 
they think, what are they worried about, what would help, how 
can we be more effective in engaging clinicians, how can we be 
more responsive to their needs and be able to get them vaccine 
faster, all of the things that would help us communicate not 
just to the public but also to the clinicians and the suppliers 
of vaccines that have to make decisions in conjunction with 
their health agencies.
    Mr. Whitfield. Do either of you have any comment on this 
communication issue?
    Mr. Gellin. I only want to add it is further complicated by 
the avian flu or pandemic flu, because we want to make sure 
that people have an understanding of each of them. At the same 
time, it is hard for people to often sort those out. I think 
there is special communications, particularly given the 
reporting on the avian flu and the concern that we all have 
about it.
    Mr. Whitfield. Let me ask you, what manufacturers do you 
expect to produce flu vaccine for this year?
    Mr. Gellin. Well, the same three that are licensed we 
expect will be able to produce vaccine. Dr. Goodman has 
provided insight into his recent visit to the MHRA and Chiron 
facility.
    In addition, I think that part of the lesson we learned 
from last year is that other manufacturers are interested in 
the influenza market in the United States. GSK particularly is 
seemingly the farthest along, and there is a hope that the data 
that has been assembled will allow them to get a license for a 
vaccine for this coming year.
    Mr. Whitfield. But we do expect that Chiron will be on 
line, correct?
    Mr. Goodman. Well, I should be clear there. You know, as I 
said in my statement, I think it is too soon to tell. What I 
did testify to is I think they've put into place and made 
substantial progress in a very aggressive, comprehensive 
remediation plan that deals with their manufacturing and 
quality control issues. So what we are seeing is a lot of 
change, a lot of change in the right direction.
    But, also, as I mentioned, the rubber has to meet the road. 
They are going to have to go soon into their full-scale 
manufacturing, and then we are going to go in there, and our 
inspectors and scientists will do their job and evaluate 
whether the remediations they have put into place have been 
effective. So I think things are in a positive direction, but 
it is too soon to tell. So we do need to be prepared for all 
possible contingencies.
    Mr. Whitfield. One other comment on this communication. I 
know within a week of the October 5 announcement about Chiron, 
there are around 12 different agencies within HHS that do have 
some responsibility for the flu policy, and within a week no 
fewer than five agencies, including the Secretary, weighed in 
through the press on the topic of the flu vaccine supply. And 
with those five different messages coming, there was confusion 
out there, and we are concerned the public might not know 
really who to listen to. It would seem it would make some sense 
if possible to try to coordinate these agencies on press 
releases in the future. I am assuming you all would not 
disagree with that.
    Mr. Goodman. I agree. I think I did see--just having been 
there when a lot of this was happening, I am not questioning 
whether some of that happened, but I do know that among those 
sitting at the table, for example, there was quite a bit of 
coordination under very tight timelines and challenging 
circumstances. But I think you have a very important point, and 
Bruce and Julie are really the lead on this. We should 
coordinate our communication as well as we can.
    Mr. Whitfield. My time has expired. I recognize Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman.
    In listening to the answers and the one question the 
chairman asked about how you all do parts of it to get ready 
for the flu vaccine, it seems like you try to identify the 
strain you expect, you provide the eggs, or at least the seeds 
for it, and really the impression I got, and correct me if I am 
wrong, then when you tell the manufacturers, here is what we 
need, they just manufacture it, right? There is a lot of 
preparatory work done by you all beforehand, right?
    Mr. Goodman. The only thing I would add, sir, is that they 
then take the seed strains that we provide them, and they have 
to see how that performs under real-scale manufacturing 
conditions.
    In certain years, even when everything goes well, we might 
have a strain that just doesn't grow that well. So they sort of 
take these tools, but then they are the experts at 
industrializing it and producing the vaccine.
    Mr. Stupak. You give them the seeds, but they are the so-
called production experts?
    Mr. Goodman. Right.
    Mr. Stupak. Okay. What does an average price per dose of 
the flu vaccine cost? Does anyone know? You tell us it is going 
up 17 percent next year.
    Ms. Gerberding. The average price of the flu vaccine 
depends on whether it is purchased by the government for 
government use or in the private sector. It has continued to 
evolve over time, and it varies depending on the product. We 
can get you the historical price list over time.
    Mr. Stupak. Do you expect the government's pricing to go up 
17 percent?
    Ms. Gerberding. I think that those contracts are under 
negotiation right now, so I am not sure we know exactly what 
the price is going to be.
    Mr. Stupak. Here is the part that bothers me, and, Dr. 
Gellin, looking at your testimony on page 8, you talk about 
that HHS received $50 million in fiscal year 2004, $99 million 
in 2005, and 2006 includes an additional $120 million. If we 
are spending all this money to strengthen it and make it more 
available and accessible to people, why is it going up? That is 
just my quick math here. That is a couple hundred million 
dollars in less than 2 years. Why would the price suddenly go 
up?
    Mr. Gellin. Let me clarify. Those expenditures are 
specifically directed for pandemic influenza preparedness, to 
get around the vulnerability.
    Mr. Stupak. You are still going to need a flu vaccine, 
right, and you prepare for both each year.
    Mr. Gellin. Except what we are really concerned with it is 
the capacity, the global manufacturing capacity. The global 
capacity for influenza vaccine is only 300 million doses a 
year, and therefore, among the things we are trying to do are 
to make investments and to provide incentives for manufacturers 
to go down roads that they might not otherwise go down.
    Mr. Stupak. If you make those investments and provide 
incentives for manufacturers to get into business, it should 
actually stabilize or lower the price for vaccine, shouldn't 
it?
    Mr. Gellin. I can't speak to the pricing, but I can speak 
to the fact that what we are asking them to do is a broad R&D 
program and investment in facilities, ultimately so that there 
is production in the United States, because we are concerned 
about that. That is a long-range strategy.
    Mr. Stupak. With the investment of all this money, we are 
really in no different position than we were last year.
    Mr. Gellin. The investments are for our future investments 
in pandemic preparedness for vaccines that are promising, but 
aren't there yet. We are trying to move them along faster.
    Mr. Stupak. But we are in no better position than we were 
last year. In fact, we are in worse shape now than last year. 
Last year at least we had three licensed, until October 5, and 
then we dropped the two, and the status of it now is we have 
two licensed, and Chiron hopefully will be relicensed to 
produce flu vaccine, right? So what has changed since last 
year, other than our suppliers have gone down by one?
    Mr. Gellin. Again, let me just clarify these expenditures 
are long-term investments and not responding to last year.
    Mr. Stupak. My final question was we are actually in worse 
shape than last year, because last year at this time we had 
three suppliers. Right now we have got two and one suspended. 
So if you look at it, we actually have less suppliers or 
manufacturers of flu vaccine than we did at this time last 
year, correct?
    Mr. Gellin. Dr. Goodman has commented about the remediation 
program of Chiron. I think the other lesson we learned from 
last year is that there are additional manufacturers interested 
in the market. GSK is an example of that.
    Mr. Stupak. Where is that? GSK hasn't even applied for a 
license yet, right?
    Mr. Gellin. I will let Dr. Goodman address that.
    Mr. Goodman. I understand your concern, but they are 
actually engaged in a very active development program, and they 
have stated publicly that they plan to submit a license 
application to FDA in the very near future, and in time, that 
if the data are good in there, and we review it and approve it, 
that they would be able to bring vaccine for this year. So I do 
think that is at least on track.
    Another point----
    Mr. Stupak. But it is not a manufacturing license. And when 
is the drop-dead date that Glaxo can get their license and 
still be ready by the flu season this year?
    Mr. Goodman. One of the pieces that is relevant to that to 
share with you that is good news there is they are a global 
manufacturer. They are engaged in producing vaccine and are 
licensed. So they are going to go ahead and produce vaccine no 
matter what. So the issue is----
    Mr. Stupak. Flu vaccine no matter what. But that is for 
Europe. They have to be licensed to bring that flu vaccine to 
the United States, and they haven't even applied for a license 
yet.
    What is the last possible date they could apply for a 
license and be ready for this flu season here in the United 
States?
    Mr. Goodman. I think they could be licensed by us at any 
time before they distributed the vaccine, and if they are 
licensed, that vaccine could be distributed here. Then, as I 
said, as far as we know, they are on track for their plan of 
submitting an application to us very soon.
    Mr. Stupak. So if they manufacture 10 million doses, that 
doesn't necessarily mean they will be licensed and used here in 
the United States?
    Mr. Goodman. No, if they don't meet our safety 
effectiveness standards or are unable to submit their 
application.
    Mr. Stupak. So what is the date when they have to meet your 
manufacturing standards and be licensed so they are ready to go 
by this flu season? Because, doctors, there is no difference; 
in fact, we are in worse shape now than we were last year. So 
what is the drop-dead date?
    Mr. Goodman. As I said, vaccine is typically delivered in 
the fall, so my view would be as long as they succeed in their 
license application before the fall, they could bring vaccine 
to the U.S. market.
    Mr. Stupak. I heard a couple of ifs there. The part 
bothering me is going back to the statement found in Dr. 
