# Presentation: 549169

## CDC VACCINE STOCKPILE FISCAL AND MANAGEMENT ISSUES

- A Presentation At The National Vaccine Advisory Committee Meeting
- February 4, 2003

**Kimberly S. Lane**
**Associate Director for Management**
**   ****and Operations**
**National Immunization Program**

## Overview

**Legal Authority**
**Budget**
**Purchase Timetable**
**Accountability**

**Notes:**
During the next 10 minutes I plan on updating you on the CDC’s vaccine stockpile legal authority, current and future budget estimates, and review with you a vaccine purchase timetable developed to support the stockpile program last fall.  Finally, I will bring to your attention some key fiscal and contract management accountability issues CDC will be addressing during the next year.

## Legal Authority

**OBRA 1993 legislation authorized DHHS to procure an adequate supply of vaccine.**
**GAO recommendation - “specifically address whether vaccines stockpiled under this program may be made available to children not otherwise eligible”.**
**HHS’s Office of General Counsel reviewed this issue and confirmed the Secretary’s authority under current law to ****establish**** a VFC stockpile of vaccines equal to the amount needed for the U.S. pediatric population for 6 months.**

**Notes:**
OBRA 1993 legislation authorized the Department of Health and Human Services and/or its designee to procure an adequate supply of vaccine.
As you may know, the General Accounting Office reviewed the problems leading up to the recent vaccine shortages, and recommended in its report, Childhood Vaccines: Ensuring an Adequate Supply Poses Continuing Challenges, that Congress amend VFC to "specifically address whether vaccines stockpiled under this program may be made available to children not otherwise eligible"
In December 2002, HHS's Office of General Counsel reviewed this issue, and confirmed the Secretary's authority under current law to build a VFC stockpile of vaccines equal to the amount needed for the U.S. pediatric population for 6 months. 

## VFC Stockpile Fiscal Update

**FY 2001 and 2002 -  $29M**
**FY 2004 President’s Budget - $124M**
**FY 2003 President’s Budget (approved January 2002) - $29M**
**December 2002 Budget Negotiations with HHS and OMB secured additional FY 2003 funding - $+143M for a total of $172M**
**January 2003 OMB approved a 4-year stockpile purchase plan in the amount of $707M**

**Notes:**
In FY 2001 and  2002, the VFC vaccine stockpile program was funded in the amount of $29 million.
The VFC FY 2004 President’s budget request includes $124 million for stockpile vaccine purchase.
When the FY 2003 President’s budget request was approved January 2002, only $29 million was approved for the vaccine stockpile.
However, due to many budget negotiations, NIP was able to secure adequate funding in 2003 for expansion of the stockpile.  NIP provided a timetable, based on the estimated quantities manufacturers can produce for the stockpile, to DHHS in September, 2002.
In January 2003, OMB approved CDC’s FY 2003 revised funding request for stockpile, along with requests in 2004 – 2006.

## VFC Stockpile Fiscal Update

**Estimated 4-year stockpile purchase plan***
**FY 2003 - $172M**
**FY 2004 - $124M**
**FY 2005 - $206M**
**FY 2006 - $206M**
***Assumption: 6 month national supply of recommended childhood vaccine based on estimated quantities of vaccine that the manufacturers can produce by 2006. Manufacturer estimates provided in September 2002.**

**Notes:**
A quarterly allocation spending plan has been submitted to HHS and OMB for the remainder of FY 2003. 
The President’ budget request includes $707 million between FY 2003 and FY 2006 to expand CDC’s stockpile.  $172 Million will be needed in 2003, $124 million will be needed in 2004, $206 million will be needed in 2005 and $206 million will be needed in 2006.

This is a current estimate based on what NIP has determined to be a six month national supply of recommended childhood vaccines and based on the estimated quantities of vaccine that manufacturers can produce by 2006. These estimates were developed in August/September 2002 so we will have to readdress this issue again and update accordingly. 

## VFC Stockpile Fiscal Update

**Contract award for the development of stockpile strategic plan in February 2003. **
**Strategic Plan may alter current stockpile cost estimates**
**New vaccines recommended by ACIP may alter current stockpile cost estimates**

**Notes:**
CDC expects to award a contract for the development of a stockpile strategic plan later this month.  It is highly likely that the strategic plan will alter current stockpile cost estimates.
Also, future vaccines recommended by the ACIP will need to be stockpiled.  The stockpile program will become more challenging as new combination vaccines are developed.  For example, the new Pediarix vaccine may impact the single antigen vaccines such as Hib and IPV.

