GAO

United States General Accounting Office

Testimony

Before the Special Committee on Aging, U.S. Senate

For Release on Delivery 

Expected at 9:30 a.m.

in Portland, Oregon 

Wednesday, May 30, 2001

FLU VACCINE

Steps Are Needed to Better 

Prepare for Possible 

Future Shortages

Statement of Janet Heinrich 

Director, Health Care-Public Health Issues

GAO-01-786T
Page 1 GAO-01-786T 

Chairman Craig, Ranking Member Breaux, and Senator Wyden:

I am pleased to be here today to discuss problems that occurred last fall

with shortages of influenza vaccine and report on some steps that could

help better prepare for possible future shortages.

Until the 2000-01 flu season, the production and distribution of flu vaccine

generally occurred without major difficulties. Last year, however, things

were different. You and other Members of Congress heard complaints

from many of your constituents who wanted but could not get flu shots.

You also heard from physicians and public health departments that could

not provide shots to high-risk patients in their medical offices and clinics

because they had not received vaccine they had ordered many months in

advance, or because they were being asked to pay much higher prices for

vaccine in order to get it right away. And at the same time, there were

reports that providers in other locations, even grocery stores and

restaurants, were offering flu shots to everyone—including younger,

healthier people who were not at high risk. There were concerns that the

delay, disruption, and confusion may have prevented some high-risk

individuals from getting vaccinated at all.

Along with 28 other Members of Congress, you asked us to examine issues

relating to the delays in production, distribution, and pricing of the 2000-01

flu vaccine. My remarks today will present the highlights of our recently

released report on those issues.1

 Specifically, I will focus on the following:

• What circumstances contributed to the production delay, and what effects

did the delay have on the prices paid for vaccine?

• How effectively do current distribution channels ensure that high-risk

populations receive vaccine on a priority basis?

• What approaches are federal agencies taking to better prepare for possible

future disruptions of influenza vaccine supply?

In brief, we found that manufacturing difficulties during the 2000-01 flu

season resulted in an overall delay of about 6 to 8 weeks in shipping

vaccine to most customers, which created an initial shortage and

temporary price spikes. Manufacturing difficulties could occur in the

future and again illustrate the fragility of current methods to produce a

 1

See Flu Vaccine: Supply Problems Heighten Need to Ensure Access for High-Risk People

(GAO-01-624, May 15, 2001).
Page 2 GAO-01-786T 

new vaccine every year. Compounding the problem is that when the

supply of vaccine is short, there is no system to ensure that high-risk

people have priority for receiving flu shots. In considering how to better

prepare for possible future shortages, it is important to recognize that the

purchase, distribution, and administration of flu vaccine are mainly

private-sector responsibilities. Consequently, federal actions to help

mitigate any adverse effects of vaccine delays or shortages need to rely to

a great extent on collaboration between the public and private sectors.

Besides focusing on improving distribution of influenza vaccine, it may

also be beneficial to consider how to increase immunization rates against

pneumococcal pneumonia, which is one of the primary causes of deaths

and hospitalizations associated with influenza.

Annual vaccination is the primary method for preventing influenza, which

is associated with serious illness, hospitalizations, and even deaths among

people at high risk for complications of the disease, such as pneumonia.

Senior citizens are particularly at risk, as are individuals with chronic

medical conditions. The Centers for Disease Control and Prevention

(CDC) estimates that influenza epidemics contribute to approximately

20,000 deaths and 110,000 hospitalizations in the United States each year.

Here in Oregon, and throughout the nation, influenza and pneumonia rank

as the fifth leading cause of death among persons 65 years of age and

older.

Producing the 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. 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. Only three

manufacturers—two in the United States and one in the United

Background
Page 3 GAO-01-786T 

Kingdom—produced the vaccine used in the United States during the

2000-01 flu season.2

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 shots at

physicians’ offices, public health clinics, nursing homes, and less

traditional locations such as workplaces and various retail outlets. CDC

has recommended October through mid-November as the best time to

receive a flu shot because the flu season generally peaks from December

through early March. However, if flu activity peaks late, as it has in 10 of

the past 19 years, vaccination in January or later can still be beneficial.

