The Centers for Disease Control and Prevention (CDC) estimates that influenza ("flu"), aviral respiratory illness, causes 36,000 deaths and more than 200,000 hospitalizations in the UnitedStates each year. For many years, vaccination has been urged for those at highest risk of seriousillness from flu, such as older persons and those with chronic illnesses. Peculiarities of flu vaccineproduction, especially its finite shelf life (it is good only for the one season for which it is produced),have led to supply and demand imbalances in recent years. Overall demand for flu vaccine hasgrown over the past decade. But CDC reports that there have been vaccine surpluses each of the pastfive winters, and unused vaccine has been discarded. (See Table 1.) Within a season,maldistribution of vaccine may lead to shortages at particular times and places, despite an overallsurplus. Gauging demand from year to year in what is mostly a private-sector market is a matter ofboth art and science, an exercise fraught with difficulty. The shortage of flu vaccine in the fall of 2004 renewed discussion of the fragility of thenation's system for providing this potentially life-saving product. Some have expressed concern thatthis situation bodes ill for national preparedness for an influenza pandemic or a large-scalebioterrorism event. This report will describe the current system of flu vaccine production anddelivery, the causes of supply problems, and options for improvement. On October 5, 2004, Chiron (pronounced KÄ«Ì-ron), a California-based biotechnologycompany, notified U.S. health officials that British regulatory authorities had suspended productionof influenza ("flu") vaccine in its plant in Liverpool, England, due to vaccine safety concerns. Theplant was slated to provide between 46 million and 48 million doses of injectable flu vaccine(FluvirinÂ®) for the U.S. market for the imminent 2004-2005 flu season, almost half the plannednationwide supply of 100 million doses. Aventis-Pasteur (Aventis), a French-based company witha plant in Swiftwater, Pennsylvania, was slated to produce 52 million doses of its injectable fluvaccine (FluzoneÂ®). After the Chiron suspension was announced, Aventis announced that its production for thisseason was on target, and could be augmented somewhat to a total of 58 million doses by continuingproduction through January 2005. An additional manufacturer, MedImmune, based in Maryland,produces a flu vaccine made of live virus for intra-nasal administration (FluMist,â¢ also referred toas live attenuated influenza vaccine, or LAIV). MedImmune was slated to produce 2 million dosesfor the 2004-2005 season after the product was poorly received the prior year. The companyannounced that it could ramp up production somewhat, but because LAIV is a live virus product, itis not licensed for use in some of the high-risk priority groups identified by CDC. The DefenseDepartment sought to obtain doses of LAIV for its healthy recruits slated for overseas deployment,in order to assure force protection without consuming the limited civilian supply of injectablevaccine. The announcement of Chiron's suspension prompted CDC and its Advisory Committee onImmunization Practices (ACIP) to re-define the groups most at risk (enumerated in Table 2 ), to begiven priority for the available vaccine doses. CDC also activated its Emergency Operations Centerto coordinate nationwide tracking of available vaccine doses, high-priority individuals who mightneed them, and infections signaling the beginning of the winter flu season. Officials from theDepartment of Health and Human Services (HHS) and CDC repeated in public statements thatvaccine doses from Aventis would continue to roll off production lines for several months, and urgedthose at risk not to stand in long lines because they believed that there will not be futureopportunities to be vaccinated. On November 9, 2004, CDC announced an allocation plan todistribute the remaining vaccine doses to state health departments based on states' unmet needs. (1) The allocation plan wouldapply to Aventis doses that became available each week through December 2004 and January 2005. In addition, CDC developed clinician recommendations for the use of antiviral drugs . Theseare drugs that can be given before infection occurs as a preventive measure, or during illness tominimize serious complications. HHS estimated that 40 million doses of antiviral drugs would beavailable, including 7 million doses purchased by HHS to treat low-income individuals, and theremainder within the private sector. The Food and Drug Administration (FDA) sent a team to the Liverpool plant to determineif any of the affected Chiron vaccine lots could be salvaged, but announced on October 15, 2004 thatnone of the vaccine was safe for use. The FDA also sought to identify additional sources of vaccinefrom other manufacturers, domestically and abroad. (Both British and U.S. regulatory agencies arerequired to assure