Influenza Vaccine Shortages and Implications

CRS Report for Congress
Influenza Vaccine Shortages and Implications
Updated December 27, 2004
Sarah A. Lister
Specialist in Public Health and Epidemiology
Domestic Social Policy Division
Erin D. Williams
Specialist in Bioethical Policy
Domestic Social Policy Division

Congressional Research Service ˜ The Library of Congress

Influenza Vaccine Shortages and Implications
Summary
On October 5, 2004, Chiron (pronounced K§'-ron), a California-based
biotechnology company, notified U.S. health officials that British regulatory
authorities had suspended production of influenza (“flu”) vaccine in its plant in
Liverpool, England, due to vaccine safety concerns. The plant was slated to provide
between 46 million and 48 million doses of flu vaccine for the U.S. market for the
imminent 2004-2005 flu season, almost half the expected nationwide supply.
The announcement of Chiron’s suspension prompted the Centers for Disease
Control and Prevention (CDC) and its Advisory Committee on Immunization
Practices (ACIP) to re-define the groups most at risk, to be given priority for the
available vaccine doses. CDC coordinated nationwide tracking of available vaccine,
high-priority individuals who might need it, and infections signaling the start of the
winter flu season. The Food and Drug Administration (FDA) sent a team to the
Liverpool plant to determine whether any of the Chiron vaccine lots could be
salvaged (they later determined that they could not) and sought additional sources of
vaccine from other manufacturers, domestically and abroad. States launched plans
to locate and re-distribute or ration vaccine, and responded to reports of price-
gouging. The response of local, state, and federal agencies was limited because most
of the U.S. flu vaccine market is in private hands.
Several bills were introduced in response to the shortage, and proposals^th
introduced earlier in the 108 Congress, in response to flu vaccine supply problems
during the 2003-2004 season, received renewed attention. Two hearings on influenza
vaccine were held immediately prior to announcement of the shortage, indicating
Congress’s ongoing interest in this issue. Additional hearings were held after the
shortage was announced. Congress also passed (in P.L. 108-357, the American Jobs
Creation Act of 2004) a provision adding flu vaccine to the National Vaccine Injury
Compensation Program (VICP), and provided $100 million in FY2005 funding for
influenza preparedness, which could be used to purchase flu vaccine.
The shortage illustrates the challenges that the federal government faces in
responding to public health threats. Much of the responsibility for preventing or
managing the shortage rests with the states or with the private sector, and the
threshold over which the federal government would wrest control from either appears
high. As a result, the federal government may appear disorganized or unresponsive.
The shortage also raises questions about the role and effectiveness of government in
rationing a scarce health resource.
As communities across the country saw long lines of sick and elderly citizens
waiting in vain for flu vaccine, and concerns about the supply for the 2005-2006
season emerged as well, policymakers asked why the system to provide this
potentially life-saving product was so unreliable, and what could be done about it.
Some have expressed concern that this situation bodes ill for preparedness for an
influenza pandemic or a large-scale bioterrorism event. This report will describe the
system of flu vaccine production and delivery, the causes of supply problems, and
options for improvement. It will be updated as circumstances warrant.

Contents
In troduction ......................................................1
Flu Vaccine Shortage in the 2004-2005 Season..........................1
Government and Corporate Actions...............................1
Shortage to Surplus?...........................................3
Implications for the 2005-2006 Season.............................5
Scientific and Technical Issues.......................................5
Annual Strain Selection and Vaccine Production.....................5
Opportunities to Streamline Vaccine Production.....................6
Legal and Policy Issues.............................................7
Overview ....................................................7
Government Responsibility for Vaccines...........................8
Determining Annual Flu Vaccine Production........................9
Flu Vaccine Distribution.......................................10
Re-Prioritizing Groups in Response to the Shortage..................10
Vaccine Rationing............................................13
Actions During the 2004 Vaccine Shortage.....................13
Strategies for Rationing....................................13
Price Gouging...............................................18
Economic Issues..................................................19
Overview ...................................................19
Economic Risk...............................................20
The Problem.............................................20
Proposals to Mitigate Economic Risk.........................21
Injury Liability...............................................22
Vaccine Pricing..............................................23
Implications for Pandemic Preparedness...............................23
Conclusion ......................................................25
Appendix A. Congressional Action in the 108^th Congress.................27
Legislation ..................................................27
Hearings ....................................................29
Investigations ................................................30

Appendix B. Information Resources..................................31
CRS Products................................................31
Government Accountability Office (GAO) Products.................31
Institute of Medicine (IOM) Reports..............................31
Health and Human Services (HHS) Resources......................32
Centers for Disease Control and Prevention (CDC) Resources..........32
Food and Drug Administration (FDA) Resources....................32
Health Resources and Services Administration (HRSA) Resources......32
National Institutes of Health (NIH) Resources......................33
World Health Organization (WHO) Resources......................33
Other Key Resources..........................................33
List of Tables
Table 1. Surplus Flu Vaccine, 1999-2003...............................9
Table 2. Federal Recommendations for Flu Vaccine, Before and After
the Vaccine Shortage..........................................12
Table 3. CDC Purchases of Flu Vaccine for 2004-2005...................19

Influenza Vaccine Shortages
and Implications
Introduction
The Centers for Disease Control and Prevention (CDC) estimates that influenza
(“flu”), a viral respiratory illness, causes 36,000 deaths and more than 200,000
hospitalizations in the United States each year. For many years, vaccination has been
urged for those at highest risk of serious illness from flu, such as older persons and
those with chronic illnesses. Peculiarities of flu vaccine production, 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
has grown over the past decade. But CDC reports that there have been vaccine
surpluses each of the past five 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 overall surplus. Gauging demand from year
to year in what is mostly a private-sector market is a matter of both art and science,
an exercise fraught with difficulty.
The shortage of flu vaccine in the fall of 2004 renewed discussion of the
fragility of the nation’s system for providing this potentially life-saving product.
Some have expressed concern that this situation bodes ill for national preparedness
for an influenza pandemic or a large-scale bioterrorism event. This report will
describe the current system of flu vaccine production and delivery, the causes of
supply problems, and options for improvement.
Flu Vaccine Shortage in the 2004-2005 Season
Government and Corporate Actions
On October 5, 2004, Chiron (pronounced K§'-ron), a California-based
biotechnology company, notified U.S. health officials that British regulatory
authorities had suspended production of influenza (“flu”) vaccine in its plant in
Liverpool, England, due to vaccine safety concerns. The plant was slated to provide
between 46 million and 48 million doses of injectable flu vaccine (Fluvirin®) for the
U.S. market for the imminent 2004-2005 flu season, almost half the planned
nationwide supply of 100 million doses. Aventis-Pasteur (Aventis), a French-based
company with a plant in Swiftwater, Pennsylvania, was slated to produce 52 million
doses of its injectable flu vaccine (Fluzone®).
After the Chiron suspension was announced, Aventis announced that its
production for this season was on target, and could be augmented somewhat to a total

of 58 million doses by continuing production through January 2005. An additional
manufacturer, MedImmune, based in Maryland, produces a flu vaccine made of live
virus for intra-nasal administration (FluMist,™ also referred to as live attenuated
influenza vaccine, or LAIV). MedImmune was slated to produce 2 million doses for
the 2004-2005 season after the product was poorly received the prior year. The
company announced that it could ramp up production somewhat, but because LAIV
is a live virus product, it is not licensed for use in some of the high-risk priority
groups identified by CDC. The Defense Department 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 injectable vaccine.
The announcement of Chiron’s suspension prompted CDC and its Advisory
Committee on Immunization Practices (ACIP) to re-define the groups most at risk
(enumerated in Table 2), to be given priority for the available vaccine doses. CDC
also activated its Emergency Operations Center to coordinate nationwide tracking of
available vaccine doses, high-priority individuals who might need them, and
infections signaling the beginning of the winter flu season. Officials from the
Department of Health and Human Services (HHS) and CDC repeated in public
statements that vaccine doses from Aventis would continue to roll off production
lines for several months, and urged those at risk not to stand in long lines because
they believed that there will not be future opportunities to be vaccinated. On
November 9, 2004, CDC announced an allocation plan to distribute the remaining¹
vaccine doses to state health departments based on states’ unmet needs. The
allocation plan would apply 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. These are drugs that can be given before infection occurs as a preventive
measure, or during illness to minimize serious complications. HHS estimated that
40 million doses of antiviral drugs would be available, including 7 million doses
purchased by HHS to treat low-income individuals, and the remainder within the
private sector.
The Food and Drug Administration (FDA) sent a team to the Liverpool plant to
determine if any of the affected Chiron vaccine lots could be salvaged, but announced
on October 15, 2004 that none of the vaccine was safe for use. The FDA also sought
to identify additional sources of vaccine from other manufacturers, domestically and
abroad. (Both British and U.S. regulatory agencies are required 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
GlaxoSmithKline influenza vaccine, Fluarix® (manufactured in Germany), in the
United States under an Investigational New Drug (IND) application, and had reached
an agreement with the company to purchase 1.2 million doses for distribution to areas

¹ Centers for Disease Control and Prevention, “CDC and States Announce Plan to Distribute
10.3 Million Flu Shots Nationwide; Public Health Officials Call Allocation Fair and Aimed
at Most Vulnerable Americans,” press release, Nov. 9, 2004.