To address our study questions, we interviewed officials from the

Department of Health and Human Services (HHS), including CDC, FDA,

and the Health Care Financing Administration (HCFA), as well as flu

vaccine manufacturers, distributors, physician associations, flu shot

providers, and others. We surveyed 58 physician group practices

nationwide to learn about their experiences and interviewed health

department officials in all 50 states.

Although the eventual supply of vaccine in the 2000-01 flu season was

about the same as the previous year’s—about 78 million doses—

production delays of about 6 to 8 weeks limited the amount that was

available during the peak vaccination period. During the period when

supply was limited and demand was higher, providers who wanted to

purchase vaccine from distributors with available supplies often faced

rapidly escalating prices. By December, as vaccine supply increased and

demand dropped, prices declined.

Last fall, fewer than 28 million doses were available by the end of October,

compared with more than 70 million doses available by that date in 1999.

Two main factors contributed to last year’s delay. The first was that two

manufacturers had unanticipated problems growing one of the two new

influenza strains introduced into the vaccine for the 2000-01 flu season.

 2

The two manufacturers with facilities in the United States were Wyeth-Ayerst

Pharmaceuticals, Inc., and Aventis Pasteur, Inc. The manufacturer with facilities in the

United Kingdom was Medeva Pharma, Ltd.

Manufacturing

Problems Caused

Temporary Shortages

and Spikes in Price

Most Vaccine Was Not

Ready During Period of

Peak Demand
Page 4 GAO-01-786T 

Because manufacturers must produce a vaccine that includes all three

strains selected for the year, delivery was delayed until sufficient

quantities of this difficult strain could be produced. The second factor was

that two of the four manufacturers producing vaccine the previous season

shut down parts of their facilities because of FDA concerns about

compliance with good manufacturing practices, including issues related to

safety and quality control. One of these manufacturers reopened its

facilities and eventually shipped its vaccine, although much later than

usual. The other, which had been expected to produce 12 to 14 million

doses, announced in September 2000 that it would cease production

altogether and, as a result, supplied no vaccine.

These vaccine production and compliance problems did not affect every

manufacturer to the same degree. Consequently, when a purchaser

received vaccine depended to some extent on which manufacturer’s

vaccine it had ordered. Purchasers that contracted only with the lateshipping manufacturers were in particular difficulty. For example, health

departments and other public entities in 36 states, including Oregon,

banded together under a group purchasing contract and ordered nearly 2.6

million doses from the manufacturer that, as it turned out, experienced the

greatest delays from production difficulties. Some of these public entities,

which ordered vaccine for high-risk people in nursing homes or clinics, did

not receive most of their vaccine until December, according to state health

officials.

Because supply was limited during the usual vaccination period,

distributors and others who had supplies of the vaccine had the ability—

and the economic incentive—to sell their supplies to the highest bidders

rather than filling lower-priced orders they had already received. Most of

the physician groups and state health departments we contacted reported

that they waited for delivery of their original lower-priced orders, which

often arrived in several partial shipments from October through December

or later.

Those who purchased vaccine in the fall found themselves paying much

higher prices. For example, one physicians’ practice in our survey 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

Limited Availability During

Peak Demand Created

Temporary Price Spikes
Page 5 GAO-01-786T 

expensive orders were delivered immediately, before any vaccine had

been received from the original April order.

Demand for influenza vaccine dropped as additional vaccine became

available after the prime period for vaccinations had passed. In all, roughly

one-third of the total distribution was delivered in December or later. Part

of this additional supply resulted from actions taken by CDC in

September, when it appeared there could be a shortfall in production. At

that point, CDC contracted with one of the manufacturers to extend

production into late December for 9 million additional doses. 3

 Despite

efforts by CDC and others to encourage people to seek flu shots later in

the season, providers still reported a drop in demand in December. The

unusually light flu season also probably contributed to the lack of interest.

