RTI Project Number

0208665.001

Influenza Vaccine: Who Buys It and Who Sells It

Issue Brief

October 2005

Prepared for

Amy Nevel, MPH

Senior Public Health Policy Analyst

Office of Science and Data Policy

Assistant Secretary for Planning and Evaluation

Department of Health and Human Services

Mail Stop 445F

200 Independence Ave., SW

Washington DC 20201

Prepared by

Christine Layton, PhD, MPH

Nathan West, MPA

RTI International\*

Health, Social, and Economics Research

Research Triangle Park, NC 27709

\*RTI International is a trade name of Research Triangle Institute.

Contents

Page

[1. Introduction 2](#introduction)

[2. Who Buys Influenza Vaccine? 2](#who-buys-influenza-vaccine)

[2.1 Wholesalers 2](#wholesalers)

[2.2 Immunization Providers 2](#immunization-providers)

[2.3 State and Federal Governments 2](#state-and-federal-governments)

[3. Where Does Influenza Vaccine Go?
2](#where-does-influenza-vaccine-go)

[3.1 Manufacturers 2](#manufacturers)

[3.2 Wholesalers 2](#wholesalers-1)

[4. Challenges and Solutions 2](#challenges-and-solutions)

[4.1 Challenges 2](#challenges)

[4.2 Solutions 2](#solutions)

[5. Summary 2](#summary)

[6. Conclusion 2](#conclusion)

[7. References 2](#references)

List of Figures

Number Page

[1. Schematic of Influenza Vaccine Distribution Pathways
2](#__RefHeading___Toc118275292)

[2. Site of Vaccination of Persons 65 Years of Age and Older
2](#__RefHeading___Toc118275293)

This issue brief is one of five produced for the Assistant Secretary for
Planning and Evaluation (ASPE) by RTI International. The contents of
these briefs is based on research involving a review of literature
including peer-reviewed journals, media reports, and other nonreferenced
sources (including those identified using the World Wide Web search
engine Google) as well as confidential interviews with 30 key informants
representing influenza vaccine manufacturers, wholesalers, community
immunizers, state and local public health officials, and other experts.
The other briefs in the series are

-   *Influenza Vaccine Economics*

-   *Influenza Vaccine Manufacturing*

-   *Influenza Vaccine Demand: The Chicken and the Egg*

-   *Influenza Vaccine Overview: Summary and Assessment.*

This issue brief was written by Christine Layton, PhD, MPH and Nathan
West, MPA.

# Influenza Vaccine: Who Buys it and Who Sells It

# Issue Brief

## 1. Introduction

The process by which influenza vaccine is purchased and distributed is
highly complex and unlike that of other vaccines, which lack
seasonality. Influenza vaccine purchase and distribution involves
numerous entities and different channels, many of which are little
understood outside the vaccine industry. This issue brief summarizes the
process and provides a more in-depth understanding of the challenges and
potential solutions for facilitating an influenza vaccine purchase and
distribution system whose goal is to protect the public's health.

Key issues of influenza vaccine purchase and distribution include

-   multiple means of purchase. Influenza vaccine is purchased by
    numerous entities including providers and distributors---including
    the federal and state governments.

-   multiple means of distribution. Wholesalers include medical-surgical
    distributors, pharmaceutical distributors, and redistributors.

-   vulnerabilities inherent in the current supply chain. Many
    wholesalers are so concerned about the problems created by an
    unreliable influenza vaccine supply that they question their
    continued role in influenza vaccine distribution.

-   the link between sellers, buyers, demand, and supply. Influenza
    vaccine purchase, distribution, demand, and supply are all
    interrelated and associated with financial risks that are unique to
    influenza vaccine.

## 2. Who Buys Influenza Vaccine?

Influenza vaccine is purchased by various entities that can be
categorized in a number of ways. Figure 1 depicts the complexity and
varying levels of interconnectedness among vaccine manufacturers,
sellers (wholesalers), buyers, and immunization providers. Some of these
entities overlap in that they may serve a dual role. For instance,
immunization providers may buy vaccines directly from manufacturers, so
they are both purchasers and immunization providers. For the purposes of
this issue brief, purchasers fall into three broad categories: (1)
wholesalers, (2) immunization providers, and (3) companies/agencies,
including state and federal governments, that purchase large quantities
and may redistribute vaccine to providers.