Gellin's statement, it says, ``Companies need to plan the 
amount of vaccine they will produce well in advance of the 
influenza season so they can secure the needed egg supply in 
which vaccine viruses are grown. Production of annual influenza 
vaccines, which contain three different influenza viruses, 
takes about 6 to 9 months.''
    If the flu season is October 5, since that seems to be the 
date we all got in trouble last year, that is like 5 months 
from now. So if you are 6 to 9 months, we are lessening that 
window period.
    Mr. Goodman. I understand your concern. Again, to be 
helpful in addressing it, what I could point out is they are 
producing that vaccine. So their plan is to produce it 
irregardless of our license or decision. They are producing it 
at risk.
    Mr. Stupak. You are right, because they can produce all 
they want, but if it is not licensed in this country, it 
couldn't do us any good. GlaxoSmithKline can do 100 million 
doses, but if it is not licensed for use in this country, it 
does us, the American people, no good, correct?
    Mr. Goodman. You are correct.
    Mr. Stupak. Let me ask you this: Exactly what would an 
expeditious licensure by the FDA be if Glaxo decided to enter 
the market, 6 weeks, 3 months, 6 months? What is expeditious?
    Mr. Goodman. You mean the time from when we receive their 
application to the time they approve it or don't approve it? I 
think that what I can say about that is, again, we have made a 
commitment that if we can get a high-quality application with 
the data in it that supports the safety and effectiveness of 
the vaccine, that we would be able to review that, and, if the 
data support approval, approve it before the flu season.
    Mr. Stupak. How long will it take, 3 months to approve it, 
2 months to approve it?
    Mr. Goodman. I think it depends on whether--you know, we 
are doing a scientific job there. It depends on what the data 
show, whether there are any concerns raised and we have to ask 
the company additional questions, et cetera. There is some 
positive information there in terms of they were one of the 
firms that we interacted with and inspected back in October-
November to try to get IND vaccines. So they are not starting 
from a zero knowledge base.
    Mr. Stupak. The answer would depend upon the quality of 
their application, right?
    Mr. Goodman. The quality of the application.
    Mr. Stupak. Scientific data with it?
    Mr. Goodman. Absolutely.
    Mr. Stupak. Then do you have to do a full-scale 
investigation as to their manufacturing safety?
    Mr. Goodman. We were there last year, but we would again 
go, and the American people expect us to review their 
manufacturing. We would do that expeditiously also.
    So you are correct, there are ifs there. I wouldn't want to 
promise something that basically is a scientific process.
    Mr. Stupak. Sure. I am just trying to get some kind of 
timeframe here.
    Dr. Gellin, the committee staff talked to the British 
counterparts. They mentioned that Britain did not rely on just 
one or two manufacturers for their influenza vaccine like the 
U.S. Does. That was a problem we had last year, but the 
situation again is exactly the same.
    Sanofi will be the supplier of at least 75 percent of our 
flu supply if we get the 80 million doses normally consumed, 
and Chiron will supply most of the remainder. It looks like the 
situation will not change in the near future. So what are you 
doing at the policy level to sign up new suppliers, or are we 
still at the mercy of the market?
    Mr. Gellin. Our goal, I think, beginning last year was to 
try to have a better understanding of the market and 
particularly what was going to be the incentives for new 
companies to come into this market.
    Mr. Stupak. So what are those incentives?
    Mr. Gellin. As Dr. Gerberding mentioned, the incentives 
there is increased demand, there is increased interest in the 
product, and the price has gone up substantially to make it a 
more interesting market for them.
    Mr. Whitfield. The gentleman's time has expired.
    At this time I recognize the chairman of the full committee 
for his question period.
    Chairman Barton. Thank you.
    How many flu shots did we end up giving to American 
citizens this flu season?
    Ms. Gerberding. We gave approximately 57 million.
    Chairman Barton. Fifty-seven million. As it turned out, 
everybody who really needed one got one; isn't that right? At 
the time we thought there were going to be a lot of people that 
wanted them that couldn't have them?
    Ms. Gerberding. Let me distinguish need and want. From our 
perspective as doctors and public health officials, we believe 
that about 185 million people need a flu shot, because the 
science says they would have a serious benefit from it.
    In terms of the number of people who want flu shots, that 
seems to be influenced by concerns about scarcity and concerns 
about the severity of the season. About this year 57 million 
people wanted a shot.
    Chairman Barton. What is the most inoculations we have ever 
given?
    Ms. Gerberding. Eighty-three million in the year that we 
had a supply of about 87 million doses.
    Chairman Barton. When was the 83 million?
    Ms. Gerberding. That was in 2002-2003 flu season. I should 
add that in every single flu season, regardless of how much we 
have, we always end up wasting somewhere between 4 to 12 
million doses of vaccine that manufacturers produce but people 
didn't want.
    Chairman Barton. Given everything that you all have done in 
the last year to prepare for next year, and you are continuing 
to do, what is the most probable number of flu shot vaccination 
doses that are going to be available in the coming flu season?
    Ms. Gerberding. We have to plan for all three scenarios. We 
have to plan for the scenario where we don't get these licensed 
products here and available for us, so we will have about the 
same amount of vaccine that we had last year; we have to plan 
for the scenario where we might have the most ever, if 
everybody produces and brings their vaccine to market here; 
and, of course, as a backup, we have to plan for sort of the 
worst-case scenario, that something goes awry with our primary 
suppliers.
    Chairman Barton. Give me three answers then. Worst case. 
What is the minimum number?
    Ms. Gerberding. Well, the worst-case scenario, I would say, 
is we would have somewhere around 53 million doses.
    Chairman Barton. So the worst case is a little bit less 
than last year. What is the best case?
    Ms. Gerberding. Probably around 98 million doses.
    Chairman Barton. Ninety-eight million, which would be more 
than we ever used.
    Ms. Gerberding. Correct.
    Chairman Barton. What is the most probable case or the 
midterm case?
    Ms. Gerberding. I can tell you what the middle-range 
scenario is. That is 75 to 83 million doses.
    Chairman Barton. Unless we have a worst-case outcome, this 
committee can be reasonably confident that every American next 
year that really needs a flu shot is going to be able to obtain 
one? Is that a fair statement?
    Ms. Gerberding. That is not quite true. Again, it is the 
difference between needing and Americans who want a shot.
    Chairman Barton. The most we have ever given was 83 
million. Last year we gave 53 million. You just said the most 
probable case is in the 70 to 80 million range. So probably 
everybody on this panel up here needs a flu shot. I am not 
going to ask for a show of hands, but I didn't get one last 
year, because if I had, I probably would have been accused of 
favoritism. Since I have never had a flu shot, I figured I 
could go 1 more year without getting one.
    Ms. Gerberding. Maybe you would like to talk to me later.
    Chairman Barton. If you talk about need, I am probably at 
the top of the list of need.
    What we don't want to do is go through another year like 
last year where at the beginning of the flu season there are 
all these press stories that there is a shortage, and that you 
kind of have panic vaccination mode. And then in the middle of 
the flu season it turns out we have got more doses available, 
and that is to the credit of you three, that you went out, and 
the Secretary of HHS went out, and we talked to our friends 
overseas, did a lot of good work and got more doses. So it 
turned out to be not as bad as we had thought. As people who 
get elected, we don't want to go through this feast and famine 
in the middle of a flu season.
    So this subcommittee, the reason of this hearing is to find 
out what you are doing different from last year, what the 
prognosis is for next year, and whether we need to really, 
really, really do aggressive oversight. If your midcase 
estimate is right, I am going to assume that things are in 
reasonably good shape, and we need to monitor it and touch base 
with you, but most Americans are going to be able to get a flu 
shot next year. If I am wrong in that assessment, this is the 
time to tell the subcommittee that, and if we need to do 
something legislatively or in the appropriations process or 
encourage some sort of negotiations overseas, now is the time 
to do it.
    Ms. Gerberding. Let me emphasize two things. One is that 
the highest priority is to get those vulnerable people 
vaccinated. Right now, even under the worst-case scenario, we 
would be able to come close to having the amount of vaccine we 
did this year, and we will know that at the beginning of the 
year. So we do feel like our most vulnerable people will have a 
pretty good chance of getting a vaccine.
    Chairman Barton. Do the other two witnesses share that 
assessment?
    Okay.
    My last question: If I need to call one person and get the 
straight answer on some of these issues, and we got three of 
you, but my assumption is that one person would be the 
Secretary of HHS, Governor Levitt. Is that the person I should 
call, or is there somebody else?
    Ms. Gerberding. I don't want to speak for the Secretary. He 
obviously is very engaged and very up to speed on this. I am 
sure if you called him, he would either give you the straight 
answer immediately or send you to one of us.
    Chairman Barton. Who would you call?
    Ms. Gerberding. I would probably call him, too.
    Chairman Barton. Okay. What about the other two? Is that 
who you would call?
    Mr. Gellin. Well, he calls me pretty often about these same 
issues.
    Chairman Barton. He calls me, too.
    Mr. Gellin. That is where it all gets put together.
    Chairman Barton. You agree with that?
    Mr. Goodman. I think that is appropriate.
    Chairman Barton. Thank you, Mr. Chairman.
    Mr. Whitfield. We have a vote on the floor. We still have 
12 minutes to go. I am going to recognize Ms. DeGette.