most in need.² Because the vaccine is not licensed in the United States, the IND
allowed it to be used as an investigational drug. Those receiving it would be required
to sign a release form noting informed consent for use of the investigational product,
and the company would be required to conduct enhanced monitoring of the product’s
use.
In response to the shortage, the House Committee on Government Reform
launched an investigation of the FDA to determine whether it knew or should have
known of the impending production failure, as its British counterpart did, since FDA
is required to assure the safety and efficacy of this product for importation. The
House Committee on Energy and Commerce launched an investigation of the
activities of HHS and Chiron leading up to the shortage.
Also following announcement of the Chiron suspension, the Securities and
Exchange Commission (SEC) and the Justice Department launched inquiries into
whether the company knew of the imminent failure of its annual production before
its public announcement. In addition, several class-action stockholder lawsuits were
filed against Chiron on the premise that the company had not fulfilled its disclosure
obligations.
States responded to the shortage by launching plans to locate and re-distribute
or ration doses of vaccine, and by pursuing widespread reports of price-gouging.
Some states exercised authority to prohibit administration of vaccine to non-priority
individuals. Some localities held lotteries to apportion limited vaccine to those in
priority groups. By early December 2004, some states were reporting that all those
in priority groups who sought vaccine had received it, and that they had doses
remaining. In order to prevent possible wastage of vaccine, CDC sent an update to
states on December 8, 2004, suggesting that they consider expanding vaccination
recommendations to those outside the priority groups, if circumstances warranted.
A number of states that had earlier placed restrictions on providers relaxed them in
response.
Shortage to Surplus?
It is not uncommon for there to be a patchwork of vaccine shortages and
surpluses at different times and places in the course of a flu season, or for there to be
early shortages that resolve into an eventual surplus at seasons’ end. The causes of
this paradoxical imbalance include the timing and severity of the flu season, (which
affect demand), the overall supply for the season, and the supply at times of peak
demand.³
In early December 2004, CDC officials were reporting that the influenza season
was off to a slow start, and a number of states were reporting a drop-off in demand

² Department of Health and Human Services, “HHS Purchases 1.2 Million Doses of Flu
Vaccine,” press release, Dec. 7, 2004.
³ A discussion of this problem in the 2000-2001 flu season is found in GAO, Flu Vaccine:
Supply Problems Heighten Need to Ensure Access for High-Risk People, GAO-01-624, May

15, 2001.

for flu vaccine. In mid-December 2004, the CDC published the results of two
surveys. One found that as of November 30, 2004, only about one-third of
individuals in high-priority groups had been vaccinated, below the coverage rate for
the prior season.⁴ The other survey of demand for vaccine, conducted by the Harvard
School of Public Health, found that slightly less than two-thirds of seniors who
sought to be vaccinated were successful, and that more than half of high-risk adults
did not attempt to be vaccinated, some because they felt they would not be
successful.⁵ After the surveys were published, the ACIP reviewed the status of flu
vaccine supply and issued revised guidelines for groups that should receive vaccine,
essentially restoring its pre-shortage recommendations.⁶ The challenge for public
health officials was to maintain demand among unvaccinated high-risk individuals
as vaccine continued to be produced each week, while avoiding a surplus at year’s
end.
Historically, manufacturers, distributors and providers have absorbed the cost
of unused vaccine. 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. Some vaccine policy experts voiced concern about the
possibility of a surplus, and discussion ensued about financial responsibility for
vaccine doses that had not yet been delivered. A news report suggested that HHS
would use federal funds designated for state immunization programs to purchase the
investigational flu vaccine doses from Germany, thereby reducing the amounts
available to support childhood immunization programs in states.⁷ The CDC Director
subsequently confirmed the use of the state account but noted that it could potentially
be reimbursed from other accounts. She also noted that FY2005 appropriations had
not yet been signed by the President and therefore were not available at the time the
purchase was arranged.⁸ In FY2005 appropriations, Congress provided HHS with
$100 million to ensure year-round influenza vaccine production capacity, stating that
the Secretary could use the funds for flu vaccine purchase if deemed necessary.⁹

⁴ CDC, “Estimated Influenza Vaccination Coverage Among Adults and Children — United
States, September 1-November 30, 2004,” MMWR, vol. 53, no. 49, Dec. 17, 2004, pp.

1147-1153.

⁵ CDC, “Experiences with Obtaining Influenza Vaccination Among Persons in Priority
Groups During a Vaccine Shortage — United States, October-November 2004,” MMWR,
vol. 53, no. 49, Dec. 17, 2004, pp. 1153-1155.
⁶ CDC, “CDC’s Advisory Committee on Immunization Practices Expands Priority Groups
for Inactivated Influenza Vaccination,” press release, Dec. 17, 2004.
⁷ One of the sources of funds for state immunization programs is the CDC Immunization
Grant Program, also called “Section 317” for its authorization in the Public Health Service
Act. The proposal for use of Section 317 funds is discussed by Gardiner Harris in “Money
for Vaccinating Children Is Diverted, Officials Say,” New York Times, Dec. 16, 2004. More
information on the Section 317 program is at [http://www.cdc.gov/programs/immun04.htm].
⁸ CDC, remarks of Director Julie L. Gerberding, “Update on Current Influenza Season and
Vaccine Supply in the United States,” transcript of telebriefing, Dec. 16, 2004.
⁹ The FY2005 Consolidated Appropriations Act, P.L. 108-447, section on Labor, Health and
Human Services, and Education, Public Health and Social Services Emergency Fund,
Congressional Record, Nov. 19, 2004, p. H10324.

Implications for the 2005-2006 Season
The flu vaccine supply for the 2005-2006 season became a matter of serious
concern when, in early December 2004, British regulators extended their suspension
of Chiron’s Liverpool plant through March 2005.¹⁰ While the action was intended
to allow more time for Chiron’s remediation efforts at the plant, many were
concerned that the company might not succeed in its efforts to return as a licensed
U.S. supplier for the upcoming season. It was reported that Aventis would be able
to expand its production. In addition, HHS launched an unprecedented effort to
license the GlaxoSmithKline vaccine in less than one year, with the company saying
it could supply 10 to 20 million doses for the U.S. market for 2005-2006. The
process typically takes several years. Another manufacturer, ID Biomedical of
Canada, sought FDA licensure for its flu vaccine but did not anticipate its availability
in the U.S. before 2007.
Scientific and Technical Issues
Annual Strain Selection and Vaccine Production
In general, vaccines, which are regulated as biologics by the FDA Center for
Biologics Evaluation and Research (CBER), are more tricky to produce than are
drugs. Manufacturers must successfully grow the particular virus or other organism
of interest while avoiding the growth of other organisms that might contaminate the
final product. Several peculiarities of the influenza virus itself and its production
process make flu vaccine production especially complicated. There are numerous
points at which the process could fail, and has failed in recent years.
The influenza virus changes over time. From year to year, the dominant strains
of virus in circulation change, which is why we may get sick every year from flu, in
contrast with having lifelong immunity to more stable viruses such as measles. Each
year in late winter, the FDA, with input from the National Vaccine Advisory
Committee and using surveillance information from the World Health Organization
(WHO) and CDC, reviews virus strains in global circulation and selects three that are
most likely to cause serious illness in the United States during the subsequent winter
season (i.e., one year hence). The chosen strains are incorporated into that next
winter’s trivalent flu vaccine, which typically contains at least one new strain each
year. Strain selection may be based on both the dominance and severity of strains in
circulation, but may be limited by certain obstacles. For example, an especially
virulent strain called Fujian was an obvious choice for the 2003-2004 flu vaccine, but
it could not be successfully grown in eggs in time to include it in the vaccine. This
problem was eventually surmounted, and based on its continuing circulation, the
Fujian strain was included in the 2004-2005 flu vaccine.

¹⁰ Chiron Corporation, “[Britain’s Medicines and Healthcare Products Regulatory Agency]
Notifies Chiron of Continuing Suspension of Liverpool License for Influenza Vaccines;
Suspension May Be Lifted If Compliance with License Demonstrated,” press release, Dec.

7, 2004, at [http://www.chiron.com].

To make large amounts of virus for vaccine production, the virus must be grown
in fertilized eggs. Large numbers of fertilized eggs are required each year to support
vaccine production. They must be specially produced, assuring the health of the
laying hens, appropriate sanitation, care in transport, incubation, and other actions as
required by the FDA to assure vaccine safety and efficacy. This endeavor is far more
complicated than the production of unfertilized eggs for food. Reliance on eggs and
is a rate-limiting step in flu vaccine production, requiring many weeks for growing
the virus and extracting it from the eggs, and introducing contamination risks.
Each year the current flu vaccine production system is a race against the clock.
Strains must be selected by February in order that they can be grown, purified,
processed and made into vaccine. Under optimal conditions vaccine is made in
batches from August through November, barely making it to market ahead of the
annual influenza epidemic. Breakdowns in the process, especially one occurring in
the fall as with the Chiron vaccine, can subvert the entire production volume. It is
difficult, if not impossible, to start over within a given season, so as with the Chiron
situation, a large-scale process failure can lead to complete loss of the entire season’s
vaccine production from that supplier.
Opportunities to Streamline Vaccine Production
The flu vaccine production process can be optimized in a number of ways. A
promising option is replacement of the cumbersome egg-growth step with cell culture
methods, in which the virus is grown in tubes or vats of certain cells. With this
technique, growth is faster, more controlled, takes up less space, and introduces
fewer contamination problems than using eggs. Cell culture techniques could make
the annual flu vaccine production cycle less prone to failures and more amenable to
re-starting production within a season if problems do arise. In other words, cell
culture techniques can provide surge capacity within existing infrastructure. This
technique is not currently FDA-approved for flu vaccine production, but is in early
stages of clinical trials, funded by the National Institutes of Health (NIH). Potential
problems must be evaluated, such as the risk of cell components and genes getting
into the vaccine or the virus. Also, for existing flu vaccine manufacturers to use this
method they would have to renovate existing facilities or construct new ones, and
would have to develop consistency in meeting good manufacturing practices (GMPs)
and other standards if they are to reliably produce vaccine each year.
Flu vaccine production can also be optimized by using reverse genetics to
produce “vaccine strains,” strains of influenza virus with the right combination of
traits to stimulate immunity, and to grow well in eggs. Currently, obtaining strains
with the right characteristics for vaccine production is a trial-and-error process;
strains are grown together in batches and sampled in a search for those with the
desired traits. With reverse genetics, the desired parts of the viral genome are cloned
and combined to create the needed traits more quickly and reliably. Reverse genetics
is not currently approved for vaccine production, but NIH-funded clinical trials are
currently underway using the technique to produce vaccine for the strain of avian
influenza (“bird flu”) now circulating in Asia, in the event that it becomes a serious
human pathogen. The safety and efficacy of flu vaccine produced using this
technique remains to be evaluated. In addition, there are potential consumer

