Background

Influenza is associated with an average of more than 200,000  hospitalizations and 36,000 deaths each year in the United States. Most  people who get the flu recover completely in 1 to 2 weeks, but some  develop serious and life-threatening medical complications, such as  pneumonia. People who are aged 65 and older, people of any age with  chronic medical conditions, children younger than 2 years, and pregnant  women are more likely to get severe complications from influenza than  other people.
For the 2004-2005 flu season, CDC initially recommended in May 2004 that  about 185 million Americans—about 85 million in high-risk groups and  over 100 million in other target groups—receive the vaccine, which is the  primary method for preventing influenza. Groups at high-risk for flu- related complications included people aged 65 years or older; residents of  nursing homes and other chronic-care facilities; people with chronic  conditions such as asthma and diabetes; children and adolescents aged   6 months to 18 years who are receiving long-term aspirin therapy;  pregnant women; and children aged 6 to 23 months. Other target groups  identified in the May 2004 recommendations included persons aged   50 to 64 years and people who can transmit influenza to those at high-risk,  such as health care workers, employees of nursing homes, chronic-care  facilities, and assisted living facilities, and household contacts of and those  who provide home care to high-risk individuals. Not everyone in these  high-risk and target groups, however, receives a vaccination each year. For  example, based on the 2002 National Health Interview Survey and other  sources, CDC estimates that only about 44 percent of individuals at high- risk and about 20 percent of individuals in the other target groups were  vaccinated.
It takes about 2 weeks after vaccination for antibodies to develop in the  body and provide protection against influenza virus infection. CDC  recommends October through November as the best time to get  vaccinated because the flu season often starts in late November to  December and peaks between late December and early March. However, if  influenza activity peaks late, vaccination in December or later can still be  beneficial.
Producing sufficient quantities of influenza vaccine is a complex process  that involves growing viruses in millions of fertilized chicken eggs. This  process, which requires several steps, generally takes at least 6 to   8 months from January through August each year, so vaccine  manufacturers must predict demand and decide on the number of doses to  produce well before the onset of the flu season. Each year’s vaccine is  made up of three different strains of influenza viruses, and, typically, each  year one or two of the strains is changed to better protect against the  strains that are likely to be circulating during the coming flu season. The  Food and Drug Administration (FDA) and its advisory committee decide  which strains to include based on CDC surveillance data, and FDA also  licenses and regulates the manufacturers that produce the vaccine for  distribution in the United States.
In a typical year, manufacturers make flu vaccine available before the  optimal fall season for administering flu vaccine. For the 2003-2004 flu  season, two manufacturers—one with production facilities in the United  States and one with production facilities in the United Kingdom— produced about 95 percent of the vaccine for the United States. A third  U.S. manufacturer produces a flu vaccine that is given by nasal spray and  is only approved for healthy persons aged 5 through 49 years. This nasal  spray vaccine is not recommended for individuals at high risk for flu- related complications. According to CDC, this manufacturer produced  about 4 million doses of the nasal spray vaccine for the 2003-2004 season.
Flu vaccine production and distribution are largely private-sector  responsibilities. Like other pharmaceutical products, flu vaccine is sold to  thousands of purchasers by manufacturers, numerous medical supply  distributors, and other resellers such as pharmacies. These purchasers  provide flu vaccinations at physicians’ offices, public health clinics,  nursing homes, and at nonmedical locations such as workplaces and  various retail outlets. Millions of individuals receive flu vaccinations  through mass immunization campaigns in these nonmedical settings,  where organizations such as visiting nurse agencies under contract  administer the vaccine. In a typical year, most influenza vaccine  distribution and administration are accomplished within the private  sector, with relatively small amounts of vaccine purchased and distributed  by CDC or by state and local health departments.
For the 2004-2005 season, CDC had estimated that about 100 million doses  of flu vaccine would be available for distribution through this network. On  August 26, 2004, one major manufacturer announced a small quantity of its  flu vaccine did not meet sterility specifications and that distribution of its  vaccine would be delayed until after further tests were completed. On  October 5, 2004, this manufacturer announced that the regulatory body in  the United Kingdom, the Medicines and Healthcare Products Regulatory  Agency (MHRA), had temporarily suspended the company’s license to  manufacture flu vaccine in its facility in Liverpool, England. The  manufacturer stated that this action prevented the company from  releasing any vaccine for the 2004-2005 flu season—effectively reducing  the anticipated U.S. supply by nearly half. This sudden disruption of the  supply set off the chain of events the nation has experienced in the past   6 weeks, and has focused national attention on the flu vaccine supply and  distribution system.