    Ms. DeGette. Thank you so much, Mr. Chairman. I just have a 
few questions.
    I am wondering, we have been talking about GlaxoSmithKline 
entering the market, and they are not licensed, and are all 
hoping they will be licensed. What backup plan do you have in 
place if they are unable to provide the expected 8 to 10 
million doses?
    Ms. Gerberding. There are two backup plans. One is the one 
I mentioned about the scenario planning, so we are planning as 
if we couldn't get that vaccine, and that is why we are going 
to start focusing vaccination early in the season on the high-
risk people and letting other people know that if everything 
goes right and we have the vaccine supply we think we are going 
to have, we will make clinics available for other people later 
in the season.
    The second backup is what we refer to as the insurance 
plan, and that is we have in the proposed budget $30 million so 
we can buy monoviral bulk vaccine from any one of the 
manufacturers that would be available to us, either as a 
licensed product or as an investigational product, that can be 
then brought into dosage forms if necessary if everything else 
fails. It is not the ideal backup, but it is a way for us to 
expand our market even further beyond Glaxo, beyond Chiron, 
into anybody in the world who manufactures flu vaccine.
    Ms. DeGette. Why is that not ideal?
    Ms. Gerberding. Because it is investigational, and it means 
we would have to get consent from people to be able to use it.
    Ms. DeGette. It also seems like it could make people really 
nervous and even more upset than they are about the real 
liability.
    Ms. Gerberding. It is insurance. It is the backup to the 
worst-case scenario.
    Ms. DeGette. Well, let me ask you this: I am still 
concerned that pharmaceutical companies, as I mentioned in my 
opening statement, are not motivated to manufacture vaccines, 
and I am wondering, maybe from you, Dr. Goodman, what we could 
do to improve this situation?
    Mr. Goodman. Well, I think it is an important question, and 
it is something we need to pay a lot of attention to. I think 
recognizing in pricing and purchasing and in our health care 
system the public health value of some of these interventions 
can be very helpful.
    Ms. DeGette. I don't know what that means. Does that mean 
we should let them charge higher prices or what?
    Mr. Goodman. Well, you know, we at FDA don't get into the 
pricing issue at FDA, but what I will say is in terms of the 
public health benefit, if we look at the prices charged, if we 
look at prices that are paid for various things in terms of 
public health benefit, vaccines are often very cost-effective.
    One comment I was going to make, although we have 
identified serious problems and fragility in the vaccine 
infrastructure, and you are very concerned about that, there 
are some positive developments, too. People are making new 
vaccines against human papilloma virus, which causes human 
cervical cancer. We have had the first ``blockbuster'' vaccine, 
pneumococcal vaccine against pneumonia in children, which has 
huge sales every year. So a number of companies are actively 
engaged in developing new vaccines in the vaccine market.
    Ms. DeGette. But if the FDA's job isn't to get involved in 
figuring out the public good versus the pricing, then it seems 
like we are acting at odds against the public interest, because 
if prices of these vaccines go up, fewer people will have them, 
and then when we have our pandemic or whatever, it is going to 
be worse. It seems to me there have to be other ways to 
incentivize the economical and widespread manufacture of 
vaccines from a public interest standpoint. This is not about 
can the pharmaceutical companies make a profit on vaccines, it 
seems to me.
    Mr. Goodman. No, I agree that is an important area. For 
example, in flu vaccine, I know CMS in recent years has, to 
some degree, done this by its reimbursement policies, and that 
has affected flu vaccine use.
    Ms. DeGette. Is that something we should continue to look 
at, that policy, Dr. Gellin?
    Mr. Gellin. Absolutely. I don't have the numbers in front 
of me, but that has gone up dramatically as far as 
reimbursement costs of those. I think we can get into that a 
little bit here, but maybe we can have a separate opportunity 
to talk about the vaccine industry at large.
    I think, as I mentioned, the flu vaccine is somewhat of a 
special case, but I think some of the things going on and the 
awareness that we have of a number of companies that 
manufacture influenza vaccine and are interested in the U.S. 
market gives us promise that some of those pieces will attract 
additional manufacturers to the marketplace.
    Ms. DeGette. Mr. Chairman, I think this would be a ripe 
issue for a future hearing.
    Ms. Gerberding. May I just add that the flu vaccine is 
actually the lowest priced of any of the vaccines that we 
routinely recommend.
    Ms. DeGette. As it probably should be.
    Ms. Gerberding. We have to say why wouldn't a manufacturer 
be in the market that should be selling 185 million doses? One 
issue is that they are not confident they can get a fair price. 
Another issue is it is tremendously risky.
    One of the things that I think Dr. Gellin referred to 
earlier that I don't want to be lost on the committee is the 
fact that the Department has provided hundreds of millions of 
dollars to the manufacturers to say, please modernize your 
vaccine production. Let's get out of eggs into cells. Let's 
move forward and build some plants. Let's get the show on the 
road here. So they have been providing these incentives to move 
this forward.
    Ms. DeGette. What is happening with that process?
    Ms. Gerberding. Those contracts, the most recent round was 
just announced, I think, last week.
    Ms. DeGette. Is it working?
    Ms. Gerberding. Science takes time, so it will be a while 
before the actual research and development gets to the point 
where we have a product, and not before flu season this fall, I 
am absolutely certain of that. But it is an important step. For 
the government to incentivize this kind of R&D in a very 
targeted way, I think, is the appropriate step, and I am glad 
we are able to do that.
    Ms. DeGette. I just have one more question. Dr. Gerberding, 
you were talking about this throughout the afternoon. Part of 
the problem last year, and it is going to be a problem if we 
have limited supplies again in the fall, is this whole issue of 
the people who should get the vaccine don't get it. This 
happened last year where we had a shortage, so a lot of the 
target population didn't realize they were the target 
population, they didn't get it, and then as time goes by, they 
just sort of forget.
    I am wondering if you can supplement your answers by 
providing for the record some kind of plan for how you are 
going to reverse that thinking. Just saying you want to reverse 
it, you know, that is not going to solve the problem next year.
    Ms. Gerberding. We will be happy to provide that.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    Mr. Whitfield. We have 5 minutes left to go cast a vote, 
and then we will have one more vote, which we will vote on 
immediately. So we are going to recess this hearing. We will be 
back here in 10 to 15 minutes. We will recess for 10 to 15 
minutes.
    [Brief recess.]
    Mr. Whitfield. We will reconvene the hearing. I will 
recognize the gentleman from Texas for his questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    If I might just back up a little bit. I know Mr. Stupak 
asked the question about the cost per influenza vaccine, and I 
don't know that I actually heard the number. Can you tell me 
that, Dr. Goodman or Dr. Gerberding?
    Ms. Gerberding. What I have is the catalogue price. So for 
a multidose vial of the Sanofi Pasteur vaccine in 2005, the 
catalog price is $9.95. For the thimerosal-free syringe, a half 
millimeter is $13.25. The MedImmune single dose is $24.50.
    Mr. Burgess. Okay. I know you went through, Dr. Gerberding, 
a scenario of the various numbers of the flu vaccine that were 
used when the chairman asked the question, but what is the 
greatest number of doses that the market can handle in a given 
year? Is it that upper figure, that 83 million doses are the 
highest that have ever been given?
    Ms. Gerberding. The most doses that have ever been 
purchased was the 83.1 million.
    Mr. Burgess. Is that the upper limit for the market?
    Ms. Gerberding. No, I don't think so. That number was used 
in a year when we had not yet made the recommendation about 
immunizing infants, and the number of infants to be included is 
approximately 6.5 million more. If we got 50 percent of those, 
that would increase that.
    We are also working harder and harder on some of our 
hardest-to-reach risk groups, like children with other medical 
conditions that makes them especially vulnerable to influenza, 
and all the time more data are being scrutinized by our 
scientists and our advisers that might expand the market 
indications even further as we learn.
    For example, it is possible in the future we may learn for 
all children there is an advantage to immunization. It may be 
less days missed from school or less days missed from work for 
their parents. But those are the kinds of questions emerging in 
our research portfolio on an ongoing basis. So it is not a 
static situation, it will evolve over time.
    Mr. Burgess. Very well. Since you brought it up, I wasn't 
going to say the word thimerosal, but you brought it up. Will 
the cost for that thimerosal-free syringe, are we reimbursing 
the manufacturer at a rate where they can make a profit on 
that?
    Ms. Gerberding. I really can't speculate. I would assume 
so, because they wouldn't do it if they didn't find it to be a 
profitable enterprise. But I would have to defer to their 
economists to answer that question.
    Mr. Burgess. But there aren't that many of them doing it. 
Now, with thimerosal-free vaccine, is that pretty much what 
everyone has gone to?
    Ms. Gerberding. The Department and the CDC have recommended 
for several years now that all vaccines for children be free of 
thimerosal as a preservative, and manufacturers have done that 
with all other vaccines.
    The current flu vaccine manufacturers are converting over 
to be completely thimerosal preservative-free, and I believe 
the GlaxoSmithKline product that is in the pipeline is being 
formulated that way to start out with. So in a brief period of 
time, I believe the manufacturers will be utilizing vaccines 
that do not contain thimerosal as a preservative.