[]{#__RefHeading___Toc118275292 .anchor}Figure 1. Schematic of Influenza
Vaccine Distribution Pathways

![](media/image1.wmf){width="6.3in" height="3.1958333333333333in"}

DoD = U.S. Department of Defense; ERs = emergency rooms; LHDs = local
health departments;\
MMCAP = Minnesota Multi-State Contracting Alliance for Pharmacy; VA =
U.S. Department of Veterans Affairs; VNAs = Visiting Nurse Associations

### 2.1 Wholesalers

According to the Health Industry Distributors Association (2005), the
2005--2006 influenza season has 26 wholesalers selling influenza
vaccine. Although a few wholesalers specialize, most offer a broad array
of products. Wholesalers include medical-surgical (med-surg) and
pharmaceutical distributors, as well as redistributors. Med-surg
distributors are organizations that provide everything from "bandages to
wheelchairs" to health care providers. They generally have sales
representatives that develop relationships with physician offices,
clinics, and larger health care facilities and sell all the supplies a
health care provider needs. Overall, med-surg distributors generally do
not offer pharmaceuticals, but some elect to offer influenza vaccine as
a convenience to their customers.

Pharmaceutical distributors generally sell influenza vaccine to
pharmacies. These pharmacies include chain pharmacies (including those
located in large retail stores), independent pharmacies, and those
located in hospitals and clinics. Because physicians and other health
care providers cannot directly dispense drugs, pharmaceutical
distributors do not generally provide them with influenza vaccine.[^1]

In addition to wholesalers, redistributors buy influenza vaccine from
med-surg or pharmaceutical distributors and then sell it to others in
the supply chain (including other wholesalers or redistributors). The
number of redistributors is unknown. By definition, any entity
(organization or individual) that purchases vaccine from one source and
sells it to another is a redistributor. As such, the definition of what
constitutes a redistributor is not straightforward. Often,
redistributors are portrayed in a negative light. For example, past
claims of "price gouging" in times of vaccine shortage usually have been
attributed to redistributors. Meanwhile, some redistributors are merely
reallocating vaccine from areas where supply is abundant to areas in
need.

### 2.2 Immunization Providers

Immunization providers include a broad array of entities that directly
or indirectly assure the administration of influenza vaccine to
individuals. In general, providers may buy influenza vaccine directly
from vaccine manufacturers or distributors (or both). Providers include
traditional (physicians' offices and clinics) and nontraditional
(community) immunizers. Here, we focus on four types of providers that
buy influenza vaccine directly from the manufacturer: (1) private health
care providers, (2) community immunizers (3) large purchasers, and (4)
health departments.

#### 2.2.1 Private Health Care Providers

Private health care providers include physicians in private practice as
well as those in small clinics. Depending on which vaccine they buy,
private providers may buy vaccine directly from a manufacturer or a
wholesaler. One manufacturer of inactivated vaccine sells nearly all of
its vaccine directly to immunization providers. Other manufacturers sell
their influenza vaccines to wholesalers who, in turn, sell vaccine to
providers and purchasers.

#### 2.2.2 Community Immunizers

Community immunizers include all of those within the community that
administer immunizations outside the traditional doctor's office or
other clinical setting. Community immunizers include so-called "mass
immunizers," local Visiting Nurse Associations (VNAs), and local health
departments (LHDs).[^2] In general, community immunizers can be
characterized as organizations that have contracts with other
organizations, most notably retailers and large employers, to provide
on-site immunization services. Community immunizers may be for-profit or
not-for-profit organizations. In general, mass immunizers are for-profit
organizations, whereas VNAs are not-for-profit. Some community
immunizers' clinics provide only influenza vaccines; however, many also
offer pneumococcal vaccine. Moreover, some mass immunizers provide other
wellness services such as hypertension or diabetes screenings.

The Centers for Medicare & Medicaid Services (CMS) relies heavily on
community immunizers to reach the elderly Medicare population. Many
community immunizers receive reimbursement through CMS for immunizing
Medicare beneficiaries so long as they accept Medicare assignment
(Centers for Medicare & Medicaid Services \[CMS\], 2005). There is no
reliable estimate regarding how many community immunizers are providing
services in the United States. Mass immunizers include large, for-profit
firms as well as some not-for-profit organizations such as the VNAs,
which are focused primarily on providing in-home nursing care and are
among the best established community immunizers (CMS, 2002).