Had a flu epidemic hit in the fall or early winter, the demand for influenza

vaccine would likely have remained high.

As a result of the waning demand, manufacturers and distributors reported

having more vaccine than they could sell. Manufacturers reported shipping

about 9 percent less than in 1999, and more than 7 million of the 9 million

additional doses produced under the CDC contract were never shipped at

all. In addition, some physicians’ offices, employee health clinics, and

other organizations that administered flu shots reported having unused

doses in December and later.

In a typical year, there is enough vaccine available in the fall to give a flu

shot to anyone who wants one. However, when the supply is not sufficient,

there is no mechanism currently in place to establish priorities and

distribute flu vaccine first to high-risk individuals. Indeed last year, mass

immunizations in nonmedical settings, normally undertaken to promote

vaccinations, created considerable controversy as healthy persons

received vaccine in advance of those at high risk. In addition,

manufacturers and distributors that tried to prioritize their vaccine

shipments encountered difficulties doing so.

 3

The manufacturer began accepting orders under this contract in early November and

began shipping vaccine from these orders in mid-December 2000. Prices were $2.99 per

dose for public purchasers and $5 per dose for the private sector.

When More Vaccine

Became Available, Demand

Had Already Dropped

Distribution of

Vaccine Does Not

Ensure Priority to

High-Risk Individuals
Page 6 GAO-01-786T 

Flu shots are generally widely available in a variety of settings, ranging

from the usual physicians’ offices, clinics, and hospitals to retail outlets

such as drugstores and grocery stores, workplaces, and other convenience

locations. Millions of individuals receive flu shots through mass

immunization campaigns in nonmedical settings, where organizations,

such as visiting nurse agencies under contract, administer the vaccine. The

widespread availability of flu shots may help increase immunization rates

overall, but it generally does not lend itself to targeting vaccine to highpriority groups.

The timing of some of the mass immunization campaigns last fall

generated a great deal of controversy. Some physicians and public health

officials were upset when their local grocery stores, for example, were

offering flu shots to everyone when they, the health care providers, were

unable to obtain vaccine for their high-risk patients. Examples of these

situations include the following:

• A radio station in Colorado sponsored a flu shot and a beer for $10 at a

local restaurant and bar—at the same time that the public health

department and the community health center did not have enough vaccine.

• One grocery store chain in Minnesota participated in a promotion offering

a discounted flu shot for anyone who brought in three soup can labels.

• Flu shots were available for purchase to all fans attending a professional

football game.

CDC took some steps to try to manage the anticipated vaccine delay by

issuing recommendations for vaccinating high-risk individuals first. In July

2000, CDC recommended that mass immunization campaigns, such as

those open to the public or to employee groups, be delayed until early to

mid-November.4

 CDC issued more explicit voluntary guidelines in October

2000, which stated that vaccination efforts should be focused on persons

aged 65 and older, pregnant women, those with chronic health conditions

that place them at high risk, and health care workers. 5

 The October

guidelines also stated that while efforts should be made to increase

 4

See CDC, “Delayed Supply of Influenza Vaccine and Adjunct ACIP Influenza Vaccine

Recommendations for the 2000-01 Influenza Season,” Morbidity and Mortality Weekly

Report, Vol. 49, No. 27 (July 14, 2000), pp. 619-622.

5

See CDC, “Updated Recommendations from the Advisory Committee on Immunization

Practices in Response to Delays in Supply of Influenza Vaccine for the 2000-01 Season,”

Morbidity and Mortality Weekly Report, Vol. 49, No. 39 (Oct. 6, 2000), pp. 888-892.

Availability of Vaccine for

Mass Immunization

Campaigns Created

Controversy
Page 7 GAO-01-786T 

participation in mass immunization campaigns by high-risk persons and

their household contacts, other persons should not be turned away.

