Should the Government Make Vaccines?

On November 27, with the United States still reeling from the attacks on the World Trade Center and the series of anthrax-spiked letters, legislators at a hearing on Capitol Hill got more shocking news. They learned that the country was ill prepared to deal with future attacks from microbes-and not just the kind released by terrorists. One expert after another testified to the Senate’s Committee on Health, Education, Labor and Pensions that in the past year the country had suffered various shortages of the vaccines critical to fighting infectious diseases. The witnesses’ warnings went beyond the threats of anthrax and smallpox, describing a chronic lack of vaccines for common influenza, which claims 20,000 American lives a year, and the childhood menaces tetanus, pertussis, diphtheria and pneumococcal disease.

These problems are not new. But they took on an unprecedented sense of urgency after September 11, when it became apparent that the country had paltry supplies of smallpox and anthrax vaccines on hand-and no vaccines whatsoever for many other potential bioweapons. What’s more, it was also obvious that the United States lacked the manufacturing infrastructure to quickly remedy the problem, or deal with a widespread epidemic of anything from smallpox to the flu. “These shortages call into serious question our ability to continue to meet the public-health needs of our citizens,” said Senator Jack Reed, a democrat from Rhode Island, at the opening of the hearing.

The situation is largely a result of the failure of market forces to encourage vaccine production, which is a risky and far from lucrative business. Only four large pharmaceutical companies in the world still make vaccines. And while the four manufacturers compete on some vaccines, and several biotechnology companies are attempting to fill in gaps, the general lack of competition means that shortages occur routinely. Seemingly minor glitches can interrupt supplies: a business decision, a regulatory ruling or trouble in a laboratory or manufacturing plant.

Fear of a looming health crisis is, for the first time, prompting scientists, industry leaders and policymakers to take a sweeping look at the nation’s vaccine needs, both exotic and routine. One bold solution: a proposal to supplement private vaccine production with a federal initiative. This scheme calls for the U.S. government to establish a National Vaccine Authority to oversee research, development and distribution of vaccines that are too risky or too unprofitable for industry to make. A central component would be a government-owned, contractor-operated vaccine-manufacturing plant.

It is a controversial idea that has been proposed before, only to be overwhelmed by industry objections. But the confluence of September 11 and a recent, acute vaccine supply problem has changed the tenor of this long-standing debate. “The anthrax terrorism event clearly exposed the weaknesses we have in the research, development and production of vaccines that are important for fighting terrorism, and at the same time dramatized that we have significant problems with vaccines that are important for the civilian sectors,” says Kenneth Shine, president of the Institute of Medicine, the health-care-research arm of the National Academy of Sciences.

Orphans

The Institute of Medicine first floated the National Vaccine Authority idea nearly 10 years ago and is still its most outspoken advocate. Strong support also comes from the Gilmore Commission, an advisory panel established by Congress in 1998 to suggest better responses to terrorism, and an independent panel that in 2000 evaluated the military’s fractured vaccine production system. The bottom line in each analysis is the bottom line: the market for vaccines is too weak for private investments to sustain it. “Sooner or later we have to come to grips with the fact,” says Shine.

Take anthrax. Until recently, there was hardly any market for this vaccine-and no commercial producer to make it. For decades, the Pentagon contracted with a laboratory owned by the state of Michigan to manufacture the vaccine, but that lab repeatedly ran afoul of U.S. Food and Drug Administration regulations. In 1998, the state finally sold the lab to a private outfit, BioPort, a new company backed by investors who had deep ties to the U.S. and British militaries. But the U.S. Department of Defense’s stockpile of vaccine began to dwindle as BioPort renovated the aging facilities. When the anthrax attacks occurred in October 2001, the plant still had not received final regulatory approval, and the Defense Department had so little vaccine on hand that it had suspended its own mandatory anthrax vaccination of all troops. Though the FDA has since given BioPort the green light, anthrax vaccine remains a scarce commodity.

September 11 also brought smallpox into sharp focus. The government’s stockpile of the original smallpox vaccine is nowhere near enough to protect the entire U.S. population, and no big pharmaceutical company has manufactured it since 1982. And though the Departments of Defense and Health and Human Services have each contracted with a different company to make a new smallpox vaccine, it will be several years before they see any results. The Department of Defense has also instructed its contractor to make vaccines against several other potential bioweapons, but that process is so cumbersome that it could easily take a decade before the first of these can be proved safe and effective.

And the problems don’t stop with rarely used bioweapon vaccines. American children receive a battery of vaccines to combat 11 diseases, many of which have thus become uncommon. But in the past year, shortages have occurred with four of these vaccines for a wide variety of reasons (see “Vaccine Shortfalls”). It is too early to assess the extent of the shortages, but many witnesses at the November 27 hearing, as well as senators themselves, made it clear that they are real.

