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




 
THE NATION'S FLU SHOT SHORTAGE: WHERE ARE WE TODAY AND HOW PREPARED ARE 
                            WE FOR TOMORROW?

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

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 17, 2004

                               __________

                           Serial No. 108-246

                               __________

       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

                                 ______

                   U.S. GOVERNMENT PRINTING OFFICE
97-448 PDF                 WASHINGTON : 2004
_____________________________________________________________________________
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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 November 17, 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.............................................   137
    Pien, Howard, president, chief executive officer, and 
      chairman of the board, Chiron Corp.; Kathleen Coelingh, 
      senior director, regulatory and scientific affairs, 
      MedImmune, Inc.; Dr. Robert Stroube, Virginia State health 
      commissioner, Association of State and Territorial Health 
      Officials; and Dr. Jerome Klein, professor of pediatrics, 
      Boston University School of Medicine.......................   245
Letters, statements, etc., submitted for the record by:
    Burgess, Hon. Michael C., a Representative in Congress from 
      the State of Texas, prepared statement of..................   404
    Coelingh, Kathleen, senior director, regulatory and 
      scientific affairs, MedImmune, Inc., prepared statement of.   266
    Crawford, Dr. Lester M., Acting Commissioner, Food and Drug 
      Administration, prepared statement of......................   192
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............   392
    Davis, Chairman Tom, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     5
    Fauci, Dr. Anthony S., Director, National Institute of 
      Allergy and Infectious Diseases, prepared statement of.....   170
    Gerberding, Dr. Julie L., Director, Centers for Disease 
      Control and Prevention, prepared statement of..............   140
    Klein, Dr. Jerome, professor of pediatrics, Boston University 
      School of Medicine, prepared statement of..................   287
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................   396
    Lantos, Hon. Tom, a Representative in Congress from the State 
      of California, prepared statement of.......................   308
    Maloney, Hon. Carolyn, a Representative in Congress from the 
      State of New York, prepared statement of...................   390
    Mica, Hon. John L., a Representative in Congress from the 
      State of Florida, article dated October 23-24, 2004........   221
    Owens, Hon. Major R., a Representative in Congress from the 
      State of New York, prepared statement of...................   309
    Pien, Howard, president, chief executive officer, and 
      chairman of the board, Chiron Corp., prepared statement of.   248
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............   306
    Stroube, Dr. Robert, Virginia State health commissioner, 
      Association of State and Territorial Health Officials, 
      prepared statement of......................................   278
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................   387
    Watson, Hon. Diane E., a Representative in Congress from the 
      State of California, prepared statement of.................   398
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California:
        Memo dated November 17, 2004.............................    10
        Prepared statement of....................................   130


THE NATION'S FLU SHOT SHORTAGE: WHERE ARE WE TODAY AND HOW PREPARED ARE 
                            WE FOR TOMORROW?

