[House Hearing, 108 Congress]
[From the U.S. Government Printing Office]




 THE NATION'S FLU SHOT SHORTAGE: HOW IT HAPPENED AND WHERE WE GO FROM 
                                 HERE?

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                            OCTOBER 8, 2004

                               __________

                           Serial No. 108-231

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
TODD RUSSELL PLATTS, Pennsylvania    JOHN F. TIERNEY, Massachusetts
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
EDWARD L. SCHROCK, Virginia          STEPHEN F. LYNCH, Massachusetts
JOHN J. DUNCAN, Jr., Tennessee       CHRIS VAN HOLLEN, Maryland
NATHAN DEAL, Georgia                 LINDA T. SANCHEZ, California
CANDICE S. MILLER, Michigan          C.A. ``DUTCH'' RUPPERSBERGER, 
TIM MURPHY, Pennsylvania                 Maryland
MICHAEL R. TURNER, Ohio              ELEANOR HOLMES NORTON, District of 
JOHN R. CARTER, Texas                    Columbia
MARSHA BLACKBURN, Tennessee          JIM COOPER, Tennessee
PATRICK J. TIBERI, Ohio              BETTY McCOLLUM, Minnesota
KATHERINE HARRIS, Florida                        ------
MICHAEL C. BURGESS, Texas            BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 8, 2004..................................     1
Statement of:
    Gerberding, Dr. Julie L., Director, Centers for Disease 
      Control and Prevention; Dr. Anthony S. Fauci, Director, 
      National Institute of Allergy and Infectious Diseases; and 
      Dr. Lester M. Crawford, Acting Commissioner, Food and Drug 
      Administration.............................................    16
    Grant, Christine, vice president for public policy and 
      government affairs, Aventis Pasteur, Inc., accompanied by 
      David Johnson; James Young, president, research and 
      development, Medimmune, Inc.; and Robert Stroube, State 
      health commissioner, Virginia Department of Health.........    51
Letters, statements, etc., submitted for the record by:
    Davis, Chairman , a Representative in Congress from the State 
      of Virginia:
        Letters dated October 7 and 8, 2004......................    80
        Prepared statement of....................................     4
        Prepared statement of Mr. Pien...........................    46
    Fauci, Dr. Anthony S., Director, National Institute of 
      Allergy and Infectious Diseases, information concerning 
      various charts.............................................    20
    Grant, Christine, vice president for public policy and 
      government affairs, Aventis Pasteur, Inc., prepared 
      statement of...............................................    54
    Stroube, Robert, State health commissioner, Virginia 
      Department of Health, prepared statement of................    76
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California, prepared statement of.................     8
    Young, James, president, research and development, Medimmune, 
      Inc., prepared statement of................................    63

 
 THE NATION'S FLU SHOT SHORTAGE: HOW IT HAPPENED AND WHERE WE GO FROM 
                                 HERE?

                              ----------                              


                        FRIDAY, OCTOBER 8, 2004

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis 
(chairman of the committee) presiding.
    Present: Representatives Davis, Burton, Mica, Souder, 
Blackburn, Tiberi, Burgess, Waxman, Kanjorski, Cummings, 
Kucinich, Tierney, Watson, Van Hollen, Ruppersberger, Norton, 
Cooper, and McCollum.
    Also present: Representative DeFazio.
    Staff present: Melissa Wojciak, staff director; David 
Marin, deputy staff director; Keith Ausbrook, chief counsel; 
Ellen Brown, legislative director and senior policy counsel; 
Jennifer Savavian, chief counsel for oversight and 
investigations; Anne Marie Turner, counsel; Drew Crockett, 
deputy director of communications; John Cuaderes, senior 
professional staff member; Susie Schulte, professional staff 
member; Teresa Austin, chief clerk; Robin Butler, financial 
administrator; Allyson Blandford, office manager; Corinne 
Zaccagnini, chief information officer; Todd Greenwood, staff 
assistant; Phil Barnett, minority staff director; Kristin 
Amerling, minority deputy chief counsel; Karen Lightfoot, 
minority communications director/senior policy advisor; Anna 
Laitin, minority communications and policy advisor; Sarah 
Despres and Rosalind Parker, minority counsels; Josh 
Sharfstein, minority professional staff member; Earley Green, 
minority chief clerk; and Jean Gosa and Teresa Coufal, minority 
assistant clerks.
    Chairman Tom Davis. Good morning. A quorum being present, 
the Committee on Government Reform will come to order. I want 
to welcome everybody to today's oversight hearing regarding 
recent developments in the U.S. influenza vaccine supply.
    As many of you know, a major flu vaccine manufacturer 
announced on Tuesday it would be unable to deliver any of its 
flu vaccine to the United States. British regulators suspended 
the manufacture's license, and held up the doses destined for 
the United States because at least some of the supply was 
contaminated.
    The loss of the Chiron flu vaccine poses a serious 
challenge to the U.S. vaccines supply for the upcoming flu 
season. Chiron was to export between 46 to 48 million flu shots 
this year to the United States, almost half of our Nation's 
supply.
    The Department of Health and Human Services had planned for 
a vaccine supply of about 100 million doses this season, after 
a demand of about 87 million doses last flu season.
    Today we will examine the contributing factors that led to 
the severe flu vaccine shortage, the public health implications 
of the vaccine shortage, and the U.S. Government and vaccine 
manufacturers plan to address this problem. Our government 
witnesses are here today to reassure and inform the public.
    The public health implications of this development are 
potentially enormous. Every year approximately 36,000 die and 
200,000 people are hospitalized due to complications from 
influenza. With a significant shortage of vaccines, the number 
of people who die from or are hospitalized for influenza could 
increase drastically this year.
    The Center for Disease Control and Prevention issued 
interim recommendations for influenza vaccinations on October 
5, 2004. They give priority for vaccination with Fluzone the 
primary vaccine that remains available to the high risk 
population.
    And nasal spray is another alternative, but there will be, 
at most, 2 million doses ready for distribution this year. As a 
result of the shortage, millions of healthy people and even 
many in the high risk population will have to forego 
vaccination. We have been telling people for years now that the 
flu is not something to take lightly. It is no wonder that 
phones at hospitals, clinics, and doctor's offices have been 
ringing off the hook this week.
    Vaccination clinics with shuttered doors do not inspire 
confidence or trust. People want to know how this happened. 
They want to know what it means for them and their families. 
They want to know how are we going to make sure that it doesn't 
happen again.
    In the short term, coordination and cooperation between 
Federal, State and local public health providers will be 
crucial. It will be more important than ever to identify 
individuals who fall within the high risk population, and 
ensure that they receive priority.
    We will collectively have to grapple with the public's 
understandable frustration and feelings of helplessness. 
Preparing for the annual flu season highlights the importance 
of strong cooperation between different health agencies and 
private sector companies at all levels.
    However, this year's vaccine shortage starkly underscores 
the need to ensure that adequate production capabilities exist. 
We are not here today to point fingers, but we go into today's 
hearing already concluding that the current system is flawed.
    In a committee hearing we held last February, witnesses 
discussed the possibility of a similar situation unfolding. The 
committee was concerned that Chiron did not have a 
manufacturing plant located within the United States. It was 
theorized that should a flu pandemic occur, the UK could 
nationalize Chiron's vaccine supply, resulting in the loss of 
half of the U.S. flu vaccine supply.
    With only a few vaccine manufacturers producing flu 
vaccines every year, we concluded then, and we reiterate today, 
we need to consider what can be done to strengthen the market 
and increase production capabilities.
    The current vaccine shortage begs the question: Do we need 
new mechanisms, new incentives to guarantee that an adequate 
number of safe and effective flu vaccines are produced and 
delivered annually?
    Questions continue to mount, and hopefully today some will 
be answered. Why did both Chiron and U.S. officials anticipate 
that only 4 to 8 million doses would be lost? Why did they not 
know before Tuesday that a license suspension was possible? Are 
any of the Chiron doses salvageable?
    Our witnesses today will discuss the factors contributing 
to the flu vaccine shortage, how the Government and vaccine 
manufacturers will respond to and manage this crisis, and the 
steps that must be taken to be prepared for next year's flu 
season.
    I know we all share the same goal at the end of the day, a 
public health system prepared to deal with the annual influenza 
season. We have a great selection of witnesses today, and I 
would like to thank all of them for appearing before the 
committee, and I look forward to your testimony. I now yield to 
Mr. Waxman for an opening statement.
    [The prepared statement of Chairman Tom Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T6948.001
    
    [GRAPHIC] [TIFF OMITTED] T6948.002
    
    Mr. Waxman. Thank you.
    Chairman Tom Davis. Let me just start--I know Mr. DeFazio 
is here from another committee. I would ask unanimous consent 
that he would be allowed to participate. Without objection, so 
ordered.
    Mr. Waxman. Well, thank you, Chairman Davis, for calling 
this hearing on a critical flu vaccine shortage facing the 
United States. Three days ago, one of the two major companies 
providing vaccines in this country announced it would not ship 
any flu vaccines this year.
    Just weeks before the start of the flu season, it appears 
we have lost half of our vaccine supply. As a result, an 
estimated 40 million Americans who would otherwise have been 
protected against the flu will not. One key question is how 
this all could have happened?
    In late August, the flu vaccine manufacturer, Chiron, which 
has a manufacturing facility in Great Britain announced that 
there were potential contamination problems with several 
million doses of the vaccine. The company began working with 
the Food and Drug Administration and British regulators to 
identify the problem, and to ensure the safety of the remaining 
lot of vaccines.
    While the company was assuring the public that the problem 
was under control, and while FDA was reviewing the company's 
investigation, British regulators sent a team of inspectors 
that shut the plant down.
    The British Government immediately announced that it had 
already purchased a back-up supply of vaccine, it nearly 
completely offset its reliance on Chiron. In the United States, 
public health officials appeared to have been taken completely 
by surprise. After the public announcement, senior FDA 
officials flew to Britain to determine whether any of Chiron's 
vaccines could be usable this year.
    A second key question is, what can be done to ensure that 
the highest risk individuals are vaccinated? The CDC responded 
instantly to the crisis by issuing new flu vaccine 
recommendations with priorities for vaccination. But following 
those recommendations will be an enormous challenge. Some 
hospitals, clinics, doctors offices and State public health 
departments are scheduled to receive their full order from 
Aventis, the only major flu vaccine supplier left this year.
    Other hospitals, clinics, doctors offices, and public 
health departments are left entirely without the vaccine. It is 
important to discuss what role the public sector can play in 
overcoming these disparities. While this hearing will, by 
necessity, focus on the current situation, I hope we can also 
find time to discuss a third key question, how can we shore up 
our fragile public health care system?
    For 5 years we have seen a series of experts reports 
calling attention to major deficits in vaccine supply for both 
children and adults. In February, our committee heard testimony 
about the urgent need to improve flu vaccine supply and 
planning. And just last week, the Government Accountability 
Office testified before the Senate that ``there is no mechanism 
in place to ensure distribution of flu vaccine to high risk 
individuals before others when the vaccines is in short 
supply.''
    This raises the question of what more can be done to better 
prepare for possible vaccine delays and shortages in the 
future? It is long past time for Congress to pay attention to 
these calls for action. In May, Chairman Davis and I asked the 
Appropriations Committee to restore cuts and enhance public 
health funding in the President's budget. Even this minimal 
request was not granted.
    I am very pleased that our Nation's leading public health 
officials and other distinguished witnesses have taken the time 
to testify this morning. We are all indebted to your efforts 
and eager to hear your testimony. Thank you.
    Chairman Tom Davis. Thank you very much.
    [The prepared statement of Hon. Henry A. Waxman follows:]

