Influenza is a contagious respiratory illness caused by a number of different influenza virus strains and can range in severity from mild to lethal. Symptoms can include cough, muscle or body aches, and fatigue. Vaccination is the primary method for preventing infection with strains of the influenza virus and controlling the disease. In order for a vaccine to be most effective, it needs enough well-matched antigen to stimulate a protective immune response, antigen being the active substance in a vaccine that provides immunity by causing the body to produce protective antibodies to fight off a particular influenza strain. The vaccine’s antigen needs to be derived from a strain that is well-matched to a specific influenza strain—in wide circulation in humans—so that the antibodies formed in response to the vaccine protect against infection from that strain. Because multiple influenza strains are in constant circulation, seasonal vaccine is produced and administered annually to protect against the three influenza strains expected to be most prevalent that year (i.e., a trivalent vaccine). In contrast, the 2009 H1N1 pandemic vaccine was formulated to match the single pandemic-causing strain (i.e., a monovalent vaccine). Within the federal government, HHS is the department responsible for leading and coordinating preparedness and medical response activities to public health emergencies, per the 2006 Pandemic and All-Hazards Preparedness Act. Additionally, as the principal department for protecting the public’s health, HHS is the primary department funding the research and development of influenza vaccines. HHS enters into contracts with manufacturers for the development of new influenza vaccines using alternative technologies. DOD also makes some investments through its technology investment agreements for the research and development of alternative technologies that can be used in producing influenza vaccine as part of its preparedness efforts in order to maintain the military’s readiness. Manufacturers with which these agencies have entered into contracts or technology investment agreements include large-scale influenza vaccine manufacturers that have vaccines licensed for use in the United States and internationally as well as manufacturers that currently only have vaccines in research and development. Influenza vaccines—both seasonal and pandemic—are biological products. Within HHS, FDA is the federal agency responsible for the licensure and regulation of biological products for use in the U.S. market (see app. I for additional information on the research and development and review of licensing applications for new influenza vaccines in the United States). These responsibilities include issuing guidance for existing and new vaccines and consulting with manufacturers on the development of their new vaccines, such as on how manufacturers conduct clinical trials required for licensure of new vaccines. Until FDA has approved its licensing application, no manufacturer can market its biological product in the United States. Table 1 summarizes the federal government’s role in the research and development of alternative technologies and the licensure and regulation of influenza vaccines. Given its responsibilities for national seasonal influenza and pandemic preparedness and response, HHS has an interest in enhancing domestic production capacity—that is, enhancing the nation’s overall infrastructure for influenza vaccine production—and expanding the supply or accelerating the availability of influenza vaccine. HHS began awarding contracts to enhance domestic production capacity for the current egg- based technology as early as fiscal year 2005. Since fiscal year 2005, HHS has supported a program to ensure a year-round, secure, domestic egg supply; prior to this funding, manufacturers maintained a 9-month supply of eggs—enough for production only during the influenza season without any additional capacity for emergencies, such as an influenza pandemic. Despite HHS’s initial efforts to maintain a year-round egg supply, other events have occurred that highlighted the need for HHS to increase domestic production capacity for influenza vaccine and to support the introduction of influenza vaccines produced using alternative technologies. First was the unexpected loss of almost half of the influenza vaccine supply because of potential contamination during the 2004–05 season and the reliance on two domestic influenza vaccine manufacturers to supply enough vaccine for that year. Second was the recognition by HHS that one of the greatest challenges to preparing for an influenza pandemic and implementing its strategy for using vaccines was the lack of production capacity within the United States. As we noted in prior work, the lack of U.S. production capacity is cause for concern among experts because it is possible that countries without domestic production capacity will not have access to influenza vaccine in the event of a pandemic if countries where vaccine is produced prohibit the export of the pandemic vaccine until their own needs are met. As a result, HHS continued its funding of egg-based technology for the production of influenza vaccine to enhance domestic production capacity using this technology. For example, in fiscal year 2007, HHS entered into contracts with two manufacturers for the retrofitting of existing domestic egg-based production facilities for the production of pandemic influenza vaccine. Some of the completed facilities were used in the 2009 H1N1 pandemic, and according to HHS, when all the retrofitting is complete, one of these facility’s production capacity will double and the other will triple. Third, concerns about strains of the H5N1 virus that had reemerged in the early 2000s, and continues to cause severe infection in humans, further prompted interest in alternative technologies to egg-based technology for producing influenza vaccine. Strains of the H5N1 virus have infected chicken flocks and other poultry, resulting in the culling of these flocks, raising concern that the egg supply for influenza vaccine was at risk. Thus, HHS began a more concerted effort to fund the research and development of influenza vaccines using three alternative technologies. Specifically, HHS has funded the development of vaccines using two alternative production technologies—cell-based and recombinant technologies—and vaccines using a third alternative technology—antigen-sparing technology (adjuvants). Each of these three alternative technologies has the potential to expand the supply or accelerate the availability of both seasonal and pandemic influenza vaccines (see app. II for a description of the production process for influenza vaccine using the current, egg-based technology). Expanding the supply or accelerating the availability of influenza vaccine is particularly important when there is a perceived shortage of seasonal vaccine—when vaccine is not available and demand is highest—or during a pandemic when demand increases because of increased risk of disease and death. Expanding the supply or accelerating the availability of influenza vaccine can be done in two ways. The first is to increase the overall amount of vaccine available at the end of the production process; the second is to speed up the production process itself by, for example, reducing