                              ----------                              


                      WEDNESDAY, NOVEMBER 17, 2004

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 1:05 p.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis 
(chairman of the committee) presiding.
    Present: Representatives Davis, Shays, Mica, Duncan, Deal, 
Murphy, Waxman, Lantos, Owens, Towns, Sanders, Maloney, 
Cummings, Kucinich, Tierney, Clay, Watson, Van Hollen, 
Ruppersberger, Norton, Cooper, and McCollum.
    Staff present: Melissa Wojciak, staff director, David 
Marin, deputy staff director/communications director; Keith 
Ausbrook, chief counsel; Ellen Brown, legislative director and 
senior policy counsel; Jennifer Safavian, chief counsel for 
oversight and investigations; Anne Marie Turner, counsel; 
Robert Borden, counsel/parliamentarian; Robert White, press 
secretary; Drew Crockett, deputy director of communications; 
Susie Schulte, professional staff member; Teresa Austin, chief 
clerk; Sarah Dorsie, deputy clerk; Allyson Blandford, office 
manager; Corinne Zaccagnini, chief information officer; 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 assistant; Sarah Despres and Naomi 
Seller, minority counsels; Richard Butcher and Josh Sharfstein, 
minority professional staff members; Earley Green, minority 
chief clerk; and Jean Gosa, minority assistant clerk.
    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 
this year's U.S. influenza vaccine supply.
    As most are now aware, on October 5, 2004, the Medicines 
and Healthcare Products Regulatory Agency, United Kingdom's 
version of the U.S. Food and Drug Administration, suspended 
Chiron Corp.'s manufacturer's license for a period of 3 months. 
Chiron planned on delivering 46 to 48 million doses of flu 
vaccine, almost half of the U.S. supply.
    This committee's investigation into the issues surrounding 
the flu vaccine shortage began at a flu pandemic hearing in 
February of this year. The committee informed U.S. health 
officials of its concern that Chiron did not have a 
manufacturing plant located within the United States. So should 
a flu pandemic occur, it was theorized that the U.K. could 
nationalize Chiron's vaccine supply, resulting in the loss of 
half of our national supply.
    At an emergency hearing on October 8, 2004, the committee 
discussed contributing factors to the flu vaccine shortage, how 
the government and vaccine manufacturers were responding to and 
managing the crisis, and what steps would be taken to prepare 
for next year's flu season.
    As a result of testimony at these two hearings, Ranking 
Member Henry Waxman and I sent a letter to the FDA requesting 
documents that would indicate whether FDA knew about the 
problems at the Chiron facility and whether FDA responded 
adequately.
    As part of this committee's investigation, I led a 
congressional delegation to London last week to meet with top-
ranking officials from the MHRA and Chiron. The committee also 
conducted an extensive meeting with FDA officials in Washington 
to discuss FDA documents and the committee's findings from 
meetings held in London. These meetings were extremely 
productive, provided the committee with a timeline of events 
leading up to October 5, 2004 the standard protocols used by 
MHRA and FDA, and the steps all parties involved are taking to 
prevent future vaccine shortages.
    The FDA documents and investigative meetings held by the 
committee confirmed several key facts. First and foremost, FDA 
was unaware prior to October 5, 2004 that MHRA would suspend 
Chiron's manufacturing license.
    On October 25, 2004, Chiron contacted the FDA to alert the 
agency there may be a delay in its vaccine shipment, as 
contamination was located in some lots of Chiron's flu vaccine. 
All documents and meetings confirm that FDA followed routine 
protocol in responding to Chiron's initial contact with FDA and 
continued to follow protocol with each step the agency took 
after October 25th.
    Chiron also notified FDA that it had conducted an internal 
failure investigation to discover how the contamination 
occurred. It is standard protocol for FDA to have a 
manufacturer's failure investigative report in hand when 
conducting an inspection. The FDA uses that report in 
determining cause and the report serves as a roadmap for the 
inspection. Chiron informed FDA that it would receive the 
internal report the week of October 4, 2004. FDA has informed 
the committee that it believed this was a reasonable timeframe. 
During this time, FDA was in constant communication with 
officials from Chiron and immediately alerted the Centers for 
Disease Control and Prevention about the delay in Chiron's 
shipment.
    Unfortunately, the internal report was not provided to FDA 
until after Chiron's license suspension. The MHRA, however, was 
provided with Chiron's findings on September 24, 2004. As a 
result, MHRA concluded its final investigative visit to Chiron 
on September 30, 2004. The FDA has since reviewed the report 
and instructed committee staff that had the agency received the 
draft report sooner, the Chiron facility would have been 
reinspected, whether or not MHRA suspended Chiron's 
manufacturing license.
    FDA, MHRA, and Chiron all agree that Chiron's license 
suspension resulted from systematic problems within Chiron's 
Liverpool facility, based on a lack of manufacturing oversight 
and execution. In addition, all parties agree that prior 
inspections conducted by both FDA and MHRA at the Chiron 
facility did not foreshadow the license suspension. While some 
issues at the facility continued from 2003 until September 
2004, Chiron's license suspension wasn't based on contamination 
in flu vaccine lots or other issues that were addressed in 
previous inspections. It would be inappropriate to imply that 
problems at the Chiron facility in 2003 recurred in 2004 and 
contributed to the closure of the facility.
    Questions have been asked as to why FDA was kept in the 
dark regarding Chiron's license suspension until October 5th. 
Pursuant to the U.K.'s Medicines Act, MHRA is prohibited from 
sharing commercial information without the consent of the 
manufacturer involved. FDA, MHRA, and Chiron all informed 
committee staff that it is widely accepted and understood that 
the two agencies do not discuss their own actions with regard 
to companies over which they each have jurisdiction. In 
addition, it would be standard procedure for Chiron not to 
discuss this interaction with FDA or MHRA with the other 
agency. Since October 5th, Chiron has permitted FDA and MHRA to 
communicate on all issues.
    This investigation has been conducted in a bipartisan 
manner. Politics has no place in the public health arena. I 
hope that this spirit of cooperation isn't threatened today by 
those who choose to ignore standard FDA protocol, accepted by 
vaccine manufacturers worldwide, and place the sole blame for 
the flu vaccine shortage on a single agency, rather than taking 
an objective look at all of the facts presented during the 
committee's investigation. If protocols need to be tweaked, 
however, then let us talk about tweaking them.
    After all, should FDA be held accountable for decisions 
made by Chiron without its knowledge or for actions taken by 
MHRA that were legally protected by the law of the U.K.? If the 
committee spends too much time placing blame and pointing 
fingers, we will be unable to look to the future to ensure that 
the United States has an adequate flu vaccine supply. Let's let 
experience be our teacher.
    My main goals in this investigation are to understand the 
lessons learned from the events leading up to and occurring 
since October 5, 2004, and, most importantly, to work 
vigilantly with U.S. health officials and private industry to 
ensure that a similar situation does not occur in the future.
    Based on my findings with the FDA, MHRA, and Chiron, I am 
optimistic that Chiron will be able to produce vaccine for next 
year's flu season. The license suspension didn't prohibit 
Chiron from procuring its startup materials for next year. As 
of today, Chiron has contracted and paid for its egg supply for 
the 2005-2006 flu season. MHRA is extremely pleased with the 
remediation plan that Chiron has submitted, and a followup 
inspection will be conducted in late December to evaluate 
Chiron's progress.
    It is important to recognize there is a need to expand the 
current number of FDA approved flu vaccine manufacturers and to 
bring those manufacturers into the U.S. markets. We are going 
to work on legislation designed to provide incentives to flu 
vaccine manufacturers in hopes that we can stimulate the 
vaccine market domestically.
    Since our October 8, 2004 hearing, both Aventis Pasteur and 
MedImmune have been able to produce additional doses of flu 
vaccine. FDA has also identified and negotiated for 
approximately 5 million doses of flu vaccine from foreign 
manufacturers. Additionally, the Nation has a supply of enough 
antiviral medicines to treat about 40 million people. These 
antiviral drugs can be used to prevent or treat the flu if 
symptoms are identified early.
    Our witnesses today will discuss how U.S. health officials 
are procuring and adequately distributing the flu vaccine to 
the high-risk population and preparing for next year's flu 
season, and what incentives can be provided to manufacturers to 
ensure a stable annual flu vaccine supply.
    In addition, I am pleased that Howard Pien, the president 
of Chiron Corp., is present to speak publicly for the first 
time since October 5, 2004. I know we are anxious to hear his 
testimony as to Chiron's remediation plan and how Chiron is 
moving forward in preparation for next year's flu season.
    We have an excellent roster of witnesses, and I would like 
to thank all of them for appearing before the committee, and 
look forward to their testimony.
    [The prepared statement of Chairman Tom Davis follows:]
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    Chairman Tom Davis. I would now like to yield to Mr. Waxman 
for an opening statement.
    Mr. Waxman. Thank you, Chairman Davis, for holding this 
hearing on the flu vaccine shortage. You and I share the goal 
of establishing a healthy vaccine supply in the United States, 
and effective government oversight is an important part of this 
process.
    This year's flu vaccine crisis raises three important 
oversight questions.
    The first question is how the United States came to depend 
on just two companies for the flu vaccine. The Institute of 
Medicine, the Government Accountability Office, the National 
Vaccine Advisory Committee have all issued reports exposing the 
weakness of our national vaccine infrastructure, and we can't 
afford to ignore their recommendations any longer. And they 
have been making recommendations since the year 2001.
    The second question is why the vaccine shortage led to such 
confusion and chaos. In a series of reports over the last 4 
years, GAO repeatedly warned that the United States does not 
have a plan to ensure that the highest risk people are 
immunized in the event of a shortage. The seniors who have been 
standing in lines for hours trying to get a flu vaccine know 
that GAO was right.
    And the third question is the primary subject of today's 
hearing: Did FDA do its job to protect the U.S. vaccine supply?
    Since the vaccine shortage began, senior administration 
officials, including Acting FDA Commissioner Lester Crawford, 
have been reassuring the public that the FDA made no mistakes 
and did everything possible to protect the vaccine supply.
    Today we will evaluate those claims.
    On October 13th, Chairman Davis and I asked FDA to provide 
copies of documents relating to its oversight of the Chiron 
vaccine plant in Liverpool, England. This is the plant that 
British regulators shut down on October 5, causing the United 
States to lose approximately half of its supply of the flu 
vaccine.
    We have now received and reviewed over 1,000 pages of 
documents. We have also met with FDA officials, and the 
chairman traveled to England with majority and minority staff 
to interview British and Chiron officials.
    The documents show that FDA failed to provide effective 
oversight. Expert scientists at FDA knew about serious problems 
at the Liverpool facility in June 2003, but there was not 
sufficient leadership at the agency to ensure that they were 
fixed.
    My staff prepared a background memorandum for this hearing 
that describes the documents and their significance in detail, 
and I ask that this memorandum and the redacted versions of 
documents cited in the memorandum be made part of the hearing 
record.
    Chairman Davis. No objection. Let me just add that I think 
that all records in the binders before the Members, majority 
and minority, ought to be made part of the record, and if there 
is no objection, so ordered.
    [The information referred to follows:]
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    Mr. Waxman. The Chiron plant in Liverpool was not an 
ordinary FDA-regulated facility. It is a facility with a 
history of contamination problems that makes half the supply of 
the U.S. flu vaccine. The plant should have received the 
highest priority from the Food and Drug Administration.
    Yet the agency ignored glaring problems at the facility and 
missed repeated opportunities to correct them.
    Mr. Chairman, you said you don't want us to point fingers 
and look at the past, let us look at the future. You even, I 
thought, said you don't want partisanship invoked in our 
hearings. I don't know what is partisan about criticizing what 
has led to, in my view, the situation we are facing today. If 
you don't learn from the past, you are not going to correct 
these problems for the future.
    I have been in Congress for 30 years. Throughout this 
period, oversight of FDA has been one of my highest priorities. 
I drafted many of the major laws that the agency implements, 
including the Orphan Drug Act, the Hatch-Waxman Act, the 
Nutrition Labeling and Education Act, the Safe Medical Devices 
Act, the user-fee law that accelerated drug approvals, and the 
Food Quality Protection Act. That is why I have become so 
concerned about how the agency has performed in recent years.
    What we are witnessing is the dismantling of FDA's 
enforcement and oversight capabilities. In area after area, the 
agency is failing to enforce the public health laws that 
Congress enacted. Enforcement actions for misleading drug 
advertisements have dropped 70 percent since 2001. Enforcement 
actions at vaccine plants and other manufacturers of biologic 
drugs have dropped over 80 percent. Key food labeling laws are 
being ignored.
    And there is no better example of what is wrong at the FDA 
than its failures at the Chiron vaccine facility.
    The story told in the FDA documents begin in June 2003, 
when a team of FDA inspectors visited the Liverpool facility 
and found 20 serious problems at the plant, including bacterial 
contamination and poor sanitary practices. The FDA experts who 
conducted the inspection recommended the agency take official 
enforcement action against the company. Yet this recommendation 
was rejected. FDA downgraded its response and asked the company 
to make only voluntary reforms.
    FDA's justification for failing to cite the facility is 
that the agency thought conditions were improving. But 
conditions weren't improving, they were deteriorating. Over the 
next 16 months, as production at the facility increased, the 
problems found in June 2003 mushroomed. Yet during this entire 
period, the FDA never once revisited the plant to see if Chiron 
was correcting its problems and making safe vaccines. 
Incredibly, FDA remained passive even after October 25, 2004, 
when Chiron disclosed that millions of doses of vaccine were 
contaminated by a potentially lethal form of bacteria.
    A responsible regulator would have inspected the plant, 
demanded to review its production records, and convened high-
level meetings of the agency's top experts. That is exactly 
what the British regulators did. A senior British health 
official summed up their philosophy as ``seeing is believing.''
    By contrast, FDA conducted oversight by conference call, 
trusting a stream of false assurances by Chiron that the plant 
had no serious problems. FDA conducted no inspection; it 
reviewed no plant records; and it was caught completely by 
surprise when British regulators shut down the plant on October 
5.
    FDA's laxity has had a heavy cost. If FDA had ensured that 
the problems identified in June 2003 were fixed, this year's 
flu crisis might never have happened. And if FDA had responded 
aggressively to the contamination problems in August, our 
public health system would have had critical extra weeks to 
prepare for the shortage and to avoid the chaos that ensued in 
October.
    It is essential for FDA to learn from its mistakes. But, so 
far, the administration has been unwilling even to admit them. 
In recent weeks, the President, the HHS Secretary, the Acting 
FDA Commissioner have all reassured the public that FDA did 
everything right. The Acting Commissioner has even indicated he 
would do it all over again, the same way.
    And I might point out that all those assurances, given all 
before the election, might be viewed as partisan, because there 
at least we were facing election. We don't have an election 
now; the election is over. So if we are critical of something 
that is going on through oversight, that shouldn't be attacked 
as partisan.
    After the flu crisis broke, Dr. Crawford told the public 
that the June 2003 inspection had ``no relevancy'' to the 
problems found in 2004. He said that FDA monitored the actions 
of Chiron and assured that the violations found in 2003 were 
corrected. And he said that the United States and British 
regulators had acted ``in synchrony.''
    Well, none of these statements are true. In this 
administration, inconvenient facts are simply ignored. This is 
a dangerous way to govern and is particularly hazardous for the 
public health.
    I expect the chairman may disagree with me today about the 
interpretation of some of the FDA documents. That is his right. 
But even as we disagree over specifics, I want to commend the 
chairman for his approach to this hearing. He has asked for the 
right documents, he has worked with us to ensure that we can 
release redacted copies so that Members and the public can 
judge their significance for themselves. That is exactly the 
right way to approach this important hearing. And I hope, after 
we have had a chance to hear the testimony and ask the tough 
questions, that we will feel better informed about what 
happened to make sure that it doesn't happen again.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Henry A. Waxman follows:]
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    Chairman Tom Davis. Thank you.
    I know a lot of Members would like to make opening 
statements, but if we go through this, we will never get to our 
panel; and our conference is still going on. So what I would 
ask is we will give Members a week to submit written statements 
for the record and, of course, on the questions they can make 
statements and use their time to do that.
    We are going to move to our first panel of witnesses. 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, the Acting 
Commissioner of the Food and Drug Administration. They are 
going to discuss efforts being taken at the Federal level to 
manage the flu vaccine crisis. They will also describe their 
efforts to coordinate distribution with State and local 
authorities, and what steps are being taken in preparation for 
next year's flu season.
    It is our policy to swear all witnesses in. You have all 
been here before, so if you would please rise and raise your 
right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Thank you very much.
    Dr. Gerberding, we will start with you. As you know, we 
have a light here. Your entire statement is in the record, and 
I can tell you that our staff and Mr. Waxman's staff have been 
through the written testimony. We would like you, if you could, 
to try to limit your testimony to 5 minutes. You have a light 
in front of you. When the light turns orange, 4 minutes are up; 
when it is red, 5 minutes are up. And when it is red, if you 
could move to completion as quickly as possible. I don't want 
to cut you off if you think there is something you need to say, 
because this is televised and people are watching, but we are 
conscious that we have a lot of questions and giving ample time 
to amplify at that point.
    Dr. Gerberding, thank you for being with us. Please go 
ahead.