    [GRAPHIC] [TIFF OMITTED] T6948.003
    
    [GRAPHIC] [TIFF OMITTED] T6948.004
    
    [GRAPHIC] [TIFF OMITTED] T6948.005
    
    [GRAPHIC] [TIFF OMITTED] T6948.006
    
    Chairman Tom Davis. Any other opening statements?
    Mr. Mica.
    Mr. Mica. Thank you, Mr. Chairman. I have taken a personal 
interest in this since I came to Congress. It is nice to talk 
about some of the effects of, say, vaccine or vaccination that 
went bad. My uncle, who has passed away, probably partly from a 
broken heart, he had two children who were vaccinated and they 
had adverse reaction.
    And both of them went into convulsions. And at the time 
they didn't know, but both of them were brain damaged. Both of 
them are still alive, but they require constant care, and none 
of them have lived normal lives. So it is something that our 
family has dealt with. My brother, when he came to Congress, 
Dan Mica, worked on the Vaccine Compensation Fund, I think, 
with Mr. Waxman and Mr. Burton and others who were here.
    And I took an interest and have tried several times to 
amend the fund so that it would be more effective. And, 
unfortunately, some folks walked away from revising that. But, 
how did we get here, with the United States basically relying 
on vaccines, flu vaccines and other vaccines, to other 
country's manufacturing?
    The number of vaccine manufacturers in the United States 
has dropped from 20 to only 3 in the past 15 years, largely as 
a result of lawsuits filed on behalf of supposed victims. Now, 
everyone has--can have an adverse reaction. I have some of my 
pills here that I take. Some people actually can have an 
adverse reaction to aspirin. And some people actually can die 
from these, and do die from these.
    But, one of the major problems is that we haven't dealt 
with the liability question. So we forced the manufacturer 
overseas or some place else for the large part. You know, they 
blame the insurance industry, but the insurance industry won't 
even cover liability in these cases. We blame the drug 
manufacturers. And they won't manufacture here. Doesn't 
somebody get it?
    Go on the Web and look at--try to get a little information 
on vaccines. Pull up the Web. And this is offensive. The first 
thing that comes up is a law firm, vaccine injury. Sue. Sue. 
Sue. So what the hell do you get? Nothing.
    So we have senior citizens and others put at risk, young 
and others, because this Congress and others won't change the 
law. I will tell you, it really--it is really sad that--and if 
it was just medicine, we are outsourcing the whole production 
of manufacturing. I come from the business sector. Most of the 
business people here in Congress don't have a clue as to how 
business operates. But it actually operates by making a profit 
and being able to exist without lawsuits, overly regulated and 
without oppressive taxation.
    So we have run them all off, whether it is--you know, we 
don't even produce any ladders in the United States. Vaccines 
and ladders. Why? Because of the field day we have created for 
trial attorneys. So I am pretty bitter about it. This should 
have been changed a long time ago. We should have changed the 
liability laws, and we should have changed the vaccine 
compensation fund so that it works, and it does provide 
compensation.
    Mr. Chairman, I yield back the balance of my time.
    Chairman Tom Davis. Thank you. Any other Members wish to 
make opening statements.
    Ms. Watson.
    Ms. Watson. Thank you, Mr. Chairman, for conveying this 
hearing so quickly. This is a very disturbing development. And 
it is very essential to have sufficient doses of flu vaccine 
available for millions of Americans that are at risk for 
complications due to the flu.
    The number of anticipated doses falls far short of the 
CDC's goal of vaccinating at least 85 million people this year. 
The CDC guidelines to ration the vaccine to high risk adults, 
children between 6 and 23 months of age, health care workers 
and the elderly is an appropriate response.
    I have concerns about what this means for our national 
bioterror response system. Yes, I know it is somewhat of a 
separate issue, but it can get--or we can get so caught off 
guard with distributing flu vaccines, and are we at risk for 
similar problems with emergency distributions of antibiotics or 
vaccines, or anthrax or small pox? I hope the witnesses can 
address this point.
    In dealing with this crisis, we must make sure mercury, 
listed as Thimerasol in vaccines is removed from the dosages of 
young children. On September 28, 2004, our Governor in 
California, Governor Arnold Schwarzenegger signed a bill 
sharply restrict the mercury content in vaccines for women and 
babies.
    Mercury is a known neurotoxic substance. Mercury inhibits 
brain function among other detrimental effects. Children 
between the ages of 6 and 23 months should not be subject to a 
substance that we would close down and--that we would close 
down a high school for 1 week after spilling a few of the 
grams.
    Manufacturers in the last few years have voluntarily 
eliminated Thimerosal or reduced it to trace elements. The only 
exception is Aventis Pasteur, who is the sole supplier of flu 
innoculations for children under 2 years old. Vaccination is an 
important health policy for our society. And we have the 
ability to vaccinate without mercury used as a preservative.
    In signing the message, Governor Schwarzenegger noted that 
the U.S. Food and Drug Administration and the American Academy 
of Pediatrics recommended the removal of Thimerosal from 
childhood vaccines in 1999. So we have a combination of issues 
here, Mr. Chairman, and we must get to the bottom.
    I feel that here in our own country, we must support the 
research on inoculations and vaccinations and the elements that 
make these potent medicines, and we must see, as a policy body, 
that we contribute the necessary resources so that we can 
develop our own vaccinations without the harmful ingredients 
that we feel are present at the current time. Thank you so 
much.
    Chairman Tom Davis. Ms. Watson, thank you very much.
    Dr. Burgess, did you have any comment.
    Mr. Burgess. Thank you, Mr. Chairman. I will be very brief, 
because I do want to hear what our witnesses have to say this 
morning. And I do thank you for conveying this hearing. I thank 
the witnesses for coming together so quickly.
    Mr. Mica made the plea about reforming liability as it 
reflects our vaccine manufacture in this country, and I just 
couldn't agree more. I think his point was extremely important. 
We forget in this country, the success of vaccine preventable 
disease. We don't see diseases any longer that in my father's 
and grandfather's generation used to affect hundreds of 
thousands of children and adults in this country.
    When I graduated from medical school in 1977, the year 
before, we all gathered around a hospital room in Houston 
because there was a child with diphtheria, and no one had seen 
diphtheria for so long, and everyone wanted to make sure that 
this class of medical students at least saw one case of 
diphtheria before they graduated.
    It is a tremendous success story that you all have, and a 
story that is not often told. We get distracted by words such 
as outsourcing and Thimerosal. I urge this panel, though, to 
come to some conclusion about what we can do to alert the 
liability structure in this country so that we are not driving 
these manufacturing jobs offshore, and so that we are not 
tarnishing the good reputation that what vaccines have done for 
this country and what life--how much better life is without 
vaccine preventible diseases in our midst.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much. Any other Members 
wish to make opening statements? Ms. Norton.
    Ms. Norton. First, Mr. Chairman, I know we are near the end 
of this term, but I want to thank you and commend you for not 
letting us go home without looking into this matter, because I 
think all over the country there is a serious concern about--we 
see it in our own region, the region you and I live in, about 
entire parts of the region whose supply comes from this 
particular provider, and therefore who have no supply.
    First, I want to say it is--I regard this as kind of a test 
or trial run. Ms. Watson spoke about bioterrorism. It ought to 
tell us that the failure to have a back-up plan for vaccines or 
medicines that can mean the lives of the American people simply 
must be allowed to happen again. It seems to me that it is much 
more serious when it happens with regard to the flu vaccine, 
because it is more likely that flu will take tens of thousands 
of lives whereas a bioterrorism attack would probably be 
contained maybe even to a small facility, who knows?
    So I certainly hope this is a shot across our bow. For 
years there have been difficulties of one kind or the other 
with respect to the flu vaccine. I simply want to raise two 
points. One is the point of science. I look at the science. I 
will be interested to know when--how what we have done in the 
development of this science, where we identify the virus, 
apparently it has to be identified pretty late, here it was 
identified in the late winter or early spring.
    But then we grow the strains in chicken eggs. The first 
thing that occurs to a nonscientist to me is by now shouldn't 
we have some alternative environment that allows us to grow the 
strains more quickly, especially this country, which has done, 
I must say, things that seem to me to be far more miraculous 
than what I have just asked.
    Second, the notion of such a major provider, such a major 
provider of an insensible vaccine being offshore. Now, if there 
are liability concerns, we need to bring those out. I think 
there may be other concerns as well.
    But, there has been a lot of talk about jobs offshore, or 
outsourcing, the economic concerns that outsourcing raises. 
But, there has been almost no concern, no talk about what 
happens when you outsource a major medicine or vaccine that is 
indispensable to the American people. And I think that this 
crisis forces us to face it.
    We raise it at the end of the session. I think it gives us 
time to follow it through and see whether we have made any 
movement as the new session begins. A third concern is how in 
the world this plant, this operation, passed FDA inspection in 
2003, and yet the British have to shut down the place. I don't 
understand the difference between the regulators in both 
places. And my fourth concern is apparently the total absence 
of a back-up plan. Everybody knows that tens of thousands of 
people will die without the vaccine.
    Everybody knows that half the supply was offshore, and here 
we are sitting here wondering what are we going to do with no 
backup plan? This is inexcusable and I think we have to begin 
to bring forward something that, one, gives us an explanation, 
and two gives us a road map to a solution in the future.
    Chairman Tom Davis. Thank you. Any other Members wish to 
make opening statements? We will proceed then to our panel. I 
am very pleased to have a distinguished panel. We have Dr. 
Julie Gerberding, the Director of the CDC. Dr. Anthony Fauci, 
the Director of the National Institute of Allergy and 
Infectious Diseases, and Dr. Lester Crawford, Acting 
Commissioner of the Food and Drug Administration here to 
discuss efforts being taken at the Federal level to respond to 
the flu vaccine shortage.
    They will also describe coordination efforts with State and 
local authorities to manage this crisis. As you know, it is our 
committee's policy that we swear you in. So if you just rise 
with me and raise your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Thank you very much. I think you know 
the rules. There will be a light on in front of you. It will be 
green when you start. When it turns orange that means you are 
at the 4 minute mark. Red, it is your 5 minute mark.
    We want you to make sure you say everything you want to 
say, but your entire written testimony is in the record, and we 
have read that and the questions will be based on that.
    So we are just very pleased and honored that you could make 
time to be here with us today. This is an important and serious 
crisis. And we know you are working on it.
    Dr. Gerberding, we will start with you. And thanks for 
being with us.

 STATEMENTS OF DR. JULIE L. GERBERDING, DIRECTOR, CENTERS FOR 
DISEASE CONTROL AND PREVENTION; DR. ANTHONY S. FAUCI, DIRECTOR, 
NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES; AND DR. 
    LESTER M. CRAWFORD, ACTING COMMISSIONER, FOOD AND DRUG 
                         ADMINISTRATION