the safety and efficacy of the Chiron product, for export and import respectively.) On December 7, 2004, HHS announced that the FDA had authorized the use of a GlaxoSmithKlineinfluenza vaccine, FluarixÂ® (manufactured in Germany), in the United States under anInvestigational New Drug (IND) application, and had reached an agreement with the company topurchase 1.2 million doses for distribution to areas most in need. (2) Because the vaccine is notlicensed in the United States, the IND allowed it to be used as an investigational drug. Thosereceiving it would be required to sign a release form noting informed consent for use of theinvestigational product, and the company would be required to conduct enhanced monitoring of theproduct's use. In response to the shortage, the House Committee on Government Reform launched aninvestigation of the FDA to determine whether it knew or should have known of the impendingproduction failure, as its British counterpart did, since FDA is required to assure the safety andefficacy of this product for importation. The House Committee on Energy and Commerce launchedan investigation of the activities of HHS and Chiron leading up to the shortage. Also following announcement of the Chiron suspension, the Securities and ExchangeCommission (SEC) and the Justice Department launched inquiries into whether the company knewof the imminent failure of its annual production before its public announcement. In addition, severalclass-action stockholder lawsuits were filed against Chiron on the premise that the company had notfulfilled its disclosure obligations. States responded to the shortage by launching plans to locate and re-distribute or ration dosesof vaccine, and by pursuing widespread reports of price-gouging. Some states exercised authorityto prohibit administration of vaccine to non-priority individuals. Some localities held lotteries toapportion limited vaccine to those in priority groups. By early December 2004, some states werereporting that all those in priority groups who sought vaccine had received it, and that they had dosesremaining. In order to prevent possible wastage of vaccine, CDC sent an update to states onDecember 8, 2004, suggesting that they consider expanding vaccination recommendations to thoseoutside the priority groups, if circumstances warranted. A number of states that had earlier placedrestrictions on providers relaxed them in response. It is not uncommon for there to be a patchwork of vaccine shortages and surpluses at differenttimes and places in the course of a flu season, or for there to be early shortages that resolve into aneventual surplus at seasons' end. The causes of this paradoxical imbalance include the timing andseverity of the flu season, (which affect demand), the overall supply for the season, and the supplyat times of peak demand. (3) In early December 2004, CDC officials were reporting that the influenza season was off toa slow start, and a number of states were reporting a drop-off in demand for flu vaccine. Inmid-December 2004, the CDC published the results of two surveys. One found that as of November30, 2004, only about one-third of individuals in high-priority groups had been vaccinated, below thecoverage rate for the prior season. (4) The other survey of demand for vaccine, conducted by the HarvardSchool of Public Health, found that slightly less than two-thirds of seniors who sought to bevaccinated were successful, and that more than half of high-risk adults did not attempt to bevaccinated, some because they felt they would not be successful. (5) After the surveys werepublished, the ACIP reviewed the status of flu vaccine supply and issued revised guidelines forgroups that should receive vaccine, essentially restoring its pre-shortage recommendations. (6) The challenge for publichealth officials was to maintain demand among unvaccinated high-risk individuals as vaccinecontinued to be produced each week, while avoiding a surplus at year's end. Historically, manufacturers, distributors and providers have absorbed the cost of unusedvaccine. The cost of additional vaccine in 2004, when it was specifically requested by the U.S.government, would have to be borne by the U.S. government in this special circumstance. Somevaccine policy experts voiced concern about the possibility of a surplus, and discussion ensued aboutfinancial responsibility for vaccine doses that had not yet been delivered. A news report suggestedthat HHS would use federal funds designated for state immunization programs to purchase theinvestigational flu vaccine doses from Germany, thereby reducing the amounts available to supportchildhood immunization programs in states. (7) The CDC Director subsequently confirmed the use of the stateaccount but noted that it could potentially be reimbursed from other accounts. She also noted thatFY2005 appropriations had not yet been signed by the President and therefore were not available atthe time the purchase was arranged.