or eliminating step(s) in the process. Table 2 describes these three alternative technologies and their potential to expand the supply or accelerate the availability of influenza vaccines (see app. III for more information on these alternative technologies). In fiscal year 2005, with funds available from that year’s appropriation, HHS funded the research and development of an influenza vaccine produced using cell-based technology. Following the release of the Plan, numerous additional appropriations became available for the acquisition and development of pharmaceutical interventions for pandemic-related purposes, including approximately $3.2 billion dedicated for vaccines. HHS has since used these funds, as well as funds available from previous appropriations, for multiyear contracts for the development of influenza vaccine using cell-based technology, recombinant technology, and adjuvants. In response to the 2009 H1N1 pandemic, Congress provided HHS with a supplemental appropriation to prepare for and respond to an influenza pandemic. In addition to making $1.85 billion immediately available to HHS, the 2009 supplemental appropriation made $5.8 billion available contingent upon one or more presidential notifications to Congress. In August 2010, after the 2009 H1N1 pandemic had ended, HHS notified Congress of its plan to direct some of the remaining funds toward pandemic and related preparedness activities. Specifically, HHS proposed spending $1.98 billion in a variety of vaccine-related activities, including the development of alternative technologies, such as recombinant technology. According to HHS, it also uses funding available from annual appropriations, such as its fiscal year appropriations for 2009 and 2010, for pandemic-related activities. From fiscal year 2005 through March 2011, the federal government awarded approximately $2.1 billion in contracts and technology investment agreements for the research and development of cell-based and recombinant technologies and adjuvants, which can be used in producing influenza vaccines. Manufacturers are demonstrating progress toward licensure. In fiscal year 2005, HHS awarded the most funding through contracts to manufacturers to develop cell-based technology. With these funds, two manufacturers are demonstrating progress toward licensure of a vaccine by completing clinical trials required to file for licensure with FDA, and one of these two manufacturers has also constructed a domestic cell- based influenza vaccine facility. HHS awarded contracts to six manufacturers—one manufacturer in fiscal year 2005 and five manufacturers in fiscal year 2006—worth a total of approximately $1 billion for the development of an influenza vaccine produced using cell- based technology (see table 3). According to HHS, it awarded multiple contracts because it expected some attrition by manufacturers as the development of new influenza vaccines progressed. Cell-based technology has the potential to increase the overall amount of vaccine available at the end of the production process. As of March 2011, two of the manufacturers to which HHS had awarded contracts—DynPort Vaccine Company LLC (with Baxter International Inc.) (DynPort/Baxter) and Novartis Vaccines and Diagnostics Inc. (Novartis Vaccines)—have completed clinical trials required to file for licensure with FDA. While Novartis Vaccines anticipates submitting a licensing application for its seasonal influenza vaccine using cell-based technology to FDA in 2011, DynPort/Baxter anticipates submitting its licensing application to FDA in 2012. Additionally, GlaxoSmithKline plc (GlaxoSmithKline) is currently conducting clinical trials with its adjuvanted cell-based pandemic influenza vaccine, and MedImmune, LLC is conducting preclinical studies in animals on its cell-based pandemic influenza vaccine. The remaining two contracts with sanofi pasteur and Solvay Pharmaceuticals were terminated by HHS. In addition to the six contracts awarded for the research and development of cell-based influenza vaccine, HHS also entered into a $486.6 million contract with Novartis Vaccines in fiscal year 2009 for the construction of a cell-based influenza vaccine production facility in the United States to enhance domestic production capacity. According to HHS, Novartis Vaccines completed construction of this facility in November 2009 and will have qualified the facility for producing pandemic vaccine using cell-based technology, if needed, by the end of 2011. HHS expects the new facility to provide at least 25 percent of the needed domestic production capacity for pandemic vaccine. This facility also has the capacity to produce seasonal and adjuvanted influenza vaccine as well as other biological products that use this technology for other infectious diseases. In fiscal year 2009, HHS awarded contracts to manufacturers for the research and development of recombinant technology. Recombinant technology has the potential to increase the overall amount of vaccine available at the end of the production process and speed up the production process itself, in part, because unlike egg-based and cell-based technologies, it does not depend on the replication of the influenza virus for production. In fiscal year 2009, HHS entered into a $34.5 million contract with Protein Sciences Corporation (Protein Sciences) for the continued development of recombinant technology for use in producing an influenza vaccine. According to HHS, if Protein Sciences’ recombinant, seasonal influenza vaccine is shown to be safe and effective through clinical trials, the contract requires the company to establish enough domestic manufacturing capacity to provide finished vaccine within 12 weeks of the beginning of a pandemic and to produce at least 50 million doses of pandemic vaccine within 6 months of the beginning of a pandemic. In May 2011, HHS extended its contract with Protein Sciences for 2 years with $46.8 million of additional funding. In February 2011, HHS awarded two additional contracts for the research and development of pandemic influenza vaccines using recombinant technology. HHS awarded contracts to Novavax, Inc. (Novavax) for $97.3 million and VaxInnate, Inc. (VaxInnate) for $117.9 million each for a 3-year period. According to HHS, if the manufacturer and department mutually agree, each respective contract may be extended for an additional 2-year period, resulting in contract amounts totaling $179.1 million for Novavax and $196.6 million for VaxInnate (see table 4). In contrast to HHS’s contract awards specifically designated for influenza vaccine described above, DOD’s funding efforts have been more generally targeted toward the research and development of technologies that could be used in producing these vaccines. For example, in fiscal year 2010, DOD entered into technology investment agreements with manufacturers and research institutes—totaling approximately $86.9 million—for the research and development of recombinant technology through a DOD initiative called Blue Angel. The Blue Angel initiative is intended to accelerate ongoing programs that would potentially assist the federal government in providing a governmentwide response to an influenza pandemic. Under the Blue Angel initiative, DOD supported the initial testing of a production process using recombinant technology to produce