acceptance concerns, especially in Europe, because the vaccine virus produced is a
genetically modified organism.
Another opportunity to optimize annual flu vaccine production rests with steady
enhancement of global influenza surveillance, which could improve the speed and
accuracy of strain selection.
Ultimately, the influenza virus holds two trump cards for which science does not
offer solutions on the near horizon. First, there is a limited ability to predict how the
virus will modify itself into each year’s dominant circulating strains. Once these
strains emerge, there is a race against time to produce vaccine while the strains are
actually causing illness somewhere on the planet. Second, the regular drifts of the
viral genome (and the more cataclysmic shifts that define a pandemic) are inherent
in its genes, and the resulting evasion of the human immune response is inherent in
our genes. This relationship has existed for eons, and no near-term scientific
breakthrough is likely to change it. Those seeking to prevent influenza infection are
stuck with the prospect of annual flu vaccines for the foreseeable future.
Legal and Policy Issues
Overview
The flu vaccine shortage announced on October 5, 2004, unfolded within a
complex interaction of government and private sector actions, leading many to
question whether the federal government’s authority is adequate to prevent these
types of crises. States and the federal government have different roles and authorities
with respect to this event. In general, public health authority rests with the states as
an exercise of their police powers. As a result, states took the lead in restricting
vaccine distribution to high-risk individuals and in prosecuting price-gouging. The
federal government, under the Commerce Clause in the Constitution, may regulate
the safety and efficacy of vaccines in commerce in the United States, but this
authority does not extend to controlling the distribution or administration of the
product. In a public health emergency, the Public Health Service Act grants the
Secretary of HHS broad authority to take such actions as necessary to control
infectious diseases. Traditionally, the federal government has supported states in
exercising their public health authorities rather than subsuming them. HHS Secretary
Tommy G. Thompson said that he did not intend to declare the flu vaccine shortage
a public health emergency.¹¹
Flu vaccination is a medical procedure, and many people voluntarily choose to
be vaccinated in settings that are primarily non-governmental, such as a physician’s
office, a workplace, or a local grocery store. While federal, state and local
governments do not control these activities directly, they play an important role in
studying the use and impacts of flu vaccination, making recommendations and
providing guidance on the use of flu vaccine, and educating providers and the public

¹¹ U.S. Department of Health and Human Services, “Flu Vaccines and Antivirals,” transcript
of news conference, Oct. 19, 2004.

about their findings and recommendations. Examples of relevant public health
research include studying the effectiveness of vaccination in preventing illness in
different risk groups, and the economic impacts of vaccination such as reduced
absenteeism in the workplace. Government-supported education efforts include
educational materials for providers outlining the use of different types of flu vaccines
in specific populations, and flyers and public service announcements encouraging
vaccination.
Federal policies and recommendations also drive private-sector flu vaccine
demand. This is discussed further in an upcoming section on “Determining Annual
Flu Vaccine Production.”
Government Responsibility for Vaccines
Most federal activities related to flu vaccine are conducted by HHS. The
National Vaccine Program Office in HHS serves to coordinate vaccine-related
activities in several agencies, and is the hub for federal pandemic influenza
preparedness activities. The FDA is responsible for assuring the safety and efficacy
of vaccines.¹² The NIH conducts intramural vaccine research and development and
funds research in universities. The Health Resources and Services Administration
(HRSA) administers the National Vaccine Injury Compensation Program (VICP),
which provides compensation for injuries judged to have been caused by certain
listed vaccines. The CDC houses the National Immunization Program, which
coordinates research projects, state grant programs (including funding for purchase
of vaccines), and other immunization activities and supports the Advisory Committee
on Immunization Practices (ACIP). CDC also administers the Vaccines for Children
(VFC) program, authorized in Medicaid law to provide immunizations for children
who are uninsured, Medicaid recipients, Native Americans, and Alaska Natives at
physicians’ offices and Federally Qualified Health Centers.
Vaccine responsibilities lie outside of HHS as well. The Department of Defense
(DOD) maintains research and development programs for vaccines against both
naturally occurring infectious diseases and bioweapons agents. DOD administers
routine and deployment-related vaccines to military personnel and some civilian
employees and contractors. As a primary healthcare provider, DOD also administers
vaccines to its retirees and to current personnel and their families. The Department
of Veterans Affairs administers vaccines to veterans within its healthcare system.
Veterinary biologics are regulated by the U.S. Department of Agriculture
(USDA), Animal and Plant Health Inspection Service (APHIS), under authority of
the Virus, Serum and Toxin Act. These products must meet similar standards of
safety, efficacy, purity, and potency as do human products. APHIS currently licenses
influenza vaccines for horses and swine.

¹² 21 CFR Parts 600-680 describe regulatory requirements for biologics products. Additional
requirements for new drug application, the conduct of clinical trials, good manufacturing
practices, and other considerations are found in other parts of 21CFR.

State and local governments carry out relevant activities within their public
health authority, such as conducting vaccine clinics, maintaining immunization
registries, and establishing immunization requirements for school attendance. (These
requirements apply to vaccine-preventable childhood diseases such as measles and
whooping cough, but not influenza at this time.) In response to the current flu
vaccine shortage, many states have taken action to prohibit administration of vaccine
to non-priority individuals and to track available vaccine, among other activities.
For more information on the production, safety and availability of all types of
vaccines, see CRS Report RL31793, Vaccine Policy Issues for the 108th Congress,
by Susan Thaul.
Determining Annual Flu Vaccine Production
Based on historical demand and on the new pediatric recommendation from the
ACIP, the two manufacturers licensed for the 2004-2005 season, Aventis and Chiron,
planned to make around 100 million doses, about evenly split between them. The
failure of all annual production by Chiron cut the supply in half. Gauging demand
from year to year in what is mostly a private-sector market is a matter of both art and
science, an exercise fraught with difficulty.
In the winter of 2003-2004 Americans received 83 million doses of flu vaccine;
87 million were produced. According to the CDC, doses of unused flu vaccine have
remained in each of the last five seasons. (See Table 1.) Vaccine manufacturers
bear the loss from surpluses, and they attempt to carefully gauge demand each year
to avoid these losses. Demand has grown in the past ten years, though, as a result of
growing ranks of high-risk groups such as the elderly, increasing use of vaccine by
other high-risk groups, and growing interest from low-risk groups, such as employers
seeking to decrease absenteeism by offering the vaccine to workers at no cost.
Table 1. Surplus Flu Vaccine, 1999-2003
(doses in millions)
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Doses produced77.277.987.795.086.9
Doses used76.870.477.783.083.1
Surplus 0.4 7.5 10.0 12.0 3.8^a
^Source:^C^o^m^m^uⁿⁱ^catⁱ^oⁿ^f^r^om^C^D^C^,^O^c^t^.^{20, 2004.}
^No^te:^T^a^rg^{et produ}^ction^f^o^{r th}^{e 2004-}^{2005 s}^eas^on^w^a^s^approx^im^at^ely^{100 m}^illion^dos^es^.
^{a. Mos}^t^of^th^is^s^u^rplu^s^w^a^s^liv^{e atten}^u^a^{ted (in}^t^ra-ⁿ^as^{al) in}^f^l^u^eⁿ^{za v}^accin^e^.
Flu vaccine demand is also driven by federal policies and recommendations. In
the spring of 2004, for the upcoming flu season, the Advisory Committee on
Immunization Practices (ACIP) added healthy young children aged 6 to 23 months
to the list of groups that should receive the vaccine. To encourage beneficiaries to be
vaccinated, Medicare began covering the full cost of flu vaccine and administration

in 1993. The Healthy People 2010 project, a public-private national goal-setting
agenda for health, set a goal of 90% for influenza vaccine coverage for certain high-
risk groups. Recently there has been greater emphasis on the prevention of influenza
in institutionalized populations. In 2000 CDC published guidance encouraging
standing orders programs to increase flu vaccination coverage in long-term care
facilities and other settings. These programs give nurses “standing orders” to
administer annual flu vaccines to residents without a physician’s explicit
authorization. To support this recommendation, in 2002 the Centers for Medicare
and Medicaid Services (CMS) removed the physician signature requirement for flu
vaccine for Medicare and Medicaid participating hospitals, long-term care facilities,
and home health agencies. The ACIP also recommends that healthcare workers
receive flu vaccine, following studies showing that vaccination of workers reduces
mortality in elderly residents in long-term care facilities.
Flu Vaccine Distribution
The path of flu vaccine from assembly line to injection is complex and largely
outside of government control. Manufacturers sell the product to distributors, or may
also sell it directly to pharmacy chains, health maintenance organizations, hospitals,
state health departments, and others. Vaccine may be transferred through multiple
distributors along the way.
The CDC, as a purchaser, would have access to distribution information for the
product it has purchased even if the product does not physically pass through CDC’s
direct control. But almost 90% of the product is circulated outside of government
control, and has not been tracked. The Government Accountability Office (GAO)
has noted the lack of a means to redirect flu vaccine during a shortage, a system that
would depend on centralized tracking.¹³ In the face of the 2004 shortage, HHS
Secretary Thompson announced that CDC had set up a secure website for state health
officials to use to identify available vaccine in their jurisdictions. Aventis and many
of its downstream distributors provided information for the site, information which
the Secretary stressed was proprietary and which state health officials must protect
as such. This marked the first time such a system was used to track flu vaccine.
Also, when the shortage was announced the FDA waived its prohibition against the
transfer of vaccine among hospitals and other healthcare entities, to facilitate their
own reallocation efforts. These downstream reallocations, while clearly helpful
under the circumstances, might not have been captured in the new CDC tracking
system.
Re-Prioritizing Groups in Response to the Shortage
In the afternoon of October 5, 2004, the day Chiron advised U.S. officials of its
failed production for 2004-2005, CDC and the ACIP issued interim vaccine
recommendations, designating “priority groups” for vaccine coverage following the
shortage. The groups previously recommended to receive vaccine and the narrowed
recommendations announced after the shortage are listed in Table 2. CDC

¹³ Government Accountability Office, GAO-04-1100T, Infectious Disease Preparedness:
Federal Challenges in Responding to Influenza Outbreaks, testimony, Sept. 28, 2004.

subsequently estimated that the pre-shortage target population of roughly 185 million
people (about 2/3 of the population) would be reduced to about 98 million priority
recipients. Based on historical vaccine usage by these groups (which ranges from
12.4% for pregnant women to 66.2% for those over age 64), CDC estimated that only
about 43 million doses would be needed to vaccinate those in priority groups.¹⁴ CDC
acknowledged that some vaccine was administered to non-priority groups before the
shortage was announced, and that despite best efforts, reallocation of remaining
vaccine to priority groups would be imperfect.
On December 17, 2004, CDC announced that the ACIP had reviewed the
current status of flu vaccine demand, and issued revised guidelines, essentially
restoring the pre-shortage recommendation that individuals aged 50-64 and
out-of-home caregivers and household contacts of persons in high-risk groups be
vaccinated. The ACIP suggested that health departments and health care providers
consider delaying the implementation of the expanded recommendations until
January 3, 2005, to provide more time for unvaccinated persons in high-priority
groups to seek vaccination.¹⁵
It is worth noting that the expansion of federal recommendations over time, and
the growing recognition of the health benefits of flu vaccination even in healthy
individuals, drives demand and serves as a market incentive to increase supply. In
the face of a severe shortage, public and private actions to encourage flu vaccination
in lower-risk groups have had to be abandoned for the 2004-2005 flu season.