    Dr. Gerberding. Thank you, Chairman Davis, Mr. Waxman, and 
the committee. We are very happy to be here to give you an 
update on the current flu situation.
    On Tuesday morning, I was unhappily awakened by the CEO of 
Chiron to notify me that we were losing 50 percent of our flu 
supply this year, just as I was preparing to testify in front 
of a different House committee. So this has been certainly the 
top challenge that the CDC is facing this week.
    While we were disappointed to learn this news, we were not 
entirely unprepared. We have been concerned about vaccine 
shortages for years. We knew in August that there may be a 
delay in shipping some doses from this manufacturer, and we are 
looking at avian influenza throughout Western Asia.
    So the Department has been aggressive in developing the 
pandemic flu plan. Secretary Thompson and the administration 
requested for fiscal years 2004 and 2005 $100 million to expand 
our vaccine supply capability and modernize our vaccine supply 
capability, Congress provided $50 million this year, and we 
hope you will support the full $100 million in fiscal year 
2005.
    We also have initiated, for the first time ever, a 
stockpile for flu vaccines for children. We have 2\1/2\ million 
doses in that stockpile. We are procuring at least 2 million 
more doses from Aventis. We also have a stockpile of antiviral 
treatment, and are hoping to expand that stockpile eminently.
    Within hours of the announcement, the Secretary conferred 
with all of the vaccine manufacturer CEOs, and the Secretary 
announced the new recommendations from the immunization 
advisory committee. These advisory recommendations had actually 
been developed by the CDC as a back-up plan for vaccine 
preparedness when we learned that we may have a shortage this 
year. So we had undertaken a contingency planning effort at the 
CDC just in case we ended up in this situation.
    Within hours, we also had a press conference, we 
communicated to our health alert system to more than 90,000 
clinicians and 88 partner organizations who resubmitted the 
information to their membership, so we were able to reach 
hundred of thousands of clinicians in just a matter of minutes, 
in part because of the investments bioterrorism preparedness.
    Within the first 48 hours, the FDA was dispatched to the 
UK, as you have already mentioned. We have had several more 
press briefings, conducted media tours, stood up our clinician 
hotline and done everything we can to try to communicate the 
priorities for immunization under this new constraint supply 
situation.
    Let me just describe the next steps that we will be taking. 
First and foremost, we will continue our traditional efforts to 
monitor flu activity in the United States, so that we know 
where the hot spots are emerging and we can use that as part of 
our prioritization efforts. In addition, we are working with 
the State and local health officers through ASHTO and NASHO to 
assess the current supply of vaccine in individual counties as 
well as the estimated demand for vaccines in those counties.
    Third, I am working with my colleagues at the CDC and the 
Department with the CEO of Aventis Pasteur to develop a 
distribution plan for the doses of vaccine that have not yet 
been distributed. I must say that we have had absolutely 
extraordinary cooperation from Aventis Pasteur as well as 
Chiron, who has let us know who their high priority recipients 
are, the people that they had contracted with who were serving 
the highest priority populations.
    Unfortunately, for the flu vaccine, the government only 
procures about 10 percent of the total supply, so we have very 
little independent capacity to modify distribution, and this 
voluntary effort is something that we are very grateful for.
    We are also, as I mentioned, taking steps to expand the 
stockpile, and also to expand our capacity to treat and 
prophalax people with antiretroviral--with antiviral therapy. 
And, finally, we are asking Americans and clinicians across the 
country to collaborate with us in this effort. This is really a 
tough time. There are going to be many frustrated people. Not 
all people who need flu vaccines are going to be able to get 
it.
    And we are going to have to work together to do the very 
best we can to match the supply that we do have with the demand 
among the people who are the most vulnerable to the serious 
complications of flu.
    And I really thank you, but I also hope that this committee 
and Congress would regard this as a call to action. The 
situation has gone on far too long. We continue to have a 
completely fragile vaccine production capability in this 
country, and it is getting more and more fragile every year. So 
we need to work together in a bipartisan way with the 
administration and Congress and really take the appropriate 
steps to protect all Americans who are at risk for vaccine 
preventable diseases. Thank you.
    Chairman Tom Davis. Thank you very much.
    Dr. Fauci.
    Dr. Fauci. Thank you, Mr. Chairman, for calling this 
hearing. And, Mr. Chairman, members of the committee, thank you 
for giving me the opportunity to testify before you today. I am 
going to spend a few minutes talking about the role of the 
research component of the Department of Health and Human 
Services, in this case the NIH, in the vaccine development 
process, but also in addressing some of the problematic issues 
that we face today with the recent events that have occurred 
over the past couple of days.
    If you look over at these posters, this is just a schematic 
diagram of the role of the research endeavor in influenza 
vaccine development. All of the way to the left is where the 
academic and NIH community generally concentrates their effort 
in concept development and early basic research that feeds into 
and informs the production and development of vaccines that are 
done in very strong partnership with industry.
    So of all of the endeavors that we engage upon, industry, 
academic, and government collaboration is not only important, 
it is essential to the ultimate endeavor. So what I am going to 
talk about is some of the research endeavors that have occurred 
and how hopefully this will help us getting to where we want to 
go.
    To give you an idea of the depth of the commitment to 
vaccine research, this is the budget of my institute, the 
Infectious Diseases Institute, which in 2004 was $4.3 billion. 
As can you see, a full 27 percent of all of our resources are 
directed at vaccine research to the tune of about $1.2 billion. 
What do we do with that? This poster designates schematically 
some of the issues that we address directly. We do a bit, a 
little bit of surveillance in epidemiology. The bulk of this is 
done extraordinarily well by the CDC.
    We fundamentally concentrate on basic research, and the 
research capacity, to allow us to get to the end game of where 
we are going, which in this case is diagnostics, therapeutics 
and vaccines. Just a moment on therapeutics, because we are not 
specifically talking about that at this hearing, but it is an 
important component of the armamentarium, the development of 
new and better drugs to be used as antivirals in influenza.
    But the question that was asked by at least a couple of 
Members of the question, particularly Ms. Norton when she asked 
about what we can do about going from the antiquated techniques 
that we have, there are two among several, but two very 
important components in vaccine development. One of them is 
isolating the virus that you are going to be dealing with, 
providing a seed virus for a pilot lot to start the production.
    That was generally done in a way that was reliable, but in 
some respects unpredictable. If you look at the blue virus, 
that is a tried and true virus that we use all of the time in 
developing vaccines. If this were the virus in question, that 
we were looking to make a vaccine against, you put these 
together, and you hope that over a period of time, weeks or 
possibly months, but hopefully weeks, it would reassort and 
recombine to give you the genes expressed of what you want in 
this one with the other genes here.
    New techniques developed by NIH grantees called reverse 
genetics allows us now to take the unpredictability out of 
this, by genetic manipulation, taking the genes directly from 
one of these viruses, and taking the genes directly here, put 
them a carrier component called a plasmid, and directly 
inserting them into the cell line that you want to make that 
seed virus in.
    That is one thing that will take away some of the 
unpredictability. Importantly, the production has relied, and I 
think with good results over the years, on egg-based culture 
systems to grow the virus to make the vaccine. The difficulty 
with that is that it takes a lot of startup time. Chickens to 
eggs, eggs are there, you inject the virus in, you make it 
grow. And it really is cyclic. It is not something that 
generally grows year round.
    We need to gradually move away from that, improve the 
efficiency of a cell-based culture in which you have more 
direct control over. If we had that as the major component of 
influenza, we would have much more flexibility, speed and 
dependability.
    In fact, on this next slide, this shows the potential 
advantages of where we want to go with cell culture-based 
influenza vaccine. It is faster production, it allows a rapid 
response to the discovery of new and evolving flu strains. It 
requires less manufacturing space, and this is important, it 
circumvents possible problems that are presented by highly 
virulent flu strains such as those that are lethal to chicken 
embryos and it is tolerated by people with egg allergies.
    And on this final poster, it shows what we have been doing 
in the enormous increase over the past couple of years in our 
influenza research funding, particularly gauged not only at the 
possibility of the evolution of pandemic flu, but also 
understanding, as we have heard Dr. Berberding allude to, the 
fragility of the system that we and many components of the 
Department would like to address.
    And hopefully the research component of this will 
contribute to the speed, the flexibility and the dependability 
of the process of influenza vaccine development, to allow us to 
respond better and to anticipate problems such as we are facing 
today. Thank you, Mr. Chairman.
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    Chairman Tom Davis. Thank you very much.
    Dr. Crawford.
    Dr. Crawford. Thank you very much, Mr. Chairman. I want to 
assure the members of the committee and the American public 
that the FDA is very serious about its vaccine safety 
responsibilities.
    Influenza vaccine is unique in that the active vaccine 
ingredients change almost every year, which as a result, 
present new manufacturing challenges. These viruses are 
continually evolving or mutating, and the recommendations for 
which viruses to include in the vaccine are based on the 
surveillance data provided from laboratories worldwide.
    Early each year, public health experts evaluate the data to 
determine the strains of virus to include in the influenza 
virus vaccine administered in the fall. For this reason, it is 
impossible to stockpile influenza vaccine for use in future 
years, when there may be a shortage due to manufacturing 
issues.
    The FDA works closely with manufacturers to facilitate the 
rapid production of influenza vaccine each year. As soon as the 
strains are recommended, manufacturers begin to grow the virus 
strains in fertile hen's eggs. These seed strains used by each 
manufacturer are tested by FDA's Center for Biologics 
Evaluation and Research [CBER], to ensure that they are the 
same as the recommended strains and to assure the safety and 
effectiveness of the vaccines.
    Then, manufacturers submit the results of their testing 
along with sample vials from each lot for lot release by CBER. 
Lot release consists of a review by CBER of the manufacturer's 
test results for each bulk lot of the vaccine.
    Finally, manufacturers and CBER perform additional testing 
prior to distribution to assure the safety and efficacy of 
these products. FDA inspected Chiron's manufacturing facility 
in 1999, 2001, and 2003. As is the case with most FDA 
inspections, FDA investigators identified compliance issues at 
each inspection.
    Chiron's corrective measures in response to these 
deficiencies were reviewed by FDA and found to be adequate. On 
August 25, 2004, the company informed FDA that they had 
discovered bacterial contamination in eight lots of the final 
vaccine product, and that Chiron was thoroughly investigating 
the problem. Chiron was holding all vaccine lots during its 
investigation, and did not release any of the product.
    Throughout September, FDA, CDC and Chiron had weekly 
conference calls to discuss the status of the investigation. 
Chiron informed the FDA that they had identified the cause of 
the contamination, and it was limited to specific lots.
    The company indicated to FDA that there was no evidence 
that any other lots were affected. But, nonetheless, they were 
retesting all final lots. Chiron later informed FDA that 
results of the testing were negative. The company indicated 
that they were going to submit their final report on the 
investigation this week, and a call was scheduled for Tuesday.
    The FDA had no knowledge of the British decision to suspend 
the firm's UK license to manufacture flu vaccine prior to being 
informed by the relevant agency from the UK this week.
    Dr. Jessie Goodwin, director of CBER and a team of senior 
scientific and compliance officials, met with FDA's counterpart 
yesterday in the UK to gain further understanding of their 
action. Today, they are meeting with Chiron officials onsite in 
England and will begin an inspection of the company's 
manufacturing facility over the weekend. During that inspection 
they will be joined by two senior inspection officials from the 
UK.
    Clearly, the loss of this vaccine poses a serious 
challenge. However, it is important to remember that we have 
faced influenza shortages in the past. We work with our HHS 
colleagues, health officials and manufacturers on how to best 
use the limited supply. For example, Aventis Pasteur has 
indicated to the FDA that they will provide an additional 1 
million doses, increasing their total number of available doses 
to 55.4 million.
    Nonetheless, this is still well below last year's supply of 
87 million doses. We are encouraging people to take advantage 
of the MedImmune FluMist vaccine. FluMist is recommended for 
healthy individuals, 5 to 49 years of age, and therefore 
provides an option for those who would not receive vaccine 
under CDC's priority vaccine guidelines.
    MedImmune anticipates having 1 to 2 million doses of 
FluMist available this year. Now, in the future, we must create 
more efficient ways to produce flu vaccine so we can better 
deal with shortages or unexpected problems.
    Each of the past two budgets, the Department has requested 
$100 million to shift vaccine development to new cell-culture 
technologies, as well as to provide for year-round availability 
of eggs for egg-based vaccines. We received 50 million in the 
fiscal year 2004 budget for this activity, and urge Congress to 
fully fund $100 million request in the fiscal year 2005 budget.
    FDA has also been investing its energy and resources in 
important initiatives such as the current good manufacturing 
practices for the 21st century, known as the CGMP Initiative, 
and the Critical Path Initiative.
    These activities will also help increase the availability 
of vaccines and other medical products. It is imperative that 
we invest in the more efficient, reliable and modern method for 
producing influenza vaccines. With adequate supply and 
widespread immunization, the morbidity and mortality from 
influenza can be markedly reduced. Once again, I thank you for 
having me here today. I look forward to the rest of the 
hearing.
    Chairman Tom Davis. Well, thank you all very much. We may 
be expecting votes in the 11 o'clock timeframe, which gives us 
about 25 minutes, about 5 rounds here. I am going start, Dr. 
Gerberding.
    Virginia, Maryland and the District of Columbia were all 
heavily dependent on Chiron to supply vaccines for the public 
sector. Is the CDC exploring the option of acquiring the 
undelivered Aventis Fluzone doses, which I think is about 20 
million, and then distributing it to States that contracted 
solely with Chiron?
    Dr. Gerberding. Thank you. The CDC is working with Aventis 
to look at the undistributed doses of vaccine. Of those, 
certain doses are considered to be very high priority, for 
example, those needed for force protection or for populations 
that we know are extremely high risk, and so Aventis will be 
certainly honoring their contracts in that regard.
    A small number of doses have not been sold. CDC is hoping 
to purchase those. We will work with Aventis to ensure that 
they are used in the highest priority areas. Then there are 
doses in the middle, some of which go to high priority 
populations such as nursing homes. We are also working with 
Chiron, because we have gotten the information about where the 
unmet high priority contacts are.
    Right now, it appears that we will be able to honor all 
public sector requests for vaccine purchase. I don't want to 
commit to that today, but it looks very promising. And we will 
be announcing the overall supply plan soon, after we are sure 
that we have accounted for the parts of the geographic 
distribution that are most vulnerable right now.
    This is not going to be perfect. And we are still going to 
have to rely on prioritization. When we issued the guidelines 
this week, we were very careful to refer to them as interim 
guidelines, knowing as we got more information about where the 
demand is, where the supply is, and where the flu is, we may 
have to even make those recommendations more or less stringent.
    Chairman Tom Davis. The priorities right now, would be as 
you would rank them. Seniors? HIV?
    Dr. Gerberding. People who are 65 years of age and older, 
are at the very highest risk for hospitalization and death due 
to flu. So they are the highest priority. Children between the 
ages of 6 months and 23 months are also a high priority, 
because they have a disproportionate hospitalization rate, and 
are at some risk of death.
    Anybody with an underlying medical condition is at risk, so 
they are included in the prioritization risk. And then there 
are people who are caretakers of individuals in those other 
groups. So because they might spread flu to somebody else, they 
are included in the priority list right now.
    Most of those people are well, and some of them certainly 
could qualify for FluMist. So we would like to emphasize the 
comment about using FluMist for those people who are otherwise 
healthy and between the ages of 5 and 49.
    Chairman Tom Davis. Dr. Fauci, I have heard someone suggest 
that, because of the shortage, the possibility of diluting the 
vaccine doses in order to double the supply. Is that a 
possibility, or would there be a need or clinical trials 
beforehand?
    Dr. Fauci. Well, that is based on a study that was 
performed through NIH funding at six institutions throughout 
the country from the 2000-2001 vaccine trivalent vaccine. What 
it did was look at 1,000 individuals and give half of them a 
half a dose and the other half a full dose. And it was found 
that although the full dose gave more of a measurable response 
that you would correlate with protection, there was not 
substantial different, suggesting that in time of dire need, 
you might be able to do that.
    These data are available. The NIH, as of a couple of days 
ago, submitted it to the FDA, and it is something that at least 
needs to be considered. There is certainly no decision or no 
promise that we can be able to do that. But, depending upon how 
things unfold, it is something that we will at least have on 
the table to look at.
    And this importantly could only be used in individuals who 
are the healthy adults, because the study was done in that 
group of individuals.
    Chairman Tom Davis. Dr. Crawford, I understand FDA 
currently has a team of scientists and researchers in Liverpool 
meeting with Chiron. We appreciate your proactivity there. Do 
you think any of the Chiron Fluviron doses are salvageable? And 
legally what can you do, because I understand there are already 
some doses in the United States?
    Dr. Crawford. It is not possible to say if any of them are 
salvageable at this point. The inspection of the facility 
itself and the examinations that would be attendant upon that 
sort of conclusion will begin tomorrow.
    The meetings with the Chiron officials are going well, as 
they did with the MHRA people yesterday. But, I have to present 
to you a pessimistic point of view of whether or not we can 
clear any of these. As you know they are contaminated with a 
bacterium, in the gram negative range, and it is not clear to 
me whether or not we can or not. I would like to be able to say 
that there is some optimism. There is the possibility that we 
will consider this on a risk-based evaluation.
    Chairman Tom Davis. My time is up, but just before I ask--I 
want to just ask one last question. What steps are we taking 
with Chiron to make sure that they are going to be able to 
produce vaccines next year? Because right now they are under 
suspension.
    Dr. Crawford. Yes. We are meeting with the MHRA, and they 
have pledged to work with us. That is the regulatory 
counterpart in the UK. And so I think together they are on the 
ground, and we are also on the ground. And I think we can work 