antigen—the active substance in a vaccine that stimulates the production of protective antibodies—using the 2009 H1N1 pandemic strain. According to DOD, although the initiative did not result in a finished vaccine, the first batch of antigen was produced within 30 days of receiving information on the pandemic-causing strain. Since fiscal year 2007, HHS has also awarded contracts for the research and development of an adjuvanted influenza vaccine. Adjuvants have the potential to increase the overall amount of vaccine available at the end of the production process by enhancing the immune response, thereby reducing the amount of antigen needed per vaccine dose. Two manufacturers have demonstrated progress toward licensure of their vaccines by completing clinical trials. HHS awarded three contracts totaling $152 million to GlaxoSmithKline, Novartis Vaccines, and Intercell AG for the research and development of an adjuvanted influenza vaccine (see table 5). Of the three manufacturers awarded contracts, GlaxoSmithKline anticipates submitting a licensing application for its adjuvanted egg-based pandemic influenza vaccine to FDA for review in 2011, while Novartis Vaccines anticipates submitting a licensing application for its adjuvanted egg-based seasonal influenza vaccine to FDA for review in 2012. According to HHS, Intercell AG’s clinical trials did not achieve the desired result and were ended. In addition to its awards through contracts with manufacturers, HHS also provided $4 million in funding to the National Institutes of Health (NIH)— an agency within HHS—for H5N1 “mix-and-match” studies starting in March 2008. According to HHS, these studies are designed to determine whether the adjuvant from one manufacturer can be safely and effectively combined with the antigen from another manufacturer in the case of a public health emergency, such as an influenza pandemic. The ability to combine the antigen from one manufacturer with the adjuvant from another manufacturer could increase the overall vaccine supply during a pandemic. The preliminary preclinical studies in animals with a H5N1 vaccine were completed in early 2009 in preparation for clinical testing by NIH. However, NIH delayed its work on the H5N1 vaccine to conduct clinical trials testing the unadjuvanted and mix-and-match 2009 H1N1 pandemic vaccine as part of HHS’s response to the pandemic. According to NIH officials we spoke with, NIH resumed work on the H5N1 mix-and- match studies in May 2011; officials anticipate completing clinical trials for these studies in 2012. DOD has also funded the development of adjuvants for use with influenza vaccine. In fiscal year 2009, DOD entered into a technology investment agreement for $3.3 million with the Infectious Disease Research Institute. According to DOD, the department is currently awaiting the results of completed animal studies using an adjuvanted vaccine. Some stakeholders and federal reports identified three primary challenges to the development and licensure of influenza vaccines using alternative technologies: low demand, high research and development costs, and regulatory challenges. Some stakeholders told us that low demand because of low vaccination rates hinders manufacturers’ willingness to develop seasonal influenza vaccines using alternative technologies. According to CDC, during the 2009–10 influenza season, national vaccination rates reached an estimated 41 percent of the population aged 6 months or older for the seasonal vaccine, and an estimated 27 percent for the separate 2009 H1N1 pandemic vaccine. Each influenza season more vaccine is produced than is actually used, even in years where there has been a perceived shortage of influenza vaccine because of challenges in the production process. Data from CDC, FDA, and the American Medical Association confirm that—despite an increase in the total amount of influenza vaccine produced and distributed since at least 2001—more doses of seasonal vaccine are produced than distributed each year, including in years when there were few licensed manufacturers or a perceived vaccine shortage (see table 6). This excess vaccine expires and is destroyed at the season’s end as it will not be useful for the next influenza season, when a new vaccine will need to be formulated using the three influenza strains expected to be most prevalent that year. Additionally, despite the increase in influenza vaccine production and distribution and the United States using more seasonal vaccine than any other country, 5 of 12 manufacturer representatives, 1 of 3 industry association representatives, and 2 of 12 other experts we interviewed said that this low demand decreases incentives for manufacturers to develop new seasonal influenza vaccines using alternative technologies. Stakeholders told us that there are a number of reasons why demand for seasonal influenza vaccine is low. For example, two experts stated that patients commonly do not view seasonal influenza as a serious disease, and another expert and an industry association representative stated there is a need for more patient education on the safety of influenza vaccine to overcome patient and provider hesitancy. Researchers have also found that patients and providers have concerns about influenza vaccine. One manufacturer representative also noted that the current influenza vaccine is less effective for certain populations, such as the elderly, which also decreases demand. We have previously reported that according to CDC, a recommendation from a physician or other health care provider is the most important factor in an individual’s decision to get vaccinated. Additionally, a recent review of survey data found that health care professionals were cited as one of three most important sources of information in making decisions about children’s vaccines by 85 percent of parents surveyed. CDC has made efforts to encourage providers to recommend vaccination to their patients. However, despite these efforts, available data suggest that getting providers to recommend vaccination for their patients has been difficult. CDC told us that it is working closely with numerous partners to implement an influenza vaccine communication plan utilizing multiple forms of media to reach the general public as well as specific target populations. HHS officials acknowledged the challenge of low demand for seasonal influenza vaccine; however, they said manufacturers remain interested in pursuing the development of new influenza vaccines using alternative technologies. For example, according to department officials, manufacturers have more than two dozen influenza vaccines in development, and many of these manufacturers have received funds from HHS. Some stakeholders said that high research and development costs required for the development of influenza vaccines can decrease manufacturers’ incentives to pursue new influenza vaccines using alternative technologies. Six of the manufacturer representatives we spoke with said that research and development costs are high. Furthermore, five manufacturer representatives we spoke with noted that clinical trials in particular contributed to high research and development costs. For example, a representative for one manufacturer we spoke with noted the significant costs associated with the research and development of its currently licensed