Delivering immunization services in nontraditional settings (e.g.,
retail stores and workplaces) is becoming more common. Figure 2 shows
that although vaccines are predominately administered in traditional
medical settings (e.g., private doctor's offices, hospitals, and
clinics) the proportion of those 65 years of age and older receiving
influenza vaccine in nontraditional settings is rising. In 2003, almost
three-quarters of influenza vaccines were administered in traditional
medical settings. A smaller proportion of vaccines, about 22 percent,
were administered in nonmedical settings. Only seven percent of vaccines
were administered in a health department. Although these proportions
remained steady between 1999 and 2002, the proportion of vaccines
administered in nonmedical settings increased for 2003. While a formal
analysis has not explained the shift toward nontraditional providers,
our research suggests this is likely due to a number of factors
including private physicians' growing reluctance to offer influenza
vaccine due to economic and administrative burdens. Moreover, as mass
immunizers increase their efforts to offer their services in the
community, the public is likely to take advantage of the convenience.

Large purchasers are entities that purchase in sufficient volume to
potentially obtain a discount. Health departments, including both state
and local health departments, may sponsor their own immunization clinics
(thus serving as community immunizers) as well as redistribute vaccine
to local providers.

[]{#__RefHeading___Toc118275293 .anchor}Figure 2. Site of Vaccination of
Persons 65 Years of Age and Older

![](media/image2.wmf){width="6.497916666666667in"
height="4.097222222222222in"}

Source: Compiled from Behavioral Risk Factor Surveillance System survey
data (Centers for Disease Control and Prevention \[CDC\], 1999, 2002,
2003).

### 2.3 State and Federal Governments

Numerous federal and state agencies and programs purchase vaccines
directly. The Vaccines for Children Program (VFC), a federal entitlement
program administered by the Centers for Disease Control and Prevention
(CDC), buys Advisory Committee on Immunization Practice
(ACIP)[^3]-recommended childhood vaccines for eligible children. The
current ACIP recommendation is for children 6 to 23 months of age to
receive the influenza vaccine. Only about seven percent of influenza
vaccine is purchased through VFC. The U.S. Department of Verterans
Affairs (VA) and U.S. Department of Defense (DoD) are additional direct
purchasers of influenza vaccine. The DoD purchases influenza vaccine to
vaccinate military personnel and some civilian employees and
contractors. As a primary health care provider, DoD also administers
vaccines as necessary to its retirees and current personnel and their
families. The VA administers vaccines to U.S. veterans who seek care in
its facilities. Federal Occupational Health (FOH) is a service unit
within the U.S. Department of Health and Human Services' (HHS) Program
Support Center. FOH offers influenza vaccine to federal employees, and
vaccines are generally administered in FOH Health Centers throughout the
country (FOH, n.d.). FOH purchases influenza vaccine through the HHS
Supply Service Center, which serves health care facilities of the
various departments of the federal government as a source of
pharmaceutical, medical, and dental supplies (D'Angelo, n.d.; Program
Support Center, 2003).

Another large government purchaser of influenza vaccine is a purchasing
alliance known as the Minnesota Multi-State Contracting Alliance for
Pharmacy (MMCAP). This is a voluntary group-purchasing organization
operated by the State of Minnesota that serves government-operated
health care facilities in 42 states and the City of Chicago. The
purchasing group contracts with over 150 pharmaceutical manufacturers
and also with wholesalers (to support the pharmaceutical contracts) for
goods and services such as hospital supplies, drug testing, returned
goods processing, influenza vaccine, and vials and containers. MMCAP's
niche is to provide, through volume contracting and careful contract
management, the best value in pharmaceuticals and related products to
its members---eligible governmental health care facilities (Minnesota
Multi-State Contracting Alliance for Pharmacy \[MMCAP\], 2005).

## 3. Where Does Influenza Vaccine Go?

### 3.1 Manufacturers

Due to a number of factors described more thoroughly in the companion
brief *Influenza Vaccine Overview: Summary and Assessment*, a limited
number of manufacturers produced vaccine for the 2004--2005 influenza
season. Three manufacturers were licensed in the United States: Sanofi
Pasteur,[^4] Chiron, and MedImmune (Knight, 2005). Although Chiron has
been a major producer of the influenza vaccine in recent years, only
Sanofi Pasteur was able to sell inactivated influenza vaccine during the
2004--2005 influenza season because Chiron's vaccine plant in Liverpool,
England, was shut down late in the production process by U.K. regulators
due to contamination issues. This event complicated the purchasing and
distribution process of influenza vaccine for myriad reasons.