	Challenges Exist in Ensuring an Adequate and Timely Flu Vaccine Supply

Ensuring an adequate and timely supply of vaccine is a difficult task. It has  become even more difficult because there are few manufacturers. As we  are witnessing this year, problems at one or more manufacturers can  significantly upset the traditional fall delivery of influenza vaccine. These  problems, in turn, can create variability in who has ready access to the  vaccine.
Matching flu vaccine supply and demand is a challenge because the  available supply and demand for vaccine can vary from month to month  and year to year, as the following examples illustrate.
In 2000-2001, when a substantial proportion of flu vaccine was distributed  much later than usual due to manufacturing difficulties, temporary  shortages during the prime period for vaccinations were followed by  decreased demand as additional vaccine became available later in the  year. Despite efforts by CDC and others to encourage people to seek flu  vaccinations later in the season, providers still reported a drop in demand  in December. The light flu season in 2000-2001, which had relatively low  influenza mortality, probably also contributed to the lack of interest. As a  result of the waning demand that year, manufacturers and distributors  reported having more vaccine than they could sell. In addition, some  physicians’ offices, employee health clinics, and other organizations that  administered flu vaccinations reported having unused doses in December  and later.
For the 2002-2003 flu season, according to CDC officials, vaccine  manufacturers produced about 95 million doses of vaccine, of which about  83 million doses were used and about 12 million doses went unused.
For the 2003-2004 flu season, shortages of vaccine were attributed to an  earlier than expected and more severe flu season and to higher than  normal demand, likely resulting from media coverage of pediatric deaths  associated with influenza. According to CDC officials, this increased  demand occurred in a year in which manufacturers had produced about  the same number of doses used in the previous season—about 87 million  doses total—and that supply was not adequate to meet the demand.
If production problems delay or disrupt the availability of vaccine in a  given year, the timing for an individual provider to obtain flu vaccine may  depend on which manufacturer’s vaccine it ordered. This happened in the  2000-2001 season, and there are reports of similar problems this season  after one manufacturer that had previously stated it expected to supply   46 million to 48 million doses announced that it would not deliver any flu  vaccine to the U.S. market. Those who ordered from this manufacturer did  not receive their expected vaccine—a different situation than those who  ordered from the other manufacturer, which reported sending its vaccine  on schedule beginning in August and September. As a result, one provider  could have held vaccination clinics in early October that would be  available to anyone who wanted a flu vaccination, while another provider  may not yet have had any vaccine for its high-risk patients.
Shortages of flu vaccine can result in temporary spikes in the price of  vaccine. When vaccine supply is limited relative to public demand for flu  vaccinations, distributors and others who have supplies of the vaccine  have the ability—and the economic incentive—to sell their supplies to the  highest bidders rather than filling the lower priced orders they had already  received. When there was a delay causing a temporary shortage of vaccine  in 2000, those who purchased vaccine that fall—because their earlier  orders had been canceled, reduced, or delayed, or because they simply  ordered later—found they paid much higher prices. For example, one  physician’s practice ordered flu vaccine from a supplier in April 2000 at  $2.87 per dose. When none of that vaccine had arrived by November 1,   the practice placed three smaller orders in November with a different  supplier at the escalating prices of $8.80, $10.80, and $12.80 per dose. On   December 1, the practice ordered more vaccine from a third supplier at  $10.80 per dose. The four more expensive orders were delivered  immediately, before any vaccine had been received from the original April  order.
With the severely reduced vaccine supply this year, opportunities exist for  vendors who have vaccine to significantly inflate the price of available  supplies. CDC is collecting information on allegations of such price  increases and is providing information to respective state attorneys  general. To date, CDC officials report receiving and forwarding over 100  reports of alleged price gouging that they received from 33 states.
Following the 2000-2001 flu season, HHS undertook several initiatives to  address supply and demand of flu vaccine and to protect high-risk  individuals from flu-related complications when vaccine is in short supply.  Actions taken include the following:    Extending the optimal period for getting a flu vaccination until the end of  November, to encourage more people to get vaccinations later in the  season.
Expanding the target population to include children aged 6 through   23 months.
Including the flu vaccine in the Vaccines for Children (VFC) stockpile to  help improve flu vaccine supply. For the 2004-2005 flu season, CDC had  originally contracted for a stockpile of approximately 4.5 million doses of  flu vaccine through its VFC authority—of which 2 million doses were  ordered from the manufacturer whose license was temporarily suspended  and therefore will not be available. CDC officials said the remaining   2.5 million doses intended for the stockpile will be apportioned as they  become available.
Taking steps to identify additional sources of influenza vaccine from  foreign manufacturers that, once approved for safe use, could help  increase the flu vaccine supply in the United States.