Democratic senator Jeff Bingaman reported that in his home state of New Mexico there is a shortage of tetanus boosters for 11- to 15-year-olds. An epidemiologist representing the Association of State and Territorial Health Officials testified that because of a vaccine shortage, Tennessee could not enforce its requirement that children in day-care facilities be immunized against pneumococcal disease. He added that a diphtheria vaccine shortage “has plagued all states,” and that a shortage of pertussis vaccine forced Colorado to suspend a requirement that children receive fourth and fifth booster doses. With influenza vaccines-which face delivery problems every year, since they must annually be made anew to combat the latest flu strains-unusually severe delays in 2001 have left many elderly people without protection.

In some ways, the problem is the fault of the lawmakers themselves, caused by legislative fine print. Regulators have long recognized that pharmaceutical manufacturers lack the financial incentive to make treatments for diseases that affect only a small fraction of the population. Congress attempted to rectify this in 1983 by passing the Orphan Drug Act, which subsidizes research and development for “orphan” medicines, defined as drugs that treat diseases affecting fewer than 200,000 people in the United States, or drugs whose U.S. sales aren’t expected to cover the cost of development. But vaccines aren’t covered by this law, and there is no comparable “orphan vaccine” act. This means that without the economic incentives of a large potential market, industry will step up to the plate only when the government offers contracts to make specific vaccines.

Mission Vaccine

The Institute of Medicine’s Shine thinks there is a reasonable way out of this bind. His idea is based on a plan he and others introduced nine years ago. In 1993, the Institute of Medicine issued a report that spelled out how the United States could best support a broad effort to increase the number of children receiving basic immunization. The report advocated creating a National Vaccine Authority that would “advance the development, production and procurement of new and improved vaccines of limited commercial potential but of global public-health need.” Despite making a big media splash for a time, the proposal never made much headway.

Since September 11, the Institute of Medicine has aggressively shopped the idea around once again. The new version calls for a total overhaul of the vaccine enterprise, and a National Vaccine Authority that would meet both civilian and military needs. The authority would oversee a government-owned manufacturing plant that would not only make vaccines for rare diseases and bioweapons but also fill in the supply gaps for more common diseases. In addition to manufacturing vaccines, Shine says, the authority would sponsor research into new vaccine ideas that hold little commercial interest. Combining three vaccines into one product, for example, makes the vaccines easier to administer-but offers no obvious benefit to manufacturers, particularly if the three vaccines are made by different companies.

“It’s not about replacing the private sector,” says Shine. “It’s based on the notion that there is a spectrum of vaccine needs that cannot and will not be met by the private sector.” Shine still believes, however, that industry has a role to play. He envisions the proposed manufacturing system as a private-public partnership, not a huge government bureaucracy. During World War II, just such a partnership, led by a U.S. Department of Agriculture lab, had tremendous success in quickly producing massive amounts of penicillin for Allied troops and, by the war’s end, the public at large.

Shine’s conclusions are remarkably similar to those reached independently by a panel that reviewed the military’s own vaccine acquisition program. The military’s reliance on a network of contracts with private manufacturers “is insufficient and will fail,” the panel wrote in its December 2000 report. The panel instead recommended that the government build its own vaccine production plant and hire a contractor to operate it, calculating that a $3.2 billion research-and-development program could reliably produce eight vaccines. The U.S. surgeon general subsequently endorsed the idea and suggested that it could benefit civilians, too.

In fact, for several decades, the Department of Defense actually had such a facility-a vaccine plant in Swiftwater, PA. While it was owned and operated by the La Jolla, CA-based Salk Institute for Biological Studies, the plant was dedicated exclusively to manufacturing vaccines to defend army troops against possible biological weapons. “It was a well-organized laboratory with good staff completely at the discretion of the army,” recalls Alexis Shelokov, who headed the facility from 1981 to 1991. The Swiftwater-made vaccines, says Shelokov, cost the government “practically nothing per dose.” And Swiftwater’s managers steadily upgraded the facilities to keep pace with the state of the art.

In the mid-1990s, in a move that dumbfounded many observers, the Department of Defense decided to dump the Swiftwater plant in favor of its current contract-based vaccine program. But now the military’s skyrocketing demand for anthrax and smallpox vaccines is making the program’s shortcomings all the more apparent-and the recommendations of both the military review panel and the Institute of Medicine for a government-owned vaccine plant are receiving new attention.

The Institute of Medicine did not suggest which agency should ultimately run a national vaccine program but hinted that a collaboration between the Defense Department and Health and Human Services might work. Retired U.S. Army major general Philip Russell, a vaccine expert recently recruited by the Bush administration to work on biological defense, has a different idea altogether. “What it really needs,” Russell said, “is a NASA-like organization that is independent and meets the needs of both agencies and is not encumbered by either bureaucracy, but can just accomplish its mission.”

Bad Reaction

It’s a mission, however, that will never get off the ground if the pharmaceutical industry has anything to say about it. Big pharmaceutical companies have also expressed concern about vaccine supplies but claim that they are already working on a solution. Though the industry’s strategy has not been spelled out in detail, executives at Merck and other companies know what they don’t want: the investment of tax dollars in a big federal project. That, they argue, would be a disaster.