egg-based influenza vaccine, estimating that his company has spent $400 million alone on clinical trials. One small-scale manufacturer conducting clinical trials for a new influenza vaccine using an alternative technology estimated that it spends $150,000 per day on these trials and other expenses as it moves toward applying for licensure. In addition, PCAST—a presidential advisory council—found in a recent report on influenza vaccine research and development that constructing a cell-based influenza vaccine production facility could cost more than $1 billion and it could take over 30 years to recover the investment. Access to capital is important to manufacturers because of these high research and development costs. A manufacturer representative and an industry association representative that we spoke with told us that manufacturers’ difficulties in raising capital to finance research and development costs deterred or slowed the development of new influenza vaccines produced using alternative technologies. One manufacturer representative told us that in the current economic market it has been challenging for his firm to find investors. Three other manufacturer representatives noted that their decision making is also influenced by perceptions of whether the benefits of a new influenza vaccine will offset these high research and development costs by increasing production efficiency or supporting higher prices for the new product compared to the current vaccine. HHS told us that it has worked to address this issue through its funding for influenza vaccines using alternative technologies and that its support of manufacturers’ efforts has helped to change the return on investment such that manufacturers have more incentive to pursue the development of new influenza vaccines using alternative technologies. Additionally, HHS noted that increased investments in this area have generated a significant interest in this type of research and development. Some stakeholders identified two regulatory challenges to the development of influenza vaccines using alternative technologies. First, some stakeholders and recent federal reports identified weaknesses in FDA’s “regulatory science” capacity—that is, its ability to utilize resources, such as staff expertise, to develop new tests and measures to assess the safety, efficacy, quality, and performance of FDA-regulated products, such as influenza vaccines. Three manufacturer representatives, one industry association representative, and three experts told us that regulatory science weaknesses at FDA create challenges in the review of new product licensing applications, including those for new influenza vaccines. In particular, stakeholders told us that FDA’s staff expertise in alternative technologies affects its ability to work with manufacturers developing new influenza vaccines using these technologies, and that limited staff expertise is a challenge to efficient communication. A manufacturer representative told us that FDA’s ability to conduct its own research is important in understanding the science manufacturers present in licensing applications, but noted that some of FDA’s research programs have been cut in recent years thereby hindering its ability to gain needed experience. An industry association representative told us that manufacturers pursuing the development of some influenza vaccines using alternative technologies sometimes find it difficult to find FDA staff who can answer their questions. One expert said that many experienced senior leaders in FDA’s biologics division—where licensing applications for new vaccines are reviewed—have left the agency in recent years; therefore, reviewers are less familiar with these alternative technologies. This expert said this lack of familiarity can make it more difficult for manufacturers to work with reviewers to explain the technology to them. Some recent federal reports have echoed stakeholders’ concerns about FDA’s regulatory science capacity. According to a recent HHS report, FDA needs to be able to conduct applied research in order to better incorporate advances in life sciences research and knowledge into the regulatory process. In order to make that possible, the report states that FDA needs greater staff expertise and infrastructure. In addition, a 2007 report prepared for the FDA Science Board—an FDA advisory group—found that the development of products based on new science cannot be adequately regulated by FDA because of a lack of capacity to review new technologies. However, FDA officials told us that they are not aware of actual examples of lack of expertise within the agency and that their staff consists of highly qualified scientists. Furthermore, FDA officials noted the continuing education that staff members engage in to maintain their proficiency in technological advances as well as the quality of FDA’s research programs. The agency said it has the scientific and regulatory experience to adequately assess the safety and effectiveness of vaccines for use in the United States, but as noted later in this report, it continues to fund improvements in regulatory science capacity and staff expertise. Some stakeholders also identified a second challenge, namely that FDA’s written guidance and consultation with manufacturers on some of the requirements for licensure of new influenza vaccines using alternative technologies is not sufficiently comprehensive. They noted that FDA’s guidance documents do not include all of the various scenarios manufacturers may encounter. Additionally, one manufacturer representative said it can take months to arrange a formal meeting with FDA officials. Another manufacturer representative noted that FDA often conducts its discussions with manufacturers in stages, which can limit their ability to plan for long-term issues. According to stakeholders, this lack of detail and incremental approach can hinder manufacturers’ abilities to plan their research and development efforts, including those for new influenza vaccines, because they are uncertain as to what requirements they must meet in order to obtain licensure. For example, two manufacturer representatives said that it is unclear what size clinical trials will be required for influenza vaccines using alternative technologies because the guidance documents available are not specific enough in laying out these requirements. In addition, PCAST found in a recent report on influenza vaccine research and development that there is currently uncertainty about the regulatory pathway for recombinant influenza vaccines and recommended that guidance be developed on areas including criteria for formulation, safety, immunogenicity, and efficacy. Also, one manufacturer representative told us that his company was repeating clinical trials for an adjuvanted vaccine that had already been performed in Europe because the company had been unaware of certain FDA requirements for data that are not typically required for similar vaccines or by regulatory authorities in other countries. The manufacturer representative noted that this situation could have been avoided if FDA had provided a more complete explanation of the requirements in this regard. FDA officials acknowledged that its guidance documents are high level, explaining that specific instructions are unique to the product as guidance