with them to bring them forward.
    Frankly, we will have to provide some technical service, as 
we often do, to vaccine manufacturers. And I would be 
optimistic about that prospect. What I am concerned about, is 
that these kinds of events often result in a further 
consolidation of the industry, the lack of competition in that 
industry is something that we have testified about before. But 
that worries me a great deal.
    Chairman Tom Davis. Thank you.
    Mr. Waxman.
    Mr. Waxman. Thank you, Mr. Chairman. Evidently in August, 
we had some idea that there was a contamination possible to the 
supply from Chiron that was the vaccine that was being produced 
in Great Britain. And the British knew about it. And they went 
out and made arrangements immediately to make sure they had a 
full supply for their needs.
    Obviously their needs are less than ours, and, second, they 
have other companies they can go to other than the two that we 
have to rely on.
    Dr. Gerberding, our system is so fragile, and contingency 
planning is so important. What happened in August when you 
first heard about the possible shortage? What actions did CDC 
take?
    Dr. Gerberding. The initial contingency plan was to assume 
the worse case scenario, that we wouldn't get vaccine from 
Chiron, and then identify what is the most restricted number of 
people who must get vaccines. And that is about 50 million 
people, based not only on the numbers in the high risk groups 
but also on patterns of requests for vaccination that we have 
observed in previous years.
    So, for example, in 2002, through our national health 
interview survey, we recognized that of the people who should 
have been receiving vaccines, what proportion actually were 
vaccinated. And we could extrapolate that into the current 
year, and make a guess at how many people were likely to 
request vaccines if these patterns held up.
    That was about 50 million people, give or take several 
million, depending on the demand and the severity of the flu 
season. So that was the first step. It is also very important 
to remember that by August, vaccine was already under contract. 
We only have access to about 10 percent of the total supply, 
and we have procured what we could for the stockpile, with the 
$40 million appropriation that we had to do that. So we had no 
flexibility to go to a different manufacturer and buy vaccine, 
because they had already sold it.
    Mr. Waxman. Now, Chiron--I mean, Aventis, which is now the 
only company that is supplying this vaccine, has its own 
contracts. They have contracts with clinics, but they also have 
contracts with the private sector.
    Do you know, and more importantly, do the State and local 
people that run the vaccine programs know to whom they are 
selling the vaccine, to whom they have already delivered it, 
and whether there can be some redirection either of the 
existing supply that has already been distributed or that part 
of the supply that has yet to be distributed so that you can 
make a determination that the prioritization schedule is going 
to be met?
    Dr. Gerberding. The vaccine manufacturers consider that 
information proprietary and we have no legal authorization to 
demand it. However, we have been able to develop an arrangement 
with Aventis Pasteur where we are getting that information to 
the county level, which I think is a very reasonable approach, 
so that the county health officers or the local health 
officers, the State health officers can see how, for our 
population, we have a very large imbalance or we are doing OK 
or no shortages are reported.
    We are hoping that will help us map out the patterns that 
we need to address with the reallocation of the remaining 
doses. And I think it is commendable that we are even talking 
about a manufacturer being willing to deflect some doses of 
vaccine from people who are expecting to receive it, to meet 
the highest priority demand.
    So this is voluntary, it is very difficult, there is no 
mapping of vaccine supply authority in this country. But, we 
will do the best we can.
    Mr. Waxman. Is there any mapping or knowledge within the 
county of who has the vaccine and who does not?
    Dr. Gerberding. The county health officials, as well as 
State health officials, have been surveying their members. The 
first survey to come out of the National Association of City 
and County Health Officers indicates that all of the 
jurisdictions are making an attempt to map availability within 
their jurisdiction, and they are certainly able to know what 
they have in the public sector.
    But some private sector participants are not willing to 
disclose the amount of vaccine they have. We sense that there 
is probably some hoarding going on, and people are waiting to 
make sure that their patients or their customers are served 
first.
    Mr. Waxman. You could ask Aventis to give you that 
information. They don't have to, but you could ask for it, 
couldn't you?
    Dr. Gerberding. We have asked for it. And the one caveat is 
that some of the vaccine is purchased, for example, by a large 
drugstore, and then they redistribute it across the United 
States. So we don't have a one-to-one mapping of exactly where 
the doses of vaccine are.
    Mr. Waxman. Dr. Crawford, in August Chiron announced 
several million doses of its flu vaccine might have been 
contaminated by bacteria. The British regulators immediately 
sent out an inspection team to review the manufacturing 
standards at the facility. FDA did not.
    Was FDA aware that this extensive review by British 
regulators was going on? And why did FDA not conduct its own 
investigation of the facility, and is there a communication 
between the British equivalent of the FDA with you so that you 
know what they are up to and you can communicate freely and 
respond?
    Dr. Crawford. Actually, when those conclusions were reached 
we did have inspectors in the plant from the United States. 
They were in Liverpool at the time on August 25. And they did 
review the records. It looked like at that point, the maximum 
number of lots that might be turned down were something less 
than 10 percent.
    We arranged, in cooperation with the Centers for Disease 
Control a weekly conference call to see what progress they were 
making. The United Kingdom did the same thing. And so what 
happened is, is that we obviously hoped for the best. It was 
too late on August 25 to start a new cycle of vaccine 
production, because that is a 6-month enterprise as we 
mentioned earlier.
    But we hoped for the best. We gave them all we could in 
terms of help, as did the British. And I think it is fair to 
say that our final conference call with them where we would 
reached a go-or-no-go decision was on the same day that the 
British announced, the time differential made us a few hours 
behind. I was in a meeting in Geneva with one of the officials 
of the MHRA who told me about this situation very early in the 
morning. And also revealed that they would be--they would have 
20 percent less vaccine in England than they had anticipated 
needing.
    Their level of vaccination is not as great as ours, so they 
didn't have quite as much of an impact.
    Mr. Waxman. Can I just ask you one question, Mr. Chairman 
if you permit? Could you contrast the FDA review with the 
British review? They seemed to be much more involved than FDA. 
You were looking at the records, but they were already 
inspecting the plant. Is that a fair statement?
    Dr. Crawford. No. Actually we were in the plant on August 
25. So I think it was about the same thing.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Souder [presiding]. Dr. Burgess.
    Mr. Burgess. Yes, Dr. Crawford. Following the same line of 
questioning that Mr. Waxman was taking. Was there some evidence 
that the British equivalent of the FDA had that was more 
compelling than the evidence that you had, because it does seem 
that their decision was different? You have to wonder if the 
data that was presented to both was consistent.
    Dr. Crawford. The decision day, which was Tuesday of this 
week, was the same for the British as it was for the United 
States. They did have a meeting on Friday when they considered 
options.
    But their final decision was not announced until Tuesday 
after further meeting on Monday afternoon and into the night. 
So I would say the availability of information was the same to 
the two governments.
    Mr. Burgess. The data presented was the same and the 
conclusion reached was identical with the two agencies.
    Dr. Crawford. Yes.
    Mr. Burgess. Are you at liberty to tell us what bacteria is 
involved in the contamination?
    Dr. Crawford. It's called serratia marcesens.
    Mr. Burgess. Dr. Gerberding, we saw headlines about the 
shortage of the flu vaccine and how it affected some of the 
youngest patients in this country. There was a contingency in 
place for this year if there was a similar bad actor from the 
flu standpoint where there was a run on the vaccine as we saw 
last year, is that correct?
    Dr. Gerberding. Yes, sir. We actually had expected a record 
number of doses of flu vaccine to be produced this year, in 
part to allow more surge than we had last year and in part 
because we had added the recommendation for children between 
the ages of 6 and 23 months to be immunized. Last year, 87 
million doses of vaccine were administered--83 million doses 
were administered. This year, we had anticipated 100 million. 
Even with the loss of the 6 to 8 million doses from Chiron, 
based on their projections, we still anticipated we would have 
more vaccine than last year.
    But, nevertheless, I am a pragmatic South Dakotan, and I 
always prepare for the worst-case scenario, and when you know 
that some doses are contaminated, even though all testimony--
the CEO of Chiron was here a week ago testifying they expected 
full delivery in October. He met with the Secretary and 
expected full delivery in October. So we were prepared for the 
delay, but in the background we had a backup plan in case the 
worst case happened, and indeed it did.
    Mr. Burgess. Do you think that preparation that you 
undertook last year, perhaps it is fair to say that is going to 
blunt some of the potential trouble that is going to accrue 
from the loss of the British vaccine?
    Dr. Gerberding. It is very helpful that Aventis' production 
was higher this year than last year for several reasons. They 
tried to make more, but also the vaccine yield was very good. 
So we were able to get a few more doses from Aventis Pasteur 
than they had initially projected several months ago.
    The opposite issue is that FluMist, which went unsold last 
year, only made 1.5 million doses instead of the 4.5 million 
doses. So we lost the opportunity to use the nasal vaccine for 
the healthy people who aren't on the priority list this year 
under the shortage condition.
    So, again, flu is always unpredictable, but the demand for 
flu vaccine is equally unpredictable. What we need is a robust 
surge capacity so that when demand exceeds supply we have some 
place to go to fill in the gaps.
    Mr. Burgess. Do you feel you have the pieces in place to 
make certain that the healthier members of the community 
understand that they need to use the internasal FluMist?
    Dr. Gerberding. We are engaged in full communication at 
CDC, so we are reaching out directly to consumers in those age 
groups. We are reaching out to employers across the business 
community. I have been interacting with the National Business 
Group on Health, and they have blasted out information to their 
memberships. We are working with stakeholder groups from our 
employee sector through NIOSH and other parts of CDC, and we 
are engaged--several CDC people are doing radio tours, and we 
are setting a satellite uplink up so that we can blast out 
through those mechanisms. There have been several press 
briefings already, and we will continue to try to use that menu 
for outreach.
    Our next emphasis will be on translating this information 
into all relevant information so that people in all communities 
will have it. We are setting up an 800 number so that people 
who cannot find vaccine will have a place to call or people who 
are confused about whether they need vaccine or not have a 
place to call to get that information from the CDC. We will be 
mapping those calls by district and by county, and then we will 
use that information as helpful input to the local health 
officials to recognize supply and demand mismatches in their 
community.
    So these activities are all ongoing, a lot of effort made 
to communicate. But with any public health situation of this 
magnitude and as challenging as this one is, you can never 
communicate enough. So we will continue to look for every 
opportunity to try to shape people's decision in a way that 
allows us to get the people who need the vaccine the most get 
vaccinated.
    Mr. Burgess. Dr. Fauci, you mentioned the funding 
difference between the 100 million that would help you go to a 
cell culture for technology. If you got that funding today from 
this Congress, that $60 million shortfall was made up, how 
quickly could we expect to see the end result?
    Dr. Fauci. I think we would be able to implement it almost 
immediately.
    There are two components to that additional amount that the 
Department had asked for. One is to provide a guaranteed year-
round availability of eggs for egg-based culture and the other 
is to push the envelope on the development of the cell-based 
culture. Since research is already ongoing on the cell-based 
culture, not only through our grantees and contractors but the 
companies themselves are starting to phase some of that in, the 
money as it becomes available will literally hit the ground 
running in making this happen.
    Chairman Tom Davis [presiding]. The gentleman's time has 
expired. Mr. Kanjorski.
    Mr. Kanjorski. Thank you, Mr. Chairman.
    Just being a total layman, it seems to me that you are 
testifying that we are involved in a crapshoot with vaccines. 
If there had been contamination at Aventis, we would be without 
a vaccine in the country and have no capacity to produce it. 
And I can understand that, but I can't figure out that there is 
a definite plan until you get the new technology in place, but 
it will take probably 5 to 7 years. This shortage could happen 
this year or the following year, and there is no methodology in 
place other than that you have a great informative thing after 
the occurrence to notify people who can't get the vaccine.
    My question is, what do we have to protect that next year 
this won't happen and what can we do or what role should the 
government play with the private sector to try and insulate? I 
am not hearing whether we should have duplicate manufacturing 
facilities, separate manufacturing facilities, onsite, constant 
inspection and when critical decisions will be made if there's 
a contamination problem. And this is just a contamination 
problem. It could have been a terrorist problem.
    Dr. Gerberding. You are absolutely right, that we are 
vulnerable to failures in the manufacturing process. We have 
known this for more than a decade. In the years 2000 to 2003 we 
saw this problem come up over and over again with childhood 
immunizations, and we need more manufacturing capability and we 
need more manufacturers of these vaccines.
    Mr. Kanjorski. Doctor, aren't we involved in a terrorism 
war, or am I missing something in the last 3 years? I seem to 
hear you testifying like we are in any age that we could have 
been in the 1980's and 1990's and that vaccines and responding 
to bacteriological problems should be one of our highest 
priorities. Can you tell me what Department of Homeland 
Security and this government has done in the last 3 years to 
make sure that this eventuality that has now occurred shouldn't 
have occurred or we should have had a backup plan?
    Dr. Gerberding. I agree with you completely. We have been 
trying to make a strong case for the fact that influenza is a 
public health threat and it deserves macroinvestments.
    Mr. Kanjorski. That is a given. We are talking about 
something that probably half a million people may die that 
wouldn't have died if they had vaccine. Is that probable?
    Dr. Gerberding. In an average year, 36,000 people die from 
influenza. We can't predict whether this year will be a severe 
flu season or a mild season.
    Mr. Kanjorski. And then we can say that because, with half 
the dosage, the likelihood we may suffer 18,000 additional 
deaths or at least 5,000. We are going to have people really 
die and as many or more people than died in the World Trade 
Center.
    Dr. Gerberding. Every year, even with an adequate vaccine 
supply, people die from flu because we don't get everybody.
    Mr. Kanjorski. Doctor, are any more people likely to die in 
the United States because of this contamination than otherwise 
wouldn't have died if we had adequate vaccination capacity?
    Dr. Gerberding. I don't know, but I'm worried about it.
    Mr. Kanjorski. You have no professional opinion that you 
can project, the likelihood? Because maybe we shouldn't spend 
anything in vaccination. If we can use half the production and 
we don't need the whole, then we obviously don't need that 
protection out there. There must be some mathematical scale 
that this is a life-death issue.
    Dr. Gerberding. I agree with you completely, and we 
cannot----
    Mr. Kanjorski. I'm not condemning your organization or the 
others at the table, other than we are 3 years into the war on 
terrorism and it doesn't sound right to me. I'm not condemning 
your agencies, your asking for money and preparation. I have 
visited these manufacturing facilities, and they have called my 
attention to the fact that they don't know what will happen to 
this country in a pandemic and how we are going to respond to 
it. Have you presented to the Congress and to the President a 
plan to meet terrorism and pandemics and have we responded to 
it?
    Dr. Gerberding. As we said, we requested resources to scale 
up the surge capacity for vaccine from Congress last year. 
Secretary Thompson and the administration requested $100 
million; Congress appropriated $50 million. We have asked for 
the opportunity to expand the vaccine stockpile so we could 
purchase a reserve. We are making progress toward achieving 
that, but we haven't had the full appropriation to accomplish 
that yet.
    Mr. Kanjorski. So this Congress has failed to respond to 
the agencies of the executive department of this government 
that would have been a response to homeland security because we 
do not have the capacity potentially to meet the biological 
protections against biological warfare, is that correct?
    Dr. Gerberding. We requested $100 million, and we received 
$50. We are hoping Congress will support the full $100 million 
in fiscal year 2005.
    Chairman Tom Davis. Mr. Souder.
    Mr. Souder. Thank you, Mr. Chairman.
    First, I would like to add my voice to the many others that 
Dr. Gerberding--I hope next time the network does a TV show 
they give you full credit. Your agency deserves full credit for 
the work that you do.
    Based on conversations I have heard here, I want to ask you 
a couple of questions. My colleague from Indiana, Senator Bayh, 
introduced legislation a year ago that sounds to me like it 
attempts to address some of the things you raised. One of the 
things that Dr. Crawford raised was a seeming lack of 
competition in the marketplace. One of the things there would 
be to encourage through investment credit more people to get 
into the business. Do you think that would help at all? What do 
you think is the biggest stumbling block?
    And I would appreciate a further comment on that, because--
and let me add this, and we will start with Dr. Crawford and 
move through. A second part of the legislation deals with 
trying to make sure that the government buys--or if the market 
doesn't meet, the government will back up and purchase a larger 
supply so we have a backup supply.
    It is not without precedent. I remember working as a 
staffer with MRE companies, because we have these pulses in 
Ready-to-Eat meals at wartime. So part of the goal had been to 
keep two or three of these companies in business so that when 
we had a policy we had the capability to do that.
    How do you feel about what impact on the market that would 
have if we had a backup guarantee if the production rate were 
higher? One question is, can we get more people into an 
investment credit; and, second, would having some backup 
guarantee for the high-risk population that guaranteed that if 
they produced it, like FluMist did--and my question along the 
same lines, FluMist is going to testify, who manufacture that, 
in the next panel that they had to cut back because the market 
didn't do it and they're restricted in the areas that the 
government backs up and we are losing manufacturers. What, if 
it isn't those two things that I mentioned earlier, would you 
do to try to get more manufacturers in the business?
    Dr. Crawford. What we are trying to do--as you know, we 
don't have funding for like startup companies and that sort of 
thing. We basically regulate them. We are the bad news for 
them, rather than the good news. What we are trying to do is 
improve our process so that we create a favorable regulatory 
environment for more companies to get involved.
    I mentioned the good manufacturing practices, which we have 
just announced after a 2-year study; and what this will do 
would make it--it would be a newer approach to manufacture. It 
would be less onerous, more scientific, more systematic. And 
over time, along with the new research initiative that we are 