In the weeks just after the October anthrax mail attacks, when concern about shortages was greatest, the drug companies issued reassurances that they were taking the supply problem seriously. The Washington, DC, lobby that represents drug firms-the Pharmaceutical Research and Manufacturers of America-recruited Michael Friedman, a former acting commissioner of the FDA, to manage an emergency working group made up of representatives from a score of drug companies. Friedman argues it would be a mistake to build a taxpayer-owned facility. The assumption that government must take charge because vaccines are inherently unprofitable is inaccurate, he says, contending that it was not just a lack of profits but national complacency about infectious diseases that led to a dearth of vaccines. All that has changed, Friedman says: “Now that we are facing a real bioterrorist threatpublic and private resources will be mobilized.”

Pharmaceutical executives are wary of anything that smacks of increased federal involvement in their business. Adel Mahmoud, president of Merck Vaccines, the world’s second-largest maker of vaccines, says the National Vaccine Authority plan is far too ambitious and would surely fail to meet its goals. He thinks many people underestimate just how difficult it is to produce vaccines on a mass scale. Moreover, he points to an eight-year-old federal vaccine purchase program that helps states immunize children-a program he says is already doing economic harm. Federal officials bargain hard to get a low price in these massive purchase deals, Mahmoud says. They “twist my arm to the point where [they create] a price cap.” And price caps discourage production. “In an open-market society, let the field develop according to the forces that will shape it,” Mahmoud says. “The more you regulate it, the more you undermine it.”

Large firms like Merck are the main players in vaccine manufacturing today, but biotech companies are making innovations that will be important for the future. And among the smaller companies, attitudes about the proposed vaccine authority vary widely. Some executives are strongly opposed-like William Haseltine, CEO of Human Genome Sciences of Rockville, MD. Haseltine says, “You don’t ask DOD to build fighter planes; why should it make vaccines?” He believes the government should invest not in production facilities but in the basic science of infectious diseases and coax academics into long-term partnerships with industry. “We need to rebuild and provide funding; the new scientists will come,” Haseltine says.

Industry skeptics like Haseltine are easy to find, but Thomas Monath, vice president for research at Cambridge, MA-based Acambis, says, “I am one of the rare people in industry who thinks it would be a good idea” to build a federal vaccine production facility. Monath, who began his vaccine development career on the army’s staff at Ft. Detrick, continues to advise military and civilian officials.

Another supporter of the idea is Franklin Top, executive vice president of MedImmune, a biotechnology firm in Gaithersburg, MD. Top thinks contracting out to a smattering of private firms might cost more money-and take longer-than concentrating the work in a facility owned by the government and directed by outside experts. “Once the big contracts are in place, you’re stuck with them,” he says. “These behemoths have a life of their own.”

Deaf Ears

The arguments for and against a National Vaccine Authority have been refined during a decade of debate over the issue. In many ways, however, the shock of the terrorist attacks changed the climate surrounding the vaccine debate in Washington, as well as in industry. As General Russell said right before he was recruited into the Bush administration, “People began to behave more in a manner of How do we solve a national problem?’ rather than How do I defend my bureaucratic ass?’”

But so far, neither the administration nor Congress has shown much enthusiasm for a National Vaccine Authority. Congress did decide to pour hundreds of millions of biodefense research dollars into the National Institutes of Health this year. But it did not draw up a master plan for translating research into vaccines-and it did nothing to address the shortages of vaccines for childhood and other common diseases. For now, the government is relying on the standard approach: giving out research grants and contracts and hoping that industry will rise to the challenge.

During the November 27 Senate hearing on vaccine shortages, Rhode Island senator Reed was obviously disturbed by the landscape of troubles that the experts described. This, Reed said, is “an amazing situation.” It is-one that will require an amazing solution. Perhaps that solution lies in a National Vaccine Authority, and perhaps not; it’s hard to see how those feuding over the question will reach a truce. If they can’t, and if the status quo is preserved, no less than the health of the nation will be the casualty.

Vaccine Shortfalls
For a variety of reasons, supplies are low for a number of the vaccines most needed in the United States.

Vaccine	Symptoms	Causes
Diphtheria and tetanus	Nationwide shortage causing delays of routine booster shots for adolescents and adults	One of two manufacturers left market
Diphtheria, tetanus and pertussis	Nationwide shortage causing fourth and fifth boosters to be deferred	Two of four manufacturers left market; removal of chemical preservative forces change from multidose to single-dose vials, which cuts yield
Influenza	Only 50 million doses available in October 2001, as compared to 75 million in October 1999	One of four manufacturers left market; one manufacturer not in compliance with U.S. Food and Drug Administration’s manufacturing procedures
Measles, mumps, rubella	Delays of six weeks in delivery	One manufacturer, production problems
Pneumococcal	34 states face shortages, causing vaccination in children older than two to be deferred	Single manufacturer of new product
Varicella	Delays of six weeks in delivery	One manufacturer, production problems
Anthrax	U.S. Department of Defense suspends mandatory military vaccination; none routinely available for civilians	One manufacturer, FDA violations
Smallpox	U.S. stockpile only enough to vaccinate five percent of population	Original vaccine out of production; manufacturers of new vaccine yet to deliver product