	Challenges Persist in Targeting Flu Vaccine to High-Risk Individuals

Our work has also found continuing obstacles to delivering flu vaccine to  high-risk individuals in a time of short supply. During the fall 2000 vaccine  shortage, for example, targeting limited doses to high-risk individuals was  problematic because all types of providers served at least some high-risk  individuals. Some physicians and public health officials were upset when  their local grocery stores were offering flu vaccinations to everyone when  they, the health care providers, were unable to obtain vaccine for their  high-risk patients. Many physicians reported that they felt they did not  receive priority for vaccine delivery, even though about two-thirds of  seniors—one of the largest high-risk groups—generally get their flu  vaccinations in medical offices.
For the 2004-2005 flu season, despite early indications that one  manufacturer was having production difficulties, CDC published guidance  in September 2004 stating that it did not envision any need for tiered  vaccination recommendations or prioritization of vaccine for those at  higher risk of flu-related complications. Following the suspension of one  manufacturer’s license and the announcement it would not supply any  vaccine to the U.S. market this season, CDC revised its recommendations  and took steps to mitigate the vaccine shortage.
Although HHS has limited authority to control flu vaccine distribution,  upon learning that nearly half of the nation’s expected flu vaccine supply  was in jeopardy, it took steps to help direct the available vaccine to help  providers get some vaccine for their high-risk patients. In particular, CDC  officials have worked with the remaining major manufacturer, as well as  state and local health departments, to assess needs, prioritize customers,  and make plans to distribute the remaining vaccine.
CDC also convened its Advisory Committee on Immunization Practices  (ACIP) to reassess and revise the recommended vaccination priorities for  the flu season. The revised priority groups for the 2004-2005 flu vaccine  include the estimated 85 million people in high-risk groups, but they do not  include many of the other target groups. In addition to high-risk  individuals, the revised priority groups include an estimated 7 million  health care workers and an estimated 6 million household contacts of  children aged 6 months or younger, for a total population of about   98 million in the revised priority groups.
While CDC can recommend and encourage providers to immunize high- risk patients first, it does not have direct control over the distribution of  vaccine (other than the generally small amount that is distributed through  public health departments); thus, CDC cannot ensure that its priorities will  be implemented. As these actions play out, more time is needed to gauge  the success of CDC’s efforts to mitigate the current flu vaccine shortage.
Despite the efforts by CDC and others, many high-risk individuals appear  to be experiencing problems getting a flu vaccination. Media across the  country are reporting that some seniors are waiting hours for flu  vaccinations and others are so frustrated they are traveling to Canada or  Mexico to get vaccinated. There are other media reports of anxious  seniors unable to get vaccinated in a timely fashion. How many high-risk  individuals ultimately get vaccinated against influenza this season remains  to be seen. We are beginning new work to analyze this year’s vaccine  shortage and the federal response.