working with the National Institutes of Health on called the 
critical path, we believe it will make it a more predictable 
climate for vaccine manufacturers but one that produces better 
products with more certainty of success.
    In the lots that we have now, I mentioned earlier that 8 of 
100 were originally considered to be defective. As we go 
through our examination tomorrow, this will actually be a test 
case. We don't know how many or if any are badly contaminated 
until we do the inspection. But certainly a better regulatory 
environment where it is more modernized, if we take a newer 
approach at it, would help; and that is what we're committed 
to.
    Mr. Souder. I agree that the regulatory environment in all 
kinds of things is a deterrent, and certainly all the 
manufacturers say that to some degree. We have only been able 
to move that slightly. I hope we continue to move that and keep 
people's health safe.
    The question is also is there a tipping point here where a 
small investment or even a medium investment tax credit would, 
say, impact these new technologies or if we, in effect, backed 
up some of the purchases for pulse components. Dr. Fauci.
    Dr. Fauci. You bring up an important point that has many 
ramifications for what has been said thus far today as we keep 
referring to the fragility of the vaccine development industry. 
I think it boils down to things that we in the Department at 
all three of our agencies have been facing, and that is a real 
lack of a climate of incentivization to get companies involved. 
People say, how come you only had two companies involved for 
the vaccine for influenza? Those were the only two companies 
licensed in this country to make it and distribute it. It isn't 
as if we had 15 companies, and we decided on 2, and I think 
that sometimes gets misunderstood.
    If you look at the climate of how we look at vaccine 
development, it's very risky business for a company to get 
involved, risky because of the profit margin, risky because you 
are dealing with biologics and they are much more difficult to 
predict the success of it. And there's the issue of the use of 
vaccine which is used once or twice or three times in a 
person's lifetime, as opposed to the other possibility of the 
same company developing a blockbuster drug that someone would 
use everyday of their lives for the rest of their lives that 
they could make millions at.
    What we are trying to do is to do everything from 
regulatory incentives to research by pushing the envelope more 
to take away some of the risks by the approaches that I showed 
in my opening statement about perfecting things like the 
reversed genetics or perfecting things like the use of cell 
culture base. And then, finally, it is the issue of pricing and 
how our culture views how much one is willing to pay for a 
vaccine.
    This morning, in preparation for the hearing, I got on the 
phone in my office very early and I called up a pharmacy in 
Bethesda and I asked about the relative prices of things, 
because we talk about it a lot. And I asked them what would be 
the retail price of a year's supply of Lipitor, which is a 
blockbuster, cholesterol-lowering drug. $1,608. What would be 
the yearly cost of 50 milligrams of Viagra? $3,500 a year per 
person. What is the cost of the Aventis Pasteur vaccine? $7 to 
$10.
    You are talking about the idea of any company wanting to go 
toward something that has a major profit margin. We need to 
help with incentives. We could do it researchwise or 
regulatorywise, but it is a rather broad, generic issue. We 
hope, working with the committee, we will be able to find 
solutions to that.
    Mr. Souder. Could I see if Dr. Gerberding has anything to 
add?
    Dr. Gerberding. In the short run, before we are able to 
scale up and using some of the tools you described, that the 
backup plan of the government purchasing additional doses of 
vaccine is one that we are already doing on a small scale; and 
it is conceivable that, by expanding that, manufacturers would 
be incentivized to make as much vaccine as they could. The 
downside of that is that taxpayers would have to be prepared 
that, most years, we would throw vaccine away and it would be a 
waste of tax dollars. So there is a tradeoff with flu vaccine 
because we have to get a new vaccine preparation every year.
    Chairman Tom Davis. Ms. Watson.
    Ms. Watson. Pass.
    Chairman Tom Davis. Mr. Tierney.
    Mr. Tierney. Dr. Crawford, does the Food and Drug 
Administration pretty much agree with the determination made by 
the British health authorities?
    Dr. Crawford. I can't answer that until we get through our 
inspection. We are looking through the lots and hoping for the 
best, but there is an air of pessimism, so probably we will.
    Mr. Tierney. Is anything being done about the prospect of 
price gouging?
    Dr. Gerberding. We are concerned about price gouging. The 
first step is to identify where it's happening, and the second 
step is to alert the State and local health officials that it's 
happening in their jurisdiction and also the FTC who has the 
regulatory responsibility to evaluate and take the appropriate 
steps. I think it is tragic. We know in any market where 
there's a shortage of product that there is a tendency to raise 
the price, these unfair price increases; and they really add 
insult to injury.
    Mr. Tierney. Are you satisfied that our officials are 
actually working on this issue, giving the proper notice to 
people?
    Dr. Gerberding. I don't have an answer on that today, just 
48 hours into this, but we will be looking for it and also make 
our hotline available if there are reports of this so people 
can alert us and we can pass the information onto the 
appropriate response agencies.
    Mr. Tierney. Dr. Fauci, you should have slept over last 
night. You were here yesterday on the West Nile virus.
    Doctor, with respect to our research, MedImmune says they 
are developing vaccines for--and giving it for free to 
government inspectors or researchers, but they obviously charge 
others who create a profit from it for that. Do we need to 
address our patent laws at all to make sure that enough people 
have access to the reverse genetics processes or anything or is 
it fine the way it is?
    Dr. Fauci. I think what you are referring to is what is 
going on is a dispute about the pattern of the reverse 
genetics. I'm not sure we need to address the patent laws on 
that. We need to clarify pretty quickly what the patent issues 
are involved there so we can get the ball rolling on this, but 
I don't think this is a generic patent law problem.
    Mr. Tierney. A moment ago you were talking about the 
different prices that you get for different prescription drugs. 
The fact of the matter is, it's not the government that is 
keeping the price of the flu vaccine low, is it? We don't set 
the price and keep it low?
    Dr. Fauci. Actually not. But one of the issues we face--
what I was referring to was not that it's the government or 
industry.
    Mr. Tierney. It's a market situation.
    Dr. Fauci. Culture of people feeling and maybe in some 
respects, appropriately so.
    Mr. Tierney. It is the market. Because if people made more 
of a demand for it, the price could be raised higher. It it's 
raised higher, they're afraid people won't buy it at the higher 
price.
    Dr. Fauci. Also, the third party payers wouldn't 
necessarily pay it. That's an important issue.
    Mr. Tierney. One of the things--I think Dr. Gregory Poland 
from the Mayo Clinic gave the options. We either have to 
subsidize or give incentives to manufacturers to get them into 
the business, or the government has to own or operate either 
themselves or to a contractor a plant to produce the vaccine. 
Seems to lay out some of the options that you say we went from 
regulation to doing it yourself.
    But as long as we leave it entirely without a regulation to 
the industry, we get the lower prices, we get less demand, and 
we get two manufacturers instead of more, and it creates a 
problem. Anybody in any of these agencies before us right now 
debating this issue as a policy matter, whether the government 
ought to have a contractor get in there and somehow subsidize 
them to create this or get in the business themselves or 
regulate the price, is that discussion going on?
    Dr. Gerberding. That discussion is ongoing and has been 
going on for some time. Just on Monday, the National Vaccine 
Advisory Committee, who has responsibility for advising the 
Department and the government on those issues, issued some 
statements that recommended that we look at those options that 
you just mentioned. There is not a long list of options, and we 
need to bite the bullet here and come up with a plan.
    Mr. Tierney. This is absolute free market aspect when it 
comes to health care. It doesn't always seem to fit the same 
model as if you're selling widgets. Health care is a different 
item here, and we get that right across the spectrum of health 
care issues. I know that everybody is paranoid of the word 
regulation or any government involvement, but we expect the 
government to step forward for our safety and protection. I 
hope that debate accelerates. I think Congress ought to be 
involved in this debate, and there ought to be further hearings 
on this away from the ideology as to what is a practical matter 
of how we take care of health concerns, and that may mean a 
little less of absolute free market and more intervention here 
to make sure we have this product available.
    Chairman Tom Davis. Mr. Mica.
    Mr. Mica. I remember previous hearings on the subject of 
the cost of some of these vaccines. I remember someone holding 
up a vaccine vial, and in that testimony they said that the 
cost of the vaccine itself was less than $1 or around $1, but--
I don't remember--if you can get insurance, the cost was like 
about $20 some. I don't know if that's still the case. Is that 
a typical ratio, Dr. Fauci? I think you were talking about some 
of the costs.
    Dr. Fauci. I'm not actually sure, and I would hesitate to 
make any statement about the relative costs of the liability 
insurance that they would have to pay.
    Mr. Mica. Are they having trouble getting it, 
manufacturers? I heard you cite some incentives. Isn't that one 
of the major problems, the most significant problem to 
manufacturers in the United States?
    Dr. Fauci. I best leave that for the companies to answer. 
But I know when you are dealing with childhood vaccines we do 
have a childhood vaccine fund for compensation. But not in the 
adult.
    Mr. Mica. Right now, we are looking at blaming sort of the 
bureaucrats, and you all haven't paid enough attention to this, 
and there probably will be horrible things like price gouging 
because the supply is down. You had a responsibility. And it 
was kind of interesting, someone said you had to fly--who flew 
over to check it?
    Dr. Fauci. The FDA.
    Mr. Mica. So we had to fly to Europe to check the supply. 
I'm sure it is much more beneficial to manufacture this outside 
the United States and keep an eye on it. I understand you have 
an annual inspection?
    Dr. Crawford. Depending on what the risk is expected to be, 
it can be as little as every 2 years.
    Mr. Mica. How many did we have here at the site that went 
bad? Can you supply a record of your visit for the committee?
    Dr. Crawford. Absolutely.
    Mr. Mica. This is a research and development budget for the 
National Institute here, and it says vaccine research. We 
supply $1.18 billion in research. Mr. Sanders and I several 
years ago went over and met some of the drug manufacturers 
trying to figure out why--what was happening in the 
marketplace. At that time, they told us there was no R&D in 
Europe, that it was all being done in the United States for 
most drug development and vaccines. Is that still the case?
    Dr. Crawford. For pharmaceuticals?
    Mr. Mica. Yes.
    Dr. Crawford. Sixty-three percent of the profit, it is 
reported, from pharmaceuticals worldwide is gained through U.S. 
sales. So quite naturally----
    Mr. Mica. We were told, quite frankly, that there is no R&D 
going on or very limited. Almost all of it comes from the 
United States. The U.S. taxpayers are financing R&D in vaccines 
and other pharmaceuticals, and then we are outsourcing because 
you can't manufacture in the United States because you get your 
butt sued. And you also certify or do you approve the drugs? 
The FDA approves those vaccines, right?
    Dr. Crawford. Yes, we do.
    Mr. Mica. You know, I think it's time we looked at some 
system where we took responsibility and there would be plenty 
of drugs available at low costs if we limited the liability, if 
we set up some funds for decent compensation for victims, 
whether it is a pharmaceutical or a vaccine. Wouldn't that be a 
better solution, Dr. Fauci?
    Dr. Fauci. I think the idea of compensation is something 
that needs to be----
    Mr. Mica. We have done some of it with children's 
immunization. We produce it.
    Our responsibility is to have an agency like the FDA to say 
that this is a good drug. Now we force the manufacturing 
outside. We are paying for the R&D. It would behoove us to 
manufacture in the United States and have better control and we 
are certifying it whether it is manufactured in the United 
States or outside that it is good. So shouldn't we have some of 
that responsibility, FDA?
    Dr. Crawford. Yes, we should.
    Chairman Tom Davis. The gentleman's time has expired.
    Ms. Norton, you will be the last questioner.
    Ms. Norton. Look, having been caught without a backup plan 
already, I'm really compelled to ask what is the backup plan in 
case the volunteer sharing doesn't work out?
    Now the most generous people in the world are health care 
people, so I'm sure everybody is doing what you'd expect them 
to do. What are you empowered to do if, in fact, your, quote, 
backup volunteer plan proves as insufficient as having no 
backup plan for half of the supplies which now are unavailable, 
what are you empowered to do? What would you do if in fact 
people begin to make their own assessments, particularly since 
the private sector controls most of the supply?
    Dr. Gerberding. Thank you. That's an important distinction 
between childhood vaccines for routine prevention of vaccine-
preventible diseases and influenza where we have such a small 
proportion of the market share in the governmental control. CDC 
has no authority to regulate distribution of vaccine or to 
regulate the manner in which vaccine is supplied. We rely on 
our best technical advice. We rely on altruism, as you have 
described.
    We have experience with this in 2000, 2001, where we had a 
similar vaccine shortage. We found that, overall, there was 
adherence to the recommendations. In fact, we ended up in many 
areas with excess doses of vaccine because people complied so 
carefully with the recommendations.
    What we are talking about here is a very fine line between 
what we have and who needs it the most. I just don't think it's 
a matter of doses, but it's a matter of where are those doses, 
and we have no authority to redistribute the vaccine.
    Ms. Norton. I don't want to take the entire time. Are you 
prepared to come back during the lame duck session and get some 
authority to do something now that you know full well that the 
private sector could turn you down and could decide on its own 
where the supplies go?
    Dr. Gerberding. We would be delighted to work on with 
Congress on solutions. Our colleagues at the FDA, who is the 
regulatory agency, has a role to play in this as well, but we 
would be willing to look at all possible solutions.
    Ms. Norton. I'm asking you and Mr. Crawford to, in fact, be 
prepared now that there is no backup plan, now that we cannot 
in our economy force the private sector to do things with 
respect to supplies in their hands, to be back here when we 
come here to tell us what it is we need to do. We can't just 
sit here saying we don't have the authority, there's nothing we 
can do about it.
    In order to let other Members ask questions, I'm going to 
forego the rest of my questions.
    Chairman Tom Davis. We have 3 minutes left to vote.
    Mr. Cooper.
    Mr. Cooper. Following up on my colleague's line of 
questioning, could this Congress save lives by passing a law 
making sure that only high-priority recipients got the 
vaccine--seniors, infants, people with chronic diseases, health 
care workers? Would that save lives in this country?
    Dr. Crawford. I should defer that to Dr. Gerberding. 
Basically, you are saying that you would codify their 
recommendations, CDC's recommendations?
    Mr. Cooper. With the force of law behind the voluntary 
guidelines that Dr. Gerberding has mentioned, would that save 
lives in this country? Because, in response to Mr. Kanjorski 
earlier, it seemed like the normal casualty rate that we could 
face with influenza could go up substantially this year as a 
result of this manufacturing shortage. You only have voluntary 
guidelines at your disposal and you're not empowered to do 
more? Would you be able to save lives if you had that extra 
legal authority?
    Dr. Crawford. I'm not prepared to answer that. I think she 
expected good compliance based on past years, but I better 
defer to Dr. Gerberding.
    Dr. Gerberding. I don't have an answer for you either. This 
is a work in progress. In past years, we have been able to have 
a good match between what we expect and how people adhere to 
those recommendations. Whether we would have more benefit from 
codifying it or more mess from codifying it, I can't really 
tell you right now. I think enforcement of that would be a very 
difficult challenge to patch together on short notice, but we 
will look at that as an option and, as the Congresswoman 
suggested, come back with a set of options that we could 
discuss with the committee during the next session.
    Chairman Tom Davis. Thank you very much.
    I'm going to dismiss this panel with our thanks. We will 
take a recess to go vote and be back in 15 minutes.
    [Recess.]
    Chairman Tom Davis. The committee will come to order.
    The gentleman from Indiana is recognized.
    Mr. Burton. Mr. Chairman, you really are fast with that 
gavel, and I love it.
    I'm sorry, Mr. Chairman, I wasn't here earlier today when 
the hearing started--and this is on a related subject. I got my 
flu shot this morning, and I guess a lot of Americans so far 
haven't been able to do it because of the shortage. But the 
concern that I have, part of the contents of the vaccination 
that people are getting. There is a substance called 
thermarisol, which is about 50 percent ethyl mercury in the flu 
vaccine, and most adult vaccines have mercury in it.
    Governor Schwarzenegger of California recently signed a 
bill in California which prohibits children up to age 3 from 
getting a vaccination that contains thermarisol; and the reason 
for that is because the mercury in vaccines--and we have had 
hearings on this over the last 4, 5 years--the mercury in 
vaccines is seen by many scientists around the world as a major 
contributing factor to neurological disorders such as autism in 
children and Alzheimer's in adults.
    Now we are getting it out of most of the children's 
vaccines. It's in about three or four of the children's 
vaccines today. In California, they are going to get it out of 
all of them, which is a giant step in the right direction, and 
I congratulate the legislature out there and the Governor for 
doing that.
    We need to get mercury out of all vaccinations. Mercury is 
toxic to the human body, to the human neurological system. It 
is in the flu vaccine and in most of the adult vaccines. It 
needs to be removed. You can go to single-shot vials without 
having mercury in them; and, Mr. Chairman, it would be great 
for the American people and the world if we removed that.
    Mercury toxicity is a major ecological problem for the 
whole world. It is in our water, in our fish. We are being told 
not to eat fish in many cases because there is mercury in them, 
and we continue to put it in vaccines that's injected in our 
children and adults.
    We used to have 1 in 10,000 children that were autistic. It 
is now 1 in 166 according to CDC. We used to have Alzheimer's 
that was recognized quite frequently, but now it has become an 
epidemic. So we need to get these toxic substances out of our 
vaccines. I think the pharmaceutical industry has done a great 
job for the people of this country and for the world, but there 
are certain things that can be cleaned up. One of them is 
getting the mercury out of the vaccines.
    Mr. Chairman, I thank you very much for yielding to me; and 
this is another shot across the bow, the pharmaceutical 
industry, to get the mercury out of all vaccines for the good 
of humanity.
    Chairman Tom Davis. Thank you very much, and you have been 
consistent in your position on this.
    We move to our next panel, and I thank our witnesses for 
appearing. They are the three flu vaccine manufacturers to 
discuss vaccine production capacities to respond to shortage 
crisis.
    We will hear from Christine Grant of Aventis Pasteur, 
manufacturer of Fluzone, the vaccine. Dr. David Johnson 
accompanies Ms. Grant, and he is available to respond to 
questions.
    We also have Dr. James Young from MedImmune, which 
manufactures the nasal spray vaccine, FluMist.
    Unfortunately, a representative from Chiron is unable to 
attend this hearing, but the company has submitted written 
testimony for the hearing record. I ask unanimous consent that 
Chiron's testimony be included in the official hearing 
language. And without objection, so ordered.
    [The prepared statement of Mr. Pien follows:]