¹⁴ Centers for Disease Control and Prevention, Interim Estimates of Populations Targeted
for Influenza Vaccination, fact sheet, Oct. 11, 2004.
¹⁵ Centers for Disease Control and Prevention, “CDC’s Advisory Committee on
Immunization Practices Expands Priority Groups for Inactivated Influenza Vaccination,”
press release, Dec. 17, 2004.

CRS-12
Table 2. Federal Recommendations for Flu Vaccine, Before and After the Vaccine Shortage
roupPre-shortage recommendationPost-shortage recommendation
All children aged 6-23 months, or older than 23All children aged 6-23 months, or older than 23
ildrenmonths with other risk factormonths with other risk factor
All such personsAll such persons
egnant womenAll women who will be pregnant during the flu seasonAll women who will be pregnant during the flu season
children aged 2-64 years with certain
cardiovascular or
conditions such as asthmaAll such personsAll such persons
ⁱ^{ki/CRS-RL32655}rsons institutionalized in chronic care facilitiesAll residents of such facilitiesAll residents of such facilities
^g/w
^s^.ored 50-64 yearsAll such personsOnly those with other risk factors
^le^ak
ed 65 or olderAll such personsAll such persons
^://wiki
^h^ttpAll healthcare personnel in all inpatient, outpatient andHealthcare workers involved in direct patient care and
rsons who can transmit influenza to those athome-care settings, and household contacts of high-out-of-home caregivers and household contacts of
h riskrisk personschildren younger than six months
^:^P^r^e-^s^h^ortag^e^recom^m^eⁿ^d^ation^s^{: P}^r^ev^en^tion^an^{d C}^oⁿ^t^{rol of}^In^f^l^ue^nz^a^:^Re^c^o^m^m^e^nd^a^tⁱ^o^ns^o^f^t^h^e^A^d^vi^so^r^y^Co^m^mⁱ^t^t^e^e^oⁿ^I^m^m^uni^z^a^tⁱ^oⁿ^P^r^actices^(A^C^I^P⁾^{, MMW}^R
^m^eⁿ^d^atⁱ^oⁿ^s^an^{d R}^e^port^s^{, May}^{28, 2004.}
^t^-^s^h^o^rtag^{e recom}^m^eⁿ^d^ation^s^{: In}^terim^In^f^l^u^eⁿ^{za Vaccin}^a^tion^R^ecom^m^eⁿ^d^ation^s^{, 2004-}^{05 In}^f^l^u^eⁿ^{za S}^eas^on^{: Gu}^idan^{ce f}^r^om^C^D^C^,ⁱⁿ^coordiⁿ^a^tⁱ^oⁿ^wⁱ^t^h^t^h^{e A}^C^{IP, O}^c^t^.^{5, 2004.}
^Iⁿ^{a ty}^pⁱ^{cal y}^ear^{, in}^ad^d^itioⁿ^to^th^{e h}ⁱ^g^h^-^rⁱ^sk^g^r^o^u^p^sⁿ^o^ted^ab^o^v^{e, m}^aⁿ^y^h^ealth^y^p^e^r^s^oⁿ^{s w}^ith^o^u^{t r}ⁱ^sk^f^acto^r^{s w}^o^u^l^d^also^seek^an^{d receiv}^e^v^accin^e^.

Vaccine Rationing
Actions During the 2004 Vaccine Shortage. While the federal
government has broad authority to take actions necessary to control infectious
diseases in an emergency, traditionally the exercise of public health authority in this
respect has rested with states. As a consequence, when the flu vaccine shortage was
announced and CDC recommended that vaccine be prioritized to certain groups,
several states, counties and the District of Columbia issued orders requiring
healthcare providers to comply, and established fines for the administration of scarce
vaccine to non-priority individuals. Some of the states declared the situation a public
health emergency, while others used narrower authorities to support their orders. A
number of states and localities relaxed these restrictions beginning in December
2004, when they had vaccine doses remaining after priority individuals were no
longer seeking vaccine. A listing of state actions is maintained by the Association
of State and Territorial Health Officials (ASTHO) at [http://www.astho.org].
While CDC facilitated states’ efforts by gathering information about supplies
and unmet needs during the shortage, the agency lacks authority to compel
manufacturers or distributors to provide this information. CDC reported good
voluntary cooperation with the effort, but the GAO has repeatedly noted the absence
of a coordinated national system to assure that those most in need receive flu vaccine¹⁶
when supplies are limited. Outgoing HHS Secretary Tommy G. Thompson said
shortly after the shortage was announced that he did not intend to declare the
situation a public health emergency, and the federal government would not exercise
authority to control vaccine distribution or administration.¹⁷
CDC’s plan to identify vaccine doses in distribution and coordinate a three-part
information exchange — unmet need, available vaccine, and circulating flu virus —
had not been done before and may serve as a useful exercise in preparedness for a
variety of public health emergencies. Since it was a new effort, its utility in the face
of the vaccine shortage has yet to be demonstrated.
Strategies for Rationing. Rationing of scarce resources is not a new
concept in health-related services. Prioritization decisions have been made in many
health-related areas including, for example, organ donation and dialysis. Not all
attempts at rationing have been met with enthusiasm. One notorious example
occurred in the 1960s, when a hospital committee attempted to ration life-saving¹⁸
dialysis based on a notion of “social worth.” This rationing mechanism led to
heavy criticism of the committee, subsequently deemed the “God Committee” for its
valuation of some human lives over others.

¹⁶ Government Accountability Office, GAO-04-1100T, Infectious Disease Preparedness:
Federal Challenges in Responding to Influenza Outbreaks, testimony, Sept. 28, 2004.
¹⁷ U.S. Department of Health and Human Services, “Flu Vaccines and Antivirals,” transcript
of news conference, Oct. 19, 2004.
¹⁸ Gregory Pence, Classic Cases in Medical Ethics (New York: McGraw Hill, Inc., 1995)
pp. 297-299.

In the late 1980s, Oregon developed a rationing system for its entire Medicaid
program, allocating various types of services rather than distributing one scarce
resource. The rationing system was designed to provide coverage to all Oregonians
living below the federal poverty line, not just those who met more selective financial
eligibility standards, by ranking condition-treatment pairs in order to determine on
an annual basis what services would be covered for which ailments. The system was
based upon a combination of cost-effectiveness, available funding, and a
prioritization of medical services “from most to least important to the entire
population.”¹⁹ Oregon’s rationing plan caused some controversy when it was first
enacted because it explicitly involved a concept of rationing in providing access to
care, and because it created difficulty in determining which services would be
covered; however the system is still in place today.
Despite the moral difficulties involved with rationing, allocation of scarce
medical resources must still occur when the supply is not sufficient to meet the
demand. Allocation decisions can be made with a range of rationing mechanisms,
each with its own benefits and drawbacks. Potential mechanisms are discussed
below. Not all of these options were considered in response to the 2004 flu vaccine
shortage, but a number of them may come into play during an influenza pandemic or
large-scale bioterrorism event, when governments will face more dire circumstances.
The mechanisms are discussed in the context of vaccine rationing, but may also be
applied to the rationing of antivirals or other medications as well.
Most Likely to Suffer Health Consequences. In a selection system that
gives a preference to those most likely to suffer health consequences, vaccine is given
first to those most likely to catch the flu, suffer serious consequences such as
hospitalization, and/or die from infection (e.g., the elderly, young children, pregnant
women, and those with suppressed immune systems).
^!Recommended by: WHO,²⁰ CDC.²¹
^!Benefit(s): Those most vulnerable to death or serious health effects
from flu infection are protected from the virus.
^!Drawback(s): This selection method does not address impact of
epidemic on the continuation of essential services, nor does it focus
on how to stop the spread of the flu. This method also fails to
address the state’s obligation to those within its control or custody,
except to the extent that those in custody are at an increased risk of²²

suffering serious health effects from infection.
¹⁹ “The Prioritized List — An Overview,” Oregon Department of Health Services website
at [http://www.dhs.state.or.us/healthplan/priorlist/main.html], visited Dec. 27, 2004.
²⁰ WHO, Department of Communicable Diseases, Surveillance, and Response, “WHO
Guidelines on the Use of Vaccines and Antivirals during Influenza Pandemics” (2004), p. 4,
at [http://www.who.int/csr/resources/publications/csrpublications/en/index7.html].
²¹ CDC, “CDC Guidelines for Large-Scale Influenza Vaccination Clinic Planning 2004-05,”
at [http://www.cdc.gov/flu/professionals/vaccination/pdf/vaxclinicplanning0405.pdf].
²² “Institutions like prisons are notorious as places where infectious diseases spread.”
(continued...)

Key Personnel. With a preference for key personnel, vaccine is given first
to persons whose health is necessary to limit social disruption (e.g., health care
workers, government employees and military personnel).
^!Recommended by: WHO, CDC.
^!Benefit(s): This method limits social disruption, maintains human
infrastructure for essential services.
^!Drawback(s): A preference for key personnel may favor vaccinating
those empowered to make decisions about who is vaccinated,
creating an appearance of conflict. The method does not address
issues of how to stop the spread of the flu, or the morbidity and
mortality rates of flu on various populations. In addition, it does not
address the state’s obligation to those within its control or custody.
Special Relationships. In a selection system based on special relationships,
vaccine is given first to those people whose health care is the responsibility of the
state or federal government (e.g., prisoners, and military personnel).
^!Recommended by: American Civil Liberties Union, for at-risk
prisoners.²³
^!Benefit(s): Governing bodies meet their obligations to protect the
health and safety of persons within their sole control.
^!Drawback(s): Selection based on special relationships does not
address issues of contagion, or the morbidity and mortality rates of
flu on various populations, except to the extent that those within the
state’s control are more likely to suffer serious health effects and/or
spread the virus. It also does not address impact of epidemic on the
continuation of essential services.
Most Likely to Spread Disease. In a selection system based upon those
most likely to spread disease, populations known for rapidly transmitting infection
are vaccinated first (e.g., children and prisoners).
^!Recommended by: Some scientific studies.²⁴
^!Benefit(s): The spread of disease is curbed across the population.