Each vaccine manufacturer has its own method for distributing vaccines
to purchasers and health care providers. Among inactivated vaccine
manufacturers, Sanofi Pasteur sells the large majority of its influenza
vaccine directly to purchasers and health care providers. The one
wholesaler with whom they work is contractually obligated to carry no
other manufacturers' product. On the other hand, Chiron relies
exclusively on wholesalers to sell its vaccines to health care
providers. GlaxoSmithKline (GSK), who was recently approved by the FDA
to sell influenza vaccine during the 2005--2006 influenza season, will
rely on its preexisting distribution chain, which includes wholesalers.
MedImmune's vaccine must remain frozen until administration.[^5] Because
of the complexities associated with assuring the "cold chain" from
manufacturer to health care provider, MedImmune distributes most of its
vaccine directly.

### 3.2 Wholesalers

In addition to all of the other vagaries of the influenza vaccine
purchase and distribution process is the fact that the supply chain
linking the point of vaccine manufacture to the person who actually
administers vaccine varies by manufacturer. As a result, the route taken
by a given brand of influenza vaccine to the person vaccinated differs
depending on which company made the vaccine. Manufacturers consider a
number of factors when deciding whether to sell their product directly
to health care providers or via wholesalers.

> *There's an issue of customer satisfaction. We need to assure that the
> end user has the products when they need them ... There's a
> cost-effectiveness piece ... \[influenza vaccine\] is a low cost
> product. We have to keep a keen eye on the costs associated with
> distribution*.

For some products there is a further consideration: "There's an overall
quality issue with a cold chain. That takes a little bit more control in
the distribution in the storage and packing end." In addition, "\[the
distribution pathway is\] decided by history---you have channels already
set up." The historical reasoning behind using wholesalers can also be
related to corporate mergers. When one vaccine manufacturer acquired a
company that included a wholesale distributor, this wholesaler became
the distributor for its product.

Distributing vaccines directly has advantages and disadvantages compared
to using wholesalers. One manufacturer explained that it wants to assure
that, in times of vaccine shortage, it is able to assure that its
vaccine is distributed to those who are most likely to follow ACIP
recommendations.

> *We like to make sure that when we utilize distributors, first of all
> that they're solid partners---that they have a good track record, are
> very ethical organizations, and we know that they're going to be
> following the ACIP recommendations, but ... a track record of
> experience and the ability to partner effectively with the distributor
> are the principal criteria. We work with a few distributors. And
> contrary to popular belief, we have contracts with 12 or 14 community
> immunization providers. When we see that we're pretty much the largest
> game or the only game in town, our principal philosophy is to ensure
> that we're getting the vaccine into the hands of the people that get
> it to the priority groups.*[^6]

This response illustrates a key point regarding the process by which
influenza vaccines are distributed: once the vaccine is in the supply
chain, it is extremely difficult to know where it is going. This is
relevant because in times of vaccine shortage or delay---whether
nationally or in specific regions---the ability to redistribute vaccine
relies on knowing where vaccine is located.

During the 2004--2005 influenza season, when Chiron's production was
shut down and none of its product was able to be distributed, the United
States was faced with a huge challenge to identify available
undistributed vaccine from other manufacturers and assure that it was
diverted to those in greatest need. This task was accomplished by
unprecedented cooperation from Sanofi Pasteur, whose product was the
only one approved for use in all age groups.[^7] Sanofi Pasteur held the
vaccine that had not yet been released for shipment prior to October 5,
2005, (when it was known that Chiron's vaccine would be unavailable that
season) and worked with CDC and other partners to assure that the
limited amount of vaccine would target those with at highest risk for
influenza complications.

Our research suggests that one factor (among others) that contributed to
the successful response to the crisis in 2004--2005 was that Sanofi
Pasteur knew its customer base. Because the majority of those who
purchased Sanofi Pasteur influenza vaccine were providers or purchasers
who could identify those who had ordered the vaccine, Sanofi Pasteur and
CDC and its partners had an easier challenge than if the manufacturer
had worked exclusively with wholesalers, who may or may not have been
able to identify the end users.

> *One of the problems ... when we have a shortage is figuring out
> who\'s going to use how much vaccine and how to distribute it. ... if
> you had some sort of a government program, you \[could\] begin to
> track where most doses are used.*

Some vaccine wholesalers also distribute medical and surgical supplies;
(i.e., med-surg companies), whereas others distribute pharmaceutical
products, or both. This overlap makes it more difficult to identify the
exact number of vaccine distributors in the United States because these
organizations are not mutually exclusive. The national organizations
that represent these wholesalers acknowledge that there is some overlap
between their members. Some wholesalers specialize in serving specific
types of customers. For example, some wholesalers specialize in serving
hospitals, whereas others specialize in serving private physicians.
Among those who specialize in serving physicians, some may target
particular medical specialties (e.g., oncology practices). As such, it
is possible for some wholesalers to make an "educated guess" as to
whether or not a customer may be immunizing those at high risk for
influenza-related complications (e.g., one may assume that a
pulmonologist's patients are all at high risk for influenza-associated
complications.) However, as many wholesalers resell to other
wholesalers, the ability to locate influenza vaccine once it is within
the wholesale supply chain is limited.

