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.