    Mr. Burgess. For all of us, for adults and children alike?
    Ms. Gerberding. The issue is if you are using a vial of 
vaccine that has more than one dose in it, it needs to have a 
preservative.
    Mr. Burgess. Very well. Now, last fall when I wasn't on 
this committee, but I was on the Government Reform Committee, 
and you testified in front of that committee, we talked a 
little bit about the ability to dilute the vaccine that was 
available. Were there any studies undertaken last fall with 
diluting the available flu vaccine stocks to try to extend them 
further?
    Mr. Gellin. I am not certain. I think I need to get back to 
you. The Defense Department may have participated in a study 
like that. We will get the facts back to you.
    Mr. Burgess. So at this point no data is available. If we 
come up against another crisis, Mr. Stupak is concerned that 
nothing has changed from last year. But one thing that might 
have changed is we might have some data on what happens if we 
dilute the vaccine in the more healthy of the population and 
extend our vaccination range that way.
    Mr. Gellin. Recognizing that we would have to then apply--
if it was last year's vaccine, it would have to make the link 
between next year's vaccine as well. But I think that is the 
case.
    Mr. Burgess. Dr. Goodman, when we heard the testimony last 
year on the Government Reform Committee, the contaminating 
agent, I was told, was a bacteria called Serratia, which is not 
a very pathogenic organization and one that likes to live in 
water baths and so forth in labs. Do you know where the 
Serratia came from that contaminated the vaccine last year?
    Mr. Goodman. There is not a definitive answer to that 
question. It was clearly an environmental problem in the 
facility. I believe that we feel it was introduced in the 
environment most likely at steps involved in not the initial 
growth of the vaccine, but the formulation, and it points out 
the importance of environmental control in this kind of 
facility.
    Mr. Burgess. Are there any procedural changes that have 
been undertaken to avoid this happening again, or is that all 
depending upon getting away from the egg-based system to a 
cell-based system?
    Mr. Goodman. No, there are quite a number of steps in terms 
of the manufacturing process that in this case Chiron has 
improved to reduce the risk of that kind of problem. These 
problems--I should state you are correct in asking about egg-
based vaccines in general. These kind of problems, the egg-
based production is more prone to them. But what is needed then 
is the testing and quality system in place to, if problems 
occur, promptly identify, isolate it, and assure it doesn't 
affect your general production.
    Again, quite a number of the steps that were proposed in 
their remediation address exactly this kind of issue; keeping 
the clean areas clean, assuring prompt and proper action when 
problems are detected, and handling the process in a way that 
is as aseptic as possible.
    Mr. Burgess. When you say when problems are identified, 
taking prompt action, what type of action? Would that be to 
sequester that part of the lab or that batch of vaccination?
    Mr. Goodman. There could be many different kinds of 
problems detected, and the responses might be different. Let's 
say, for example, vaccine manufacturers do frequently and 
carefully monitor the environment in which manufacturing is 
performed and look for excursions that suggest problems with 
control of the environment. When you find those, it is 
important to act quickly, investigate the cause and prevent 
further problems. That would be one example; then certainly if 
you note this in a product, very promptly investigating and 
trying to understand, by looking at safe samples, looking at 
the process that occurred, where did that occur, and do we 
understand that that is isolated and that the other lots are 
acceptable.
    Mr. Burgess. Again, I would just point out, that might be 
one other thing that would fall into the broad category of what 
has changed since last year when we found we didn't have enough 
vaccination.
    Let me just state for the record that I did not take a flu 
vaccine last year. The only people that were concerned about it 
were CNN, but they did seem to be very interested if I did have 
a vaccination. I didn't. If it will help you, Dr. Gerberding, I 
will take one this year. But you tell me if it is okay. I will 
wait for your word.
    In the brief time I have left, I will ask Dr. Gerberding, 
you have described several scenarios for us, best-case, worst-
case scenario. Do you have in mind, and I don't mean to get too 
far into the science fiction aspect, but do you have an idea of 
what the pandemic scenario would look like? What would we see 
as Members of Congress, what sort of reports would be coming to 
us from the field, what would you all be seeing before we were 
aware of it, what would you be doing and how would you make us 
aware that there was, in fact, a problem creeping up on us of 
that magnitude?
    Ms. Gerberding. Thank you. As you know, we are very 
concerned about the situation with avian flu in Asia. That is a 
good example to use the what if story from.
    The first thing we would expect if this new pandemic 
unfolded the way the previous ones did, we would begin to see 
more clusters of flu in people and evidence that those clusters 
were expanding in time. In other words, one person is infecting 
their neighbor and the next person. So we would see an expanded 
timeframe for the clustering.
    Often as flu evolves, it doesn't just make a sudden jump to 
become very transmissible in people; it gradually gets there 
over a period of weeks or months. So those clusters are very 
important sentinels of impending transition to a virus that 
could be more easily transmitted and potentially cause a 
pandemic.
    The main reason we are worried about pandemic with this 
virus is because no human beings around the world have ever 
seen it. None of us have preexisting immunity to it. So that is 
where we are so especially concerned about this avian flu.
    What we would do is identify the clustering and also have 
the viruses themselves so that we would be able to characterize 
them in our laboratories or in the World Health Organization 
collaborating laboratories and try to make a connection between 
what is going on in the people and what is going on in the 
virus. We would also take those viruses as they emerged and 
work on making a seed virus very quickly so we could put it 
into the manufacturing processes that we have for flu virus.
    One scenario is that we would convert from making the 
regular seasonal flu virus, which, incidentally, has three 
virus strains in every vaccine, into a vaccine that had only 
the pandemic strain in it. So instead of having a global 
capacity to make 300 million doses, we would be able to at 
least get 900 million doses out of it. So we would try to 
expand our supply by making a single-strain vaccine. But the 
timing to do that, as you know, is many months, so in the 
interim, what we would concentrate on is, first of all, 
containing the outbreak at the source through quarantine, 
isolation and use of our antiviral drug Oseltamivir.
    In addition, if we had a limited supply, we which we do now 
of this particular pandemic vaccine, we would use that to help 
support immunization in the people closest to the exposed cases 
and try to buy some time while we were scaling up our vaccine 
supply.
    But if you think about SARS where we had no drugs and no 
vaccine, the world was able to contain that outbreak by using 
old-fashioned methods of isolation and quarantine. The one 
difference is, of course, that flu is probably transmitted much 
more efficiently than SARS was, in retrospect.
    So it would be a very big challenge, and that is exactly 
why we are spending so much time every day at the Department 
preparing all the steps in the process, the detection steps, 
the stockpiling of the drugs to treat the flu, the development 
on a fast track of the manufacturing processes for an avian 
vaccine that would allow us to scale up and reduce the time to 
produce it by a few months under emergency conditions.
    All of that has to include not just the government at the 
Federal level, but communities across America as well as the 
globe.
    Mr. Burgess. Mr. Chairman, I should point out that with the 
SARS situation, NIH identified that virus with gene sequencing 
techniques, and within 30 days they pretty much knew the virus; 
is that correct?
    Ms. Gerberding. No, actually it was CDC that did that.
    Mr. Burgess. Oh, was it. I am sorry. Thank you.
    Mr. Whitfield. I recognize the gentleman from Washington 
for his questions.
    Mr. Inslee. Thank you, and thanks to the panel for waiting 
for us. We appreciate that.
    Dr. Goodman, I wonder if you could tell us what incentives 
exist, what you are working on, if anything, both through a 
commercial aspect and through regulatory aspect to really 
create incentives for new entrants into the market 
domestically?
    Mr. Goodman. Well, we at FDA don't have financial 
incentives to offer. What we can do is try to provide what I 
would classify as a very rich, productive, helpful interaction 
with manufacturers, and also to try to be sure that the 
expectations that we put forward in terms of safety and 
effectiveness and how manufacturers meet them are balanced and 
get us the information we need without creating undue burdens. 
So we have been very engaged in that with the flu 
manufacturers.
    Every year, even with the existing manufacturers, we have 
extensive interactions. As you heard, we provide them with seed 
viruses and reagents that are helpful to them.
    In addition, the other thing we challenge ourselves to do 
is say can we look at the data and say can we help them speed 
the clinical development program, and that is where we came up 
with the accelerated approval mechanism based on the likelihood 
that good antibody levels against the virus will predict 
protection. This has allowed, for example, in the case of GSK, 
them to accelerate their plan by 1 to 2 years to come to 
licensure.
    So those are the kinds of things we can do to help make 
this a faster, more economic way to market. But we can't 
provide ourselves any economic incentives. The market provides 
those.
    Mr. Inslee. Any thoughts from the other two agencies in 
that regard?
    Mr. Gellin. Let me add to that. As Dr. Goodman said, there 
is the market piece. It is also important to appreciate the 
demand and use of influenza vaccine over time that Dr. 
Gerberding has mentioned. The peak of our use has been in the 
mid-80 millions, but recognizing just as briefly as maybe 10 
years ago, the marketplace was far smaller than that with maybe 
30 million doses as the annual allotment.
    So I think a big part of it has been not only the increased 
awareness by the population of protective value of the vaccine, 
but the expansion and recommendations has created a bigger 
marketplace overall.
    Mr. Inslee. Dr. Gerberding, any thoughts?