Purchasers and providers generally make decisions on how to buy their
influenza vaccine based not on who is the manufacturer, but on who is
their sales representative for supplies in general. As one key informant
explained,

> *It's not like they understand who bought what from whom. They know
> their reps \[sales people\]. They trust their reps. Their reps are
> people they've built relationships with. It's not like they sit there
> and say, 'This person's with this company.' They build personal
> relationships with these people.*

## 4. Challenges and Solutions

### 4.1 Challenges

The primary challenge to the supply chain is how to balance the
potential financial liability of unused (and thus unpaid for) vaccine
with the desire to provide influenza vaccine to those who need it.
Influenza vaccine is unlike other vaccines (or health care products) in
that (1) it has an extremely short sales period (traditionally October
through December for the current influenza season) and (2) it cannot be
returned once purchased. Another great challenge to the supply chain is
the uncertainty of demand from one influenza season to another. Although
demand has grown in response to public policies, it still fluctuates
from year to year, depending on many factors that are difficult to
predict and almost impossible to control. Vaccine manufacturers cannot
predict when outbreaks will occur in an influenza season, or how severe
these outbreaks will be. These challenges put the entire system at
financial risk since vaccine production is very expensive and seasonal
demand is unpredictable.

From the wholesalers' perspective, they carry the largest risk in the
vaccine supply system. This is particularly true for distributors who
prepurchase vaccines from manufacturers before the actual demand of the
vaccine is known. This problem has led some wholesalers to discuss no
longer selling influenza vaccine at all.

The greatest challenge to the influenza distribution process is the
ability to track influenza vaccine through the supply chain. At the
present time, the only means to track influenza vaccine once it has left
the manufacturer is by using information regarding who has prebooked
vaccine (i.e., client lists). Prebooking is used by purchasers and
providers to, in essence, "reserve" influenza vaccine months before the
influenza season. Prebooking, which is unique to the influenza vaccine
market, generally occurs the spring before a given influenza season.
Because influenza vaccine is sellable for such a short period,
manufacturers rely on prebooking to calculate how much vaccine to make
in a given year. In turn, wholesalers also rely on their own prebooking
numbers to predict how much to order from manufacturers.

Policies concerning prebooking have varied from season to season. For
example, CDC and ACIP adopted a two-tiered vaccine prebooking plan for
the 2005--2006 influenza season (CDC, 2005). This prebooking plan is
intended to prevent the vaccine supply problems encountered during the
past influenza season. CDC is encouraging health care professionals and
vaccine manufacturers and distributors to submit prebooking orders for
inactivated influenza vaccine in two parts: (1) doses needed based on
anticipated demand by persons in priority groups and (2) doses needed
based on anticipated total demand. The new policy encourages
distribution of vaccine in partial shipments, starting with doses
allocated for priority patients. However, one should keep in mind that
wholesalers are not in a position to know who will be adhering to ACIP
recommendations, "\[wholesalers\] can't police that in terms of who's
high risk. We as a distributor can't make that decision."

The information collected in the prebooking process is essentially
client lists. Because client lists are proprietary, manufacturers are
under no obligation to share this information. As such, in times of
shortage manufacturers may elect to sell their influenza vaccine to
whomever they choose. This past season showed a good example of
manufacturers coming forth with their client lists, but this is a
voluntary process that is vulnerable to the whims of the vaccine
manufacturers.

### 4.2 Solutions

#### 4.2.1 Improve Vaccine Supply

Distributors with whom we spoke expressed the belief that a first step
to improve supply is to have more manufacturers willing to produce an
influenza vaccine. As one wholesaler explained, "There needs to be more
manufacturers involved in the process, because it gives people more of a
sense of security that there will be vaccine actually available, more
standardization in the sense that there's a supply that will go around."

Additional manufacturers would give providers more choice and would
likely increase confidence among the public that vaccine is available
when needed. Having more than two manufacturers will give providers and
ultimately the public more of a sense of security that vaccines will be
available as the need arises. Although additional vaccine supply could
theoretically be achieved by existing manufacturers increasing their
current capacity, such an approach would not resolve the threat to
vaccine supply from production problems. When a problem with production
occurs, it generally affects all of a manufacturers' supply.