²² (...continued)
Elizabeth Alexander, executive director of the ACLU’s Prison Rights Project in
Washington, quoted in Mark Pitsch, “Few Kentucky Inmates Will Get Flu Shots,” The
Courier Journal (Louisville, KY), Oct. 28, 2004, at [http://www.courier-journal.com/
localnews/2004/10/28ky/ A1 -prisonflu1028-6253.html ].
²³ Elizabeth Alexander, executive director of the ACLU’s Prison Rights Project in
Washington, quoted in Mark Pitsch, “Few Kentucky Inmates Will Get Flu Shots,” The
Courier Journal (Louisville, KY), Oct. 28, 2004, at [http://www.courier-journal.com/
localnews/2004/10/28ky/ A1 -prisonflu1028-6253.html ].
²⁴ “A pilot scheme to vaccinate thousands of children in Texas found that when just a quarter of
them were given the vaccine it led to a drop of up to 18 per cent in flu cases among unvaccinated
adults.” “Children, Not the Elderly, Should Get Flu Vaccines,” Independent Newspapers, Nov.

22, 2004, at [http://www2.netdoctor.co.uk/news/index.asp?id=116485&D=22&M=11&Y=2004].

^!Drawback(s): This selection method does not address impact of
epidemic on the continuation of essential services, or state’s
obligation to those within its control or custody, except to the extent
that those in custody are at an increased risk of spreading disease.
This method also fails to address the morbidity and mortality rates
of flu on various populations.
Lottery. With a lottery system, vaccine is given to people who are selected
randomly.
^!Recommended by: Used in some places in the United States to²⁵
allocate flu vaccine.
^!Benefit(s): The system does not require people to choose any one
person or population over others.
^!Drawback(s): Registration and communication with lottery winners
could prove cumbersome. Lottery selection does not address impact
of an epidemic on the continuation of social services and
infrastructure. This method does not address the state’s obligation
to those within its control or custody. Lottery selection also fails to
address issues of how to stop the spread of the flu, or the morbidity
and mortality rates of flu on various populations. (Note: some of
these drawbacks could be averted if lottery selection were used in
conjunction with other selection criteria.)
First come-first served. With a first come-first served selection system,
vaccine is given to those who arrive first at a designated time and place.
^!Recommended by: Used in some places in the United States to
allocate flu vaccine.²⁶
^!Benefit(s): This method is easy to coordinate, requires only basic
advertising, and does not require people to choose any one person or
population over others.
^!Drawback(s): A first come-first served method favors those with
flexible schedules, transportation to vaccination site, and does not
address impact of epidemic on the continuation of social services
and infrastructure. This method does not address the state’s
obligation to those within its control or custody, issues of contagion,
or the morbidity and mortality rates of flu on various populations.
(Note: some of these drawbacks could be averted if first come-first
served were used in conjunction with other selection criteria.)

²⁵ See, for example, “Portland to Hold Flu Vaccine Lottery,” Kennebec Journal online, Oct. 21,
2004, at [http://kennebecjournal.mainetoday.com/news/local/1080656.shtml]; “Flu Vaccine
Lottery in One NJ Town,” Eyewitness News 7 Online, Oct. 19, 2004, at [http://abclocal.go.com/
wabc/news/wabc_101804_bloomfi eldflushots.html ] .
²⁶ See, for example, “Lines for Flu Vaccine Clinics Get Longer as Supply Dwindles,” ABC
7 News, Oct. 13, 2004, at [http://www.wjla.com/news/stories/1004/180203.html]; “Imminent
Flu Epidemic Lengthens Vaccine Lines,” CNN.com, Dec. 13, 2003, at [http://www.cnn.com/

2003/HEALT H/12/13/sprj .flu03.flu/].

Some recent scientific studies suggest that there may be two additional methods
of rationing vaccine. The first study indicates that vaccine is more effective in some
populations than in others.²⁷ Based upon this finding, vaccine doses could be
withheld from those populations in which it is least effective. The problem is that
the group in whom the vaccine is least effective is also one that is most likely to
suffer health consequences from the flu: the elderly. For this reason, the vaccine’s
effectiveness in a population is unlikely to be used as a tool for rationing.
The second study indicates that less than a full dose of some types of flu vaccine
may create a serum antibody response (indicating that the vaccine may be effective)
in healthy individuals.²⁸ This finding could lead to a system of rationing that
increases the number vaccine doses by giving certain populations less than a full
dose. However, this strategy has not been fully evaluated to test its effectiveness, and
it was not implemented during the 2004 vaccine shortage.
One confounding issue is that studies suggest that particular populations,
including some minority groups, are less likely to participate in vaccination
programs.²⁹ The rationing system of choice might have some mechanisms designed
to encourage participation by targeted populations that historically have low rates of
vaccination.
When designing a rationing policy, many of the aforementioned rationing
methods may be used alone, or in conjunction with one another. For example,
priority could be given to both key personnel and those most likely to suffer serious
health effects. In addition, if the number of eligible people were larger than the
number of available doses, a lottery could be used to determine which of the
prioritized people would receive vaccine.
During the 2004 flu season, states and localities employed a variety of rationing
methods, many of which were derived from federal guidelines presented in Table 2.
The guidelines call for the vaccination of some individuals who are most likely to
suffer health consequences (some categories of elderly, sick, and children), as well
as some who are most likely to spread the virus (some categories of children, health
care workers, and institutionalized persons), and certain key personnel (some
categories of health care workers).

²⁷ Sandy Kleffman, “Flu-vaccine Shortage Leaves Seniors at Risk; but Effectiveness Wanes
with Age,” Seattle Times, Nov. 27, 2004, p. A4.
²⁸ See, for example, J. Treanor et al., “Evaluation of a Single Dose of Half Strength Activated
Influenza Vaccine in Healthy Adults,” Vaccine (Jan. 15, 2002) vol. 20, nos. 7-8, p. 1099.
²⁹ See, for example, Victoria Stagg Elliott, “Creativity Needed to Reach Minority Elderly,”
AMANews, Apr. 14, 2003, at [http://www.ama-assn.org/amednews/2003/04/14/hlsc0414.htm].

Price Gouging
Media reports of price gouging were widespread following the announcement
of the vaccine shortage, with reports that distributors were seeking more than 10
times the original price. The Attorneys General of Connecticut, Florida, Kansas, and
Texas responded with lawsuits. In addition, most state attorneys general issued
consumer alerts, urging consumers to report price gouging violators. According to
a chart compiled by the National Association of Attorneys General, more than half
of the states have statutes prohibiting price-gouging, though there are a variety of
definitions and triggering events, not all of which would apply to this situation.
However, the Association also provided information showing that most if not all
states could bring action under broader, more flexible authorities that prohibit “unfair
and deceptive acts and practices.”
On October 14, 2004, HHS issued a press release urging states to aggressively
prosecute flu vaccine price-gouging.³⁰ State action would require not only the
requisite authority, but also the decision to act and the resources to do so. Some in
Congress, concerned that states may not always be able to respond effectively, have
asked about relevant federal authorities. Neither CDC nor FDA has authority to act
in this matter, though CDC (which activated its Emergency Operations Center when
the shortage was announced) gathered reports of price-gouging and referred them to
state attorneys general. On October 22, 2004, HHS announced that it had filed (along
with the Department of Justice) a friend of the court brief in support of Florida’s
price-gouging lawsuit against a distributor.³¹ HHS reported that the brief lays out the
public health threat posed by price gouging, namely that price gouging leads to
allocation of scarce flu vaccine based on who has the most money and not on who
has the most need, that it risks the health of Medicare and Medicaid eligible patients,
who are vulnerable and most in need of the vaccine, and that it may also lead to
violations of the Federal Food, Drug, and Cosmetic Act such as tampering with, and
counterfeiting of, flu vaccine.
On October 15, 2004, the House Committee on Government Reform called on
the Federal Trade Commission (FTC) to launch a nationwide investigation of flu
vaccine price-gouging, and to report on enforcement actions it is taking or plans to
take.³² It is not clear under what specific authority the FTC would act, as there is no
federal price gouging statute. However, as noted above for states, the Commission
could possibly bring an action under its general authority to prohibit unfair or
deceptive acts or practices under the Federal Trade Commission Act.

³⁰ Department of Health and Human Services, “HHS Secretary Urges States to Aggressively
Prosecute Flu Vaccine Price Gouging” press release, Oct. 14, 2004.
³¹ Department of Health and Human Services, “HHS Files Brief in Support of Florida Price
Gouging Lawsuit,” press release, Oct. 22, 2004.
³² House Committee on Government Reform, “Davis and Waxman Ask FTC to Launch
Inquiry on Flu Vaccine Price Gouging,” press release, Oct. 15, 2004.