    Ms. Gerberding. I would agree that driving the demand for 
the vaccine is an important and critical step actually. We do 
this by science. We do the research, we find out who is going 
to benefit from the vaccine, what is the benefit, what is the 
cost-effectiveness of the vaccine. And as we identify that in 
new populations, we make recommendations that we should be 
vaccinating these people. That influences what the government 
pays for; that influences what CMS reimburses for. So we can 
drive forward the market, and we have done that over the past 
15 years, by expanding the number of people that we recommend 
in the immunization pool.
    There is consideration now, though there has been no 
decision on this, that the pool be expanded even further. I 
mentioned the possibility that we would end up with enough 
evidence to recommend universal vaccination of children, for 
example, for flu every year.
    I think ultimately the big payoff will be the manufacturer 
who identifies a better vaccine, and by that I mean a vaccine 
that we don't have to give every year, a vaccine that could be 
given once or twice in life like all of our other vaccines and 
really get us beyond this annual challenge that we face.
    That is a matter of basic science, and that is why these 
investments that the Department is making in motivating the 
science, not just through the research grants that the NIH is 
putting out, but also through these contracts with 
manufacturers to try to develop a better vaccine, are so 
critical for the mid to far term of this problem.
    Mr. Inslee. Given this pandemic possibility, which is kind 
of disconcerting, should we be giving thought to accelerated 
FDA approval of some of these to try to inspire new entrants 
into the market? I am told it is about 12 months. Is that 
realistic? If so, is there anything we can do to accelerate 
that?
    Mr. Goodman. We are applying similar principles to the 
pandemic vaccines as we are to trying to bring additional 
manufacturers in for the routine vaccines. So you are 
absolutely right, we see that as an issue, and we are doing 
that.
    In fact, with the U.S.-licensed manufacturers, we view a 
new vaccine for a pandemic not as a new vaccine that would 
require a new license, but as a change in strain such as we see 
each year. So the data we require is very different, and we are 
able to really facilitate that process.
    Mr. Inslee. So what is the time span then from start to 
finish?
    Mr. Goodman. It is primarily related to their ability to 
manufacture and then submit to us data about that strain.
    Mr. Inslee. What does that end up in the real world being?
    Mr. Goodman. Well, you know, typically, for example, one of 
the things, as Dr. Gellin mentioned, is the Department has 
funded the production of an investigational or new vaccine 
against the current avian influenza strain. Because the immune 
response to these viruses, one of the issues why it is a 
pandemic, it is because you or I have no experience against 
that virus or its relative, so we can't always predict how good 
our immune response will be.
    But in this case, Aventis Pasteur very quickly produced a 
commercial scale lot. I actually don't want to give you a 
number, but it just was within a very few months, and that is 
undergoing testing. Now, in fact, I think most--a bunch of that 
testing has already been completed, supported by the National 
Institutes of Allergy and Infectious Disease.
    So a manufacturer with a licensed existing technology and 
manufacturing capacity, provided with the right virus, can very 
quickly begin to produce it for the initial testing, and then 
we would look at that data and be able to evaluate it.
    I think the real issue here that we are also concerned 
about is what is the manufacturing capacity out there to 
produce the millions and millions of doses that would be needed 
and the time that is needed to do that. As you have heard, it 
typically takes several months to ramp up and produce enough 
vaccine for the whole U.S. population.
    Mr. Inslee. So I am trying to get some sense of the time in 
days, months, weeks, portions of centuries, some timeframe, and 
if you can break it down from the time they have some 
manufacturing capacity demonstrated, from there, how long would 
it take the FDA to do the evaluation to really get the 
certification?
    Mr. Goodman. As I said, we would not consider it a new 
vaccine, so the major factor there is how long it takes them to 
produce the vaccine.
    Mr. Inslee. Say it takes 3 months to produce a vaccine. How 
much longer?
    Mr. Goodman. They would do a clinical study, for example, 
to show the immunogenicity and safety of that strain. We would 
probably require limited data, and they would submit that data. 
They could potentially do that study, I think, as has been 
done, for example, by GSK, within a matter of a couple of 
months. Then they would submit that data, and we would look at 
it very quickly. We do this every year.
    So, again, we would not be the limiting factor there, 
unless a problem with the vaccine were to occur.
    Mr. Inslee. Say it takes 3 months to do the manufacturing 
capacity, 2 months to do the clinical trials. How long--if you 
would give me some parameters of how long it takes the FDA to 
finish that? I am just looking for parameters.
    Mr. Goodman. Each year we review a new strain submitted. 
For example, if they change a strain in a vaccine, each year we 
review that, and we typically do that within a month. This may 
be more complex if there is more data.
    Mr. Inslee. Okay. Could you give us any thought about the 
difference between the European system and ours relative to 
their experience with this? I sense there is--and maybe it is 
this one difficulty we have run into--is there a different bar, 
a different screen they are running through to have a different 
experience, and if so, does that give us any thoughts on ours?
    Mr. Goodman. Regulatory?
    Mr. Inslee. Yes.
    Mr. Goodman. Well, there is not one European regulatory 
system, so for traditional vaccines, there are multiple 
countries that can review and approve those vaccines. They may 
do it similarly or differently.
    For the routine strains, there are some differences. For 
example, each year clinical studies and clinical information is 
required by the Europeans, so in other words, they take the new 
vaccine that is made each year for annual influenza production 
and actually require that the manufacturers provide a small 
clinical trial of that vaccine. At FDA we view them as strain 
changes for licensed vaccine, and we don't require that. So, 
that is one difference that each year they require clinical 
data, and we don't. I would say that is a major issue.
    Similar to us, they have inspections, and you can see, for 
example, with Chiron, there was an independent inspection by 
the EUK regulatory authority of that manufacturer, which was 
located in England.
    But the main difference is--I can't say there is one 
systematic difference, that one country is tougher or weaker or 
anything like that, but there is this one major difference, 
which is that they are required to provide clinical data there 
each year. We feel we have had enough experience with the 
routine strain changes and the licensed manufacturers that we 
are comfortable just making sure that strain is exactly what it 
is supposed to be and the potency and safety of it are proper.
    Mr. Inslee. Great. Thank you very much.
    Mr. Whitfield. Thank you.
    I recognize the gentlewoman from Tennessee for her 
questions.
    Mrs. Blackburn. Thank you, Mr. Chairman. I want to thank 
all of you for your patience. I know it is disconcerting 
sometimes as we are in and out and going for floor votes.
    Director Goodman, I think I will come to you first. I had 
done a little bit of reading in preparation for the hearing 
today, and I found a great article, What Is Wrong with Our Flu 
Vaccine Supply, and actually highlighted a few points in here. 
I found it quite interesting. It seems like basically if you 
were to say the underlying problem or the root of the problem 
goes back to being this, and it is because of liability, 
because of regulation, because of maybe some changes in public 
policy through the 1990's that the U.S. has become a less 
friendly environment for U.S. vaccine manufacturers. Then you 
begin to look at some of the situations that arise because of 
that and the liability and the different situations that exist 
because of that.
    With all that said, taking that as a premise, a question 
that I have got, in reading this, I was looking at the 
developmental strategy, the multiple developmental strategy of 
when you are looking at a strain, and why is it impossible to 
have a multiple strategy, a multiple developmental strategy, 
for one of the vaccine formulations? And then how could we get 
to the point that we have multiple developmental strategies for 
the vaccines, for a specific vaccine, for a certain flu, to be 
certain that--I think Dr. Gerberding mentioned earlier that 
sometimes you pull a certain strain, but you don't know if that 
is going to be what you end up needing or not or if it is going 
to replicate itself well or not.
    So, how do you get to the point that you develop those 
multiple strategies?
    Mr. Goodman. I want to be sure I understand your question 
before I answer it. I can see two questions there. One is would 
it be possible to develop a vaccine that protects against 
multiple different strains? The other would be if we have 
problems such as Dr. Gerberding mentioned occasionally where a 
strain is circulating and we didn't predict that it would be 
important, could one have prepared a vaccine against that ahead 
of time?
    Mrs. Blackburn. Right. Take both questions.
    Mr. Goodman. The first one is really a science question. It 
is something that the Department and NIH and FDA are all 
supporting research on. It would be ideal to have a vaccine 
that protects against multiple strains without having to every 
year go out and find all those strains and grow all those 
strains. So people are trying to find proteins in the vaccine, 
in the virus, that might provide protection in multiple years 
or against multiple strains. That kind of research is going on. 
There is some evidence that there may be some advantages for 
live attenuated vaccines in providing that kind of protection.
    So there is a lot of work going on in that, and it is a 
Holy Grail, and it would be very desirable and could even help 
protect us against pandemics potentially. But the science isn't 
there yet, and it has been difficult to achieve.
    The other question is really again limited by the capacity 
of the industry. So as manufacturing gears up, the industry, 
based on CDC and WHO's surveillance data, FDA's expert 
committees, tries to examine what has gone on out there in the 
world and pick the strains that are likely to threaten our 
population and put them in the vaccine. In general, they have 
done a remarkable job at doing that, but occasionally there is 
a strain that circulates in one part of the country or another 
that causes a problem and isn't well covered by the vaccine.