documents cannot cover all possible scenarios. In its comments, HHS officials noted that FDA’s guidance is intended to provide a regulatory framework, adding that guidance cannot be specific to individual manufacturing processes because these processes are trade secrets. Because of their inability to be very specific in guidance documents, FDA officials told us that they regularly meet with manufacturers developing vaccines using alternative technologies to discuss various issues and provide advice. They also noted that the agency has a good record of achieving its goals on meeting with manufacturers within a specific time frame, adding that officials often consult with manufacturers in other ways, such as participating in teleconferences. Additionally, FDA officials said that it is necessary to consult with manufacturers in stages because their review is an iterative process. They explained that it is not always apparent what requirements may be necessary for a late phase of clinical trials because such decisions are based, in part, on results from earlier trials the manufacturer has completed. Furthermore, FDA noted that it has approved many vaccines for other diseases that used alterative technologies, such as adjuvants, and these manufacturers were able to successfully develop and license their products using FDA’s guidance. Finally, FDA has published guidance on criteria for the formulation, safety, immunogenicity, and efficacy for vaccines using recombinant technology, and one manufacturer has submitted a licensing application for its influenza vaccine using this technology. According to HHS, part of this guidance, which is available on FDA’s Web site, is related to clinical trials and is specific to clinical data needed to support the licensure of pandemic influenza vaccines. HHS has expanded its recommendations for seasonal vaccination to a larger population and has released a 10-year strategic plan to address national immunizations. HHS also plans to assist manufacturers with high research and development costs by funding the establishment of specialized facilities. In addition, HHS plans to fund the enhancement of regulatory science capacity and FDA’s staff expertise to address challenges that may hinder the licensure of new influenza vaccines using alternative technologies. HHS has expanded its recommendations for seasonal influenza vaccination to a larger population and has released its 10-year strategy to enhance immunization rates in the United States, which it expects could eventually increase demand for influenza vaccine. In August 2010, HHS announced that it was expanding its vaccination recommendations for the 2010–11 influenza season from specific target groups based on personal risk from the disease to all persons aged 6 months and older. According to HHS, its expanded recommendations simplify the public health message to providers and to the public on who should be vaccinated against seasonal influenza. Because the 2010–11 influenza season is the first for which the recommendations are in place and the first influenza season after the 2009 H1N1 pandemic, HHS is also evaluating vaccination rates from this season for changes from previous years. For example, preliminary data from CDC suggest an increase in vaccination rates against seasonal influenza among children aged 6 months to 17 years. According to CDC, vaccination rates for this population increased by 6.7 percentage points, or from 42.3 percent during the 2009–10 influenza season to 49 percent, as of February 2011. Officials noted that currently, only about 40 percent of Americans are vaccinated against seasonal influenza. HHS added that eventually demand for seasonal vaccine could increase by approximately 32 percent—or 100 million people—as a result of the expanded recommendations. Additionally, a rise in immunization rates for seasonal influenza vaccine could result in an increase in the market for this vaccine of approximately $3 billion annually, according to HHS. In February 2011, HHS released its updated national immunization strategy, which outlines, in part, the department’s efforts to address low vaccination rates for influenza. This strategy, called the National Vaccine Plan, lays out HHS’s efforts to enhance aspects of vaccines and vaccination rates against infectious diseases and provides a comprehensive plan for U.S. vaccine and immunization efforts from childhood to adulthood. As we have noted above, several stakeholders we spoke with cited a lack of provider and public education and concerns regarding the safety of vaccines as factors affecting the demand for influenza vaccine. The National Vaccine Plan has been updated to reflect experiences from the 2009 H1N1 pandemic and describes various goals, such as enhancing provider and public education on vaccines and vaccine safety and assisting providers and the public with making informed decisions regarding vaccination. HHS also plans to develop a corresponding implementation plan that will include measurable indicators so the department can assess its progress in achieving the goals of the National Vaccine Plan; HHS anticipates releasing this implementation plan later in 2011. Additionally, HHS launched a new Web site, www.vaccines.gov in the spring of 2011 as another way of educating providers and the public on vaccines and vaccine safety. HHS plans to assist manufacturers with high research and development costs by supporting the establishment of two or three privately owned facilities called Centers for Innovation in Advanced Development and Manufacturing that will provide support and expertise to manufacturers. HHS indicated that it intends to enter into contracts to partially fund the construction of new facilities or the retrofitting of existing facilities using approximately $478 million available from various appropriations. Although not the primary purpose of these facilities, according to HHS, one benefit of these specialized facilities is that they could reduce smaller, less-experienced manufacturers’ research and development costs by providing needed resources and knowledge about manufacturing, and reduce the technical risks of researching and developing medical countermeasures, such as influenza vaccine produced using alternative technologies. These facilities are primarily intended to provide, on a routine basis, core services that include the advanced development and manufacturing of chemical, biological, radiological, and nuclear medical countermeasures. These specialized facilities may also be used in an emergency to make pandemic influenza vaccine produced using alternative technologies, such as recombinant technology. HHS noted that smaller, less-experienced manufacturers often lack the staff and other resources to address technical issues—such as those related to production, quality control, and licensure—resulting in delays and higher costs, which could cause an effort to fail. These specialized facilities would have the resources to provide manufacturers with the necessary staff, technical resources, and expertise to address these delays that can result in higher costs or effort failures. According to HHS, these facilities might also reduce the total cost of the federal government’s contracts with manufacturers. By using these specialized facilities for vaccine production, the costs