Economic Issues
Overview
Vaccines for the U.S. market are made by private, for-profit firms, and most of
the supply is privately controlled. For the 2004-2005 season, CDC purchased 11.4
million doses of flu vaccine, or about 11% of total production. (See Table 3 for a
breakdown of CDC purchases.) The public purchase price ranged from $6.80 to
$10.00 per dose, depending on the formulation, which is generally lower than private
sector prices.
Table 3. CDC Purchases of Flu Vaccine for 2004-2005
Doses from supplier
(thousands)
P r ogram Tot a lAve n t i s Chi r o n
Vaccines for Children (VFC)4,7522555,007
Section 317 (purchases for states)9003771,277
Purchases to stockpile2,5002,0004,500
Purchases using state funds461179640
Tot a l 8,613 2,811 11,424
^Source:^C^o^m^m^uⁿⁱ^catⁱ^oⁿ^f^r^om^C^D^C^on^O^c^t^.^{10, 2004.}
^No^te:^T^a^{ble ref}^l^ects^pu^rch^a^sⁱⁿ^g^con^t^racts^{prior to an}ⁿ^o^uⁿ^cem^en^{t of}^s^h^ortag^e^.
Manufacturers point to a number of disincentives that deter them from the flu
vaccine market, such as poor profitability, risk of a production failure, and injury
liability.³³ Policymakers point to a number of problems in assuring adequate supply,
including too few manufacturers, low vaccination rates among groups who are
advised to be vaccinated, unpredictable timing and severity of annual flu seasons, and
reluctance of manufacturers to overshoot demand estimates. The 2004 flu vaccine
shortage resulted from failure of production by a company that held almost 50% of
the market share, because there were only two companies producing injectable flu
vaccine for the U.S. market. During the 2001-2002 season, when there were three
manufacturers supplying the U.S. market, one sustained significant losses from
unused surplus vaccine, which led to its decision to drop out of the market
Many have noted that expanded public purchase of vaccine would have helped
this situation only if such purchases had increased overall production by shifting
some of the risk of over-production from the manufacturer to the government. Then,
if a product were to fail, the other supplier would have produced relatively more and
a shortage would not have been as severe. Long term, many feel that it is essential

³³ Christine Gorman, “The Flu Snafu: A Vaccine Shortfall Grows into a Political Headache,”
Time, Nov. 1, 2004.

to have more manufacturers involved, so the consequences of a failure of one would
have less impact on supply. But absent a substantial increase in demand,
diversification would likely cut into the market for existing manufacturers,
potentially reducing their incentives for remaining engaged.
A number of these issues have been discussed in the context of Project
BioShield, a program to promote research and development of countermeasures for
bioterrorism. In some ways Project BioShield is an imperfect model for flu vaccine
shortages, because BioShield is designed to create production incentives for products
that lack a commercial market. Nonetheless, there are enough similar issues at play
that flu vaccine supply may be added to the agenda in ongoing discussions of the
BioShield program. For example, the Project BioShield Act of 2004, P.L. 108-276,
contains a provision which allows the Secretary of HHS to temporarily authorize the
emergency use of non-licensed drugs and vaccines. Some in Congress called on the
Secretary of HHS to exercise this new authority in response to the flu vaccine
shortage, by locating available flu vaccine in other countries and making it available
to Americans as quickly as possible. As Congress considers follow-on legislation to
address remaining concerns, additional issues such as ways to expand vaccine
production capacity may also be relevant for flu vaccine.³⁴
The next section will explore several disincentives to flu vaccine manufacture,
and several proposals for removing these barriers or otherwise stabilizing the annual
flu vaccine market.
Economic Risk
The Problem. It is often suggested that making flu vaccine is not a good
business proposition. The product is not highly profitable. Furthermore, production
of vaccines is technically difficult, and lot failures resulting from sterility breaks or
other causes are not uncommon. Flu vaccine is especially tricky because of the time
constraints inherent in using eggs, and because vaccine does not have a shelf life
beyond the year it is produced. It is difficult to start from scratch if a problem crops
up mid-way in production. If annual demand is overestimated, unused vaccine is
discarded at a loss to the manufacturer.
Manufacturers have an obligation to investors to make sound business decisions,
and to adhere to standards of transparency in their business conduct. Following
Chiron’s announcement of its failed flu vaccine production for 2004-2005, the
company became the subject of Securities and Exchange Commission (SEC) and
Justice Department inquiries, reportedly to determine whether Chiron knew of the

³⁴ For more information, see CRS Report RS21507, Project BioShield, by Frank Gottron,
and CRS Report RL32549, Project BioShield: Legislative History and Side-by-Side
Comparison of H.R. 2122, S. 15, and S. 1504, by Frank Gottron and Eric Fischer. The
Biological, Chemical, and Radiological Weapons Countermeasures Research Act, S. 666,^th
was introduced in the 108 Congress to address issues remaining after passage of the
BioShield Act.

imminent failure of its product before its public announcement.³⁵ Several class-
action shareholder lawsuits were filed on the premise that the company had not
fulfilled its disclosure obligations.³⁶ In early December 2004, British regulators
extended their suspension of Chiron’s Liverpool plant through March 2005. The
company has tried to balance its obligations to shareholders and its interests in
remaining a U.S. supplier, saying that it seeks to produce vaccine for the 2005-2006
season, but not stating with assurance that it could overcome regulatory hurdles by
March 2005, when production for the upcoming season would have to begin in
earnest. This situation also poses a challenge for CDC as it attempts, in its
discussions with other suppliers, to set production targets without knowing Chiron’s
status with certainty.
Proposals to Mitigate Economic Risk. Some in Congress and others have
proposed a number of incentives to vaccine manufacturers to encourage entry into the
market and to guarantee demand for vaccine, which would in turn promote diversity
of manufacturers and increase annual supply.
Government Buy-Back of Surplus. Under this proposal the federal
government would purchase vaccine that remained unused at the end of a season.
This would work, in theory, by encouraging manufacturers to produce more than they
believed they could sell, thereby providing a cushion if annual supply were to fall
short for any reason. However, if manufacturing problems or other supply
disruptions did not occur, wastage of unused doses would become a government
expense rather than a private one.
In FY2005 appropriations, Congress provided HHS with$100 million to ensure
year-round influenza vaccine production capacity, stating that the Secretary could use
the funds for flu vaccine purchase if deemed necessary. Some have considered these
fund appropriate for the purchase of any surplus vaccine from the 2004-2005 season,
while others have argued that it was intended to back-stop the 2005-2006 season if
necessary (though if a surplus resulted in that season, it would occur in FY2006).
Still others have argued that the original intent of the funds was to support pandemic
influenza preparedness. Neither statutory language nor committee report language
clarifies the intended use of these funds.
Government Purchase for Stockpiling. Under this proposal, the federal
government would purchase doses of vaccine at the beginning of the season, to serve
as a cushion if needed. However, because of its one-season shelf life, flu vaccine is
not an attractive candidate for stockpiling. Products such as smallpox vaccine have
a long shelf life, and stockpile purchases can be considered one-time expenditures
for which a high cost is acceptable. CDC purchased 4.5 million doses of flu vaccine
to stockpile for the 2004-2005 season, at a cost of $40 million. Two and a half
million of these doses were produced by Aventis and would be used to ameliorate the
shortage, but it was a small amount in the face of a shortfall of 46 million doses. A

³⁵ Paul Elias, “Grand Jury Investigating Chiron’s Flu Vaccine Failure,” Associated Press,
Oct. 13, 2004.
³⁶ Bernadette Tansey, “Chiron Shows a Profit: Battered Flu Vaccine Company Circling the
Wagons,” San Francisco Chronicle, Oct. 21, 2004.

federal flu vaccine purchase of sufficient magnitude to cushion a two-supplier market
in the event that one failed would be costly, considering that in each of the past five
seasons there were surpluses of flu vaccine, and that the 2004 shortage may be the
exception. But by expanding annual demand, stockpile purchasing could encourage
additional manufacturers to enter the market.
Incentives for Construction of New Facilities. Since the shortage was
announced, several vaccine manufacturers expressed interest in entering the flu
vaccine market. For new manufacturers to be licensed in the United States, they
must apply years in advance for FDA approval, and pay for plant construction or
renovation, clinical trials and other regulatory obligations before any profit can be
realized. Given the high capital cost for entry into this market, some have proposed
offering tax credits or other incentives to offset these costs and encourage new
manufacturers to join the U.S. flu vaccine market.
Injury Liability
An Aventis executive, when asked about the impact of injury liability on flu
vaccine producers, commented that it is a burden, that it is absorbed as a cost of
doing business, and that his company is committed to remaining in the flu vaccine
business.³⁷ The chair of an Institute of Medicine (IOM) panel examining vaccine
financing testified that when the panel attempted to determine how serious this
problem is, as far as its potential deterrent effect on manufacturers and therefore on
vaccine availability, the panel had difficulty obtaining pertinent information.³⁸
Vaccine manufacturers have two potential avenues for protection against injury
liability claims. They can purchase insurance to cover the costs of defending against
or paying out claims, and incorporate costs into the price of vaccine. Also, certain
vaccines are covered under the National Vaccine Injury Compensation Program
(VICP). Congress added flu vaccine to the VICP list in October 2004, in the
American Jobs Creation Act of 2004 (P.L.108-357). Under VICP, an excise tax
applied to vaccine sales pays for a public compensation fund. Congress enacted the
program in 1986 as a no-fault alternative to the tort system for resolving claims
resulting from adverse reactions to mandated childhood vaccines. Individuals of any
age alleging injury from any covered vaccine must seek compensation through the
program first, though they may decline a proposed award and then seek a remedy in
court. The program is administered by the Office of Special Programs in the Health
Resources and Services Administration (HRSA).³⁹ HRSA says that the program has
been successful in providing compensation to those injured by vaccine-associated
adverse events, in reducing liability for vaccine manufacturers and healthcare

³⁷ U.S. Department of Health and Human Services, “Flu Vaccines and Antivirals,” transcript
of news conference, Oct. 19, 2004.
³⁸ Testimony of Frank Sloan before the Senate Special Aging Committee, hearing on
Liability, Licensing and the Flu Vaccine Market: Making Decisions Today to Prevent a^th^nd
Crisis Tomorrow, 108 Cong., 2 sess., Nov. 16, 2004.
³⁹ See HRSA National Vaccine Injury Compensation Program Home Page at
[http://www.hrsa.gov/osp/vicp/INDEX.HT M].

workers who administer vaccines, and in achieving vaccine market stabilization.
Others have reported problems in program administration and performance.⁴⁰
Vaccine Pricing
A number of vaccines in the U.S. market are purchased by federal agencies at
prices that are discounted or capped through various mechanisms. Some have argued
that this depresses overall prices and contributes to the lack of attractiveness of
vaccines as business ventures. Examples of such public purchases include CDC
purchases of pediatric vaccines for uninsured children, and purchases by the Veterans
Administration for its patient population. HHS notes that the Centers for Medicare
& Medicaid Services (CMS) has more than doubled the Medicare payment rates for
the flu vaccine, from $8.92 in 2000 to $18.30 in 2004.⁴¹ According to HHS, this
increase will help assure that beneficiaries can get the vaccine from their physicians’
offices, and help cover the costs of vaccine and administration for the providers.
An Institute of Medicine (IOM) panel examining vaccine financing and its
effects on availability has recommended a different approach to financing, based on
the premise that vaccines confer benefit not just to the individuals who receive them,
but to society as a whole.⁴² The panel recommended replacing a government
purchase price with a federal subsidy to maintain affordable vaccine coverage for
target groups, and mandating that private insurers cover federally-recommended
vaccines. The recommendations have not been universally embraced and their
implementation has not gone forward, though they have stimulated further
discussions of vaccine financing and availability among interested parties.
Implications for Pandemic Preparedness
Influenza circulates around the globe every year, changing slightly each year so
that healthy adults have partial immunity to new strains. The virus, its genome in
constant flux, typically makes healthy people sick, but not too sick, each year. Now
and then, usually several times in a century, the virus changes enough that there is no
partial immunity. This event, called an influenza pandemic, results in severe illness
and death, even in healthy people. The CDC estimates that in the United States,
while an annual flu season results in 36,000 deaths, on average, a pandemic could
cause more than 200,000. The extent and severity of illness, and the disabling impact
on healthy young people, could cause serious disruptions in services and social order.