#### 4.2.2 Improve Uniformity of Distribution and Vaccine Tracking 

An additional solution to the challenges faced by the influenza vaccine
supply chain is improving its uniformity and standardization. Presently,
different influenza vaccines are distributed to purchasers and providers
in a variety of means. Although this approach has been acceptable, it
does not offer a means to track influenza vaccine in the supply chain.
When influenza vaccine is limited or delayed due to vaccine shortage or
production problems, those at highest risk of influenza-related
complications need to have priority in receiving the vaccine. However,
the current approach has an extremely limited capacity to identify or
otherwise track the location of influenza vaccine in the supply chain
and where it is directed. Reallocation of influenza vaccine is extremely
difficult---if not impossible---if its location and intended recipient
cannot be identified easily.

The overarching challenge of influenza vaccine distribution is the means
to track the vaccine once it is in the supply chain. In times of vaccine
shortage or maldistribution, it is necessary to know where vaccine is in
the supply chain in order to redirect it to priority groups. Key
informants agreed that---under ordinary circumstances---vaccine
distribution should remain in the private sector. However, nearly all
key informants believed that the federal government ought to play a
sizable role in time of vaccine shortage. The 2004--2005 influenza
shortage was an example of a situation in which CDC, Sanofi Pasteur (the
sole inactivated vaccine manufacturer), and other partners worked
together to assure that available influenza vaccine was redirected to
priority groups. Despite the ultimate success of their efforts, the
approach was not necessarily reproducible---nor does it appear that
those involved desire to adopt that approach again.

One readily available way to track influenza vaccine once it is in the
supply chain is for manufacturers and wholesalers to share their
prebooking information with public health officials, so the information
is readily available in case of vaccine shortage or maldistribution.
While this is being done on a voluntary basis during the 2005--2006
influenza season, it would be helpful for public health officials to be
able to rely on these data being available, rather than hope that
manufacturers and distributors will provide this information on a
voluntary basis. Although this approach is not without its limitations,
it does let public health officials use information already collected to
redirect vaccine in times of vaccine shortage or maldistribution.

#### 4.2.3 Improve Infrastructure

Former director of CDC's National Immunization Program, Walter
Orenstein, and colleagues argue that the present vaccine delivery system
has been more successful in protecting children than adults. They
attribute this disparity in part to the fact that adult vaccines, such
as influenza or pneumococcal vaccine, while effective, are not as
effective as other vaccines used in children, and the vaccine delivery
system fails to reach adult target populations (Orenstein, Douglas,
Rodewald, & Hinman, 2005). For example, in 2002 although more than 90
percent of children 19 to 35 months of age received recommended
childhood vaccines (which did not include influenza vaccine), only 66
percent of people 65 years of age or older received an influenza vaccine
(CDC, 2003).[^8]

The 109th Congress has proposed legislation (S. 1527 and H.R. 3502) that
would establish a new adult vaccination program using VFC as the model.
The bill, known as the Vaccine Access and Supply Act, would authorize
Section 317A funding to purchase vaccines recommended for (1) uninsured
adults, (2) adults who are receiving care in certain public clinics and
have no insurance coverage for vaccination, (3) adults who are
incarcerated and have no insurance coverage for vaccination, and (4)
adults vaccinated by public health departments. The adult vaccine
program would be administered by states, similar to the VFC program
(Vaccine Access and Supply Act, 2005).

#### 4.2.4 Improve Support for Public Health in General

Wholesalers with whom we spoke thought that that the vaccine supply
could be improved through an enhanced public health education effort.
From one wholesaler's perspective, the public needs to understand that
the benefits of influenza immunization go far beyond protecting
themselves to benefiting the community at large. Universal immunization
benefits the public by reducing the transfer of influenza from one
individual to another. Those who receive influenza vaccine, in most
cases, would dramatically decrease their odds of developing influenza
and potentially infecting other individuals they encounter in their
lives. One manufacturer argues that "a universal recommendation that all
Americans receive annual influenza vaccine will drive demand ... which
in turn provides the impetus on the part of vaccine manufacturers to
increase their production" (Brown, 2004).

One debate currently ongoing among health care professionals, experts,
and researchers is whether or not to mandate influenza vaccinations for
health care workers. Despite recommendations, only 38 percent of health
care workers report having received an influenza immunization (Harper,
Fukuda, Uyeki, Cox, & Bridges, 2004). Health care workers may transmit
influenza to those for whom they care, whether or not they have
symptoms. Studies have shown that immunization of health care workers
can result in reduced mortality in their patients (Carman et al., 2000)
as well as reduced influenza infection and absenteeism among the health
care workers themselves (Wilde et al., 1999). Challenges and unanswered
questions remain as to how a mandate would be implemented and enforced,
but there is consensus that such a mandate would drastically increase
demand and inherently improve supply.