associated with producing these initial vaccine doses, such as those for use in clinical trials, could be included in the facilities’ operating budgets rather than in manufacturers’ research and development contracts, thereby reducing the total amount of these contracts. According to HHS, the enhanced production capacity from these facilities could also help manufacturers with which HHS has contracts avoid production delays. These specialized facilities could also allow smaller, less-experienced manufacturers to focus more on developing new influenza vaccines using alternative technologies rather than on production and licensure issues. HHS anticipates awarding competitive contracts to establish these facilities in 2011 or 2012. HHS has announced plans to spend $170 million available from its fiscal year 2009 and fiscal year 2010 annual appropriations, in part, to facilitate FDA’s review of licensing applications for influenza vaccines produced using alternative technologies and for other medical countermeasures. Specifically, HHS intends to enhance regulatory science at FDA, that is, the development of new tests and methods to assess the safety, efficacy, quality, and performance of FDA-regulated products, such as influenza vaccines. According to HHS’s report, The Public Health Emergency Medical Countermeasures Enterprise Review, improvements in regulatory science at FDA will help strengthen the agency’s review of licensing applications. In October 2010, FDA released a report outlining a proposed framework for advancing regulatory science using the funding intended by HHS for this purpose. According to FDA, improvements in regulatory science would focus on transitioning products more efficiently through review from initial concepts to licensed products. In its report, FDA identified areas in which it would focus that would potentially assist it in reviewing licensing applications for products more quickly, including during an influenza pandemic or other public health emergency. In its October 2010 report, FDA proposes additional efforts that could enhance staff expertise in reviewing licensing applications for new vaccines using alternative technologies. For example, FDA intends to initiate a program to help recruit experts in emerging technologies to work as researchers and reviewers throughout the agency. FDA is also initiating the creation and support of Centers of Excellence in Regulatory Science to conduct applied regulatory science research both independently and in collaboration with the agency. According to FDA, this additional research will enhance staff expertise with emerging technologies. FDA has issued guidance to the industry on various aspects of vaccine production, such as on the selection of cells as a medium for producing vaccines and the clinical data needed for licensure of pandemic influenza vaccines. FDA officials noted that developing guidance relies on experience, which takes time to acquire, adding that they plan to continue to make themselves available to manufacturers to consult with and advise them on various aspects of the vaccine development process, including on conducting clinical trials and safety assessments. HHS, DOD, and the Department of State reviewed a draft of this report. HHS and DOD provided written comments, which we have reprinted in appendixes IV and V, respectively. The Department of State did not provide comments. HHS also provided technical comments, which we have incorporated as appropriate. In its comments, HHS stated that it agreed on the importance of expertise and research to the development of influenza vaccines produced using alternative technologies—cell-based and recombinant technologies and adjuvants. HHS also noted that the department has made significant contributions to advancing such expertise and research, as reflected in the collaboration within the department as well as with influenza vaccine manufacturers during the 2009 H1N1 pandemic. For example, HHS described how the Biomedical Advanced Research and Development Authority, FDA, and NIH worked with manufacturers producing both the seasonal and pandemic influenza vaccine. After approving seasonal vaccines from six manufacturers during the summer of 2009, FDA approved pandemic vaccines from four manufacturers in September 2009, and a pandemic vaccine from a fifth manufacturer in November 2009. HHS also described work done that allowed for influenza vaccine to be produced more rapidly. For example, FDA developed a technique to assess the sterility of vaccine, reducing the time for testing from 14 days to 5 days. HHS’s written comments also noted the department’s concern that our description of challenges identified by stakeholders could be construed as an endorsement of them. However, as stated in our objectives, scope, and methodology, we examined challenges identified by stakeholders to the development and licensure of influenza vaccines produced using alternative technologies, and we believe our report clearly attributes these statements to the stakeholders. In response to industry concerns, HHS stated that FDA has an excellent record of responding to industry within agreed-upon time frames under applicable law and that FDA’s guidance documents cannot be specific to individual manufacturing processes because these processes are trade secrets. HHS also stated that FDA provides clear guidance to manufacturers regarding the size of clinical trials and meets with sponsors of new vaccines at key stages of the product development process to provide further guidance that is informed by earlier trials. In its comments, DOD agreed with the contents of the draft and noted that it had no substantive or administrative issues with the draft report. We are sending copies of this report to the Secretaries of HHS, DOD, and State and to interested congressional committees. The report also is available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or crossem@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VI. The research, development, and review of licensing applications for new influenza vaccine for the U.S. market involve several stages. Manufacturers producing a biological product, of which influenza vaccines are one type, must submit a licensing application for review by the Food and Drug Administration (FDA) in order to market their vaccine in the United States. If FDA approves the application, the vaccine will be licensed for use in the United States. As shown in figure 1, this process can take, on average, a little over 10 years to complete. Both seasonal and pandemic influenza vaccines for the U.S. market are produced using egg-based technology—a complex process that involves growing seed strains in millions of fertilized chicken eggs. As shown in table 7, this process involves a sequence of steps that can take approximately 4 to 5 months to complete. Both seasonal and pandemic influenza vaccines for the U.S. market are produced using egg-based technology—a complex process that involves growing seed strains in millions of fertilized chicken eggs. The antigen for an egg-based influenza vaccine—the active substance in a vaccine that provides immunity by causing the body to produce protective antibodies to fight off a particular influenza strain—is derived from strains well matched to the strains in wide circulation. In order