⁴⁰ See, for example, Stanley A. Plotkin and Walter A. Orenstein, Vaccines, 4^th ed.
(Philadelphia: W.B. Saunders, 2004), chapter 63, pp. 1591 ff.; and Myron Levin, “Vaccine
Injury Claims Face Grueling Fight,” Los Angeles Times, Nov. 29, 2004.
⁴¹ Department of Health and Human Services, “HHS Says Supply of Flu Vaccines,
Medicines Will Help Keep People Safe During Coming Flu Season,” press release, Oct. 19,

2004.

⁴² Institute of Medicine, Financing Vaccines in the 21st Century: Assuring Access and
Availability, Aug. 4, 2003, at [http://www.iom.edu/report.asp?id=14451].

Some have expressed concern that the 2004 flu vaccine shortage presages
problems for a national response to an influenza pandemic. The shortage was in
some ways a relevant drill for pandemic preparedness, but in other ways was
different. In the face of the shortage, many were concerned with the logistics of
finding available vaccine and vaccinating high-risk individuals. Others were
concerned about fairness in the way that companies and federal, state and local
agencies handled the situation.
Many of these concerns about limited resources and equity in their allocation
will be writ large during a flu pandemic. Potentially, a vaccine could not be
produced until a pandemic virus strain is actually circulating. For this and other
reasons, severe vaccine shortages are expected during an influenza pandemic. The
WHO and HHS each have published plans for influenza pandemic preparedness.⁴³
Both stress the role of basic infection control practices and have expanded guidance
for handling large numbers of victims, such as expanding capacity for isolation and
enacting plans to keep people at home.
The WHO says that with current technology, worldwide production capacity for
influenza vaccine would cover only 5% of the world’s population. Countries are
advised to consider how they would apportion this scarce resource. WHO notes that
because healthy individuals may become severely ill, or may even die from infection
with a pandemic flu strain, consideration should be given to maintaining essential
services by prioritizing vaccine delivery to critical service providers such as
healthcare, public health and public safety workers. Americans are accustomed to
deferring to those who are most vulnerable in situations where risk of death is low,
as they have been asked to do for the current flu vaccine shortage, but a pandemic
may require a different message. (See the previous section on “Vaccine Rationing”
for further discussion.)
Some in Congress have expressed concern that a portion of the U.S. flu vaccine
supply is produced in a foreign facility. The concern is that during a flu pandemic
or other emergency, foreign governments may seize vaccines and production
facilities within their borders. The International Federation of Pharmaceutical
Manufacturers Associations reports that in 2003, more than 95% of the world’s flu
vaccine was produced in nine countries: Australia, Canada, France, Germany, Italy,
Japan, Netherlands, the United Kingdom, and the United States.⁴⁴ The global flu
vaccine market is a confusing patchwork of companies and subsidiaries that may be
based in one country, producing vaccine in another, and marketing in multiple other
countries. Aventis and Chiron are the only companies currently licensed by the FDA
to produce injectable flu vaccine for the U.S. market, though other companies have
expressed interest in having their products licensed in the future.

⁴³ World Health Organization, “Influenza Pandemic Preparedness Plan: The Role of WHO
and Guidelines for National or Regional Planning,” Geneva, Switzerland, Apr. 1999; and
U.S. Department of Health and Human Services, “Pandemic Influenza Preparedness and
Response Plan,” Aug. 26, 2004.
⁴⁴ World Health Organization, “Global Distribution of Influenza Vaccines, 2000-2003,”
Weekly Epidemiological Record, vol. 79:(40), pp. 357-368, Oct. 1, 2004.

While both the WHO and HHS plans also stress the use of antiviral drugs during
a pandemic, these are likely to be in very short supply as well. A similar problem
may arise with access to healthcare facilities and providers. A flu pandemic could
result in mass casualty situations, and while these may be isolated in time and place,
they may force what is referred to as degradation of care, the circumstance in which
a standard of care is lowered in the face of overwhelming resource constraints in
order to maximize overall survival. Providers are concerned about the ramifications
on social order and liability, and have sought federal guidance on this matter.
The 2004 flu vaccine shortage demonstrates the concept of dual use in public
health preparedness, in which plans, systems and protocols for one event are
applicable to others as well. CDC’s flu vaccine reallocation plan, which coordinated
information about vaccine availability, unmet need, and circulating virus, is a useful
model for any number of natural or intentional public health emergencies, including
pandemic influenza. In addition, efforts to bolster bioterrorism preparedness have
yielded bonuses for pandemic preparedness, such as the development of community
mass-vaccination plans. Generally, advancements in the development of vaccines
for pandemic influenza will benefit annual flu vaccine production, and vice versa.
The response of the public to government recommendations during the 2004
shortage is illustrative. According to CDC surveys (discussed in an earlier section
“Shortage to Surplus?”), persons not in designated priority groups mostly deferred
vaccination, while a small number of them reported that they sought vaccination but
were unsuccessful. Of particular concern were findings that significant numbers of
high-risk individuals did not seek vaccination because they doubted they could get
it, and that willingness to be vaccinated dropped off when the vaccine was
investigational and required signing a consent form. These findings remind public
officials of an important premise for public health preparedness: that imperfect
compliance with recommendations is expected and should be taken into account in
planning.
Serious questions remain about the exercise of federal authority during an
influenza pandemic. Many of these questions were raised in the face of the 2004 flu
vaccine shortage. Should the federal government have, or exercise, authority to
identify and control doses of scarce flu vaccine? Should the federal government
have, or exercise, authority to control administration of vaccine by healthcare
providers? Is the current model, which leverages state authorities with federal
assistance, adequate for the current shortage, or for pandemic influenza or other
public health emergencies? Given that the federal government has overarching
emergency authorities but has not used them, will federal officials know how to
conduct themselves if such authorities were invoked in an emergency? The flu
vaccine shortage presents a small study of these important questions.
Conclusion
It is intuitively appealing to think that federal officials, when faced with a public
health emergency, could take charge of information and assets, and assure that
remedies and burdens were equitably and efficiently distributed. Actually, the

shortage of flu vaccine illustrates two serious challenges that the federal government
faces in a public health emergency. Law and tradition place much of the
responsibility for preventing or managing the shortage either with the states, or with
the private sector, and the threshold over which the federal government would wrest
control from either appears high. The federal government does not dictate the
practice of medicine or compel companies to do business. As a result, in situations
like this one, free market forces operate, the public health system responds in a
decentralized fashion, efforts may seem disorganized, and the federal government
may appear unresponsive.
Since the terror attacks of 2001, some barriers have been overcome without
substantial changes in the legal landscape. An example is state preparedness
planning with uniform guidance, so that states aim for the same targets in planning
for mass drug distribution, or in overhauling their emergency public health
authorities. Decentralization of public health authority to states is less of a problem
if all of them can respond capably and in a consistent fashion. Another example is
the government use of proprietary information, such as drug store sales, to conduct
surveillance for unusual health events. The flu vaccine shortage has prompted further
examination of the coordination of these partners in response to a national challenge,
posed another opportunity to explore creative solutions, and offered another chance
for lessons learned.

Appendix A. Congressional Action
in the 108^th Congress
Legislation
Selected legislative proposals aimed at addressing flu vaccine production or
shortages are listed. A number of bills were introduced before the 2004-2005
shortage was announced, some in response to flu vaccine problems during the 2003-
2004 season. Several proposals would subject flu vaccine to an excise tax, in order
to add it to the Vaccine Injury Compensation Program table. A version of this
provision was passed in P.L. 108-357, the American Jobs Creation Act of 2004,
which was signed by the President on October 22, 2004. Other proposals in
authorizing legislation listed below have not been considered in either chamber as of
this writing.
H.R. 3758 (Emanuel)
The Flu Protection Act of 2004, to amend the Public Health Service Act to provide
for an influenza vaccine awareness campaign, ensure a sufficient influenza vaccine
supply, and prepare for an influenza pandemic or epidemic, to amend the Internal
Revenue Code of 1986 to encourage vaccine production capacity, and for other
purposes.
Introduced February 3, 2004.
Related bill S. 2038.
H.R. 4520 / S. 1637 (Thomas, Grassley)
The American Jobs Creation Act of 2004, includes a provision to add any trivalent
influenza vaccine as a taxable vaccine for purposes of the excise tax on certain
vaccines.
Became P.L. 108-357 on October 22, 2004.
H.R. 5243 (DeFazio)
The Influenza Vaccine Emergency Act, to amend the Public Health Service Act to
provide for emergency distributions of influenza vaccine.
Introduced October 7, 2004.
H.R. 5404 (Kucinich)
The Fair Vaccine Price Act of 2004, to prohibit price-gouging during a shortage of
a covered vaccine.
Introduced November 19, 2004.
H.R. 5409 (Lowey)
The Emergency Flu Response Act of 2004, to amend the Public Health Service Act
to address the shortage of influenza vaccine, and for other purposes.
Introduced November 19, 2004.
S. 15 (Gregg)
Project BioShield Act of 2004, to amend the Public Health Service Act to provide
protections and countermeasures against chemical, radiological, or nuclear agents by
giving the National Institutes of Health contracting flexibility, infrastructure