## 5. Summary

Wholesalers want policymakers to recognize three very important and
distinct issues regarding the purchase and distribution of influenza
vaccines:

-   the complexity of influenza vaccine demand, supply, and
    distribution;

-   the high level of financial risk for vaccine wholesalers; and

-   the need to better educate the public regarding the benefits of
    vaccination for themselves and for the greater public good.

First, policymakers need to understand that production and distribution
of influenza vaccine is unique and cannot be compared to any other type
of vaccine or pharmaceutical. The complexity of the system is borne out
of the immense unpredictability of demand for the vaccine; the
relatively long time required for production coupled with the short
season of use; and the public reaction to supply delays, shortages, or
surpluses. Wholesalers understand this complexity and recognize that
solutions that will improve vaccination supply and distribution cannot
be achieved solely by one entity of the system---whether manufacturers,
providers, or wholesalers. Wholesalers with whom we spoke discussed the
notion that influenza vaccine manufacturers need greater incentives to
develop new technologies to produce the vaccine more quickly and
efficiently. Furthermore, wholesalers reported the notion that the
influenza vaccine distribution system could benefit from a public that
is better educated regarding the importance of universal vaccination.

Second, wholesalers feel that they carry the greatest financial risk
among the various entities involved in the vaccine production and supply
chain. Wholesalers recognize that manufacturers carry a great financial
risk producing influenza vaccines in such an unpredictable market, and
this risk is transferred to the wholesalers once vaccine supplies are
prebooked and sold. Additional protections are needed to reduce the risk
that manufacturers, and particularly wholesalers, face in a marketplace
where profit margins are lower than for other products (making influenza
vaccine a less financially attractive product to produce or distribute).

Third, wholesalers see a need for the public to be better informed
regarding the importance of vaccination. A more informed public would
conceivably increase demand, which may in turn solve many of the vaccine
supply and distribution issues. Current prebooking requirements are
based on the supposition that the actual or potential supply of vaccine
is limited. Greater demand and therefore greater supply will alleviate
prebooking requirements and minimize shortages that make it necessary
for CDC to develop a distribution strategy unique to the influenza
vaccine.

## 6. Conclusion

The process by which influenza vaccine is purchased and distributed is
highly complex with many idiosyncrasies that are unique to influenza
vaccine. Such complexity creates challenges to the existing supply
chain---especially in times of vaccine supply delay, shortage, or
maldistribution. As the supply chains vary from one vaccine manufacturer
to the next, new manufacturers entering the U.S. market may increase the
number of different supply chains for influenza vaccine. However,
although additional manufacturers may be beneficial in terms of
increasing overall supply, additional supply chains may add more
complexity to an already complicated supply chain.

## 7. References

Brown, D. (2004, October 9). Fixing vaccine supply system: Task will not
be easy, say health and drug industry officials. *Washington Post,* p.
A05.

Carman, W.F., Elder, A.G., Wallace, L.A., McAulay, K., Walker, A.,
Murray, G.D., & Stott, D.J. (2000). Effects of influenza vaccination of
healthcare workers on mortality of elderly people in long-term care: A
randomized controlled trial. *Lancet, 355*, 93--97.

Centers for Disease Control and Prevention (CDC) (2003). Public health
and aging: Influenza vaccination coverage among adults aged ≥ 50 years
and pneumococcal vaccine coverage among adults aged ≥ 65 Years---United
States, 2002. *MMWR* 52, no. 41: 987--992.

Centers for Disease Control and Prevention (CDC) (2005). Influenza
prebooking and distribution strategies for the 2005-06 influenza season.
*MMWR, 54*(12), 307--308. Retrieved October 13, 2005, from
<http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5412a4.htm>

Centers for Disease Control and Prevention (CDC) (1999, 2002, 2003).
*Behavioral Risk Factor Surveillance System Survey Data*. Atlanta,
Georgia: U.S. Department of Health and Human Services.