Some organizations that conducted mass immunizations said they

generally did not screen individuals who came for flu shots in terms of

their risk levels. Some said they tried to target high-risk individuals and

provided information on who was at high risk, but they let each person

decide whether to receive a shot. Their perspective was that the burden

lies with the individual to determine his or her own level of risk, not with

the provider. Moreover, they said that the convenience locations provide

an important option for high-risk individuals as well as others. Health care

providers in both traditional and nontraditional settings told us that it is

difficult to turn someone away when he or she requests a flu shot.

The manufacturers and distributors we interviewed reported that it was

difficult to determine which of their purchasers should receive priority

vaccine deliveries in response to CDC’s recommendations to vaccinate

high-risk individuals first. They did not have plans in place to prioritize

deliveries to target vaccine to high-risk individuals because there generally

had been enough vaccine in previous years and thus there had been little

practical need for this type of prioritization. When they did try to identify

purchasers serving high-risk individuals, the manufacturers and

distributors often found they lacked sufficient information about their

customers to make such decisions, and they also were aware that all types

of vaccine providers were likely to serve at least some high-risk

individuals.

As a result, manufacturers reported using various approaches in

distributing their vaccine, including making partial shipments to all

purchasers as a way to help ensure that more high-risk persons could be

vaccinated. Others made efforts to ship vaccine first to nursing homes,

where they could be identified, and to physicians’ offices. All of the

manufacturers and distributors we talked to said that once they

distributed the vaccine it would be up to the purchasers and health care

providers to target the available vaccine to high-risk groups.

Immunization statistics are not yet available to show how successful these

ad hoc distribution strategies may have been in reaching high-risk groups,

but there may be cause for concern. Some state health officials reported

that nursing homes often purchase their flu vaccine from local

pharmacies, and some distributors considered pharmacies to be lower

priority for deliveries. In addition, many physicians reported that they felt

Manufacturers and

Distributors Reported

Difficulty Determining

How to Get Vaccine to

High-Risk Individuals
Page 8 GAO-01-786T 

they did not receive priority for vaccine delivery, even though nearly twothirds of seniors—one of the largest high-risk groups—generally get their

flu shots in medical offices. The experience of the 58 physicians’ practices

we surveyed seemed consistent with this reported lack of priority: as a

group, they received their shipments at about the same delayed rate that

vaccine was generally available on the market.

Ensuring an adequate and timely supply of vaccine, already a difficult task

given the complex manufacturing process, has become even more difficult

as the number of manufacturers has decreased. Now, a production delay

or shortfall experienced by even one of the three remaining manufacturers

can significantly affect overall vaccine availability. Looking back, we are

fortunate that the 2000-01 flu season arrived late and was less severe than

normal because we lacked the vaccine last October and November to

prepare for it. Had the flu hit early with normal or greater severity, the

consequences could have been serious for the millions of Americans who

were unable to get their flu shots on time.

This raises the question of what more can be done to better prepare for

possible vaccine delays and shortages in the future. We need to recognize

that flu vaccine production and distribution are private-sector

responsibilities, and as such options are somewhat limited. HHS has no

authority to directly control flu vaccine production and distribution,

beyond FDA’s role in regulating good manufacturing practices and CDC’s

role in encouraging appropriate public health actions.6

Working within these constraints, HHS undertook several initiatives in

response to the problems experienced during the 2000-01 flu season. For

example, the National Institutes of Health, working with FDA and CDC,

conducted a clinical trial on the feasibility of using smaller doses of

vaccine for healthy adults. If smaller doses offer acceptable levels of

protection, this would be one way to stretch limited vaccine supplies.

Final results from this work are expected in fall 2001. In addition, for the

upcoming flu season CDC and its advisory committee extended the

optimal period for getting a flu shot until the end of November, to

encourage more people to get shots later in the season. HHS is also

 6

Under the Federal Food Drug and Cosmetic Act, FDA 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. Wholesale distributors are excluded

from the definition of health care entities.