 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. And I thank you and the staff of 
the committee for their incredible interaction and 
professionalism in helping us prepare and be responsive to this 
hearing.
    CDC is in a situation where we are faced with two big 
goals. One is to do our part to ensure that we do have a modern 
vaccine available to everyone who needs it that is safe, 
effective, affordable, and accessible, and is produced in a 
domestic manufacturing process that is reliable and robust. We 
have a second urgent goal, and that is to assure that the 
vaccine we do have this year gets to the people who need it the 
most as quickly as possible.
    And I would just like to start by thanking some very 
important health protection heroes who have been doing their 
part. First and foremost, I thank the people who have been 
patiently waiting in lines and persistently trying to find 
vaccine. I am sorry that they are in this situation. We are 
doing everything we can to distribute the available vaccine 
that is out.
    I also thank the people who have stepped aside to let those 
who need the vaccine get it. I am incredibly appreciative of 
Aventis, who has collaborated with CDC's allocation plan. 
Aventis, Chiron and the distributors who have made proprietary 
information available to health officials so that we can do a 
good job of targeting the vaccine.
    Most importantly, I thank the true heroes of this whole 
process, which are the State and local health officials who 
have been working around the clock to assess the needs, assess 
the flu situation in their jurisdictions, and make hard 
decisions about where to allocate vaccine at the local level.
    On the next graphic I have a picture of the current flu 
situation as of the end of a week ago. The current situation is 
good news: the season is not off to a fast start. We have local 
flu activity or sporadic flu activity in many States; we still 
have some States with no flu activity.
    But as we pointed out in the next graphic, flu is very 
unpredictable. The peak months of flu activity is very 
unpredictable. February is the most common peak, but it can be 
earlier or later than that. We also know that demand for flu 
vaccine is unpredictable. We have seen, this year, a great 
increase in demand. Certainly we have learned that the supply 
is unpredictable. The current influenza activity suggests that 
situation is getting us where we have a little more time to get 
vaccine out, but we are not resting until we have every dose 
allocated.
    On the next graphic I have just put an organizational chart 
of the CDC operation. We have activated our Emergency Operation 
Center to handle the logistics of the flu season this year. It 
involves several hundred people across CDC and public health 
agencies who are working on various tasks. First and foremost 
among them is allocating vaccine. CDC is using about 20 times 
more dollars for flu this year than we did in 2002, so we are 
doing everything we can to utilize those dollars and achieve 
the best possible flu preparedness that we can.
    In August, when we learned of the shortage, we purchased 
vaccine for the stockpile in addition to those doses that we 
had purchased earlier in the year. We also increased our supply 
of antiviral medication for the stockpile. And more recently, 
after the loss of the vaccine was noted in October, we have 
increased by 5 million treatment courses antivirals for the 
stockpile. We have also, in August, initiated a survey to 
assess States' preparedness and contingency planning for 
reprioritization and reallocation of vaccine, and took a number 
of steps within the agency to have some contingency for worst-
case scenario. However we were operating on the premise that 
the most likely scenario is that ultimately we would end up 
with an unprecedented supply of vaccine.
    On the next graphic I just have given a very few snapshots 
of the kind of traditional flu tracking we do at CDC. This 
involves people across our health agencies. We do laboratory 
typing, State-based typing, mortality tracing of both adults 
and pediatric populations.
    But on the next graphic I have demonstrated some of the new 
innovations that we are utilizing this year that never have 
been used before to track flu. Chief among them is an ongoing 
household survey where we can assess people's vaccine status on 
an ongoing basis. In the first week of November, through the 
household survey, we were able to determine that our targeting 
efforts are working. Only 4 percent of low-priority patients 
have been vaccinated this year, and for those that need it 
most, including the seniors over age 65, we have more than 26 
percent vaccine coverage, which is about where we would be at 
the midpoint of the flu season.
    The last graphic really illustrates the most important 
component of all, and that is that flu is a preventable 
illness. Vaccine is the most important component of prevention, 
but there are other steps that we have to focus on this year as 
well, including prevention of person-to-person transmission, 
respiratory hygiene, hand hygiene, and, of course, antivirals. 
For people who cannot get the flu vaccine but need it, it is 
very important that they seek medical attention at the earliest 
onset of flu, because antiviral drugs can treat flu and prevent 
serious complications. We want to make sure that word gets out 
widely. And, of course, we are also preparing for a worse flu 
season than usual through other interventions at the community 
and institutional level if we need them as we go down the road.
    There are a number of things ongoing across the agency, and 
we really appreciate the support of Congress in helping us get 
there. We know we need to do more. We know that we have 
requested $100 million in the 2005 budget to modernize our 
vaccine strategy, and we look forward to working with you in 
the committee and others on how we can do this expeditiously 
and successfully. Thank you.
    [The prepared statement of Dr. Gerberding follows:]
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    Chairman Tom Davis. Thank you.
    Before we get to Dr. Fauci, Mr. Waxman.
    Mr. Waxman. Dr. Fauci, before we hear from you, I want to 
express my feelings, and I think the feelings of the members of 
this committee, about the loss, and sudden loss, of a leader in 
infectious diseases, your Deputy, Dr. John La Montagne.
    Members may not have known him personally, but he was a 
person from whom we all benefited. He worked on issues such as 
flu vaccination, biodefense research, malaria, and 
tuberculosis. He was held in the highest esteem by all of his 
colleagues. He had an exemplary public service record. I know 
it is a loss to you, and I think to the country, that he has 
suddenly passed away, and I wanted to extend my condolences.
    Chairman Tom Davis. And I concur with that.
    Dr. Fauci. Thank you very much, Mr. Waxman, Mr. Chairman, 
and members of the committee. We really appreciate the 
recognition that you have given to John La Montagne. It is a 
fact that John was one of the leaders in influenza vaccine 
research and, in fact, when he first came to the National 
Institutes of Health almost 30 years ago, he was the first 
influenza program officer in our research enterprise. So I 
think he would be particularly interested in this hearing were 
he here today, and thank you for your recognition.
    Thank you, Mr. Chairman. I would like to take my time 
allotted to me now to talk to you a bit about the research 
approach toward tackling and meeting the challenge of 
influenza, both the immediate challenge and the long-range 
challenge, including that of pandemic flu.
    As shown on this first poster, the NIH influenza research 
is one of the components of the Department of Health and Human 
Services' comprehensive program involving surveillance, 
regulation, and research to not only understand the influenza 
virus and the disease's cause, but also to help us partner 
better with industry in order to overcome some of the 
challenges that we have been meeting over these past several 
months.
    The research endeavor is comprised of both basic research; 
research capacity; a bit of surveillance, which, as you know, 
is fundamentally what the CDC does; but the end point is to 
develop vaccines, therapeutics, and diagnostics.
    This particular slide showing the influenza funding I think 
is very telling, because it shows the effort that has been put 
in under the leadership of Secretary Thompson at the Department 
in expanding our capabilities. As you can see, in 2001 our 
research endeavor was about $20 million, and the President's 
budget for 2005 is approximately $66 million, a clear, rather 
impressive increase in resources.
    Some of the scientific issues that were tackled are of 
importance to the discussions that are taking place here today. 
Many of you have heard of the terminology ``reverse genetics.'' 
I will try to simplify that for you.
    This was a technique that was developed by NIH grantees, 
and what this technique does, it takes some of the uncertainty 
out of finding and isolating the seed virus to grow for a 
vaccine. And when you get a virus like isolated this year, the 
H5N1 from Asia, and you want to grow that to develop a pilot 
lot, you generally put a vaccine that is well adapted to 
growing in eggs, which is the main medium of growing, together 
with the vaccine in question, hoping that they will naturally 
reshuffle their genes so that you have the component of the 
virus in question within the framework of a virus that you know 
from year after year grows well.
    Reverse genetics circumvents that; it allows you to 
actually pick out the genes and deliberately put them together 
to form a hybrid type of a virus that we call a reassortment, a 
molecular version of the reassortment, where you deliberately 
do it yourself. That is how we isolated and got the H5N1 that 
we are now preparing for a vaccine in the event of a pandemic 
flu.
    The next slide shows the two major research endeavors that 
are ongoing now to tackle the question of how we can have 
alternatives to egg-based vaccine, and that is the development 
of cell culture vaccine production and recombinant DNA 
technology. Hopefully we will get a chance to discuss this 
during the question period.
    Another important component of tackling influenza is what 
we do with therapies, therapies that are for the actual 
treatment of influenza as well as those that can be used for 
prophylaxis or prevention. There are four drugs that are 
available today against different targets. Three of them are 
used for prevention and all of them can be used for treatment.
    We need a more robust pipeline to be able to have in our 
armamentarium other drugs in the event of the development of 
resistance to these drugs by the influenza virus. And we know 
from experience that whenever you treat a microbe over a period 
of time, sooner or later there will be resistance. But we do 
have drugs, as was mentioned by Dr. Gerberding, such as Tamiflu 
