Testimony 

Before the Subcommittee on Health and 

the Subcommittee on Oversight and 

Investigations, Committee on Energy and 

Commerce, House of Representatives

United States Government Accountability Office

GAO 

For Release on Delivery 

Expected at 9:30 a.m. EST 

Thursday, November 18, 2004 FLU VACCINE

Recent Supply Shortages 

Underscore Ongoing 

Challenges 

Statement of Janet Heinrich 

Director, Health Care—Public Health Issues 

GAO-05-177T 
What GAO Found

United States Government Accountability Office

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Highlights

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www.gao.gov/cgi-bin/getrpt?GAO-05-177T.

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and methodology, click on the link above. 

For more information, contact Janet Heinrich 

at (202) 512-7119. 

Highlights of GAO-05-177T, a testimony 

before the Subcommittee on Health and 

the Subcommittee on Oversight and 

Investigations, Committee on Energy and 

Commerce, House of Representatives 

November 18, 2004

FLU VACCINE

Recent Supply Shortages Underscore 

Ongoing Challenges 

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 flurelated 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. 

We shared the facts contained in this statement with CDC officials. They 

informed us they had no comments. 

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 onehalf 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. 
Page 1 GAO-05-177T 

Messrs. Chairmen and Members of the Subcommittees: 

Thank you for the opportunity to be here today as you discuss the nation’s 

response to problems with the supply and distribution of influenza 

vaccine. This year’s loss of roughly half of the country’s supply of flu 

vaccine highlighted what has become a growing problem—the fragility of 

the vaccine production and distribution system. We have been monitoring 

this issue for a number of years, and we are starting new work for the 

House Committee on Government Reform to analyze this year’s situation 

in greater detail. My testimony today focuses on (1) the challenges in 

ensuring adequate supply to meet demand for vaccine and (2) the 

mechanisms in place to target high-risk populations when, as happened 

this year, a vaccine shortage occurs. 

My remarks are based on reports and testimony we have issued since May 

20011

 as well as work conducted to update key information. Our prior 

work on flu vaccine included analysis of information provided by and 

interviews with Department of Health and Human Services (HHS) officials, 

vaccine manufacturers, medical distributors and their trade associations, 

companies that provide flu vaccinations at retail outlets and work sites, 

physician and other professional associations, and other purchasers. We 

also surveyed physician group practices and interviewed health 

department officials in all 50 states about their experiences in the 2000-

2001 flu season. In September and November 2004 we updated this work 

with analysis of information provided by Centers for Disease Control and 

Prevention (CDC) officials, one major manufacturer, and other sources. 

We obtained information on (1) the available doses and demand for the 

2002-2003 and 2003-2004 flu seasons, (2) the status of this year’s flu 

vaccine, and (3) CDC activities, including actions taken following the 

announcement that one major manufacturer could not supply any vaccine 

for the U.S. market this year. We conducted all of our work in accordance 

with generally accepted government auditing standards. 

In summary, the current situation demonstrates the challenges of 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 

 1

See “Related GAO Products,” at the end of this testimony, for a list of our earlier work 

related to flu vaccine. 
Page 2 GAO-05-177T 

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, 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. 

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.2

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 flurelated 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; 

 2

Influenza and pneumonia rank as the fifth leading cause of death among persons aged 65 

and older. Persons aged 65 and older are involved in more than 1 of 2 hospitalizations and 9 

of 10 deaths related to influenza. 

Background 
Page 3 GAO-05-177T 

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.3 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 highrisk 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 

 3

See HHS, Centers for Disease Control and Prevention, “Prevention and Control of 

Influenza: Recommendations of the Advisory Committee on Immunization Practices 

(ACIP),” Morbidity and Mortality Weekly Report, vol. 53 (2004). CDC also recommended a 

vaccination for anyone who wanted one. 
Page 4 GAO-05-177T 

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 flurelated 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.4

 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 

 4

Data collected by states through the CDC Behavioral Risk Factor Surveillance System 

during 2002 indicate that among persons aged 18 years or older reporting receipt of flu 

vaccine, about two-thirds reported getting their last flu vaccination at a health care facility, 

such as a doctor’s office, health center, or health department, while about one-third 

reported getting vaccinated at a workplace, community center, store, or other location. 
Page 5 GAO-05-177T 

6 weeks, and has focused national attention on the flu vaccine supply and 

distribution system. 

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 

Challenges Exist in 

Ensuring an Adequate 

and Timely Flu 

Vaccine Supply 
Page 6 GAO-05-177T 

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: 
Page 7 GAO-05-177T 

• 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. 

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. 

Challenges Persist in 

Targeting Flu Vaccine 

to High-Risk 

Individuals 
Page 8 GAO-05-177T 

Although HHS has limited authority to control flu vaccine distribution,5

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.6

 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 highrisk 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 

 5

Under the Federal Food Drug and Cosmetic Act, FDA ensures compliance with good 

manufacturing practice and has limited authority to regulate the resale of prescription 

drugs, including influenza vaccine, that have been purchased by health care entities such as 

public or private hospitals. This authority would not extend to resale of the vaccine for 

emergency medical reasons. The term health care entity does not include wholesale 

distributors. CDC has a role in encouraging appropriate public health actions. 

6

See HHS, Centers for Disease Control and Prevention, “Interim Influenza Vaccination 

Recommendations, 2004-2005 Influenza Season,” Morbidity and Mortality Weekly Report, 

vol. 53 (2004). 
Page 9 GAO-05-177T 

to be seen. We are beginning new work to analyze this year’s vaccine 

shortage and the federal response. 

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. 

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. 

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. 

Concluding 

Observations 

Agency Comments 

Contact and Staff 

Acknowledgments 
Page 10 GAO-05-177T 

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 HighRisk People. GAO-01-624, Washington, D.C.: May 15, 2001. 

Related GAO Products 

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