Additional Actions

Needed to Prepare for

Future Vaccine Delays

and Shortages
Page 9 GAO-01-786T 

working to complete a plan for a national response to a severe worldwide

influenza outbreak, called a pandemic. While the plan itself would likely be

applied only in cases of public health emergencies, we believe that the

advance preparations by manufacturers, distributors, physicians, and

public health officials to implement the plan could provide a foundation to

assist in dealing with less severe problems, such as those experienced last

year.7

We believe it would be helpful for HHS agencies to take additional actions

in three areas.8

 Progress in these areas could prove valuable in managing

future flu vaccine disruptions and targeting vaccine to high-risk

individuals. First, because vaccine production and distribution are privatesector responsibilities, CDC needs to work with a wide range of private

entities to prepare for potential problems in the future. CDC can take an

ongoing leadership role in organizing and supporting efforts to bring

together all interested parties to formulate voluntary guidelines for

vaccine distribution in the event of a future vaccine delay or shortage. In

March 2001, CDC co-sponsored a meeting with the American Medical

Association that brought together public health officials, vaccine

manufacturers, distributors, physicians, and other providers to discuss flu

vaccine distribution, including ways to target vaccine to high-risk groups

in the event of a future supply disruption. This meeting was a good first

step, and continued efforts should be made to achieve consensus among

the public- and private-sector entities involved in vaccine production,

distribution, and administration.

The experience of the 2000-01 flu season showed how difficult it is to

change established behavior regarding when to be vaccinated. For this

reason, we believe CDC can concentrate greater efforts on education and

outreach to members of the public and providers focused on the value of

being immunized later in the winter. CDC issued guidelines to this effect,

posted similar information on a Web site, and conducted a media

campaign in select cities, but it appears those efforts had limited impact

on changing behavior. CDC could maximize the results of future efforts by

assessing its past efforts to identify the most effective means of

influencing behavior. Those means should be used to educate flu vaccine

 7

See Influenza Pandemic: Plan Needed for Federal and State Response (GAO-01-4, Oct. 27,

2000).

8

See GAO-01-624 for formal recommendations to HHS.
Page 10 GAO-01-786T 

providers and the general public well before the start of the traditional fall

vaccination period.

Finally, while vaccination against pneumococcal disease is not a substitute

for the annual flu shot, it can provide protection against a major

complication of the flu if vaccine is not available. One pneumococcal

vaccination can provide long-term protection, with immunity lasting 5 to

10 years. Available data indicate that only about half of seniors have been

vaccinated, however, and the rate is much lower for high-risk people

under age 65. HCFA has ongoing activities directed toward increasing both

pneumococcal and influenza vaccination rates for adults aged 65 and older

in the Medicare program. At the same time, CDC supports state activities

for both childhood and adult immunization, although little of that funding

goes to adult immunization programs. Collaboration between HCFA and

CDC in pneumococcal and influenza vaccination programs for adults

could maximize the use of federal resources in this area. For example,

CDC could focus on increasing these immunizations in the high-risk nonMedicare population, which would complement HCFA’s ongoing activities

to improve immunization rates in the Medicare population.

HHS responded to our first two recommendations by citing related actions

that are under way. For example, HHS told us that CDC is also working

with interested parties, including state health departments, to develop

contingency plans for vaccine distribution and has started to assess the

relative success of its various outreach and educational efforts last season.

In response to our third recommendation, HHS commented that CDC

supports efforts to use pneumococcal vaccine more widely.

This concludes my statement. I would be happy to answer any questions

you may have.

For more regarding this testimony, please contact Janet Heinrich,

Director, Health Care—Public Health Issues, at (202) 512-7119, or Frank

Pasquier, Assistant Director, at (206) 287-4861. Other individuals who

made contributions to this statement include Lacinda Ayers, George

Bogart, Ellen M. Smith, Stan Stenersen, and Kim Yamane.

GAO Contacts and

Staff

Acknowledgments

(290065)