	Concluding Observations

Ensuring an adequate and timely supply of vaccine to protect high-risk  individuals from influenza and flu-related complications remains a  challenge. The limited number of manufacturers and the manufacturing  problems experienced in recent years illustrate the fragility of vaccine  production. The abrupt loss of nearly half of the nation’s vaccine supply  has further highlighted the potential inequities that can result from the  current vaccine distribution system. Under this system, some providers  can be left with little immediate recourse for meeting the needs of those  most at risk. CDC is responding by working with the remaining major flu  vaccine manufacturer and states and local public health agencies to better  target high-risk populations. Nonetheless, with this flu season, there are  reports of long lines, people crossing international boundaries to obtain  their flu vaccinations, and anxious seniors unable to obtain a vaccination  on a timely basis. Whatever the outcome of this flu season, ensuring that  vaccine can be made available as expeditiously as possible to those who  need it most in times of shortage remains a challenge.

	Agency Comments

We shared the facts contained in this statement with CDC officials.  They  informed us they had no comments.
This concludes my statement. I would be happy to answer any questions  the Chairmen or other Members of the Subcommittees may have.

	Contact and Staff Acknowledgments

For further information about this testimony, please contact Janet  Heinrich at (202) 512-7119. Jennifer Major, Terry Saiki, Stan Stenersen,  and Kim Yamane also made key contributions to this statement.

Related GAO Products

Infectious Disease Preparedness: Federal Challenges in Responding to  Influenza Outbreaks. GAO-04-1100T, Washington, D.C.: September 28,  2004.
SARS Outbreak: Improvements to Public Health Capacity Are Needed for  Responding to Bioterrorism and Emerging Infectious Diseases. GAO-03- 769T, Washington, D.C.: May 7, 2003.
Infectious Disease Outbreaks: Bioterrorism Preparedness Efforts Have  Improved Public Health Response Capacity, but Gaps Remain. GAO-03- 654T, Washington, D.C.: April 9, 2003.
Flu Vaccine: Steps Are Needed to Better Prepare for Possible Future  Shortages. GAO-01-786T, Washington, D.C.: May 30, 2001.
Flu Vaccine: Supply Problems Heighten Need to Ensure Access for High- Risk People. GAO-01-624, Washington, D.C.: May 15, 2001.
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Summary:
Why GAO Did This Study

Influenza is associated with an average of 36,000 deaths and more than 200,000 hospitalizations each year in the United States. Persons who are aged 65 and older, people with chronic medical conditions, children younger than 2 years, and pregnant women are more likely to get severe complications from influenza than other people. The best way to prevent influenza is to be vaccinated each fall. In early October 2004, one major manufacturer of flu vaccine for the United States announced that its facility's license had been temporarily suspended and it would not be releasing any vaccine for the 2004-2005 flu season. Because this manufacturer was expected to produce roughly one-half of the U.S. flu vaccine supply, the shortage resulting from its announcement has led to concern about the availability of flu vaccine, especially to those at high risk for flu-related complications. GAO was asked to discuss issues related to the supply, demand, and distribution of vaccine for this flu season in the context of the current shortage. GAO based this testimony on products we have issued since May 2001, as well as work we conducted to update key information.

What GAO Found

The current vaccine shortage demonstrates the challenges to ensuring an adequate and timely flu vaccine supply. Only three manufacturers produce flu vaccine for the U.S. market, and the potential for future manufacturing problems such as those experienced both this year and to a lesser degree in previous years is still present. When shortages occur, their effect can be exacerbated by the existing distribution system. Under this system, health providers and vaccine distributors generally order a particular manufacturer's vaccine and have limited recourse, even for meeting the needs of high-risk persons, if that manufacturer's production is adversely affected. By contrast, providers who purchased vaccine from a different manufacturer might receive more of their order and be able to vaccinate their high-risk patients. The current situation also reflects another concern: the nation lacks a systematic approach for ensuring that seniors and others at high risk for flu-related complications receive flu vaccine when it is in short supply. Once this year's shortage became apparent, the Centers for Disease Control and Prevention (CDC) took a number of steps to influence distribution patterns to help providers get some vaccine for their high-risk patients. These steps are still playing themselves out, and it will take more time to assess how well they will work. Problems have not been totally averted, however, as there have been media reports of long lines to obtain limited doses of vaccine and of high-risk individuals unable to find a flu vaccination in a timely fashion.