and Rimantadine in our strategic national stockpile, with in 
fact many more doses now being prepared for that stockpile.
    And finally let me just mention a word of how we use the 
research enterprise to approach the pandemic flu threat that is 
an ever-looming threat. We know that this is occurring in Asia 
right now. H5N1 is a virus that has already infected 44 people 
and killed 32. The good news is that it has not yet learned to 
effectively transmit from person to person; there is only one 
documented case.
    But if we use history to tell us what microbes can do, 
sooner or later either this virus or a related virus might 
learn that. So there are some research issues that need to be 
addressed that will help us to be able to meet that challenge.
    They are listed here. One is to isolate that virus, which 
we, in collaboration with the CDC and the WHO, last year did, 
and we did it by the reverse genetics technique that I 
introduced you to just a moment or two ago. We are developing 
pilot lots of the H5N1 and other bird flus. By pilot lots we 
mean small amounts, 8,000 to 10,000, that can be used in 
clinical trials, as shown on the third bullet.
    Those clinical trials will begin anywhere from January up 
to and including March or April; and this has been in 
association with the purchase by the Department of 2 million 
doses of H5N1 from Aventis-Pasteur to be able to have in our 
stockpile, should we need it. And, finally, the continual 
screening and development of new therapeutics.
    So, in summary, as part of the broad comprehensive approach 
of the Department, the NIH research endeavor will hopefully 
continue to contribute productively to the challenge that we 
will inevitably meet. Thank you, Mr. Chairman.
    [The prepared statement of Dr. Fauci follows:]
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    Chairman Tom Davis. Thank you very much.
    Dr. Crawford, thank you for being with us.
    Mr. Crawford. On August 25, 2004, Chiron informed FDA that 
the company had discovered bacterial contamination in eight 
lots of final vaccine product for this year's flu supply, and 
advised that they were already investigating the problem to 
determine the root cause of the contamination. At the same 
time, they proceeded to quarantine all of the vaccine lots 
while they retested the product.
    In September 2004, FDA, CDC, and Chiron scheduled weekly 
conference calls to discuss the status of the firm's 
investigation. During these calls, they advised FDA that they 
had identified the cause of the contamination, that it was 
confined to specific vaccine lots. During their investigation, 
Chiron informed FDA that the results of the retesting were 
negative. They planned to submit a final investigative report 
to FDA during the week of October 4th.
    It is important to recall that on September 28th Chiron's 
chief executive officer advised the Senate Special Committee on 
Aging, ``As of September 27th, it remains Chiron's expectation 
that between 46 million and 48 million Fluvirin doses will be 
delivered to the U.S. market beginning in early October.''
    On the morning of October 5, 2004, the British regulatory 
organization, MHRA, announced a 3-month suspension of Chiron's 
license to manufacturer influenza vaccine. FDA had no prior 
knowledge of that intention, to suspend the firm's license. The 
chief executive of MHRA indicated that they did not have the 
legal authority to notify FDA before the October 5th 
suspension.
    Upon learning of the suspension, FDA contacted both Chiron 
and the MHRA. Chiron indicated to FDA that it believed it had 
satisfactorily addressed MHRA's inspectional findings. However, 
the British expressed serious concerns about Chiron's vaccine 
stocks and the company's ability to assure the safety of the 
vaccine. FDA immediately dispatched a senior team of scientists 
to the U.K. to meet with company officials and MHRA, and to 
inspect Chiron's Liverpool manufacturing facility.
    On October 15, 2004, after completing its inspection, FDA 
determined that it could not adequately assure that Chiron's 
vaccine met our safety standards. As a result, Chiron will not 
supply any influenza vaccine to the U.S. market for the 2004-
2005 flu season.
    In coordination with others at the Department of Health and 
Human Services, we have been actively exploring all viable 
options to secure additional dosage of flu vaccine to provide 
more Americans protection against the flu. Through these 
efforts, we have been able to increase the available supply of 
licensed flu vaccines for the U.S. population to 61 million 
doses for this flu season. We have also been contacting 
manufacturers worldwide in an effort to identify increased 
supplies of antiviral medications that will provide further 
protection and treatment for Americans during this flu season.
    Next year, Aventis-Pasteur believes they have the 
capability of producing the same or more doses of the influenza 
vaccine. In addition, MedImmune has indicated that it has the 
capability to produce 10 million doses of FluMist for the 2005-
2006 season and as much as 40 million doses by 2007.
    In partnership with the MHRA, we will continue to work with 
Chiron in an effort to bring them back online for next year's 
flu vaccine production. We are also encouraging foreign 
licensed manufacturers to apply for U.S. licensure, and we will 
work to help them achieve this goal.
    Looking further ahead, we must develop more efficient ways 
to produce flu vaccine so that we have the flexibility to deal 
with shortages or unexpected problems. The Department has 
requested $100 million for fiscal year 2005 to shift vaccine 
development to new cell culture technologies, as well as to 
provide for year-round availability of eggs for egg-based 
vaccine. We urge Congress to fully fund the $100 million 
requested, and we are encouraged by the positive response from 
Congress on this important request.
    To help manufacturers overcome challenges such as the 
vaccine development problems that Chiron is experiencing, FDA 
has been investing its energy and resources in important 
initiative such as the Current Good Manufacturing Practices for 
the 21st century initiative, or the GMP initiative. Under that 
initiative, FDA is working with industry to encourage the use 
of advanced technologies, as well as quality systems and risk-
based approaches, that build quality into the manufacturing 
process and avoid the problems such as those Chiron 
experienced.
    Thank you very much.
    [The prepared statement of Mr. Crawford follows:]
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    Chairman Tom Davis. Thank you very much.
    Mr. Waxman and I have agreed to begin the questioning. We 
will take 15 minutes and then Mr. Waxman will get 15 minutes on 
his side, and then we will go down and allow individuals to get 
their 5 minutes, should they desire to do so.
    Dr. Crawford, let me start the questioning. FDA provided 
the committee with the Form 483s from the June 2003 and the 
October 2004 inspections of Chiron's Liverpool facility. This 
is an important point because a lot of has been made about a 
duty, perhaps, of the FDA to have gone back and continued to 
inspect that plant prior to October 2004.
    Could you explain the differences between these two forms 
and why, even though some similarities exist between faults 
that were found in the June 2003 inspection and October 2004 
inspection, that Chiron's license suspension in October 2004 
was not foreshadowed by the June 2003 inspection?
    Mr. Crawford. Well, the two events were unrelated. In 2003 
we inspected the plant and were involved with it, and we did 
issue Form 483, which cites some corrections that must and 
should be made; and the plant responded affirmatively. We were 
able to interact with them in a productive way; and the proof 
of that was that the 2003 vaccine production was completed on 
schedule and none of it was condemned, as was the case in 2004.
    So they are two entirely separate situations. The 2004 
situation was quite different.
    Chairman Tom Davis. When the team biologics returned to the 
United States after its June 2003 inspection of Chiron's 
Liverpool facility, it initially recommended that official 
action be taken against the facility. FDA ultimately decided 
that voluntary action should be taken. Can you explain to us 
the protocol FDA follows in deciding actions after routine 
inspections of manufacturing facilities?
    Mr. Crawford. Yes. The inspectors that actually do the 
evaluation onsite come back and make a recommendation as to 
what kind of action FDA should take, if any, and then team 
biologics actually has a decisionmaking process so that all of 
the members of the team are able to evaluate the severity of 
the situation and also what progress is being made. By that 
time, they did have the response from the company to the 483, 
and based on that, and also based on the fact that vaccine 
production process last year did come to full and successful 
completion, the action was changed from mandatory to voluntary.
    Chairman Tom Davis. FDA's routine protocol, as I understand 
it, is to inspect foreign manufacturers once every 2 years?
    Mr. Crawford. That is correct.
    Chairman Tom Davis. The last routine inspection of Chiron's 
Liverpool facility, then, was June 2003. FDA informed the 
committee it accepted Chiron's response plan to correct the 
issues that were raised in June 2003 and, therefore, the file 
was closed on September 3, 2003, is that correct?
    Mr. Crawford. That is correct.
    Chairman Tom Davis. If these steps were following standard 
FDA protocol, would there be a reason for FDA to go back to 
Chiron's Liverpool facilities prior to the 2-years time to 
reinspect?
    Mr. Crawford. No, we don't do that.
    Chairman Tom Davis. So you were following protocol.
    Mr. Crawford. Yes.
    Chairman Tom Davis. Let me just ask you this. In 
retrospect, now that we have seen what happened, is there 
anything in inspection in that time period that might have 
shown that we should have gone back? I know it wasn't within 
protocol.
    Mr. Crawford. No. Within the number of years that we have 
been doing this, for decades, this has been our standard 
protocol. It is modified somewhat from time to time in order to 
deal with the good manufacturing practices, as practices within 
the industry change, but the sequence of events has been 
unchanged over recent years and has been very effective. This 
is the first time we have had contamination in final lots of 
vaccine at that plant, and that was a different kind of thing. 
But we would not have changed the protocol leading up that.
    Chairman Tom Davis. You believe that the causes of the 
contamination in the vaccine in October 2004 were unrelated to 
the initial reports that we got back in June 2003 and potential 
contaminations at that point?
    Mr. Crawford. Yes. The flu vaccine composition is changed 
each year based on the expected strain, so this was an entirely 
different production.
