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**Presentation to the National Vaccine Advisory Committee (NVAC)**

**Second Workshop on Strengthening the Supply of Vaccines**

**January 25, 2005**

**[Talking Points]{.underline}**

-   [State funding for vaccine purchase]{.underline}

    -   States contribute varying amounts of funding to the purchase of
        vaccine (ranging from tens of millions of dollars to no funds).
        While state budget cuts have been problematic for some states,
        the failure of Section 317 funding to keep pace with the cost of
        vaccines has been problematic for nearly all states.

    -   One universal state reported that they contribute 150% of what
        they get in 317 funds for the purchase of childhood vaccines.
        Because 317 funding has been nearly flat-funded over the past
        several years, while the cost of vaccine has risen, the state
        has had to contribute even more to sustain their universal
        program. When state contributions for adult vaccine purchase are
        included, the state funds equal 200% of the 317 funding.

    -   Another state contributes 50% of what they receive in 317 funds.
        Their state contributions have been very stable over the past 5
        years, but 317 funding has decreased. They are able to provide
        Prevnar for their 317-eligible children.

    -   A third state, that contributes more money in state funds than
        they receive in 317 funding, is still unable to purchase Prevnar
        for their 317-eligible children.

-   [Rising cost of vaccines]{.underline}

    -   See charts: "Percent Increase of the Cost of Full Series" and
        "Number of Children Who Could Potentially be Immunized", in the
        presentation given by Steve Cochi, Acting Director of the
        National Immunization Program (NIP), at the June 2004 NVAC
        meeting.

    -   Also see ASTHO graph: "Cost to Immunize 1 Child"

-   [Prevnar]{.underline}

    -   As of March 2004, 19 states were unable to provide Prevnar to
        underinsured children due to lack of 317 funds. This means that
        children with no insurance and children with full insurance
        could receive the PCV-7 vaccine in public health settings, but
        children with insurance plans that do not cover the cost of
        vaccines or have high deductibles or co-pays could not.

-   [Increasing profit margin on vaccines by \$10 per dose as incentive
    to manufacturers]{.underline}

    -   Vaccines are undervalued, and ASTHO agrees that more must be
        done to increase the societal value of vaccines. By the age of
        5, it is recommended that children receive 23-26 shots (assuming
        no combination vaccines aside from DTaP and MMR are
        administered). For vaccine purchased off the federal contract,
        the total cost of these immunizations is approximately \$470.
        Increasing the cost of vaccines by \$10 a dose would increase
        the total cost of immunizing a child by 50% or \$230-260 above
        the \$470.

    -   History shows that funding for vaccines does not increase along
        with cost (see ASTHO chart: "Percent Increase of the Cost of
        Full Series") and we are concerned that the same would be true
        if a policy to increase the cost of vaccines by \$10 per dose
        were enacted.

    -   If this policy is enacted and funding for vaccines is not
        increased, fewer vaccine will be purchased by states, resulting
        in fewer children receiving vaccines and no net gain to the
        manufacturer.

    -   Without additional federal funding, the burden to pay the
        potential \$230-260 cost increase per child served in the public
        sector would fall on the states. We fear that currently
        successful universal states would be unable to continue their
        universal programs and states already behind the curve on PCV-7
        vaccine would be unable to keep pace with other vaccines. More
        children would fall through the cracks.

-   [State perspective on incentives]{.underline}

    -   Financial incentives for manufacturers are an important element
        in the nation's vaccine financing system, and states generally
        support them when the burden does not fall on the states or the
        children they serve. But financial incentives alone will not fix
        the vaccine financing system or achieve a dependable supply of
        vaccines. To achieve this, national financing policies are
        needed that will support and sustain existing and new childhood
        and adult vaccines. This may include the expansion of VFC to
        cover underinsured children in all settings or better
        across-the-board insurance coverage of immunizations. (See ASTHO
        position statement on Vaccine Supply, and fact sheet:
        "Administration FY05 Initiative")

**[General Vaccine Purchase Background]{.underline}**

-   States receive funding for vaccine purchase from three sources: VFC,
    Section 317, and state funds.

-   State vaccine purchase policies range from "universal purchase",
    under which the state offers publicly purchased vaccine to all
    vaccine for all children in their medical homes (both public and
    private providers' offices), to "VFC only", under which
    publicly-purchased vaccine is only available in VFC-enrolled
    providers' offices to eligible children.

-   When a state purchases vaccine with Section 317 funding, the
    manufacturer bills NIP for the vaccine and the money is deducted
    from the state's 317 funds. When a state purchases vaccine off the
    federal contract with state funds, the manufacturer bills the state
    directly. Manufacturers report regularly to NIP on the amount of
    vaccine shipped to each state so that NIP can monitor the
    approximate amount of vaccine to which the states have access.