Centers for Medicare & Medicaid Services (2002). *2002--03 Immunizers'
Q&A Guide to Medicare Coverage of Influenza and Pneumococcal
Vaccinations: Steps to Promoting Wellness: Adult Immunizations*.
Retrieved September 16, 2005, from
<http://www.doh.wa.gov/cfh/WSC/Model_Info/Delivery_System_Design/2i.pdf>

Centers for Medicare & Medicaid Services (2005). *The Guide to Medicare
Preventive Services for Physicians, Providers, Suppliers, and Other
Health Care Professionals.* Retrieved September 16, 2005,
<http://www.cms.hhs.gov/medlearn/psguid.pdf>

D'Angelo, L.M. (n.d.). *Request for exemption from 21 CFR 201.66*
\[Letter to the U.S. Food and Drug Administration\]. Retrieved October
13, 2005, from
<http://www.fda.gov/ohrms/dockets/dailys/03/Aug03/080103/98n-0337-app0044-01-vol9.pdf>

Federal Occupational Health (n.d.). *Take a shot at good health: Adults
need shots, too*. Retrieved October 13, 2005 from
<http://www.foh.dhhs.gov/Public/ProductFocus/Mar2005/immunizations.asp>

Harper, S.A., Fukuda, K., Uyeki, T.M., Cox, N.J., & Bridges, C.B.
(2004). Prevention and control of influenza: Recommendations of the
Advisory Committee on Immunization Practices (ACIP). *MMWR Recomm Rep
53*:1-40

Health Industry Distributors Association (2005, September 9). *Flu
vaccine distributors*. Retrieved October 13, 2005, from
<http://hida.org/document.asp?document_id=10082>

Knight, J. (2004, November 1). Got the Flu? Blame the Free Market.
*Washington Post*, p. E01

Minnesota Multi-state Contracting Alliance for Pharmacy (MMCAP) (2005).
*MMCAP Web site*. Retrieved September 16, 2005 from
<http://www.mmd.admin.state.mn.us/mmcap/background.htm>

Orenstein, W.A., Douglas, R.G., Rodewald, L.E., & Hinman, A.R. (2005).
Immunizations in the United States: Success, structure, and stress.
*Health Affairs (Millwood), 24*(3), 599--610.

Program Support Center (2003, July 9). *FDA licensed drug repackaging
services---Unit-of-us pharmaceutical prepacks*. Retrieved October 13,
2005, from <http://www.psc.gov/sas/ssc/fdalicense.html>

Vaccine Access and Supply Act (Introduced in House), H.R.3502. 109th
Cong., (2005). Retrieved October 13, 2005, from <http://thomas.loc.gov/>

Wilde, J.A., McMillan, J.A., Serwint, J., Butta, J., O'Riordan, M.A., &
Steinhoff, M.C. (1999). Effectiveness of influenza vaccine in health
care professionals: A randomized trial. *Journal of the American Medical
Association, 281*, 908--913.

[^1]: Vaccines are in a regulatory grey zone. Although vaccines are
    regulated as drugs, they cannot be administered without a syringe or
    other device (such as the one used with vaccines administered
    intranasally). Devices are regulated separately from drugs. This
    regulatory issue explains why device (med-surg) distributors may
    sell vaccine despite the fact that it is a drug.

[^2]: Although "local health departments" is a commonly understood term,
    it is important to recognize that as the public health
    infrastructure varies around the United States, other agencies
    provide essential public health services. In some areas, hospitals,
    VNAs, and other entities may perform the roles traditionally
    associated with LHDs.

[^3]: ACIP is a 15-member panel of experts on immunization from the
    fields of medicine, immunology, and public health. ACIP advises CDC
    and the U.S. Department of Health and Human Services and develops
    written recommendations for routine vaccine administration.

[^4]: In 2004, Sanofi merged with Aventis Pasteur to create the Sanofi
    Aventis Group. The vaccine division of the Sanofi Aventis Group
    changed its name to Sanofi Pasteur.

[^5]: A second-generation live attenuated influenza vaccine (LAIV)
    product that will not require freezing is anticipated for the
    2007--2008 season. How this product will be distributed is not
    clear.

[^6]: Priority groups include persons 65 years of age or older, persons
    of any age with chronic diseases, pregnant women, children 6 to 23
    months of age, health care personnel, and household contacts of
    previously listed groups. Target (or targeted) groups include
    priority groups plus healthy adults 50 to 64 years of age.

[^7]: MedImmune also cooperated to identify available vaccine, but as
    its product was approved for use only among those 5 to 49 years of
    age without certain health conditions; in many instances, it could
    not be substituted for Chiron's product.

[^8]: One distinction of note between influenza vaccine and pneumococcal
    vaccine is that influenza vaccine must be administered annually,
    whereas pneumococcal vaccine is necessary only every 10 years.