for a vaccine to be most effective, it needs to contain enough antigen to stimulate a protective immune response. Egg-based technology has been used to produce influenza vaccine for several decades. Department of Health and Human Services (HHS) officials we spoke with described it as a “tried and true” production technology with which regulators and manufacturers are familiar. This technology utilizes fertilized eggs as the medium for producing the vaccine. Additionally, several decades of safety and efficacy data on the influenza vaccine produced using egg-based technology are available. However, the timeliness of vaccine production is hindered, in part, by egg- based technology’s reliance on seed strain development and growth. Another factor affecting the production timeline is the amount of antigen produced per egg. For example, during the 2009 H1N1 pandemic, vaccine delivery was delayed, in part, because of poorer yields of antigen per egg than expected. Also, the amount of influenza vaccine that can be produced depends on the manufacturer’s egg supply. It generally takes 12 to 18 months to establish an egg supply large enough to meet the demands of either seasonal or pandemic influenza. Some experts we spoke with expressed concern that despite keeping chicken flocks producing the eggs in secure conditions to prevent contamination, these flocks are at risk of infection by, for example, the H5N1 avian influenza virus (also known as “bird flu”). Alternative technologies that can be used in producing influenza vaccines include alternative production technologies—such as cell-based and recombinant technologies—as well as the use of adjuvants. While various alternative technologies are in development, in this report we focus on these three because these are the alternative technologies the federal government has primarily funded. These three technologies have the potential to expand the supply or accelerate the availability of both seasonal and pandemic influenza vaccines. Expanding the supply or accelerating the availability of influenza vaccine is particularly important during times of a perceived seasonal vaccine shortage—when vaccine is not available and demand is highest— or during a pandemic when demand increases because of increased risk of disease and death. Expanding the supply or accelerating the availability of influenza vaccine can be done in two ways. The first is to increase the overall amount of vaccine available at the end of the production process; the second is to speed up the production process itself by, for example, reducing or eliminating step(s) in the process. The key potential benefit to cell-based technology is the ability to increase the overall amount of vaccine available at the end of the production process. This technology for influenza vaccines typically relies on the use of well-established cell lines, such as those originally derived from the kidney cells of monkeys or canines. These cells can exponentially increase in number, allowing for the rapid expansion of the medium used for influenza vaccine production. Additionally, cells can be stored in freezers and prepared for use within days or weeks for large-scale production demands. Vaccines using cell-based technology are licensed for use in the United States for use against other infectious diseases, such as polio. Both seasonal and pandemic vaccines using such technology are also licensed in other countries, such as those in the European Union, including Germany and Spain. Cell-based seasonal and pandemic vaccines are also licensed for use in Iceland and Norway. Despite the potential benefits of cell-based technology, there are challenges associated with its use. Similar to egg-based technology, cell- based technology relies on seed strain development and growth to obtain the influenza vaccine’s antigen. For example, during the 2009 H1N1 pandemic, manufacturers had low production yields in both eggs and cells when they started vaccine production, which resulted in limited supplies for delivery to the public. Also, cell-based technology has not yet been licensed for use with influenza vaccine for the U.S. market. Additionally, few manufacturers have established domestic production capacity for influenza vaccine using this technology, and construction costs for cell- based facilities are high. For example, the construction costs for Novartis Vaccine and Diagnostics Inc.’s cell-based facility in Holly Springs, North Carolina, were over $1 billion, of which HHS funded approximately 40 percent and the manufacturer funded the remaining 60 percent. Recombinant technology potentially increases the overall amount of vaccine available at the end of the production process and speeds up the production process itself. First, this technology can also utilize specialized cells—from mammals or from other sources, such as from bacteria, yeast, insects, or plants—that can exponentially increase in number as the medium for influenza vaccine production, allowing for the rapid expansion of the medium used for influenza vaccine production. Recombinant technology also has the potential to speed up the production process because it does not rely on the development and growth of a seed strain to obtain the influenza vaccine’s antigen. Instead, antigen is derived from the protein(s) on the surface of the influenza virus or from the virus’s genes. Recombinant technology is currently used in U.S.-marketed vaccines against other diseases, such as hepatitis B and the human papillomavirus, so FDA has experience reviewing licensing applications for vaccines produced using this technology. However, influenza vaccine using recombinant technology has not yet been licensed for use in the United States. Although some influenza vaccine has been produced for use and is currently being used in clinical trials, influenza vaccine has not yet been produced on a large scale using this production technology. One manufacturer, Protein Sciences Corporation, has submitted a licensing application to FDA for a recombinant seasonal influenza vaccine, but some experts we spoke with said it is unlikely we will know the benefits of this technology in producing influenza vaccine for several years. Adjuvants’ antigen-sparing capability has the potential to increase the amount of vaccine available at the end of the production process. Adjuvants—which can be used with influenza vaccines produced using egg-based, cell-based, or recombinant technologies—can enhance the immune response, thereby reducing the amount of antigen needed per vaccine dose. By reducing the amount of antigen needed per vaccine dose, adjuvants could increase the overall influenza vaccine supply. Adjuvants have other benefits beyond potentially accelerating the delivery of influenza vaccine (see table 8). Seasonal influenza vaccines administered with adjuvants are licensed for use in other countries for targeted populations, such as the elderly. Adjuvants are licensed for use with seasonal influenza vaccine in other countries, such as those in the European Union, including Belgium and Italy. Adjuvanted seasonal influenza vaccines are also licensed for use in Argentina, Columbia, Hong Kong, Mexico, the Republic of South Africa, New Zealand, and Thailand. Adjuvants were also used with the 2009 H1N1 pandemic vaccine in other countries. These other