    Chairman Tom Davis. Now, let me step ahead a little bit and 
try to understand that everyone's goal this year, MHRA, 
Chiron's, the FDA, is to get Chiron up and running so that they 
can produce flu vaccine next year. They have gone ahead and 
ordered the eggs; the invested financially in being able to go 
ahead next year and get the doses up and the supply ready for 
the United States.
    But if Chiron isn't up and operating, if something goes 
wrong, if the changes that they are making within their planned 
operation somehow do not pass muster and we still have 
contamination, can you tell the committee what is our Plan B?
    Mr. Crawford. Well, at that point it will be early enough 
for us to seek alternative production facilities, but also 
alternative sources of vaccine from other countries and 
elsewhere. So that will be a signal to both the British and to 
us that we need to work with their version of the Centers for 
Disease Control and our version of our own CDC in order to work 
together to secure an adequate vaccine supply from other 
sources, if in fact they are not going to be able to provide 
it.
    As you recall, we testified in 2002 that the vaccine 
industry was extremely fragile; we would be down to a very few 
suppliers, and we needed to work on that. When you find out too 
late in the production season, it is too late to seek 
alternative sources because they can't get up and running fast 
enough. It will be earlier than that this year.
    Chairman Tom Davis. You also have foreign license 
manufacturers. In fact, Chiron has other plants, do they not, 
where they manufacture vaccine?
    Mr. Crawford. They do.
    Chairman Tom Davis. Are we in the process of going out to 
other manufacturers that are currently providing dosage for 
Europe and for other parts of the free world, and have met 
criteria in other countries, to get those licenses as well, so 
that, should this occur again, we have other sources of supply?
    Mr. Crawford. Yes. I have personally talked to every chief 
executive officer manufacturing flu vaccine anywhere in the 
world, even those that have elected not to come to the U.S. 
market, and have encouraged them to do that and also have 
encouraged them of the commitment of FDA to work with them in 
that process, because we need more competition, if you will, 
within the flu vaccine industry. I have also talked to the 
manufacturers of substances like FluMist and also the antiviral 
drugs, and have assured them also of our commitment. Some of 
them, the antiviral drug manufacturers, also have chosen to not 
enter the U.S. market. I have encouraged them to rethink that, 
and we are having a continuing series of calls on a virtually 
daily basis in order to see what their thinking is and also to 
work with them.
    Chairman Tom Davis. It is true that worldwide there is a 
shortage of flu doses? It is just that in the more affluent 
parts of the world we tend to be able to go out and buy it and 
usually have ready supply? Is that a fair comment?
    Mr. Crawford. Yes. Dr. Gerberding would be better able to 
talk about that, but we consume more than our share of the flu 
vaccine that is produced worldwide. That is as it should be; we 
have a very aggressive public health program thanks to CDC, and 
we are moving forward, I think, to vaccinate an even larger 
percentage of our population. But the number of companies that 
are actually manufacturing are down really to about three or 
four.
    Chairman Tom Davis. Dr. Gerberding, is that an accurate 
statement?
    Dr. Gerberding. That is accurate. I don't have the global 
production figures this year--we can get them for the 
committee--but in most years it is less than the total of 300 
million doses globally.
    Chairman Tom Davis. OK. What is the annual death toll from 
influenza around the world? We know it averaged about 36,000 in 
the United States in an annual basis. What would it be 
worldwide, any idea?
    Dr. Gerberding. We don't have accurate estimates globally 
because there really is no system for surveillance for flu 
deaths on an international basis.
    Chairman Tom Davis. In many countries.
    Dr. Gerberding. We are working on that, but I can't answer 
the question.
    Chairman Tom Davis. OK.
    Let me go back to you, Dr. Crawford. What are Chiron's 
obligations to FDA in order to get their license back to 
produce Fluvirin vaccines for next year's flu season, and how 
are you working with Chiron and the MHRA to develop and 
implement the remediation plan, and how confident are you that 
we are going to be successful?
    Mr. Crawford. Thanks to an agreement that has been reached 
between the MHRA, FDA, and Chiron, we are now able to share 
information and also to work together in helping to get the 
vaccine production facilities----
    Chairman Tom Davis. And that is the first time we have had 
that, correct?
    Mr. Crawford. It is, yes.
    Chairman Tom Davis. In fact, without that, under British 
law, they couldn't share this with you.
    Mr. Crawford. They could not and did not share information. 
We are now working hand-in-glove to get that particular plant 
up and functioning, and a decision will be made on that by 
January 5. Now, it is important to note that since the facility 
is in the United Kingdom, the license will come from the 
British Government.
    Chairman Tom Davis. Correct. And we have talked about the 
Plan B, that at that time you still have time to look worldwide 
into other areas.
    Mr. Crawford. Yes.
    Chairman Tom Davis. Let me ask you another thing. We have 
some jurisdictions, State of Illinois, city of New York, that 
are talking about importing vaccines from countries that are 
not FDA certified.
    Mr. Crawford. Yes.
    Chairman Tom Davis. What are we doing about that?
    Mr. Crawford. Some Governors and mayors have come to FDA 
and have offered to go and try to find vaccine that is still 
unused in wholesale distribution channels, and they have found, 
starting with the Governor of Illinois and then the last one to 
enter the situation was the mayor of New York City, they have 
come up with up to 750,000 extra doses. And what we are doing 
now is we had to first collect the lot numbers on those doses 
in order to be sure that they were legitimate, that they came 
from the plant where they were supposed to have come from. The 
second this is now we are developing what is called a pedigree, 
and that is to be sure that we know where all this vaccine has 
traveled throughout the world and whether or not the cold 
chain, as it is called, that is, refrigeration, has been in 
place sufficiently and adequately to make sure that the vaccine 
is still viable and can be used.
    We are down to that point now, and we are also meeting with 
that CEO on a regular basis as they help us to get the data we 
need in order to bring the vaccine in. Now, it is not approved 
in the United States, so we will have to do some special 
procedures in order to bring it in, but we are not at that 
point yet, but we are making progress.
    Chairman Tom Davis. And I would just emphasize, from my 
perspective, for next year and the years after, we just need to 
get more providers out there. And if we can't get them to 
produce it here, we have to go worldwide to just get them 
certified, where they can do that.
    Also the FluMist, are we looking at testing that to see if 
that can have a wider applicability than it has?
    Mr. Crawford. Well, as I mentioned, they are going up to 10 
million doses, and as you also know, it is now used for people 
that are in healthy physical condition between the ages of 5 
and 49. The company has released information that they are 
interested in perhaps expanding that perhaps to some further 
ages, and I can assure you, although we can't reveal the 
procedures and what is going on in terms of the data that has 
been submitted to us and the relevant applications, we will do 
everything we can to work with them or anyone else who wants to 
expand a flu vaccine product in the U.S. market.
    Chairman Tom Davis. OK.
    Dr. Gerberding, let me ask you. Getting parochial, 
Virginia, Maryland, and D.C., this whole region, we are all 
heavily dependent on Chiron to supply our vaccines for the 
public sector. How has the CDC worked with Aventis to 
redistribute the portion of the Aventis flu zone doses to 
States that contracted solely with Chiron?
    Dr. Gerberding. On October 5th, 33 million doses of Aventis 
vaccine had already been distributed, but there were a 
projected 25 million doses left to be allocated. The first 
phase of allocation was targeted to people who need the vaccine 
the most. So looking at the Aventis purchasers, as well as the 
public sector purchases, we did everything we could to ensure 
that we got all the doses out to the Vaccine for Children 
Program, doses going to nursing home and to other high-priority 
obvious areas where there were most likely to be people who 
needed it.
    Once that plan was developed and implemented, then the 
remaining 12 million or so doses needed to be allocated, and in 
this step the State health officials stepped in and said we 
will work with CDC and Aventis to target those doses of vaccine 
to the places in our communities that need vaccine the most. 
Thus the States have really done an assessment of where it is 
needed, how it is needed, and we have made sure it has gotten 
there.
    In this process of working with the States to allocate the 
vaccine, we have made available to them, for the first time 
ever, proprietary information on a secure Web base that tells 
them now just how many doses, but exactly to whom Aventis 
shipped the doses. The Chiron distributes have been providing 
that information now as well. Therefore the doses are going, at 
the direction of the State health officials, to the people in 
those jurisdictions who need them the most.
    Chairman Tom Davis. Let me ask. If you go back to October, 
it looked like we had about 50 million doses nationally 
available, is that about right?
    Dr. Gerberding. In October we had already used 33 million 
of the----
    Chairman Tom Davis. I am talking about total doses 
available. With Chiron not being able to produce it, we were 
going to be around 50 million doses. Is that right?
    Dr. Gerberding. A total of 61 million doses total this 
year, including 3 million doses of the FluMist.
    Chairman Tom Davis. But part of that is because we have 
stepped up efforts since October, isn't that correct?
    Dr. Gerberding. Right. Exactly.
    Chairman Tom Davis. I am just saying it was about----
    Dr. Gerberding. Aventis had a higher than expected yield, 
and they were also able to get a few million more doses out of 
the production line.
    Chairman Tom Davis. So we are up to 61? Will that go any 
higher, do you think, looking at some of the foreign 
distribution?
    Dr. Crawford, do you know?
    Mr. Crawford. Yes.
    Chairman Tom Davis. We were at 75 million doses last year. 
What do we expect to be at the end of the flu season? How many 
doses can we reasonably expect to have on the street, available 