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    Chairman Tom Davis. We also have a visitor to this 
committee who I have known for many years, Dr. Robert Stroube. 
He is the Virginia State Health Commissioner. He is no stranger 
to this committee either. He's here to provide an assessment of 
State and local public health departments' ability to respond 
adequately to the vaccine shortage threat.
    We swear all witnesses before you testify. So if you would 
rise and raise your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Ms. Grant, we'll start with you; and 
we'll move straight on down. I can't thank you enough for being 
with us and being patient, but we'll try to get through 
questions as quickly as we can.

STATEMENTS OF CHRISTINE GRANT, VICE PRESIDENT FOR PUBLIC POLICY 
 AND GOVERNMENT AFFAIRS, AVENTIS PASTEUR, INC., ACCOMPANIED BY 
      DAVID JOHNSON; JAMES YOUNG, PRESIDENT, RESEARCH AND 
DEVELOPMENT, MEDIMMUNE, INC.; AND ROBERT STROUBE, STATE HEALTH 
          COMMISSIONER, VIRGINIA DEPARTMENT OF HEALTH

    Ms. Grant. Good morning, Chairman Davis and members of the 
committee. Thank you for the opportunity to testify today on 
behalf of Aventis Pasteur.
    During the past 10 years, Aventis Pasteur has been a 
reliable supply of influenza vaccine for the United States, 
consistently increasing our annual production. This year, we 
expect to produce 55.4 million doses, 33 million of which have 
already been distributed.
    I'm here to communicate our company's pledge to continue to 
do everything we can to manage this influenza season consistent 
with the recommendations of Federal and State health 
authorities. Vaccines have proven to be the most cost-
effective, preventive intervention in human history; and all of 
our employees are passionate about the contributions they make 
to lifesaving work.
    Aventis Pasteur is the world's largest vaccine company with 
nearly 9,000 employees. The company's global experience has 
been utilized to manage influenza epidemics over many decades. 
Vaccine has been produced at the Swiftwater, PA, location for 
over 100 years and influenza vaccine produced there for more 
than 30 years. Today, we produce approximately one-half of the 
U.S. influenza vaccine supply. Although there have been years 
where disruption and shortages have ensued in the influenza 
vaccine marketplace, Aventis Pasteur has been able to deliver 
vaccine to our customers on a timely basis during influenza 
season.
    As I previously stated, Aventis Pasteur intends to achieve 
its plan to produce approximately 55.4 million doses of Fluzone 
for the United States this season. Customers had already placed 
orders for more than 52 million of those doses prior to 
Chiron's announcement. This included approximately 4.5 million 
doses for the CDC, including the late season strategic reserve, 
which the CDC proactively and wisely planned. It is important 
to note that over 85 percent of all influenza vaccine is 
administered by the private health care sector.
    So since hearing the announcement 3 days ago, we have 
worked with the CDC and the FDA to determine whether we can 
manufacture additional doses later this year. Any additional 
doses available from going back into production, however, would 
not be available until February or March; and such a decision 
would have implications for the amount of vaccine which can be 
produced for next 2005-2006 season.
    Mr. Chairman, as we have heard today, the supply shortage 
has caused many policymakers to ask: Why are there so few 
vaccine manufacturers in the United States and what needs to be 
done to encourage vaccine manufacturers?
    Over the last several years, we testified before Congress 
about the urgent need for Federal policymakers to do more to 
cherish and promote vaccine companies; and we suggest five 
recommendations to achieve this goal.
    First, demand for vaccine drives supply. We need to work 
together to steadily increase annual reliable demand to achieve 
Healthy People 2010 goals. This will give companies confidence 
to continue to reinvest and thus increase supply.
    Second, annualize the funding for CDC's strategic influenza 
vaccine reserve, which was only budgeted for two seasons yet is 
proving to be a very wise investment.
    Third, liability exposure chills interest in this field. We 
are pleased to acknowledge the House of Representatives passage 
of the JOBS bill just late last night, which included the 
Influenza Vaccine Excise Tax; and we strongly encourage the 
Senate and White House to take quick action on the bill. This 
will ensure that influenza vaccine is now covered under the 
Vaccine Injury Compensation Program.
    Fourth, we encourage the committee and Congress to begin 
now to plan to address special vaccine liability issues that 
will occur when there is an influenza pandemic.
    Fifth, we encourage the committee to help resolve 
inconsistencies between SEC accounting guidelines for routine 
pediatric stockpiles and CDC's desire to implement such 
stockpiles, for which Congress has already authorized the 
appropriated funding.
    We are aware that vaccine companies have left the U.S. 
market in the last decade. This included two companies that 
produced influenza vaccine. It's important to remember that, 
even if a new company were to plan a new facility today, it 
would require a minimum of 5 to 7 years to build, validate, 
license, manufacture and deliver vaccine to the marketplace. 
This is due to the inherent complexity of building reliable 
production facilities that meet necessary health and safety 
standards.
    Aventis Pasteur has been a leader in introducing innovative 
technology. We have learned through experience it takes years 
to develop and incorporate new processes into routine 
manufacturing. For example, we are working on the promising 
technology known as cell culture, but we caution it is going to 
take years to transition this technique from research to full-
scale production. Additionally, the technique will not 
substantially reduce the total production time.
    Mr. Chairman, we share the committee's concern and 
frustration with this year's supply problem. However, 
government authorities and the private sector have worked well 
together in the past to manage difficult situations to ensure 
optimal immunization rates; and we want to commend HHS, the CDC 
and the FDA's leadership for their immediate and decisive 
action to address what is inherently the unpredictable nature 
of vaccine production. In less than 12 hours, as you heard, the 
CDC's Advisory Committee on Immunization Practices issued 
interim recommendations to prioritize influenza immunization 
for high-risk populations.
    The National Flu Summit, a public-private partnership of 
the CDC, professional associations, public health authorities 
and companies such as ours, has already discussed how best to 
implement those recommendations; and influenza professionals 
are recommending that health care providers who actually see 
patients are best equipped to determine who is at high risk.
    In summary, Aventis Pasteur pledges to continue to do 
everything we can do to manage this season consistent with the 
recommendation of Federal and State health authorities; and we 
commend Congress for your prompt interest to address this issue 
during your busiest week of your session.
    Chairman Tom Davis. Thank you very much.
    [The prepared statement of Ms. Grant follows:]