countries include Canada and Malyasia. Although adjuvants have been used in other vaccines licensed for the U.S. market—such as in vaccine against tetanus—FDA has not approved a licensing application for a seasonal influenza vaccine using this technology in the United States; adjuvants were also not used in the U.S. supply of 2009 H1N1 pandemic vaccine. Some experts have noted potential concerns regarding the safety of repeated, annual administration of adjuvants in healthy populations—such as young adults—in a seasonal influenza vaccine. In addition to the contact named above, Thomas Conahan, Assistant Director; George Bogart; Cathleen Hamann; Mariel Lifshitz; Gay Hee Lee; John Rancourt; and Kristal Vardaman made key contributions to this report. Influenza Pandemic: Monitoring and Assessing the Status of the National Pandemic Implementation Plan Needs Improvement. GAO-10-73. Washington, D.C.: November 24, 2009. Influenza Pandemic: Gaps in Pandemic Planning and Preparedness Need to Be Addressed. GAO-09-909T. Washington, D.C.: July 29, 2009. Influenza Pandemic: Continued Focus on the Nation’s Planning and Preparedness Efforts Remains Essential. GAO-09-760T. Washington, D.C.: June 3, 2009. Influenza Pandemic: Sustaining Focus on the Nation’s Planning and Preparedness Efforts. GAO-09-334. Washington, D.C.: February 26, 2009. Influenza Pandemic: HHS Needs to Continue Its Actions and Finalize Guidance for Pharmaceutical Interventions. GAO-08-671. Washington, D.C.: September 30, 2008. Influenza Pandemic: Efforts Under Way to Address Constraints on Using Antivirals and Vaccines to Forestall a Pandemic. GAO-08-92. Washington, D.C.: December 21, 2007. Influenza Vaccine: Issues Related to Production, Distribution, and Public Health Messages. GAO-08-27. Washington, D.C.: October 31, 2007. Influenza Pandemic: Further Efforts Are Needed to Ensure Clearer Federal Leadership Roles and an Effective National Strategy. GAO-07-781. Washington, D.C.: August 14, 2007. Influenza Pandemic: Efforts to Forestall Onset Are Under Way; Identifying Countries at Greatest Risk Entails Challenges. GAO-07-604. Washington, D.C.: June 20, 2007. Influenza Pandemic: DOD Combatant Commands’ Preparedness Efforts Could Benefit from More Clearly Defined Roles, Resources, and Risk Mitigation. GAO-07-696. Washington, D.C.: June 20, 2007. Avian Influenza: USDA Has Taken Important Steps to Prepare for Outbreaks, but Better Planning Could Improve Response. GAO-07-652. Washington, D.C.: June 11, 2007. Influenza Pandemic: Applying Lessons Learned from the 2004–05 Influenza Vaccine Shortage. GAO-06-221T. Washington, D.C.: November 4, 2005. Influenza Vaccine: Shortages in 2004–05 Season Underscore Need for Better Preparation. GAO-05-984. Washington, D.C.: September 30, 2005. Influenza Pandemic: Challenges in Preparedness and Response. GAO-05-863T. Washington, D.C.: June 30, 2005. Influenza Pandemic: Challenges Remain in Preparedness. GAO-05-760T. Washington, D.C.: May 26, 2005.

Summary: Production delays for the 2009 H1N1 pandemic vaccine using the current egg-based production technology heightened interest in alternative technologies that could expand the supply or accelerate the availability of influenza vaccine. Within the federal government, the Department of Health and Human Services (HHS) and the Department of Defense (DOD) support the development of technologies that can be used in producing influenza vaccines. HHS's Food and Drug Administration (FDA) reviews licensing applications for new vaccine, and the Department of State is the U.S. diplomatic liaison to the international entity that declares worldwide pandemics. GAO was asked to review federal activities for the development of alternative technologies used in producing influenza vaccine. This report examines (1) federal funding from fiscal year 2005 through March 2011 for alternative technologies and the status of manufacturers' efforts, (2) challenges to development and licensure identified by stakeholders, and (3) how HHS is addressing those challenges. GAO reviewed HHS and DOD documents and funding data. GAO also interviewed stakeholders, including manufacturer representatives, industry associations, and other experts on challenges to development and licensure. GAO interviewed HHS officials on how they are addressing those challenges. From fiscal year 2005 through March 2011, HHS and DOD provided about $2.1 billion in funding for the development of alternative technologies that could potentially expand the supply or accelerate the availability of influenza vaccine. Specifically, HHS and DOD have funded two alternative production technologies--cell-based and recombinant technologies, which produce vaccine in cells instead of eggs--and adjuvants, which can reduce the amount of vaccine needed to stimulate an immune response. HHS's funding supports the development of a new influenza vaccine using alternative technologies with the goal of manufacturers submitting licensing applications to FDA. DOD's funding supports the research and development of a technology that can make various vaccines, including influenza vaccines. HHS awarded $1 billion in contracts to manufacturers to develop cell-based technology, with manufacturers making progress toward licensure. HHS and DOD funded $296.5 million in contracts and $86.9 million in technology investment agreements, respectively, for the development of recombinant technology. HHS also awarded about $152 million in contracts for the development of adjuvanted influenza vaccines. Two manufacturers receiving HHS funds plan to submit licensing applications for their adjuvanted vaccines to FDA within the next 2 years. Some stakeholders said low demand, high research and development costs, and regulatory challenges can hinder the development and licensure of new vaccines using alternative technologies. For example, despite the United States using more seasonal vaccine than any other country, some stakeholders told us that low vaccination rates can decrease incentives for manufacturers to develop new influenza vaccines using alternative technologies because there is not sufficient demand for new products. Some stakeholders said high research and development costs can also decrease manufacturers' incentives; however, HHS noted that increased investments in this area have generated a significant interest in this type of research and development. Some stakeholders also told us that some of FDA's guidance documents are not sufficiently comprehensive. FDA officials told us that their guidance documents cannot cover all possible scenarios; thus, they regularly meet with manufacturers to discuss issues and provide advice. HHS is addressing challenges in the development and licensure of new influenza vaccines using alternative technologies. For example, HHS intends to fund the establishment of specialized facilities that will provide support and expertise to manufacturers. Additionally, through FDA, HHS plans to facilitate the review of licensing applications for new influenza vaccines using alternative technologies and to enhance FDA's staff expertise. HHS, DOD, and the Department of State reviewed a draft of this report. In commenting on a draft of this report, HHS and DOD agreed with GAO on its findings. The Department of State did not provide comments. HHS provided suggestions to clarify the discussion.