    As you said, you could deal with that by potentially, if 
you saw something possibly emerging, making some vaccine 
against that strain. The tradeoff there is right now the total 
capacity is limited, so you would have to cut back on someone 
else. So right now we are unfortunately in the situation of 
people making the best educated decision and then going ahead 
and producing. I don't know if Dr. Gerberding or Dr. Gellin 
want to add to that.
    Mrs. Blackburn. Well, I think that is probably one of the 
things that is just a continuing source of frustration. And I 
am sure Director Gerberding has a certain amount of that. It 
seems there is a flu virus that you all, if I am understanding 
that correctly--you may identify something in the spring, and 
then by the fall there is another strand that you have nothing 
for that is actually causing the flu, the outbreak, the 
epidemic, whatever. And then is there anything that you can 
begin to do, either through preparation or through science that 
the CDC can do, to take some steps to forestall that?
    Ms. Gerberding. The virus is very unpredictable, and it is 
usually not just one virus circulating during a flu season; 
there are several, usually at least three and often many more 
variants than that. And so we use our experience and our 
predictions based on the past early in the spring to look at 
what is present at that point in time, because in most years 
what is present in the spring is what is going to be present in 
the fall. That doesn't always prove to be correct.
    But what usually happens--and this example happened last 
year where the vaccine predicted strain was a toss-up. We 
didn't know if it was going to be a Fujian strain or whether it 
was going to be a different strain, and we wanted to have the 
best chance of coverage. Unfortunately, the Fujian strain 
didn't grow very fast when we were trying to create the seed 
virus. And we had to make the decision we had better go with 
the one we can get a vaccine to because there is no room to 
wiggle in the timing of getting these products to market.
    So the vaccine that was produced that year wasn't a perfect 
match for what turned out to be the dominant strain that fall. 
Fortunately, there was crossover. So the strain that we did use 
was a close cousin, and there was some protection afforded to 
people. And that is usually what happens even if it is not a 
perfect match. If it is a cousin instead of a twin, we get 
reasonably good protection of the people who need it the most.
    But there is right now no way to accurately predict which 
one of the swarm of viruses is truly going to emerge, and 
sometimes we don't get it right. What Dr. Goodman is really 
describing is the fantasy that we all have, that we will find a 
way to make a vaccine against some part of the flu virus that 
doesn't change every year, some other molecule in the virus 
that is consistently there that would be a good enough source 
of protection that would allow us to just vaccinate using that, 
and then it didn't matter about all these other changes that go 
on and on and on. But we have no proof of that principle yet, 
and, believe me, everyone would like to find such a vaccine. It 
is a little bit like the AIDS vaccine, where the virus changes 
so much over time, you can't pin it down and find something 
that will uniformly protect against all strains.
    Mrs. Blackburn. And if I am understanding correct, ma'am, 
it is basically what is happening with this is that you 
mentioned the wiggle room, and you have very little time to 
move. You do a lot of work on faith, basically, and informed 
science and then a little bit of faith. And then you move 
forward into production, but you don't have a lot of time for 
testing.
    Ms. Gerberding. That is exactly right. If we pick the 
strain, let us say we find it in February or March, we have to 
make the seed for the vaccine from that in a matter of weeks, 
get that off to the FDA and the manufacturers who have to put 
it into production mode. And it is not just about popping it 
into some eggs. It actually takes time to grow in the eggs. It 
has to be harvested; it has to be processed so that all of the 
potential contamination from the eggs is removed. That was the 
problem that Chiron was experiencing. And then it has to be 
packaged. It has to be tested to make sure that all of packages 
have exactly the same amount of antigen in them. There are all 
kinds of quality control steps that have to go on in there. 
Everything has to work exactly right for that vaccine to be 
available in September when we need it.
    Mrs. Blackburn. Okay. Thank you very much.
    Mr. Chairman, I yield back.
    Mr. Whitfield. Thank you very much.
    We will begin a second round. And I would recognize Mr. 
Stupak for 8 to 10 minutes of questions.
    Mr. Stupak. Thank you, Mr. Chairman.
    And, Dr. Gerberding, in response to Mr. Burgess' questions, 
you had indicated that the cost for the vaccine is--you gave 
three different costs, 9.95, 13.25, and 24.50. Is that this 
year's prices or last year's?
    Ms. Gerberding. What I am quoting to you are catalog prices 
for 2005 for three different manufacturers of vaccine. I would 
be happy to provide you with the list of the catalog prices for 
your record.
    Mr. Stupak. Very good.
    Mr. Stupak. Catalog price, is that the price the government 
would pay for?
    Ms. Gerberding. Generally we are able to negotiate a slight 
discount off of those prices.
    Mr. Stupak. If we want to put--and I think you used the 
word overexpanding our pool of more and more people getting the 
flu vaccine, and ideally we would like everybody to get it, I 
thought you said. So, in a business model, wouldn't the more we 
produce lower the cost per vaccine?
    Ms. Gerberding. Ultimately that may be true. I think what 
we are talking about is a market-driven process here. The more 
people you vaccinate, obviously you can commoditize the vaccine 
if you get up to a large enough population. If you were 
thinking about the global community of people who need to be 
vaccinated, we would be talking about large-scale and 
potentially very cheap vaccine.
    Mr. Stupak. How about just here in the United States? 
Because I think earlier in your testimony you said we have 
spent hundreds of millions to modernize a facility to develop a 
new culture, to move from the egg to a cell culture. So that 
would help drive down the cost of manufacturing; would it not?
    Ms. Gerberding. That is an independent investment. We are 
talking about apples and oranges here. One is the process, by 
simply making more of what we already know how to make, and the 
other is making something completely new. And the investments 
we are making is a completely different manufacturing process 
that would involve new factories and a new science and a new 
regulatory approval process.
    Mr. Stupak. Here is my problem. Those hundred millions came 
from the U.S. taxpayer, right?
    Ms. Gerberding. Correct.
    Mr. Stupak. And if you look at the first chart you had up, 
and the ones who get the immunizations first are the high-risk 
group, people over 65.
    Ms. Gerberding. Correct.
    Mr. Stupak. And young babies probably under 2 years old, 
right? And if you look at that, over 65, that means Medicare 
pays, doesn't it?
    Ms. Gerberding. That is correct.
    Mr. Stupak. Under 2, most of that is Medicaid paid, 
correct?
    Ms. Gerberding. Not necessarily. It applies to all 
children.
    Mr. Stupak. Okay. Well, children are either covered--well, 
private insurance, of course. But I think you would find most 
of the children are probably covered who are getting these 
shots through either CHIP program, Children's Health Initiative 
Program, or through a Medicaid program. In my home State of 
Michigan, that certainly is the case.
    Ms. Gerberding. The children who do not have private 
insurance are covered under something called the Vaccine For 
Children Program. So it is a special program that applies to 
all of the other childhood immunizations.
    Mr. Stupak. So we have got another program then. Okay. The 
point being, why can't then the government negotiate deeper 
discounts then, if we are putting hundred of millions into the 
manufacture to modernize the facilities, most of the costs or 
the payments on these immunizations are coming through the 
government on Medicaid, Medicare, CHIP or the children's 
immunization program. I would think we could get bigger 
discounts, because I am really bothered by the 17 percent 
increase.
    And just a thought there. If we--you also mentioned 
something about 30 million in insurance. Is that 30 million set 
aside to buy immunizations if we should run out in this 
country? You mentioned 30 million in insurance. Do I understand 
that right?
    Ms. Gerberding. In this fiscal year we have $20 million 
available to purchase bulk vaccine. And what that means is the 
manufacturer at the end of the season can continue the 
production, but not necessarily take that big vat of vaccine 
and convert it into individual vials. So it is a very cheap 
purchase because we buy it at an earlier production process.
    Two things--well, three things could happen. One is we turn 
out to need it, and we would need that late-season vaccine. 
Maybe it is a bad season, maybe we've got a failure in somebody 
else's manufacturing process and we need it. So they can go 
ahead and complete the production and utilize it the way we 
would the regular vaccine purchase.
    The second thing is that we may not use it this year, but 
by luck sometimes one of this year's strains is also the strain 
in the next year's vaccine. So we are a step ahead of the 
process; we have already purchased some vaccine for the 
following year. And when it is in monovalent form like that, we 
have got three different strains sitting in those formulations, 
so there is a good chance that one or two of them will be able 
to be used the following year.
    The third thing could happen is that that wouldn't be the 
case, and that would go to waste. But if we are wasting it, it 
is a cheaper waste than buying the fully manufactured vaccine 
and wasting that.
    So it is a way for us to partition the risk to the 
taxpayers, but the opportunity to develop a little more vaccine 
at the end of the season if it turns out that we need it, and 
in a year like this we would have liked to have had that.
    Mr. Stupak. So in your strategies development and in your 
policy development, do you have any monies then set aside in 
case we do have a bad flu season; we use up everything we have, 
and we have to get more into this country to help out that 
high-risk population? Is there any backup plan?
    Ms. Gerberding. We have, in addition to the $20 million I 
mentioned for the monovalent, we have $20 million at least 
proposed in the 2006 budget for vaccine purchase. It is not 
specific to purchasing at any particular place or time, but we 
will be negotiating contracts for that. We also purchased 
through the Vaccines for Children Program that you mentioned 
before a stockpile of influenza vaccine again so that if we end 
up late in the season and we need that, the government has 
purchased some to protect those children.