improvements, and expediting the scientific peer review process, and streamlining
the Food and Drug Administration approval process of countermeasures. Introduced
March 11, 2003.
Became P.L. 108-276 on July 21, 2004.
S. 666 (Lieberman)
The Biological, Chemical, and Radiological Weapons Countermeasures Research
Act, to provide incentives to increase research by private sector entities to develop
antivirals, antibiotics, vaccines and other products to prevent and treat illnesses
associated with a biological, chemical, or radiological weapons attack.
Introduced March 19, 2003.
S. 754 (Frist)
The Improved Vaccine Affordability and Availability Act, to amend the Public
Health Service Act to improve immunization rates by increasing the distribution of
vaccines (including flu vaccine) and improving and clarifying the vaccine injury
compensation program.
Introduced April 1, 2003.
S. 1817 (Santorum)
To amend the Internal Revenue Code of 1986 to include influenza vaccines in the
Vaccine Injury Compensation Program.
Introduced November 4, 2003.
S. 1896 (Grassley)
To add to the definition of taxable vaccines any vaccine against hepatitis A and any
trivalent vaccine against influenza.
Introduced November 19, 2003.
S. 2038 (Bayh)
The Flu Protection Act of 2004, to amend the Public Health Service Act to provide
for an influenza vaccine awareness campaign, ensure a sufficient influenza vaccine
supply, and prepare for an influenza pandemic or epidemic, to amend the Internal
Revenue Code of 1986 to encourage vaccine production capacity, and for other
purposes.
Introduced January 28, 2004.
Related bill H.R. 3758.
S. 2959 (Dayton)
The Influenza Preparation and Vaccination Act, to amend the Public Health Service
Act to ensure an adequate supply and distribution of influenza vaccine.
Introduced October 8, 2004.
S. 2968 (Reed)
The Emergency Flu Response Act of 2004, to amend the Public Health Service Act
to address the shortage of influenza vaccine, and for other purposes.
Introduced October 8, 2004.

S. 2997 (Inhofe)
The Flu Vaccine Incentive Act of 2004, to amend the Social Security Act to
encourage the production of influenza vaccines by eliminating the price cap
applicable to the purchase of such vaccines by HHS, to amend the Internal Revenue
Code of 1986 to establish a tax credit to encourage vaccine production capacity, and
for other purposes.
Introduced November 18, 2004.
H.R. 2660 / S. 1356 (Regula / Specter)
Making appropriations for Labor, Health and Human Services, Education and
Related Agencies for FY2004, includes funding for influenza vaccine research and
stockpile purchase.
Became Public Law No. 108-199, the Consolidated Appropriations Act, 2004, on
January 23, 2004.
H.R. 5006 / S. 2810 (Regula / Specter)
Making appropriations for Labor, Health and Human Services, Education and
Related Agencies for FY2005, includes funding for influenza vaccine research and
vaccine purchase.
Became Public Law No. 108-447, the FY2005 Consolidated Appropriations Act, on
December 8, 2004.
Hearings
House Committee on Energy and Commerce, Subcommittee on Health and
Subcommittee on Investigations, joint hearing on Flu Vaccine: Protecting
High-Risk Individuals and Strengthening the Market, November 18, 2004.
House Committee on Government Reform, full committee hearing on The Nation’s
Flu Shot Shortage, November 17, 2004.
Senate Special Aging Committee, hearing on Liability, Licensing and the Flu
Vaccine Market: Making Decisions Today to Prevent a Crisis Tomorrow,
November 16, 2004.
House Committee on Government Reform, full committee hearing on The Nation’s
Flu Shot Shortage, October 8, 2004.
Senate Committees on the Judiciary and Health, Education, Labor and Pensions, joint
hearing on BioShield Legislation, October 6, 2004.
House Appropriations Committee, Subcommittee on Labor, Health and Human
Services and Education, hearing on Influenza Vaccine, October 5, 2004.
Senate Special Aging Committee, hearing on Influenza and the Elderly, September

28, 2004.

House Committee on Government Reform, Subcommittee on Human Rights and
Wellness, hearing on Mercury and Autism, September 8, 2004.

House Appropriations Committee, Subcommittee on Labor, Health and Human
Services and Education, hearing on Global Diseases Programs Appropriations,
April 28, 2004.
House Committee on Government Reform, hearing on Health System Preparedness
to Handle Health Threats, focused on the 2003-2004 influenza season, February

12, 2004.

Investigations
The House Committee on Energy and Commerce is conducting an investigation into
the federal role in the flu vaccine shortage. The Committee Chairman and Ranking
Member sent letters to the Chiron Corporation, the Acting FDA Commissioner and
the Secretary of HHS, requesting information, on November 18, 2004, available at
[ h ttp://energycommerce.hous e.gov/108/News/11182004_1408.htm] .
The House Committee on Government Reform is conducting an investigation into
FDA’s role in the shutdown of the Chiron plant. The Committee Chairman and
Ranking Member sent a letter to the Acting FDA Commissioner, requesting
information, on October 13, 2004, available at [http://reform.house.gov/
UploadedFiles/101304fdaletterrelease.pdf] .

Appendix B. Information Resources
CRS Products
CRS Report RL31793, Vaccine Policy Issues for the 108th Congress, by Susan
Thaul.
CRS Report RS21507, Project BioShield, by Frank Gottron.
CRS Report RL32549, Project BioShield: Legislative History and Side-by-Side
Comparison of H.R. 2122, S. 15, and S. 1504, by Frank Gottron and Eric
Fischer.
CRS Report RS21747, Avian Influenza: Multiple Strains Cause Different Effects
Worldwide, by Jim Monke.
CRS Report RL31333, Federal and State Isolation and Quarantine Authority, by
Angie A. Welborn, (discusses state and federal authority for public health
emergencies).
CRS Report RL31719, An Overview of the U.S. Public Health System in the Context
of Bioterrorism, by Holly Harvey and Sarah Lister.
Government Accountability Office (GAO) Products
GAO-05-177T, Flu Vaccine: Recent Supply Shortages Underscore Ongoing
Challenges, testimony, November 18, 2004.
GAO-04-1100T, Infectious Disease Preparedness: Federal Challenges in
Responding to Influenza Outbreaks, testimony, September 28, 2004.
GAO-04-458T, Public Health Preparedness: Response Capacity Improving, but
Much Remains to Be Accomplished, testimony, February 12, 2004.
GAO-02-987, Childhood Vaccines: Ensuring an Adequate Supply Poses Continuing
Challenges, report, September 13, 2002.
GAO-01-786T, Flu Vaccine: Steps Are Needed to Better Prepare for Possible Future
Shortages, testimony, May 30, 2001.
GAO-01-624, Flu Vaccine: Supply Problems Heighten Need to Ensure Access for
High-Risk People, report, May 15, 2001.
Institute of Medicine (IOM) Reports
IOM, The Threat of Pandemic Influenza: Are We Ready? A Workshop Summary
November 16, 2004, at [http://www.iom.edu/report.asp?id=23639].

IOM, Immunization Safety Review: Influenza Vaccines and Neurological
Complications, October 6, 2003, at [http://www.iom.edu/report.asp?id=15625].
IOM, Financing Vaccines in the 21st Century: Assuring Access and Availability,
August 4, 2003, at [http://www.iom.edu/report.asp?id=14451].
IOM, Board on Health Care Services, Calling the Shots: Immunization Finance
Policies and Practices, June 16, 2000, at [http://www.iom.edu/
report.asp? id=5508] .
Health and Human Services (HHS) Resources
HHS National Vaccine Program Office Home Page: general information on vaccines,
and the Draft Pandemic Influenza Preparedness and Response Plan.
[ http://www.hhs.gov/nvpo/] .
Centers for Disease Control and Prevention (CDC) Resources
CDC Influenza Home Page: information for health professionals and the general
public, including guidelines related to the current vaccine shortage,
[ http://www.cdc.gov/flu/] .
CDC, Prevention and Control of Influenza, Recommendations of the Advisory
Committee on Immunization Practices (ACIP), MMWR Recommendations and
Reports, May 28, 2004, recommendations prior to announcement of the vaccine
shortage for 2004-2005.
CDC National Immunization Program Home Page: information about CDC-funded
vaccine purchases and related information, [http://www.cdc.gov/nip/].
CDC Public Health Law Program Home Page: information on state authorities and
actions taken to assure priority distribution of flu vaccine,
[ h ttp://www.phppo.cdc.gov/od/phlp/In fluenz a.asp] .
Food and Drug Administration (FDA) Resources
FDA Center for Biologics Evaluation and Research, Influenza Virus Vaccine 2004-
2005 Home Page: information about Chiron, Aventis, and MedImmune vaccine
production, [http://www.fda.gov/cber/flu/flu2004.htm].
Health Resources and Services Administration (HRSA)
Resources
HRSA National Vaccine Injury Compensation Program (VICP) Home Page,
[ h ttp://www.hrsa.gov/osp/vicp/INDEX.HTM] .

National Institutes of Health (NIH) Resources
NIH National Institute of Allergy and Infectious Diseases influenza Home Page:
[ http://www.niaid.nih.gov/dmid/influenz a/] .
World Health Organization (WHO) Resources
WHO Influenza Home Page at [http://www.who.int/csr/disease/influenza/en/].
Other Key Resources
F.A. Sloan et al., “The Fragility of the U.S. Vaccine Supply,” New England Journal
of Medicine, 351:2443-2447, Dec. 2, 2004.
J. Treanor, “Weathering the Influenza Vaccine Crisis,” New England Journal of
Medicine, 351:2037-2040, Nov. 11, 2004.
R. Giffin et al., “Childhood Vaccine Finance and Safety Issues,” Health Affairs,
23(5): 98-111, Sept./Oct. 2004 (despite the title, a general overview of
federal/state/private vaccine financing and distribution issues).
National Vaccine Advisory Committee, “Strengthening the Supply of Routinely
Recommended Vaccines in the United States: Recommendations from the
National Vaccine Advisory Committee,” JAMA 290(23), Dec. 17, 2003, pp.

3122-3128