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    Chairman Tom Davis. Dr. Young, thanks for being with us.
    Dr. Young. Good afternoon, Mr. Chairman. Certainly a 
pleasure for me to be here this afternoon to address the 
committee on this very important topic, and I commend you on 
inviting members of the manufacturing community here to provide 
their perspective.
    My name is Dr. Jim Young. I'm president of research and 
development at MedImmune, a biotech company headquartered in 
Gaithersburg, MD. As you may know, MedImmune is new to the 
influenza vaccine business, having introduced a new type of flu 
vaccine this past year called FluMist, approved by the FDA for 
use in helping individuals 5 to 49 years old. Unlike the other 
flu vaccines which are injected into the muscle, this vaccine 
is simply sprayed into the nose to protect against influenza.
    MedImmune currently has the manufacturing capacity to 
produce 20 million doses of FluMist. This year, however, we 
produced only 2 million doses of bulk vaccine and before this 
week's events had planned on filling and finishing only 1.1 
million of those doses, which we did. That finished material, 
I'm pleased to report, was released for distribution by the FDA 
yesterday.
    I'm sure you are sitting there thinking, with the capacity 
to produce 20 million doses of this innovative vaccine, why did 
we only fill 1 million doses? Quite simply, because, one, the 
product was approved with a very narrow label indication by the 
FDA; two, it has been faced with significant confusion and 
misinformation propagated in the marketplace; three, has not 
had strong support from the recommending authorities; and, 
four, was launched into a climate of overwhelming complacency 
and with a lack of awareness on the part of the public as to 
the severe illness and death that is associated with influenza.
    It is these factors that account for an insufficient demand 
to justify increased production of FluMist.
    Nearly 8 months ago, I sat before this committee testifying 
that close to 4 million of the 5 million FluMist doses 
manufactured last season would be destroyed at the end of the 
2003-2004 influenza season, a season in which there was a 
vaccine shortage and 152 children died from flu. Thirty-nine of 
those children actually were eligible to receive FluMist and 
could have received the vaccine but didn't. The fact of the 
matter is that there were 4 million lost vaccination 
opportunities with product that we had available that went 
unused.
    Consequently, as a result of last season's experience and 
based upon FluMist's existing licensure for the restricted 
population of healthy individuals 5 to 49 years, MedImmune 
planned very limited production this season, somewhere between 
1 and 2 million doses. This was a substantial about-face from 
original intent when we decided to enter the influenza vaccine 
business nearly 3 years ago with the desire to increase the 
number of influenza manufacturers in the United States and 
worked to fulfill the stated goals of public health officials 
to expand the number of U.S. citizens receiving influenza 
vaccination.
    However, in response to the vaccine shortage announced this 
week, we are committed to filling the remaining bulk material 
we have in inventory actually starting today and expect to 
produce up to 1 million additional doses of FluMist for 
distribution. Under normal circumstances, getting these 
additional lots of FluMist approved and released by the FDA 
would likely take well into December. However, we are in 
communication with the FDA and hopeful that, with their 
assistance, the timing of this release can be expedited.
    As they did during the flu crisis last season, the FDA has 
also indicated that it may be willing to consider waiving other 
logistical and distribution requirements, including the need 
for a freezebox to store vaccine in frost-free freezers, in 
order to broaden the distribution of these additional doses. 
None of these expedited procedures will, of course, pose any 
added risk to the consumer or to the quality of the product. By 
producing up to 2 million doses for the healthy population 
between 5 and 49, we are freeing up 2 million doses of the 
injectable vaccine for use in the highest risk population, 
which could potentially save hundreds of lives.
    After our initial very disappointing and sobering 
experience as a flu vaccine manufacturer, we spent several 
months earlier this year evaluating whether we should remain in 
the influenza vaccine business or whether we should cut our 
losses and get out after dealing with the costly and 
overwhelmingly difficult regulatory landscape to bring this new 
and effective vaccine to the market. Our partner with FluMist 
last year, Wyeth, a former manufacturer of the inactivated flu 
vaccine, also went through this same internal debate. In April, 
Wyeth opted to exit while MedImmune decided to stay in the 
business.
    MedImmune's decision to stay in the flu business was based 
on a continuing belief that influenza is an extremely important 
disease and that FluMist is an important new addition in 
prevention, warranting our investment to become a meaningful 
contributor to the vaccine production in this country. Since 
taking over complete control of the future of FluMist, we have 
cut the price of the product from $46 a dose last year to a 
price as low as $16 a dose this year for the private market and 
negotiated even lower prices for government purchases. We are 
working with the CDC, VA and DOD, providing them the option to 
purchase a significant proportion of the additional product we 
are now working to deliver to the marketplace.
    While we are here today because of an imminent and serious 
vaccine shortage, I want to emphasize the problem is much 
larger and transcends well beyond the season. As Speaker of the 
House Dennis Hastert stated on Wednesday, ``there are only a 
handful of vaccine manufacturers left in the world. We know 
that our current production capabilities would not be able to 
handle a massive surge for vaccine products caused by a flu 
crisis. We need to take steps to address this situation before 
it becomes an even bigger problem.''
    Bigger? How much bigger does this problem need to become? 
How many more hearings, analyses, consultants, discussions and 
testimonies must there be before any action is taken? Already, 
King Pharmaceuticals, Wyeth, Parke-Davis and Merck have pulled 
out of the influenza vaccine business over the past few years. 
Why are they exiting? Two reasons.
    First to participate in the influenza vaccine business 
requires enormous investment in clinical development, 
manufacturing facilities and regulatory requirements; and the 
return on the investment is abysmal, given the low price 
received for the vaccine. On our part, MedImmune has invested 
$1 billion to bring FluMist to the market with what is a very 
narrow label and expects to invest $200 million more in an 
attempt to expand the indication to a broader U.S. population, 
an amount that you saw this morning from Dr. Fauci's 
presentation, which is greater than the NIH is expected to 
spend on FluMist over the next 3 years.
    Second, the demand for influenza vaccine is inconsistent, 
such that when manufacturers increase capacity in anticipation 
of broader demand, interest often wanes and unused product is 
wasted. Demand is strongly influenced by policies set by the 
Federal authorities. Current influenza vaccine recommendations 
primarily target high-risk individuals. However, the burden of 
the influenza virus illness is significant in healthy persons 
who fall outside of these targeted age groups as well and in 
otherwise healthy unvaccinated school-aged children who serve 
as vectors for transmission of influenza to their families and 
to high-risk individuals with whom they have contact.
    The vast majority of stakeholders in influenza prevention 
are reaching the same conclusion, that the recommended 
population for influenza vaccination must be expanded greatly, 
a movement that we all endorse. A universal recommendation that 
all Americans receive annual flu vaccine will drive the demand 
for routine annual vaccination and the development of 
sufficient infrastructure to develop the vaccine, which will in 
turn provide the impetus on the part of vaccine manufacturers 
to increase their production. This will ensure the capacity 
needed to produce even larger quantities of vaccine in the 
event of the emergence of a new pandemic strain.
    Ironically, it is a situation like the one we are now faced 
with, where we are telling healthy individuals not to get 
vaccinated, which runs counter to the message public health 
authorities need to send to expand demand. History tells us 
that it will take several years before many healthy individuals 
again seek vaccination for flu.
    What is it that MedImmune specifically recommend that the 
Federal Government do?
    First, we believe that regulatory authorities should look 
at the available scientific and clinical data pertaining to 
FluMist and reconsider a broader role FluMist could play 
potentially within the context of public health given the 
benefits that we have demonstrated in clinical studies of this 
vaccine. This is particularly relevant to the 50 to 64-year-old 
high-risk group that will otherwise go unprotected this year.
    Second, the government needs to find ways to incentivize 
companies to build manufacturing facilities in the United 
States. There is an increasing trend for U.S.-based companies 
to build manufacturing plants offshore in order to gain access 
to a well-trained pool of potential workers as well as 
significant tax advantages. With this trend comes the increased 
risk of the type of event we are currently experiencing. 
Companies will face regulatory decisions that may prevent 
product from entering the United States or, worse yet, in the 
event of a catastrophic event or the emergence of a new 
pandemic strain, the host country may embargo vaccine for use 
in its own borders.
    Third, logistical and accounting issues need to be sorted 
out so that the Federal Government can stockpile additional 
product or even bulk vaccine, a relatively inexpensive step in 
the manufacturing process. Bulk material could be stored for up 
to 2 years or until a new influenza strain is introduced and 
could be filled at a defined schedule as needed.
    Finally, the Federal Government should provide incentives 
for manufacturers to develop innovative production methods that 
could expand the capacity. They should make potential new 
vaccine strains available to the manufacturer sooner and 
eliminate the need for the FDA release for flu vaccine lots. 
All of these would result in earlier and greater product 
availability.
    In conclusion, I would like to reiterate that MedImmune has 
manufacturing capacity to produce 20 million doses of influenza 
vaccine; and with the addition of our new $75 million state-of-
the-art manufacturing facility currently being validated and 
modest changes in the works at our current facility, we will 
soon be able to produce 40 to 50 million doses of vaccine. In 
order to make production at these levels a viable option, we 
need the Federal Government to create sufficient support and 
demand to reduce regulatory hurdles and to place a far higher 
value upon influenza vaccination for all Americans.
    Thank you for this opportunity to speak to you today.
    Chairman Tom Davis. Thank you very much.
    [The prepared statement of Dr. Young follows:]

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    Chairman Tom Davis. Dr. Stroube.
    Dr. Stroube. Mr. Chairman, distinguished members of the 
committee, my name is Robert Stroube; and I'm the State health 
commissioner for the Commonwealth of Virginia and honored to be 
testifying before you today. I would like to thank the Chair 
and the committee for holding this hearing regarding the recent 
developments concerning the U.S. influenza vaccine supply.
    The recent flu vaccine shortage is creating a serious 
challenge for public health. The present system of vaccine 
production and distribution is incapable of effectively 
responding to the current demand for the vaccine, let alone a 
large-scale flu outbreak or pandemic. It is imperative the 
Federal Government take steps now to improve our current flu 
vaccine production and distribution system.
    In Virginia, the health department ordered about 110,000 
doses of flu vaccine from Chiron, which we will not receive. 
This is almost all the flu vaccine that we typically provide to 
adults through 119 local health departments. Not having this 
vaccine will mean that many people, especially those at high 
risk for flu complications, will not be able to count on their 
local health department for a flu shot this year.
    At this time, we expect only to receive about 11,000 doses 
of adult flu vaccine, but this is a drop in the bucket compared 
with the amount of flu vaccine that is needed for those people 
in our communities who are most vulnerable to serious 
complications from the flu. Any flu vaccine available from our 
local health departments will be provided to those people in 
the high-risk priority groups recommended by the Advisory 
Committee on Immunization Practices this past Tuesday.
    The flu vaccine shortage hopefully will not impact the more 
than the 115,000 doses of flu vaccine we have ordered from 
Aventis for children in the Vaccines for Children program. This 
program is for underinsured children, Native American children 
and those on Medicaid. But the health department provides only 
a very small proportion of the flu vaccine that is provided to 
the public. Most vaccines are provided by the private sector.
    The biggest difficulty is determining how much flu vaccine 
is available in the private sector within our State and how to 
advise the at-risk population on where to find any available 
vaccine. We do not have a way of tracking flu vaccine 
availability in the private sector. We do not have any legal 
authority to redirect flu vaccine in the private sector.
    We are making every effort to encourage the medical 
community to follow the ACIP recommendations and prioritize the 
available supply for people in the priority groups identified. 
We have distributed information from the CDC to the health care 
community through our Health Alert Network. Over 54,000 health 
care providers were notified by e-mail or faxed Tuesday night 
and Wednesday.
    In addition to our outreach to the medical community, we 
distributed a Statewide press release urging the prioritization 
of available flu vaccine, we have conducted numerous media 
interviews, and we have taken hundreds of phone calls from 
citizens. We are providing people the best information we have 
available regarding this developing situation.
    This serious situation is compounded by the fact that we 
have gone to great lengths over the past few years to educate 
the people about the importance of getting their flu shot each 
year. We have not only encouraged people in the high-risk 
groups to get their flu shot, but more and more it has been 
encouraged for all people.
    We had just launched our Statewide education efforts for 
this year--prior to receiving the unexpected news from Chiron. 
Our education efforts have now been undermined again due to 
this situation. For example, we had to cancel our annual 
``vaccinate and vote'' campaign, which targets the vaccination 
of high-risk individuals on Election Day.
    Six upcoming smallpox vaccination dispensing exercises for 
a bioterrorism preparedness program are now on hold because we 
were going to use flu vaccine to get volunteers to participate 
in these exercises.
    This current situation follows similar problems we had last 
year when we ran out of flu vaccine at the height of the 
season. Last year, VDH, the Virginia Health Department, 
administered more than 160,000 of flu vaccine to the public, 
which is more than double the number of flu shots that we 
typically provide.
    When we ran out of the flu vaccine last year, many high-
risk patients went without vaccine, parents could not get young 
children vaccinated, and health care providers could not 
vaccinate their staff. Attempting to prioritize vaccine to 
high-risk patients was a local health department nightmare. In 
some cases, security was needed to maintain control of 
demanding patients.
    Now Virginia and other States are faced with the 
difficulties of prioritizing a limited supply of flu vaccine 
again, even more limited than last year. We anticipate that 
many people will go unvaccinated this year.
    As you know, only three companies are licensed in the 
United States to produce the vaccine. Chiron was expected to 
provide about half of the vaccine supply. Aventis is the other 
company that produced the flu vaccine for injection. The third 
company produces the live attenuated nasal flu vaccine, which 
is not targeted for the high-risk patients.
    As I stated earlier this year when I testified before this 
committee, Congress needs to support the development a of a 
more reliable vaccine production and distribution process. The 
current year-long process is incapable of meeting increasing 
vaccine demands or timely adjustments to vaccine formulation. 
The Nation's influenza program must include a comprehensive and 
critical look at all aspects of the system, including 
production and distribution of vaccine.
    The current situation over the past few years caused 
concern regarding our ability to address an influenza pandemic 
in the United States. Virginia has a pandemic flu response 
plan, but that plan cannot be effectively carried out without 
having an adequate supply of vaccines and antiviral 
medications. We must rely on the Federal Government to assure 
this.
    In Virginia alone, we estimate that during an influenza 
pandemic there could be more 1.3 million outpatient visits, 
over 28,000 hospitalizations and over 6,200 deaths in a 12- 
week period. The thought of these statistics alone are enough 
to make improving the flu vaccine production and distribution 
system a high priority.
    Given the estimated 36,000 people that die each year in the 
United States due to flu, I believe addressing the flu vaccine 
production and distribution problem should be a high priority 
for Congress. Government must support improvements of the 
vaccine production process and consider ways to ensuring that 
enough flu vaccine is available.
    Thank you for the opportunity to speak to you, and I will 
be glad to answer questions.
    [The prepared statement of Dr. Stroube follows:]