to the public? Anybody want to take a stab at that?
    Mr. Crawford. Yes. We have made contacts with a variety of 
companies, and we are in final negotiations with three of them 
that are in other countries, and it is possible that we will 
have an additional 5 or 6 million doses cleared for shipment to 
the United States by the first of the year. The exact figure we 
don't know at this point because we are continuing to 
negotiate, but we have sent inspectors to those plants and they 
have filed their findings. And I expect to have on the first 
plant, which is actually the largest one, a recommendation by 
the end of this week, and then I can make a determination as to 
whether or not it meets U.S. standards and can be brought in 
under special circumstances.
    Chairman Tom Davis. You would agree, though, we need more 
suppliers to avert this kind of thing in the future? Does 
everybody agree with that?
    Dr. Gerberding. Absolutely.
    Mr. Crawford. Yes.
    Chairman Tom Davis. And that means the FDA is going to have 
to be proactive in going out and getting some of these other 
areas licensed, is a fair assumption?
    Mr. Crawford. It does. Yes.
    Chairman Tom Davis. Dr. Gerberding, let me just conclude. 
What lessons from our response to this year's flu vaccine 
shortage are really relevant to bioterrorism preparedness?
    Dr. Gerberding. Well, the systems that we have been using 
to track and allocate flu this year are the same systems that 
we would use for a pandemic or for a terrorism event. I think 
it has been a challenging exercise. We have been asking a lot 
of our public health system in this regard, but the laboratory 
network, the communication network, the emergency operations 
network, and really the countermeasure allocation system that 
we have executed are all critical components of any emerging 
threat, including terrorism.
    Chairman Tom Davis. And they are working pretty well under 
these circumstances?
    Dr. Gerberding. Well, so far we have been very pleased with 
the steps that have been taken and the success that we have 
had, but, again, it is early in the season and we have a long 
way to go before we are through with this.
    Chairman Tom Davis. Thank you very much.
    Mr. Waxman, you have 15 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Dr. Crawford, I want to start my questions with you. In 
1999 the Food and Drug Administration inspectors went to a 
Liverpool plant and they identified manufacturing problems--
this was before Chiron purchased it--and the inspectors 
responded to these problems by issuing a warning letter. And as 
I understand the significance of a warning letter, it is an 
official enforcement action. If the manufacturer doesn't 
correct the problems or remedy the violations, FDA can initiate 
legal action against them. So it is a serious matter. And, in 
addition, once there is a warning letter, it generally ensures 
that another inspection will be conducted to make sure the 
problems have in fact been fixed. So that is what happened in 
1999.
    In June 2003 FDA inspectors went out again. There were four 
inspectors, as I understand it, to look at this Chiron plant in 
Liverpool. And they found bacterial contamination, in some 
cases 1,000 times higher than expected. They found unsanitary 
practices. They found the plant was not doing an adequate job 
investigating and correcting these problems. The June 2003 
inspection team recommended, as I understand it, unanimously 
that there be an official action, as there was in 1999. Instead 
of a warning letter being sent, which would be official 
actions, the recommendation was ``downgraded to a request for 
voluntary action by the company,'' a request that carries no 
legal weight and that did not lead to a prompt followup 
inspection.
    What I am concerned about is why did FDA downgrade its 
response and ask for only a voluntary action?
    Mr. Crawford. It is because of the progress that the plant 
was making. We issued what is called a 483, which is a 
statement of what we think should be corrected. We stayed in 
touch with the plant as they moved toward the end of that 
production cycle. Two things happened: they responded very 
well, they corrected the problems; and then the vaccine 
production in that plant for that year, which was ready for our 
evaluation a few weeks later, turned out to be OK. The 2003 
production was not contaminated. So they had in fact completed 
what we wanted them to do and there was no need to have 
mandatory or a warning letter.
    Mr. Waxman. Well, there was no need, but there could have 
been, and that would have enforced another inspection. In fact, 
did FDA go back to the plant to inspect whether conditions in 
the plant were actually improving as you thought they were or 
you hoped they were? Did you schedule another inspection, as 
FDA would likely have done if you had taken an official 
enforcement action?
    Mr. Crawford. Well, two things happened, as I mentioned.
    Mr. Waxman. Well, could you answer yes or no on that 
question?
    Mr. Crawford. Pardon me?
    Mr. Waxman. Could you answer yes or no?
    Mr. Crawford. Would you restate the question?
    Mr. Waxman. Well, you didn't send an official letter, which 
would require followup inspection; and you thought things were 
improving. And I want to know did FDA go back to the plant and 
inspect whether the conditions in the plant were actually 
improving, as you hoped they were, and did you schedule another 
inspection, as FDA would have done had you issued an official 
letter?
    Mr. Crawford. Well, it is not possible to answer that yes 
or no because we did go back in August 2004. If that is the 
question, the answer is yes.
    Mr. Waxman. Well, the answer wouldn't be yes, because under 
an official letter you would have gone back earlier than that.
    Mr. Crawford. But they corrected the problems.
    Mr. Waxman. Well, how do you know they corrected the 
problems?
    Mr. Crawford. Because we got the vaccine produced and it 
was OK.
    Mr. Waxman. That was the final product.
    Mr. Crawford. In 2003.
    Mr. Waxman. But in the 2003 inspection your people said 
that there were unsanitary conditions there, that there is a 
high bacterial contamination. Maybe it wasn't in the final 
product that you saw, but it certainly became the reason why 
the British shut down the plant in 2004, isn't that correct?
    Mr. Crawford. No, that is not correct.
    Mr. Waxman. It is not correct? OK, we will get to that in a 
minute.
    I think it was a mistake for you not to have gone back 
earlier than 2004. If you had issued an official letter, you 
would have had to have gone back earlier. And the reason it was 
a mistake is conditions weren't getting better, as you thought 
they were; they were deteriorating. But because you weren't 
there in the plant until 2004, when we already had a problem 
that was much worse, you had no idea how bad things actually 
were. Unfortunately, what happened at the Chiron plant I think 
is emblematic of larger problems at your agency, but let me get 
to that in a minute as well.
    FDA inspected the flu vaccine supply in June 2003. The 
report of the inspectors found serious problems in 20 areas of 
vaccine manufacturing and distributing. You stated that FDA's 
oversight in 2003 had no relevancy for 2004. I want to ask you 
first about the finding of high bio burden, meaning high levels 
of bacteria in the vaccine production process. In 2003 FDA 
found evidence of bio burden more than 1,000 times higher than 
expected, even after they had this filtration system to stop 
it. FDA also found that on repeated occasions the vaccine pools 
had been contaminated with potentially lethal bacterial called 
serratia; and FDA even found contamination in the vaccine after 
sterile filtration, which is supposed to eliminate any 
potential for bacterial growth.
    Now, is it not true that if these findings of high bio 
burden, how you can say they had no relevancy, the problem that 
led to the closure of the plant in 2004?
    Mr. Crawford. Well, as you mentioned earlier, in 1999 we 
had this same sort of problem with the bio burden. As you know, 
every vaccine production lot starts off with a bio burden, and 
production is in large place decontaminating it so that it goes 
back to a sterile situation. After 1999 we had a perfectly fine 
production in 2000; after the findings of 2003, that vaccine 
turned out to be OK. There was no linkage between it and what 
happened in 2004.
    Mr. Waxman. Well, in the documents that we finally got from 
you--and it took a while to get it--this was the inspection in 
2004. They talked about this high bio burden in the lots and 
they said ``not corrected from previous inspections in 2003, in 
that similar occurrences noted during this inspection.'' So 
when they went back in 2004, the FDA inspectors found the same 
problems they found in 2003, a high level of bacteria that can 
contaminate the supply. And I think this is a key point. In 
2003 FDA found problems at the company investigating sterility 
failure, and it was the failure at the plant to investigate and 
correct the 2004 contamination that led to the shutdown.
    Mr. Crawford. No, that is not correct.
    Mr. Waxman. What led to the----
    Mr. Crawford. Bio burden is present in every production lot 
of flu vaccine; it starts with a bio burden and then the point 
is that the bio burden has to be reduced and eliminated.
    Mr. Waxman. They had problems with the bio burden; it was 
1,000 times more than it was supposed to have been. Is that 
right?
    Mr. Crawford. What year are you talking about?
    Mr. Waxman. 2003.
    Mr. Crawford. They had problems, but they were able to 
decontaminate it, so the vaccine actually went on the market.
    Mr. Waxman. Well, your inspectors went back in 2004, and 
they said the problem had not been corrected for the bio 
burden. When you finally went back on October 15, 2004, you 
found a high bio burden that hadn't been adequately 
investigated. And this inspection expressly stated it wasn't 
corrected from the previous inspection in 2003. When you read 
these documents, it is clear that the bio burden problems and 
Chiron's failure to be able to identify and correct them were a 
significant factor behind the closure of the facility. They 
existed in 2003, they weren't corrected; they got worse in 
2004. As I mentioned, the FDA inspectors, in 2003, found 
evidence of contamination in the vaccine, even after sterile 
filtration that is supposed to remove all bacteria, ``a 
potential source of contamination was identified in the aseptic 
connections between the tanks of the vaccine and the 
formulation area.''
    So in June 2003 FDA found that the company had failed to 
address these problems with these connectors, and this year 
Chiron investigated its most recent contamination problems and 
the company found a major weakness and possible cause of the 
contamination in the aseptic connections. FDA scientists wrote, 
``The contamination most likely occurred during the multiple 
number of aseptic connections in the formulation stage.''