    And, as Dr. Goodman has stated, we have a good chance of 
getting an international manufacturer interested. And we are 
not stopping there; we are obviously continuing to work with at 
least two other ones to encourage them to get their licenses 
and their applications.
    Mr. Stupak. This $20 million for purchase and reserve that 
you sort of are holding on, did you have this in reserve last 
year, too? Did you have that amount of money, $20 million, in 
reserve to purchase immunizations if you needed it last year?
    Ms. Gerberding. We had a stockpile for the first time this 
past year. So that was one step that had already been taken. We 
also had a stockpile of drugs for the first time this past year 
in part of our overall flu preparedness, not anticipating. And 
then during the flu season, the additional doses were purchased 
under the investigational new drug category, which is not the 
optimal way to get vaccine, but if we don't have it any other 
way, that is the resort we had to use.
    Mr. Stupak. Well, when you purchased the IND, where was 
that purchased from?
    Ms. Gerberding. That was purchased from two companies, one, 
the GSK purchase, and then I can't remember the--Berna Biotech.
    Mr. Stupak. Berna Biotech, was that the Canadian company?
    Ms. Gerberding. I think so.
    Mr. Goodman. Swiss.
    Ms. Gerberding. Right. Sorry. That is right, we didn't buy 
the Canadian.
    Mr. Stupak. So you have no objections to reimportation of 
drugs then if it is necessary on this flu vaccine if we need 
it.
    Ms. Gerberding. This would not be considered reimportation. 
This is purchasing vaccine from an international manufacturer 
in a plant that we have certified as having good manufacturing 
practices and a chain of custody of the product that would 
assure our Americans that it arrived here safely.
    Mr. Stupak. And we inspect drug manufacturers all over the 
world, don't we, to make sure that they are safe and there is a 
chain of custody, Correct?
    Ms. Gerberding. If the drug is going to be sold in the 
United States and licensed in the United States, I believe that 
is----
    Mr. Stupak. In fact, we get a lot of our drugs from India; 
do we not, Dr. Goodman?
    Mr. Goodman. Certainly it is an increasingly global market 
with global manufacturing. One important difference here, of 
course, is those, the GSK and the Berna Biotech that Dr. 
Gerberding mentioned, were not U.S.-licensed vaccines. And so 
they were purchased by the government basically for emergency 
use, and they would have been used under the nonlicensed 
category of investigational new drugs, so they would have 
required informed consent by the recipients. So there is some 
of the same issues, certainly, but these were not licensed 
products.
    Mr. Stupak. Sure. And my time is running short here. But we 
have FDA inspectors all over the world inspecting plants all 
over the world to make sure that they meet standards and 
qualities, right?
    Mr. Goodman. That is certainly increasingly the case.
    Mr. Stupak. Sure. So the issue on reimportation is to make 
sure we have people who can do the inspections and make sure 
the chain of custody is intact, right?
    Mr. Goodman. I think--I am not an expert in that field, I 
am a biologics person. But certainly a critical requirement 
would be to be sure the product is what you think it is, that 
it was properly made, and that it has been in custody and 
proper care. And that is a very resource-intensive----
    Mr. Stupak. Let me ask you one more question. Mrs. 
Blackburn brought up about the liability issue there and her 
multistage strategy or whatever it was. In the vaccines that 
are made for flu, does the Federal Government back up or 
indemnify the manufacturer if there is a claim?
    Mr. Gellin. There is an vaccine injury compensation program 
that is defined by a vaccine that is given universally to 
children. This year for the first year the influenza vaccine 
was added to that list because of the recommendation for this 
past year that all children 6 to 23 months of age receive it.
    Mr. Stupak. So medical liability really shouldn't be an 
issue in this, then, if it is being backed up or indemnified by 
the Federal Government.
    Mr. Gellin. Again, the flu vaccine is now included in the 
program.
    Mr. Stupak. So medical liability would not be an issue.
    Mr. Gellin. Again, I am not an expert in that. There is 
always the potential for people to go outside that program, 
given the way it is designed, but it is there as really the 
first stop.
    Mr. Stupak. If we modernize the plants, we are the biggest 
purchaser, we indemnify them for medical liability, I can't 
figure out why we can't gain more entrance into the flu vaccine 
area.
    Mr. Whitfield. Thank you.
    Just to follow up on Mr. Stupak for a minute, is the FDA 
concerned that, in times of shortage, that State and local 
agencies might look beyond the established U.S. manufacturers 
to get a vaccine supply?
    Mr. Goodman. Well, I think we recognize that with what 
happened with flu last year, you know, if I were a Governor--I 
was in a State not too long ago and worked with the State 
health department as part of what I did. I can see that there 
was really a desire to get vaccine quickly. I think what we are 
concerned with is that any vaccine that is administered to the 
American people meet the high standards they expect for safety 
and efficacy. So if that were being done in a way that raised 
concerns about that, we would be concerned.
    Mr. Whitfield. But the policy right now is that, as I think 
Dr. Gerberding explained, if you have to go out in these 
emergency situations now, these plants are licensed, and you 
have the custody issue; and, if not, then you have to have 
informed consent. Is that correct, Dr. Gerberding? I mean, 
under your insurance policy that you were discussing, you can 
go out and buy additional vaccine and if there is a real need. 
But you do that only under certain circumstances.
    Ms. Gerberding. We are buying incompletely manufactured 
vaccine as a backup.
    Mr. Whitfield. Okay. At this time I would recognize our 
doctor from Texas for 8 minutes of questions.
    Mr. Burgess. Thank you, Mr. Chairman.
    Well, let us continue on that line that Mr. Stupak just 
brought up now on the vaccine injury compensation fund. Is that 
only for children? If adults are immunized with the flu vaccine 
and have an adverse reaction, are they also indemnified by the 
vaccine fund?
    Mr. Gellin. The program is designed around a vaccine, and 
if a vaccine is recommended for all children or a group of 
children, then anybody who receives that vaccine would be 
covered by the program.
    Mr. Burgess. Now, does that limitation of liability, would 
that indemnify a company if they had thimerosal in their 
vaccine?
    Mr. Gellin. It is not an indemnification program; it is an 
injury compensation program.
    Mr. Burgess. Would that cover an injury that was purported 
to be covered by thimerosal?
    Mr. Gellin. There is a list of compensable reactions to 
these vaccines, and that is not currently on the list of 
adverse reactions to influenza vaccine.
    Mr. Burgess. So if a family wished to bring a charge or a 
case against a manufacturer for placing thimerosal in their 
product, that would be outside the compensation range of the 
injury fund, the vaccine compensation injury fund?
    Mr. Gellin. I am sorry. I guess this gets beyond my 
expertise and the nuance of the program. So I think we should 
supply you with the details about that and about the program.
    Mr. Whitfield. Did you want to respond to that, Dr. 
Gerberding?
    Ms. Gerberding. I think that anyone can bring a claim to 
the injury compensation fund. Whether or not it would be 
settled in favor of the claimant is something that would be 
based on the merits of the claim. So that is the extent of my 
knowledge of the program as well.
    Mr. Burgess. Well, Mr. Stupak was making the point that 
since there was complete release of liability, he didn't 
understand why the manufacturers would not be in the game. But 
it is my understanding that the additive in the flu vaccine, if 
that is the target of the lawsuit, that that may be outside 
what is covered by the vaccine injury compensation fund.
    Ms. Gerberding. I think right now it is important to think 
of risk in an even more comprehensive way. There is certainly 
the risk to the individual who receives the vaccine, a risk 
that the manufacturer experiences as the manufacturer of 
vaccine that's caused the risk to an individual. But the risk 
that is really in play this past year is the risk to the 
manufacturer of not being able to produce vaccine and get it 
licensed because the process and the methodology used is so 
prone to problems. And we have seen this happen over and over 
again.
    You are starting with an egg, which is intrinsically not a 
sterile product; you are growing something in it, and in the 
end you have to end up with a vaccine that is free of any kind 
of contamination. So just getting from the egg to the vaccine 
is a very risky prospect from the standpoint of the people who 
are manufacturing it. And I think that is one of the kinds of 
risks that is very difficult to eliminate. You need an 
insurance policy for that kind of risk to replace the profit 
that was lost because your license was pulled due to a 
manufacturing methodologic issue. And I am not aware that we 
have that kind of insurance program for vaccine manufacturers.
    Mr. Burgess. I am not either. We do it for farmers, I 
think.
    On the issue of the price increase, I guess what is being 
referenced is a Wall Street Journal article from May 4, which 
is today, and it talks about the 17 percent increase. The 
actual dollar amount of that increase was $1.40 above 2004 
prices and the first rise in 3 years, if I am reading this 
article correctly. Any speculation on what amount of that price 
increase is there because of liability concerns or other 
manufacturing risk concerns?
    Ms. Gerberding. I couldn't speculate about that. I think 
that would have to be addressed to the manufacturer.
    Mr. Burgess. Mr. Chairman, do we have any way of obtaining 
that information?