## CDC’s Estimated Purchase Timetable (Sept. 2002)

| Vaccine | Purchase
Price | Number
of Doses | Purchase
Amount | Obligation
Date | Outlay
Date |
| --- | --- | --- | --- | --- | --- |
| Varicella | $40.69 | 1,300,000
428,020 | $52.90 M
$17.42 M | 01/2003
01/2004 | 09/2003
09/2004 |
| Hib | $8.32
$6.68 | 500,000
7,500,000 | $4.16 M
$50.10 M | 01/2003
unknown | 09/2003
unknown |
| Hep A | $11.15 | 3,000,000
1,000,000
 | $33.45 M
$11.15 M | 01/2003
01/2004 | 06/2003
09/2004 |
| Hep B | $8.25
9.10 | 3,000,000
3,000,000
 | $24.75 M
$27.30 M | 01/2003
01/2003 | 09/2003
11/2003 |
| PCV | $45.24 | 8,000,000 | $361.92 M | Unknown | Unknown |
| DTaP | $9.50 | 10,000,000 | $95.0 M | 01/2004 | 09/2005 |
| OPV | $7.25 | 4,000,000 | $29.0 M | 01/2003 | 09/2003 |

**Notes:**
Last August, NIP initiated discussions with the manufacturers to determine their projections of product availability for establishment/expansion of vaccine stockpiles.

This table was presented to HHS and OMB during budget negotiations this past fall.  

Now that additional funds have been secured, this timeline will be updated based on the recommendations of an internal CDC stockpile technical workgroup and additional data from the vaccine manufacturers.  

## Accountability

**Stockpile purchase and storage/rotation contract modifications based on:**
**New CDC Strategic Plan**
**Office of General Counsel Expertise**
**Financial Management/Accounting Expertise**
**Stockpile Access**
**Manufacturer “borrowing”**
**Official withdrawals**
**317 and VFC orders authorized**
**Resale to manufacturer for private sector purchases**

**Notes:**
A $707 million dollar program requires increased accountability activities.  Our first priority after the Stockpile Strategic Plan is developed is to modify our existing and/or establish new stockpile contracts with the manufacturers.  The new contract specifications will be based on input from a variety of key stakeholders, including the Office of General Counsel and Financial Management and Accounting experts.
We believe access to the stockpile will include CDC and manufacturer agreed “borrowing” when supply is interrupted and CDC prefers to maintain existing levels.  The “borrowed” vaccine is used to fill the public and private sector pipeline and the manufacturer replenishes the borrowed stockpile based on a mutually agreed timeline.  When the stockpile quantity must decrease in size or terminate, we would propose an “official drawdown”.  317 and VFC vaccine orders may be placed against the stockpile. However, the CDC would have to sell stockpiled vaccines back to the manufacturer in order for the manufacturer to sell product to the private sector.  

## Accountability

**Financial Transactions**
**Automation via NIP’s new Vaccine Management Enterprise System**
**Transaction process included in new HHS Unified Financial Management System**
**Account transaction Standard Operating Procedures (SOPs) due to multiple funding sources (317,  VFC and manufacturer resale)  **

**Notes:**
Another critical area related to accountability is the financial transaction process.  The expansion of the stockpile program requires CDC to automate this program.  We currently do not have an electronic system which captures the necessary data such as, vaccine purchase dates, delivery dates, and stockpile quantities by fund source.  We have a contractor conducting a business case analysis of our existing vaccine management system so we feel pretty confident that this issue will be addressed in their report.

Secondly, the stockpile financial transactions will most likely be addressed in the HHS proposed Unified Financial Management System.  We will be working through our Financial Management Office on this issue during the next year.

An finally, standard operation procedures for all account transaction will be required.   Funds will be debited and credits in different accounts since there is more than one fund source involved with some of our stockpiles.  Furthermore, since the VFC funds are part of the Medicaid Trust Fund, transactions may have to occur with CMS.  

## Conclusions

**Expansion of the CDC stockpile is imminent**
**Strong support from HHS and OMB**
**Legal Authority exists under current law**
**4-year $707M estimated cost**
**Enhanced program accountability**