# Presentation: 016436

## Effectively Utilizing Vaccine Stockpiles

- Presentation to NVAC
- Phil Hosbach, Vice President, New Products and Immunization Policy
*sanofi pasteur* January 24, 2005

## Effectively Utilizing Vaccine Stockpiles

- Importance of Pediatric Stockpiles
- Overview of Pediatric Stockpiles
- History of Supply Interruptions
- Contracts/Funding
- Other Issues associated with Stockpiles
- Current Developments: Revenue Recognition Issues
- Options to Resolve Stockpile Challenges
- Stakeholder Report Card: Update from February 2002 NVAC Meeting

**Effectively Utilizing Vaccine Stockpiles**

## Importance of Pediatric Vaccine Stockpiles

*“**The national vaccine stockpile program appears to be the most advantageous short-term solution to prevent future shortage crises.”*
- 			NVAC 2003

**Importance of Pediatric Vaccine Stockpiles**

-  * *

## Importance of Pediatric Vaccine Stockpiles

- Minimize impact of supply interruptions
- Prepare for pandemic scenarios
- Goal is to maintain a 6-month supply of all routinely recommended pediatric vaccines funded by VFC

**Importance of Pediatric Vaccine Stockpiles**

-  * *

## Supply Interruptions: Routinely Recommended Pediatric Vaccines

| 
Vaccine | 
Approximate Start of Shortage | 
Approximate  End of Shortage |
| --- | --- | --- |
| Tetanus and diphtheria booster (Td) | November 2000 | Ended June 2002 |
| Diphtheria, tetanus, and acellular pertussis (DTaP) | March 2001 | Ended June 2002 |
| Pneumococcal conjugate vaccine (PCV) | September 2001 | Ended May 2003 |
| Measles, mumps, and rubella (MMR) | October 2001 | Ended July 2002 |
| Varicella | October 2001 | Ended July 2002 |

- Source: *Strengthening the Supply of Routinely Recommended Vaccines in the U.S., 2003 *

**Notes:**
hepb

## Stockpiles Important for Existing and Pipeline Products

**Stockpiles Important for Existing and Pipeline Products**

| Routine Immunization  | Special uses  | In Development  |
| --- | --- | --- |
| Diphtheria  | Hepatitis A  | Rotavirus  |
| Hepatitis B | Meningococcal disease | RSV |
| Hib  |  | HIV |
| Mumps  |  | Hepatitis C, E |
| Pertussis  |  | Herpes Simplex |
| Pneumococcal disease  |  | Chlamydia |
| Polio |  | H. Pylori |
| Rubella  |  | Ebola |
| Tetanus |  | Plague |
| Measles |  | Malaria |
| Varicella |  |  |
| Influenza (S. Reserve) |  |  |

## Brief Overview of Stockpile Contracts

- Historically, CDC took title and paid for vaccine when it was delivered into stockpile
- CDC solicits a bid and industry responds
- CDC purchases product
- Vaccines stored by manufacturer
- Product is segregated in warehouse and rotated to maintain freshness and reduce wastage
- Manufacturer responsible for vaccine rotated out of stockpile
- For more than 20 years, sanofi pasteur contracted with CDC to maintain certain pediatric vaccine stockpiles

## Congress Appropriated Resources

- CDC indicated that stockpiles have been used on 9 occasions since 1983 to alleviate vaccine supply interruptions
- FY 2003, CDC allocated $171 million to expand national stockpile program to include all routinely administered vaccines
- According to CDC, President requested $707 million for FY2003-2006 for 6 month stockpiles

- Source: *Strengthening the Supply of Routinely Recommended Vaccines in the U.S., 2003 *

**Congress Appropriated Resources**

## Current Developments: Revenue Recognition Issues 

- Between 1982 and 1999 revenue recognized when orders fulfilled
- In 1999, the Securities Exchange Commission issued Staff Accounting Bulletin #101 [SAB101]
- Intended to identify criteria for revenue recognition
- After reviewing SAB101, vaccine industry auditors concluded that CDC stockpile contract language falls into a “bill and hold” sale
- As a result, industry auditors interpreted that not all conditions necessary for revenue recognition (upon delivery into stockpile) have been met
- Industry may no longer recognize revenue for building and maintaining the stockpiles
- Revenue can only be recognized upon delivery to end-users
- Under this scenario, firms may never recognize revenue

## Current Developments: RevenueRecognition Issues

- Important to _match_ revenue from stockpile sales with significant expenses/resources incurred and to manufacture vaccines to be delivered and maintained in stockpiles
- To resolve stockpile issue, numerous discussions with key agencies have occurred during past two years with modest results

## How Can We Move Stockpile Issue Forward?  

- Profound implications exist for public health and emergency pandemic preparedness
- All stakeholders need to support prompt resolution of this matter to ensure that a robust stockpile program is established

## Recommended Options to Resolve Stockpile Issue 

- Policy Options:
- Option 1: SEC allows revenue recognition upon delivery of product into stockpiles as an acceptable method of accounting
- Option 2: Restructure current agreement format between manufacturers and CDC

## Other Issues To Be Resolved ToStrengthen Vaccine Stockpile Program

- Draw downs on stockpiles need to be done in manner that balances public health and does not undermine market distribution
- During stockpile contract period, newer/more expensive product rotated into stockpile at the original contract price

**Other Issues To Be Resolved To****Strengthen Vaccine Stockpile Program**

-  * *

## Stakeholder Report Card: Update from February 2002 NVAC

## Ten Proposals for a More Robust Vaccine Supply* Report Card: 

| Principle  | Progress | Limited Progress | No Progress |
| --- | --- | --- | --- |
| Manufacturers pledge to provide advance notice if voluntarily cease production of vaccine  |  |           |  |
| Empower CDC to confidentially share proprietary supply information |  |  |  |
| Expand stockpiles for use if supplies are disrupted |  |   |  |
| Use the expertise of vaccine manufacturers to help formulate sound immunization policy  |  |  |  |
| Government and advisory bodies agree to act with greater predictability |  |  |  |
| Increase FDA funding for vaccine testing research |  |  |  |
| Offer RFPs to industry for limited supply products |  |  |  |
| Strengthen the Vaccine Injury Compensation Program |  |  |  |
| Strengthen message of prevention as most desirable intervention |  |  |  |
| Heed warning signs of real and present danger – increasing lack of confidence in immunization |  |  |  |

***Ten Proposals for a More Robust Vaccine Supply****** ****Report Card: **

** Presented at February **National Vaccine Advisory Committee Meetin**g: February 11 – 12, 2002*