    Mr. Whitfield. We will submit that question for the record 
and do some follow-up on it and see what we come up with.
    Mr. Burgess. Well, the line of questioning previously 
seemed to indicate an environment that was free of risk for the 
manufacturer, a guaranteed purchase by the Federal Government, 
and a guaranteed pool of purchasers. It looks to me to be a 
field that is fraught with a great deal of more peril than was 
previously outlined.
    Mr. Stupak. Would the gentleman yield on that point?
    Mr. Burgess. Well, I was going to say I will yield back my 
time because I know the other side has some additional 
questions. Thank you, Mr. Chairman.
    Mr. Stupak. Would you yield on that point? It was Mrs. 
Blackburn that brought up the liability issue with her 
questions, multistrategy, as she called it. So I was trying to 
probe the depth of it. And I knew that the Federal Government 
does provide some funds there to patient protection. I am not 
trying to get into a malpractice argument with you. That is for 
another day.
    Mr. Whitfield. But we will note the doctor's question, and 
we will follow up on that and get that into the record.
    Mr. Burgess. Well, it really wouldn't be a malpractice 
question, it would be a products liability question, defective 
product from the thimerosal standpoint.
    Mr. Whitfield. Do you have any other questions?
    Mr. Burgess. No, sir. I will yield back.
    Mr. Whitfield. At this time I will recognize for 8 minutes 
Ms. Schakowsky of Illinois.
    Ms. Schakowsky. Thank you.
    In 2004, knowing that a severe flu season without an 
adequate supply of vaccine could result in a disaster, 
especially among the elderly and the chronically ill and the 
very young, Illinois Governor Rod Blagojevich began looking for 
additional vaccine for Illinois. He asked a licensed regulated 
wholesaler in Europe to see if they could find and secure 
approved European flu vaccine on our behalf. After an intensive 
search, the wholesaler found vaccine and began securing doses 
to meet Illinois' request.
    On October 25, Illinois officials sent a letter to the FDA 
asking it to review and approve vaccine made by Aventis Pasteur 
in France and GlaxoSmithKline in Germany. And 4 days later the 
officials, Illinois officials, came and met in person with the 
FDA to answer their questions. And that started a dialog 
between Illinois experts and the FDA over the origin, custody, 
storage of the vaccine, volumes of documentation. And while the 
FDA didn't respond, Illinois, it gave the CDC approval to 
import millions of doses from the very same German made 
GlaxoSmithKline vaccine for use in the United States.
    And then early December, after numerous exchanges between 
Illinois experts and the FDA, Acting Commissioner Lester 
Crawford stated in a press conference that Illinois had 
answered their questions and provided all the information they 
needed, and that the FDA would have a response very soon. As of 
today, 5 months later, Illinois still has not received a 
response from the FDA.
    I would like an answer, Dr. Goodman. What went wrong, and 
why can't Illinois, after its best effort in working with you, 
come to an agreement on how to take care of its own 
constituents, its own residents?
    Mr. Goodman. Well, a couple of comments. I don't have all 
the details on the correspondence between or communications 
between the Office of Regulatory Affairs, the inspectorate 
force, basically, who were working most intimately with 
Illinois to document the nature of the vaccine. But what I can 
tell you is we met very early on with the Illinois people. I 
appreciate, and I told them at the time and so did others at 
the FDA, the demands being made upon them and their desire to 
get vaccine for their citizens. So we very much appreciate 
that.
    Ms. Schakowsky. That is all very nice.
    Mr. Goodman. Well, we made the point very early on that 
apparently the vaccine was extensively in distribution, was not 
clearly--they were not clear about whose hands it had been in. 
Some had been shipped to other countries. It was not in the 
manufacturer's distribution. And we said to them that we would 
work with them, but it was a very difficult task they would 
have ahead of them to provide adequate documentation that the 
vaccine was what it was, had been properly stored so that it 
would be safe and effective. And another important point is 
this is not U.S.-licensed vaccine, so that it would then have 
to be used under IND.
    My understanding is, to answer your question, that the 
information--first of all, they told us we would provide that 
information right away. It took quite some time to provide 
information. The information was reviewed in the Office of 
Regulatory Affairs. The message was given that there were 
numerous gaps in the documentation.
    Ms. Schakowsky. And why did Dr. Crawford state in a press 
conference that Illinois had answered all their questions and 
provided all the information that was needed?
    Mr. Goodman. Well, again, my understanding from the Office 
of Regulatory Affairs is that their last information given by 
them to the representatives of the State--and I can't say 
whether this was a letter or from whom or in what form--was 
that the documentation provided had deficiencies; and that 
given concerns about the safety of the vaccine, how it had been 
handled, what it was, that additional information would be 
needed. And I also understand that it was suggested and later 
offered, I believe, through the Centers For Disease Control, 
that vaccine that had been clearly under control, stored, and 
in the manufacturer's control, which was why we worked on 
getting that right away at the Secretary's request, would be 
made available, in fact, to Illinois or others who wanted it 
under the CDC's IND. So you had the opportunity for a well-
characterized, well-known vaccine that we knew to be safe, 
where there had been extensive review of the manufacturing and 
the pedigree of that vaccine. So I think we made a good-faith 
effort together working with your folks.
    I think there were deficiencies in the data. I think then, 
when that was the case, we also made a good-faith effort to get 
this other vaccine where there were not deficiencies in the 
data and to make it potentially available. I would be happy to 
talk more with you about it or----
    Ms. Schakowsky. I think we need to talk more about it, 
because I think there was a clear understanding in December 
that Lester Crawford had clearly stated that we had--and 
Illinois met all the requirements, and that still there was--
and that there would be an FDA response very soon, and that 
none of that happened. So I hope that we can clarify that.
    I had to step out for a little while, and I am just 
wondering if you did finally answer the question that Mr. 
Stupak had asked if we--and I am quoting now from the Wall 
Street Journal: It also shows that the vaccine production 
infrastructure remains nearly as fragile and outdated as it was 
before last year's crisis.
    Let me just say that, hearing Dr. Gerberding's numbers, it 
sounds to me like even the middle case doesn't even begin to 
meet what is--your statement of what is a public health need. I 
understand demand and need are different, but what it also says 
to me is that we need to promote getting the vaccine in a more 
aggressive way to a large population that isn't even asking for 
it. And, second, were they to ask for it, even under the very 
best of scenarios, we cannot provide it. Now, so are we in as 
good a shape, better shape, worse shape than we were last year? 
Anybody?
    Mr. Goodman. Well, I am happy to take the first crack at 
that. I think we all recognize there is a clear problem with 
the fragility of the flu vaccine manufacturing infrastructure. 
I think there is some progress that has been made, but there is 
still a problem. The progress that has been made is that, as 
mentioned, GlaxoSmithKline, in part because of the work on the 
IND, has stated that they are going to apply for U.S. Licensure 
under the accelerated approval mechanism we provided. So they 
expressed clear interest to enter the market for this year. 
That is potentially more diversity. Another bit of progress is 
the--while the jury is still out, the improvements that Chiron 
has made in its manufacturing. Then I would go one step further 
and say there are at least a couple of other manufacturers that 
we have been working with who have indicated long-term interest 
in the U.S. market.
    But, yes, you are absolutely correct. Challenges remain 
both in the underlying technology and in the market forces. And 
it is almost a vicious circle, because if you can't provide a 
stable vaccine supply, how can you continue to ramp up demand? 
And if you don't continue to ramp up demand, how do you have a 
stable supply? We are all living that, and we definitely 
support things to occur on both ends, stabilizing the supply 
and increasing uptake and demand.
    It is helpful to realize that I think about 10 years ago 
there were only about 20 million doses of flu vaccine 
administered in the United States. So while it seems we have a 
long way to go, and as a public health person I think we do and 
we share that concern, there has been progress over a 10-year 
period.
    Mr. Whitfield. Ms. Schakowsky's time has expired. Do the 
two of you want to respond to her last question, or do you 
feel--okay.
    One comment that I would just make on this Illinois 
situation, and you can tell me if I am correct or incorrect, 
but it was my understanding that the FDA, did they actually 
receive appropriate drug master files on the vaccines from 
Illinois?
    Mr. Goodman. I would have to get back to you on the drug 
master file. The drug master file would be what the 
manufacturer possesses that says everything about the product. 
I think--I would need to get back to you because there were at 
least a couple different manufacturers involved. But the 
manufacturers, to my knowledge, signaled a willingness to help 
in this.
    The issue that was definitely where there was a deficiency 
was in the data that documented every--how that vaccine had 
been handled after it left the manufacturer. And I think that 
is where the Office of Regulatory Affairs had a safety concern.
    Mr. Whitfield. Okay. Well, that concludes today's hearing. 
I want to thank the witnesses for your patience. And we are 
going to keep the record open for 30 days, and ask that any 
questions for the record be submitted within 7 days to be 
answered.
    Obviously this is a particularly important subject, and 
your testimony today, I think, provided enlightenment not only 
for the committee members, but also for the general public. And 
we do commend you for the work that you are doing and look 
forward to working with you as we move forward to address this 
important issue.
    With that, the hearing is adjourned.
    [Whereupon, at 5:12 p.m., the subcommittee was adjourned.]

                                 
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