    So let me ask you this question. Aseptic connections were 
identified as a potential source of contamination in 2003. They 
weren't fixed. They then were identified by both Chiron and FDA 
officials as a likely source of contamination in 2004. Doesn't 
that make the 2003 inspection and FDA's failure to followup to 
make sure the problems were fixed relevant to the problems in 
2004?
    Mr. Crawford. No. The bio burden comes in with the eggs, 
the chicken eggs that the virus is grown in, and it is discreet 
to that particular year. The bio burden of 2003 is long gone. 
So you bring in a new bio burden with the new chicken eggs, and 
what you have to do is reduce that load through various means.
    Mr. Waxman. Your staff met with our staff this week, and 
when they met, your senior FDA officials conceded that a number 
of findings in 2003 were relevant to the 2004 problems. These 
included problems not only with the bio burden and the aseptic 
connections, but also with the basic sanitary practices in the 
facility. In essence, what they told us is that the problems 
identified in 2003 didn't get better, as FDA hoped they would; 
instead, as production volumes increased in 2004, the problems 
at the plant expanded, ultimately leading to the shut down of 
the facility.
    I would submit that this was a serious cost of the FDA 
failure to be more vigilant. If the agency had taken official 
enforcement action, as the FDA inspectors asked for, as they 
recommended, the problems at the plant might have been 
corrected and the flu vaccine crisis might have been averted. 
And if FDA would be more honest about what happened and the 
mistakes that were made, the public would have greater 
confidence that the agency will correct its mistakes and can be 
trusted in the future.
    Dr. Crawford, I know you want to say this is different, but 
essentially what we have is a plant that has had troubled 
sanitary conditions in its production, and those troubled 
sanitary conditions eventually led to the contamination of the 
vaccine supply. That is what caused the shutdown by the 
British. That is what your FDA people saw when they finally got 
out there. I would submit to you that now that we have these 
documents, it is not good enough to say, well, things were 
getting better. They weren't getting better; the problems 
hadn't been corrected; the production was being increased. And 
with the increase in production and the facilities not having 
their sanitary problems corrected, we ended up with a 
breakdown.
    Mr. Crawford. Well, I had to condemn, as you know, the 
production for this year based on the fact that the bio burden 
could not be reduced this year; and that didn't happen in 2003. 
It was one of the toughest decisions I ever had to make, but we 
could not allow that vaccine into the United States. We had to 
take that particular step, and we are working now with the 
British to see what can be done for the next flu season.
    Mr. Waxman. Well, you say it was a very tough decision for 
you to make, but in fact it wasn't you that made it, it was the 
British who shut down the facility and prohibited Chiron from 
selling any vaccine.
    Mr. Crawford. No, we already had between 6 and 7 million 
doses in the United States. We sent a team over to do an 
inspection of the plant, and then I had to make the decision. 
That is the sequence of events.
    Mr. Waxman. That was after the British action or before the 
British action?
    Mr. Crawford. That was when the British notified that they 
were suspending the license. We already had the vaccine here in 
the United States.
    Mr. Waxman. Well, the point is clear: the British suspended 
the license because these problems were contaminating the 
vaccine supply. You had some of the supply here; you decided 
you can't use that supply. The British had already shut down 
the plant.
    You said that there was no relevancy to the June 2003 
inspection to later problems. I just dispute that statement. 
You said that the FDA assured that Chiron took all steps to 
resolve the problems from 2003. But FDA had not done any 
reinspection of the facility, and your own inspectors found 
this to be untrue in October of this year, finding that a key 
issue involving contamination was not corrected since the 
previous inspection.
    All of these statements that I think were made by you and 
others in the administration that were not accurate had the 
effect of reassuring Americans, before the election, about the 
Bush administration's role in the flu vaccine shortage. Prior 
to the election, FDA withheld documents from this committee 
that revealed the truth. FDA ostensibly said that there was a 
reason to not send us the documents at the time we requested, 
because the individuals who were to produce the documents were 
too busy trying to find more vaccine. But when we look at the 
fax cover sheets now with these documents, they were sent to 
you by individuals on October 18th, 2 days prior to our 
deadline, just as I had been informed by an FDA employee.
    So what I am picking up here is a pattern of misleading 
statements, and maybe even political calculations, that I think 
reflect poorly on the administration, but I think they do an 
enormous amount of damage to the credibility of the FDA.
    I did want to get into the other enforcement actions that 
have not been followed through by FDA. We have seen just 
dramatic decreases in enforcing the law. I know you consider 
this a routine procedure, but this is not a routine procedure 
when you are talking about half the vaccine supply of the 
United States.
    Mr. Crawford. Can I respond to some of this?
    Mr. Waxman. Please.
    Mr. Crawford. Every statement I made was accurate. As you 
know, the chairman granted us an extension of time so we could 
produce the documents that were requested all together, and not 
just dribble them in. So we complied with the chairman's 
timing.
    Mr. Waxman. I just want to ask this one last question, 
because my time has expired. How could you say there was no 
relevance for the inspection in 2003, when your inspection in 
2004 had specifically noted on it by the inspectors that the 
previous problems had not been corrected from 2003, which have 
to do with contamination of the facility?
    Mr. Crawford. The problems were corrected, because the 
vaccine production was good and could be used. They use the 
same terms, and that may be where the confusion is coming in.
    Mr. Waxman. Your inspectors said that wasn't true, though.
    Mr. Crawford. Because if something happened like in 1999--
--
    Mr. Waxman. So you think the problem was----
    Chairman Tom Davis. The gentleman's time has expired.
    Mr. Crawford, I want to give you an opportunity, if you 
want, to finish that.
    Mr. Crawford. No, I was just saying they used the same 
terms of art to describe inspections, you know, maybe over a 20 
year period. That doesn't mean that whatever it is, like the 
bio burden doesn't occur from year to year----
    Chairman Tom Davis. Well, let me ask. You could have taken 
the 1999 inspection and said that had a problem with 2004 as 
well, couldn't you, under the same logic?
    Mr. Crawford. Absolutely.
    Mr. Waxman. Would the gentleman yield just on that point?
    We are not talking about something years before, we are 
talking about 1 year earlier they told you there was a problem. 
You said it didn't show up, so it was corrected, but it didn't 
appear to be corrected according to your own inspectors.
    Chairman Tom Davis. I think he just explained it.
    Mr. Waxman. If it hadn't been corrected, I think that's a 
problem----
    Mr. Crawford. I have already answered that. They were 
corrected.
    Chairman Tom Davis. I think he explained it, and I don't 
think we are going to reach a closure on this.
    Mr. Mica, you are recognized for 5 minutes, and then we 
will go, Mr. Waxman, to you.
    Mr. Mica. Dr. Crawford, don't you realize how many times 
you deny the accusation, that it is still thrown at you? Dr. 
Crawford, this little exhibit here, warning letters for 
biological manufacturing violations have dropped sharply since 
the fall of 2001. Actually, it goes back to 2000. Are vaccines 
considered part of biological manufacturing?
    Mr. Crawford. Yes, they are.
    Mr. Mica. And hasn't there been a significant drop in 
actual manufacturers of vaccine?
    Mr. Crawford. Yes. We are down to only----
    Mr. Mica. So if we have fewer people producing the 
vaccines, then we would have fewer people to go after.
    This is a great example of trying to now blame the 
bureaucrats, as I have said, and FDA. Now, FDA, you don't know 
it, but you are the fall guy. I have sat on this panel now for 
12 years, and I have been through vaccine hearings over that 
period of time, and first the folks on the other side, they 
blame the drug manufacturers; these are bad people and they 
were producing bad stuff, and they were charging too much for 
it. So then the next routine was it is not just the drug 
manufacturers, it is those bad insurance companies, because the 
cost went up dramatically. And I think I cited at the last 
hearing one vial someone held up and said this only costs $1 or 
$2, the actual vaccine itself, but the insurance costs $20 or 
$30, if you could get it.
    Now we have no manufacturers in the United States, I guess 
except for nasal vaccines. We have no insurers, so it is your 
turn to be the fall guy, and it is your fault. Don't you 
understand that? Now, you just heard that if you had gotten 
there a little bit earlier or sent a warning a little bit 
earlier, there wouldn't be any shortage. Is that correct?
    Mr. Crawford. I did hear that.
    Mr. Mica. Well, first we go on the premise that you weren't 
there in time, which you have said you acted in an appropriate 
manner. But somehow even if you had acted a few weeks earlier, 
would we have a flu vaccine shortage today?
    Mr. Crawford. It wouldn't have had any effect, because it 
started just in January.
    Mr. Mica. And you have made that point. But the root 
problem and cause, and a lot of folks in Congress don't want to 
admit it, are, first of all, liability. It is kind of 
interesting that you had trouble getting to Liverpool to look 
at a manufacturer.
    I submit for the record this article from the International 
Herald Tribune that shows France, Germany, and Switzerland, for 
example, followed the so-called British rule, where the losing 
party pays the cost of winner's lawyer, and it goes on to 
describe how difficult it is in the countries where they are 
manufacturing flu vaccine, where you have to fly over and try 
to find out what they are doing, how much easier it is to 
produce that and how much more difficult it is to sue and have 
lawsuits, which have driven manufacturing out of the United 
States.
    Chairman Tom Davis. Would the gentleman ask that article be 
put in the record?
    Mr. Mica. Oh, yes. I am sorry.
    Chairman Tom Davis. Without objection, the article will be 
entered into the record.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T7448.179
    