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    Chairman Tom Davis. Well, thank you all.
    I would ask unanimous consent to put in the record a letter 
from a Mr. Victor Schwartz talking about his concerns about 
product liability issues for a national vaccine strategy.
    And Mr. Waxman wanted to put in the record a letter to 
Secretary Thompson signed by Evan Bayh and Rahm Emanuel.
    Without objection, those will go into the record.
    [The information referred to follows:]

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    Chairman Tom Davis. Let me start the questioning.
    Dr. Young, on MedImmune, it just was called to my attention 
in terms of what NIH was telling some of their employees about 
the FluMist for some of their health care workers. For healthy 
people who don't fall into those vulnerable areas, FluMist is 
about all we are going to be able to get this year. What level 
of protection does that give, and if you are a health care 
worker or a vulnerable population, why isn't this used for 
them? Can you explain that?
    Dr. Young. Currently, because of the body of data we have 
from our clinical trials, supports the use in healthy 5 to 49 
year olds. That is where the FDA approved it. We have done 
numerous studies in younger populations, older populations----
    Chairman Tom Davis. Your 5 to 49-year-olds. Vulnerable 
population is 65 and over?
    Dr. Young. Absolutely.
    Chairman Tom Davis. That leaves me out. What do you do if 
you are 55?
    Dr. Young. Although we have done studies----
    Chairman Tom Davis. If you are a 55-year-old healthy guy 
where does that put you?
    Dr. Young. You know, I ask the same question. I am 51 years 
old, and I ask why should I not be able to receive FluMist when 
my 49-year-old peer can. I certainly don't believe that I am at 
any worse risk to receiving----
    Chairman Tom Davis. This was just in clinical trials.
    Dr. Young. That is right.
    Chairman Tom Davis. There is no evidence that it doesn't 
work. It is just that is where it has been----
    Dr. Young. Well, in fact, we have--our original clinical 
trial was in adults up to age 64. It is an interesting 
situation where, when we went to the Vaccine Advisory Panel of 
the FDA the first time, 4 years ago, they actually recommended 
approval for all adults up to age 64. In the meantime, 2 years 
later, 50 to 64-year-olds had become a recommended population 
for the vaccine. When the committee was asked again, should 
this be approved now for 50 to 64-year-olds, we were in a 
double jeopardy situation, and they said, well, we think it is 
safe, but we can't be sure that the efficacy has been 
demonstrated sufficiently to recommend approval.
    We had actually gotten the reverse message from the FDA on 
that. They thought that we needed more efficacy data when, in 
fact, there is no--all of the evidence from the clinical trails 
suggests it is just as efficacious in that segment as in the 
lower population, adult population segment.
    So I think we need to relook at that, particularly in a 
situation where last year we were recommending that 50 to 64-
year-olds are a high risk population and yet now we are saying 
that they shouldn't get it, when in fact we may have a vaccine 
that could be useful in that population.
    Chairman Tom Davis. Now, based on last year's sale, you 
produced a smaller supply of flu vaccines this year, is that 
right?
    Dr. Young. That is correct.
    Chairman Tom Davis. Does the vaccine shortage this season--
will that affect your decision next year? And is there any way 
you can cook up a larger batch this year or it is too late?
    Dr. Young. As I mentioned in my testimony, we actually had 
some additional unfilled product in inventory in freezers, 
which we are now thawing out and re--and filling to provide 
potentially another million doses of vaccine. But we can't ramp 
up de novo new additional supplies beyond that.
    Whether it will influence us to produce more vaccine 
remains to be seen. We still have a lot of questions in the 
marketplace, a lot of confusion.
    Just this morning you heard Dr. Gerberding report about the 
revised recommendations that came out 2 days ago suggesting 
that healthy health care workers and those who care for young, 
young children should be encouraged to use FluMist. While she 
was testifying to that, the NIH put out a memo to their 
employees saying they should not, in their hospitals, should 
not receive FluMist. So again adding to the confusion that the 
agencies are putting out different mixed messages out there to 
the constituencies.
    Chairman Tom Davis. OK. Thank you.
    Ms. Grant, you mentioned in your testimony that demand 
drives supply. What can the government do to help ensure that 
the demand for the annual flu vaccine is predictable? We do 
that for farmers. I mean, vaccine is pretty important.
    Ms. Grant. Well, I am going to start with a nonfinancial 
incentive first. That is to make sure that we are all pulling 
in the same direction in looking at the groups that aren't 
getting immunized. Only 67 percent of the seniors are getting 
immunized today, and yet we all know that is a recommendation. 
So that we can work with our agencies that care for Medicare 
patients, only 37 percent of our health care professionals in a 
year are getting immunized. They, obviously, are role models as 
well as needing to protect themselves. So we need to pull 
together to make clear year after year that we aren't anywhere 
near meeting the Healthy People 2010.
    I think the other issue, a financial incentive that needs 
to continue to be discussed and reviewed, is you heard about 
the strategic stockpile this year. Certainly that has turned 
out to be a wise investment that CDC thought of planning for, 
having a few million extra doses; and that is something which I 
would encourage your committee to continue to look on 
favorably.
    Now a little of a good thing goes a long way, and then we 
have to balance to make sure what the appropriate sizing of 
such an annual strategic stockpile would be so we don't risk 
throwing away excessive doses. But those two approaches would 
help drive demand, which will drive supply.
    Chairman Tom Davis. Thank you.
    Mr. Kanjorski.
    Mr. Kanjorski. Thank you, Mr. Chairman.
    Mr. Chairman, I have the great honor and privilege of being 
the Member of Congress representing Aventis in the Poconos in 
Pennsylvania. I have had the occasion to be at the plant on 
numerous occasions where 1,700 of some of the most highly 
qualified people are working day and night to provide 
protection not only for the influenza but other necessary 
vaccines.
    My impression, having been there and met with the officials 
of that organizations is that their first mission is to meet 
the needs of the American population and the world population 
to fight infectious diseases such as influenza. It seems to me 
they have the capacity to do so.
    They are frustrated, if I may say, that government has not 
participated in the best way to get that done. We talk about 
it. We have hearings on it. I think, as the Secretary referred 
and the other gentleman on the panel, that nothing seems to be 
accomplished.
    It seems that the Congress has hearings when we find out a 
disaster such as this occurs, but after that we all go home. I 
dare say we won't have another hearing on vaccinations or 
vaccines until the next terrorist attack or other such pandemic 
occurs in the world, and we will all come in here, rub our 
hands, and say why didn't we all prepare for this, when all of 
the three witnesses today that are appearing at this panel, and 
the three earlier witnesses, are telling us out that there are 
things we can do to make sure that we smooth out the line for 
demand, that we anticipate future needs, that we anticipate 
pandemics and that we prepare to meet those challenges at 
relatively small cost.
    I think I heard the figure of $100 million for a plant, and 
I think I have heard in the past maybe $1 billion of investment 
and other incentives to this industry would really bring us up 
to high speed to prepare for whatever we need at the highest 
technical response that science can give us and industry can 
give us.
    I did a little calculation, and that was part of my 
antagonism toward the first panel. I am sure they are capable 
and doing the best they can. But what you are talking about, if 
it were $1 billion, it would cost us only 2 days of the cost of 
the Iraq war; and we are talking about the risk of 300 million 
Americans and 6 billion people in the world.
    When you will look at the numbers in any regard and the 
lead time necessary to meet these challenges, the expenditures 
of 2 days of the Iraq war or a week of the Iraq war is 
miniscule. That money I think could be made available by the 
Congress, and probably there is a full intent to do so, except 
we have pretty terrible communication between the executive 
branch with a plan, the Congress with a response of priority, 
and then the people that are going to do the work, the private 
sector in this country and all around the world, that seem to 
be left out except when they run into a problem or we have a 
problem. Then we have this tremendous partnership that joins 
for these few days to soothe the American population so that 
everybody can go home and think that we are prepared. We are 
neither prepared for a world influenza epidemic, and we are 
certainly not prepared for a biological attack.
    So, with all of this criticism, Mr. Chairman, it is not 
without a suggestion. I have enjoyed all of my visits to 
Aventis. I think they would entertain either this full 
committee or a representative portion of this committee to come 
up to the great Poconos Mountain areas for a day or two, show 
you what they do, show you what the industry does, show you the 
lack of coordination and cooperation between government and the 
industry and our various regulatory authorities and that we can 
walk away in 24 or 48 hours with an actual knowledge of what 
has to be done by this Congress and the executive branch of 
this government to really put a coordinated response to the 
challenge of viral and bacterial infections in the United 
States. I highly recommend it.
    Now I know I have a few minutes left.
    Chairman Tom Davis. I will ask the staff to look at the 
that, too.
    Mr. Kanjorski. It is my invitation. Come on up there. You 
will enjoy it.
    Chairman Tom Davis. It will certainly be better for me than 
the last time that I was in your district.
    Mr. Kanjorski. I agree with you, Mr. Chairman.
    Mr. Chairman, Ms. Grant represents Aventis here. I just 
want to throw the question: What do you think the government 
has to do to help your company and other companies meet these 
challenges, not only of influenza but biological attack? What 
do we have to do? And lay it out and be candid with us.
    Ms. Grant. Well, thank you, Mr. Congressman; and we are 
equally honored to have you and your capable staff representing 
our employees and our district. So I thank you.
    I would say we certainly welcome the committee's visit to 
the great State of Pennsylvania and the wonderful Poconos. You 
might want to consider doing it before the snow sets in, but--
or after--but we would love to have you up there.
    Congressman, I had mentioned five recommendations; and I 
will just reiterate two at this point.
    First of all, it is the kind--a little kind of thing that I 
mentioned. And that is, for some reason, there are SEC 
accounting guidelines that just popped up in the last year or 
so which suddenly have created inconsistencies with the 
language that CDC has been using quite successfully with our 
and other companies for many decades to build strategic 
stockpiles. So it is like the old adage of, but for the nail in 
the horse's shoe, the battle was lost. So this little thing, 
which seems certainly within the purview of this committee, to 
perhaps talk about getting those two agencies together to see 
if we can't work that out.
    The second issue, the very important issue you mentioned, 
planning for pandemic. CDC, through the National Vaccine 
Program Office, has just put out a draft plan for pandemic. We 
would strongly encourage this committee to think about the need 
to prepare now for the inevitable vaccine liability concerns 
and exposure that are going to emerge when any company in the 
world is asked to prepare a pandemic vaccine that by its very 
nature will not have had years of clinical trails and 
experiences.
    What we are saying is we need to bring that issue to your 
attention. We need to work with you to make sure that we 
balance compensation and liability concerns so you are not 
disappointed when the companies point out that they just can't 
get in the business of working on the pandemic vaccine when we 
are in the middle of the pandemic.
    So those are two of the five that I bring to your 
attention.
    Chairman Tom Davis. Thank you very much, and thank you for 
what your company is doing.
    Mr. Cooper, thanks for your patience.
    Mr. Cooper. If we focus on the short-term concerns for a 
second. The earlier panel discussed the possibility of being 
able to halve the dose so that twice as many people could 
receive the vaccine or the FluMist. What are the practical 
obstacles to making that happen, assuming that you got FDA 
approval for that?
    Ms. Grant. I am sorry, sir. As Dr. Fauci said, that is 
certainly something that--I am not sure it is a short-term 
solution. Because here we are in the midst of a season where we 
are already being advised by the public health authorities not 
to go the route of immunizing healthy individuals; and, as you 
heard, the trials done to date have been on healthy 
individuals. So while I believe my medical colleagues would 
suggest that there may be some promise in looking at that, it 
is probably too late this year to really think that is going to 
solve our problem.
    I would be happy to ask my colleague, Dr. Johnson, to 
comment if he wishes.
    Dr. Young. If I can make a comment to that. I think the 
biggest concern is that there is concern now that the 
injectable vaccine doesn't work as well in the elderly as their 
immune system starts to decline with age. So the thought of 
halving a dose in a population which is currently thought to be 
suboptimally responding to the vaccine----
    Mr. Cooper. So your product is for the healthy, 5 to 49, 
and could you halve the dose there?
    Dr. Young. Actually, half the dose would still fall in the 
specification for the vaccine.
    Mr. Cooper. So you could do it?
    Dr. Young. The problem is that then you would have to 
adjust the shelf life to make it a much shorter half life so it 
doesn't fall below that spec over time. So unless the vaccine 
is used very quickly, that would be a problem.
    Mr. Cooper. But FluMist could probably do it, if you got 
FDA approval?
    Dr. Young. Unfortunately, there is not a lot of data that 
supports being able to do that.
    Mr. Cooper. I said if you got FDA approval.
    Dr. Young. Certainly.
    Mr. Cooper. Second question. A number of jurisdictions 
across the country unfortunately ordered only from Chiron. What 
do we tell those jurisdictions that basically have no flu 
vaccine at all right now?
    Ms. Grant. As Dr. Gerberding said, literally Tuesday 
morning, as Blackberries were being worked at another hearing 
and the impact of this announcement became known, our company 
began to work with her staff to being to understand which 
States, particularly the public health sector, although it only 
buys about 10 percent of the vaccine, is and is not--does and 
does not have access.
    As you heard, and I would like to reiterate, what we are 
working on together is to figure out where there is lack of 
coverage and then do the best we can. As she said, it won't be 
perfect, but the pledge is to try to make sure that we are able 
to provide some vaccines to all public health sectors.
    Mr. Cooper. Let me put in a word for Nashville, TN, because 
it is my understanding that none of our hospitals in our city 
were able to get any vaccines. So it would be helpful there.
    Third, for Aventis. When you sell the vaccine to a 
distributor, are there any safeguards against price gouging in 
the contract?
    Ms. Grant. OK. Well, in the case of a distributor, by their 
very nature, they intend to sell it on. So as far as our 
contract goes, we do not, per se, have controls over the price 
they charge.
    I will say, however, Congressman, that as both an attorney 
and as a former health commissioner, I am well aware of the 
price--I think we should all be aware of the price-gouging laws 
that exist in every State and certainly our company would find 
that--any kind of price-gouging behavior absolutely outrageous 
and would encourage, if we hear from any customer or patient, 
to contact their local authorities to find out what their 
remedies are.
    Mr. Cooper. How would you define price gouging? As a 
doubling of the price? What would it be?
    Ms. Grant. That is an interesting question. I really 
haven't thought about it to begin to volunteer a standard. But 
that might be one of those things that we would know when we 
see it.
    Mr. Cooper. I think we are going to have a hard time 
reporting it unless we give them an idea of what the standard 
would be. If they don't know what they are going to report, you 
know, what is--what does the average vaccine sell for?
    Ms. Grant. Well, I will just say that our company has made 
very clear--our prices are known. It would be visible.
    Mr. Cooper. What is the price?
    Ms. Grant. As was suggested, in general, it varies by the 
customer class and the type of vaccine. In general, this year 
it is between $8 and $10; and then the pediatric vaccine, the 
list price is about $12 a dose.
    Mr. Cooper. So if customers were to see, $20, $25, that 
would be a doubling of the price; and that might count as 
gouging.
    Ms. Grant. A customer certainly might want to ask questions 
about that.
    Mr. Cooper. There are a lot of other long-term concerns.
    I appreciate everyone's testimony. I think you have given 
this panel and Congress a lot to think about; and hopefully we 
will be able to respond not only to this sort of problem but 
also a possibly larger problem, should bird flu or things like 
that come to the fore. Thank you very much.
    Chairman Tom Davis. Thank you.
    Mr. Van Hollen, thanks for your patience.
    Mr. Van Hollen. Thank you, Mr. Chairman. I also want to 
thank all of the witnesses for their testimony; and, Dr. Young, 
thank you for your testimony.
    MedImmune is in my congressional district, Mr. Chairman, 
right here in Gaithersburg. So I think when we are planning 
that trip, Mr. Chairman, I just want to--we should make sure we 
stop in Gaithersburg, which is, of course, very close by here. 
I am sure that the company would be happy to have the committee 
visit.
    Let me ask you, Dr. Young, or anybody else, but you in your 
testimony talked about the fact that there were a number of 
children last year who died of the flu who would have been 
eligible to receive FluMist. You were here I think for the 
testimony of Dr. Gerberding, and she was very reluctant to 
answer the question: What will be the direct health effect of 
this shortage that we are facing now in terms of the numbers of 
deaths and the number of people hospitalized? And her answer 
was we can never predict the severity of the flu season and flu 
strain.
    I understand that in terms of absolute numbers. But in 
terms of percentages, you know, given a particular flu season 
and the severity of that, do you have any estimate as to what 
this crisis is going to mean in terms of additional lives lost 
in this country?
    Dr. Young. I think it is very hard to come to a precise 
number, and it all depends on how well the available supplies 
of vaccine are deployed to the highest risk individuals.
    Clearly, if we can continue to administer the available 
vaccine in that highest-risk elderly population, then clearly 
we can avoid a fair number of deaths, much like previous years.
    Mr. Van Hollen. Right.
    Now, I guess the question--maybe this was asked earlier. 
But Aventis has obviously got contracts with certain providers 
already; and some of those, I assume, were providers who were 
going to be providing the product to people in the healthier 
range who would be eligible for FluMist. I guess the question 
is whether or not there is any discussions under way where we 
would redirect the Aventis product, which has been cleared for 
the broad age group, to the people at most severe risk and 
allow FluMist to be directed to those in the healthier age 
range.
    Ms. Grant. Well, I hope I gave the right figure about 33 
million of our vaccine doses have already been distributed; and 
they certainly were, I am sure, sold to customers caring for 
all different populations.
    You heard Dr. Gerberding say that, as we speak, our people 
are working with her people to figure out, certainly at the 
county level, where vaccine is. So I think we are always open--
I mean, that will be, of course, a matter among the health 
providers at that level. The sheer scale--it would be unwise to 
promise too much because the sheer scale of the difference 
between the vaccine that we have produced and what under the 
best of circumstances can be available from FluMist won't solve 
the problem. But we will work together through CDC.
    Mr. Van Hollen. Let me ask you. You mentioned Dr. 
Gerberding and the fact that you are in discussions with some 
of your--the people you provided the product to and trying to 
figure out where it is and how we can get it to the most at 
need and risk populations. Has there been any reluctance on the 
part of Aventis to provide that information to public health 
officials at the county and State levels?
    Ms. Grant. I wouldn't characterize--I think the cooperation 
has been terrific. As I understand and in personally talking 
with her and in personally talking with our CEO who has been 
working with her, we are trying to do everything the best we 
can.
    We are suggesting that there are some ways--just last year 
when we faced the late season surge demand and there was sort 
of the first instinct to, well, let's know where all of the 
vaccine is, having worked in the field for some 30 years our 
people knew that a lot of that vaccine had already been 
distributed. So that probably the first instinct should be 
let's ask people what they still have. Rather than trying to 
set up an enormously elaborate information system, sending 
things out, wondering why we are not hearing back, just go out 
to people generally and say, if you have vaccine, please 
contact your local health officers. And that was actually 
rather successful.
    So I don't think it is a question of reluctance. I think it 
is question of talking through practically what are you likely 
to get in the way of the best response to solve the problem. 
And that is as I understand where we are.
    Mr. Van Hollen. Good. Now I understand that with respect to 
the FluMist, because of the whole range of issues you discussed 
in your testimony, you didn't plan to produce more this year; 
and given the production times, it is just not feasible to do 
more than an additional million doses. Is that----
    Dr. Young. That is absolutely correct.
    Mr. Van Hollen. Dr. Fauci testified about some very, very 
important and good long-term options, but as we discussed the 
short-term options, I think your testimony is pretty clear. It 
is not so much in terms of our ability to generate more 
vaccine. It is a question of just using what we have and 
redistributing it.
    Dr. Young. Oh, yeah. If you look at the long-term planning 
that goes into supply requirements, it is years of planning. We 
have long-term 3-year, 4-year contracts with the egg producers 
to make sure that we have adequate supplies of substrate we 
need to grow the vaccine. Once we finish our campaign and stop 
making vaccine, the egg supply dries up; and, consequently, we 
can't go back and manufacture more product in a rapid response 
mode. So we have to really understand up front where the demand 
is going to be in order to ensure that we have adequate 
supplies on hand.
    Mr. Van Hollen. All right. Let me just ask one more.
    In previous years, as I understand it, individuals in the 
50 to 65-year range were also defined to be at high risk, is 
that right?
    Dr. Young. That is correct.
    Mr. Van Hollen. So when we get the list now of who is a 
high-risk group, it is really not based on a health decision. 
It is saying, here is the doses we have available, these are 
the people most at risk, but that those other individuals in 
this other age category, in terms of health analysis, they 
continue to be at risk as much this year as they were last 
year, right?
    Dr. Young. Absolutely. It is basically a triage system to 
say, with limited supply, who can we prioritize and ensure that 
we have the least--the greatest benefit for the amount of 
vaccine we have. And that is--it is a very difficult decision 
to have to say to someone, last year, you--we told you to get 
the vaccine. This year, we are telling you not to get the 
vaccine.
    Mr. Van Hollen. Thank you very much.
    Chairman Tom Davis. OK. Any other questions?
    Mr. Van Hollen. No.
    Chairman Tom Davis. Thank you all very much.
    I know Ms. Blackburn is on her way over, so I am going to 
ask a couple of other questions as well.
    Dr. Stroube, let me ask you: For those individuals who 
don't fall into the high-risk priority group for the flu 
vaccine, what precautions can they take to reduce their risks 
of contracting the flu?
    Dr. Stroube. Well, what we put out in--I was trying to find 
my press release so I can tell you exactly what we are telling 
people. It is, basically, wash your hands if you have--anytime 
you think about it, anytime you have been with somebody or if 
you have a runny nose, to keep from spreading, to use good 
hygiene, to avoid--if you are sick with the flu, going in 
nursing homes, around people who are ill. Those are the type of 
recommendations we are making.
    Chairman Tom Davis. Now, washing the hands, that is not--
how does washing the hands help? Because your hand comes in 
contact with your face and everything else?
    Dr. Stroube. You rub your mouth and eyes, and then you have 
picked it up on your hands and you are transmitting it back to 
yourself.
    Chairman Tom Davis. So washing your hands frequently would 
be one thing.
    Dr. Stroube. That is one thing. That is a traditional 
public health message for all kinds of things. But that is one 
of the things that we are stressing.
    Chairman Tom Davis. What are we trying to do in Virginia 
since the British supply is now canceled for us? Are we going 
to try to work with the Center for Disease Control and Aventis 
and try to get some of that released for our vulnerable 
population?
    Dr. Stroube. Well, yesterday we had a video conferencing 
with all of our health directors all across the State and their 
staffs; and we are trying to find out what is going on from 
southwest Virginia, northern Virginia, the whole place, and 
come up with some consistent policies for the State. So we put 
a freeze yesterday on the vaccine we did have until we can sort 
out where it is and make sure it is equitably distributed.
    Some of our local health departments got vaccine directly. 
Others didn't. So we want to try to do that. We want to come up 
with some knowledge of where the most needs are.
    Yesterday, we were overcome, overwhelmed with nursing homes 
calling in and said they were relying on getting the vaccine 
from Chiron and don't have it. So we have to sort out who has 
vaccine, who needs it, and then figure out how we can match 
that up. And some will need persuasion, hopefully moving some 
of the vaccine that people have and using their good will to 
let us take it to other places on it.
    We were actually hoping that we would be able to do more 
with the halving of the doses, but that doesn't look like it is 
going to be viable.
    Chairman Tom Davis. How do private doctors get it? Do they 
get from the State or contract individually?
    Dr. Stroube. In Virginia, they contract directly with the 
distributors on it.
    Chairman Tom Davis. Are you coordinating with them, too, to 
see what they have available, what doctors might----
    Dr. Stroube. Exactly. We sent out--like I was saying, 
54,000 e-mails and faxes went out late Tuesday, early Wednesday 
to all of the health care providers. We have a law in Virginia 
now that requires that to provide their e-mail and fax to us, 
and we have that in a data base. We sent it out urging them to 
work with us, and we will be following up on that, trying to--
at a local level, that will be passed off to our districts.
    Chairman Tom Davis. Thanks. Let us know how we can help. 
Obviously, you learn from what has happened this year, and we 
just want--we don't want a reoccurrence, but we have to get 
through this year as well.
    Mrs. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman; and I want to 
thank our panel for being here, all of the witnesses that have 
participated today.
    In my State, in Tennessee, this is something that is 
important to us; and we are, of course, concerned about our 
supply, just as everyone else is. We have two suppliers, Chiron 
and--does about a third of the supply, and then Aventis does 
about two-thirds of the supply.
    My question, Ms. Grant, is to you. You mentioned in your 
testimony, in your written statement, that demand drives the 
supply and what can the government do to help ensure that the 
demand for the annual flu vaccine is more predictable each 
year? Because one of the things that concerns me, and this is 
the reason that I asked the question of you, is it seems that 
so many times, regardless if we are looking at public health 
policy or we are looking at operational policy for governmental 
entities, whether it is the Federal, State or local entity, we 
are more reactive than proactive; and we fail to plan. We think 
in short-term segments and not long-term segments.
    We know that you all have said--more than one of you have 
said in your written statements in your testimony that it takes 
from 5 to 7 years for a new company seeking to locate in the 
United States to be able to provide that vaccine. So, you know, 
I want you to, if you will, talk for just a moment about 
process and what we can do to do a better job with the 
predictable nature of what we would need each year.
    Ms. Grant. Well, as I mentioned in a couple of the 
recommendations, that it is very, very important that we all 
speak with the same language consistently, that despite the 
occasional setback, as we clearly are going to face this year 
which is frustrating to all of us, that we have to all agree 
that we are going to pull together to continue to recommend to 
the various risk groups the importance of being immunized.
    And it is interesting, in Tennessee, I know that they are 
taking very seriously something that wasn't taken seriously a 
couple of years ago, and that is the importance of using 
standing orders when people are admitted to hospitals or 
nursing homes to make it very easy and routine. That is a 
process. It is a simple thing, in a sense. It is not so simple 
to execute it, but it is a simple thing to ensure that every 
single patient who is a resident of a nursing home or hospital 
year in year out is offered influenza vaccine.
    There are millions of those patients, and that would have a 
profound affect on a certainty that demand--if all hospitals in 
all States we knew would do that, we would know how much more 
vaccine is likely to be utilized.
    We talked about the health care workers, only 37 percent. 
If we had a common understanding that health care workers are 
ready, willing and able to--and interested in protecting 
themselves and their patients by being immunized.
    So there are many individual things that we can do.
    I mentioned the strategic reserve. Again, while the 
strategic reserve is not the total solution, the predictability 
of the government working with us collectively to think about 
what is the appropriate amount to guarantee that the government 
sector is interested in buying--we are not looking for that to 
be the total solution. It is a private market. It is working 
reasonably well. But those are a couple of very important 
things that we can start talking about.
    Mrs. Blackburn. Thank you.
    Dr. Young, I would like to hear from you and then Ms. Grant 
talking about, with a company who wants to locate, wants to 
create a flu vaccine and the 5 to 7-year window of time--which 
I think really is pretty optimistic if you are looking at it. 
But knowing the demand for vaccine is not going to be 
decreasing, it is going to increase, talk for a moment, if you 
will, about what you think that we should be looking at to 
shorten that window of time to create some efficiencies within 
what is a very heavily bureaucratic system which makes it very 
difficult for anyone who is doing R&D work or creating a 
vaccine to walk through that process. I would love to hear your 
thoughts on that.
    Dr. Young. It is a very complex issue, to say the least. 
Clearly, the vaccine business--the entire pharmaceutical 
business is highly regulated, as it well should be, to protect 
the safety of the public who receives these vaccines and drugs. 
So, clearly, very stringent standards have been established for 
current good manufacturing practices; and it is quite clear 
that it takes significant investments to meet those standards 
to design, construct, validate. We have to demonstrate that the 
process works reproducibly within certain parameters, time in 
and time out, to assure the quality of the product.
    It is particularly significant when you start talking about 
biological products like this. It is not like chemical 
processes that are very easy to control and maintain strict 
control over the parameters of production. It is the 
manufacturing of biological products that become very labor 
intensive and testing intensive to ensure the high quality of 
that product.
    So, unfortunately, there aren't really any easy shortcuts 
building a plant, designing a plant, and then validating and 
operating that plant. We have to put in some very strict 
standards to ensure the reproducibility, the safety and the 
potency of that product time in and time out; and, 
unfortunately, there aren't just any shortcuts to doing that.
    Mrs. Blackburn. Ms. Grant.
    Ms. Grant. I would say certainly, as a company, we are used 
to planning 5, 10 years out. So while it is a long timeframe, 
the most important thing I would say for the government and 
this committee to think about right now are two or three things 
not to do. To tell our management and our shareholders in the 
world that we should continue to increase our capacity, which 
we want to do at Aventis, we have to make sure that the 
government is not going to chill our interests. So two things I 
would not do.
    I would not think about what is sometimes described as the 
GOCO, or the government-operated facility. That is not what we 
are looking for in the way of competition. We are looking for 
healthy private sector competition, and we will welcome that.
    I think the second issue is the notion that we are sort of 
skirting around today, some of the taking issues. We would like 
to say that the first order of business is to really work 
collaboratively with the public sector to make sure that we get 
through tough situations and seasons without sort of jumping to 
more Draconian solutions.
    It is always very welcome to have Congress work with State 
officials on environmental issues to make sure that, while we 
never compromise safety or other standards, that, nevertheless, 
that things--we work together and know that we want to get 
there in the next few years and work out those issues.
    Mrs. Blackburn. Thank you. Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    Just a couple of last questions and we will let you go.
    Ms. Grant, it is already October. Soon you are going to 
begin the process of developing and producing a new flu vaccine 
for next year. What does this do to avoid the shortages next 
year and the contingency plans, and we are not even sure that 
Chiron will be producing next year at this point. How do you 
factor that in?
    Ms. Grant. Well, certainly everyone in our company is very 
concerned about that type of issue; and I can only finish by 
repeating the pledge that we are taking into account all of the 
information in the environment, just as this year. We are 
seeing how we can optimize, maximize our production capability. 
This will certainly influence, as we hear more from the 
government over the next month or so, what we can do. We do 
have a certain maximum capacity. We are scraping up against 
that. But we are going to do everything possible to make sure 
we maximize.
    Chairman Tom Davis. Easy for me to say, but then all of a 
sudden, if everybody else gets in the business and you are 
stuck holding 40 million shots, then it hits you financially. 
So isn't that part of the equation?
    Ms. Grant. It is a factor. And I just would say that is why 
we have to work together to make sure that we continue to 
increase the demand so that we always feel comfortable our 
ability to sell increased supply is justified by seeing the 
demand will be there.
    Chairman Tom Davis. Well, we appreciate what you are doing. 
I am glad you are here. You are our saviors this year.
    And, Dr. Young, that goes for your company as well. Same 
answer that I just talked about in terms of capacity for next 
year.
    Dr. Young. Absolutely. I mean, I think we have to look at 
the overall situation. Clearly, if more vaccine were available 
and the recommending bodies would be more proactive in trying 
to promote the use of the vaccine--just like this year. They 
have cut back on vaccine when it is--the recommendations in 
terms of who should get it, to prioritize who gets the vaccine 
in the event there is excess vaccine, they ought to be going in 
the other direction and saying, look, we have extra vaccine. We 
ought to be using it more broadly in kids. Only 10 percent of 
kids get vaccinated now. We ought to be pushing that in that 
event in order to spur more demand.
    Chairman Tom Davis. 36,000 deaths, that is a lot of people 
that could have probably been--any of those been vaccinated? I 
mean, these are the people who don't get vaccinated for the 
most part, right?
    Ms. Grant. It certainly is an issue. We knew last year that 
most of the children, sadly, the pediatric cases that resulted 
in death had not been vaccinated. So the public needs to 
understand that it is a very serious disease in the elderly and 
the young children and make sure they are immunized.
    Chairman Tom Davis. Guys like me and Dr. Young, I guess we 
just keep washing our hands.
    But thank you very much, both of you, for what you are 
doing. Dr. Stroube, thank you for your leadership at the State 
level. Let's work with you every way we can in the 
Commonwealth.
    With that, the hearing is adjourned.
    [Whereupon, at 1:35 p.m., the committee was adjourned.]
    [Additional information submitted for the hearing record 
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