    [GRAPHIC] [TIFF OMITTED] T7448.180
    
    Mr. Mica. So, one, we need liability and tort reform. Until 
we get that, folks, you are not going to have health care cost 
reduced. It is interesting. Pick up the papers today and see 
how, in a couple of the papers, how many more doctors are 
closing down their operations, how many health care providers 
are going out of business or relocating their activities. And 
that will continue until you get some tort and liability reform 
in medicine.
    Regulatory reform, and it now takes some 8 months, and you 
have described the process.
    Let me go back first. The accusation is maybe we haven't 
spent enough money, because you have to always spend a lot of 
money.
    NIH, that is Dr. Fauci. In 2001, on research, we had a 10 
percent increase from 2001 to 2002. I am not very good at math, 
but that is what it looks like. Even before all this came out, 
I don't want to say we doubled, we went from 22.8 to 57.4, 
which I would say is about 160 percent increase in research. So 
that goes out the window.
    Chairman Tom Davis. Does the gentleman have a question? His 
time has expired.
    Mr. Mica. OK.
    Chairman Tom Davis. Mr. Waxman, you are recognized.
    Mr. Mica. Well, I have a number of points and a number of 
questions. I am willing to stay for a second round, but I am 
trying to get at the root problem and identify liability, 
regulatory reform, and I have a host of questions about the 
States buying this, about guaranteed purchases by the 
government that have driven up costs. And I will get to those 
when I have adequate time. Thank you.
    Chairman Tom Davis. Thank you.
    Mr. Waxman, you are recognized for 5 minutes.
    Mr. Waxman. Mr. Chairman, my colleague, Mr. Mica, didn't 
get to his questions because he was making absolutely incorrect 
statements about a lot of different things. He used the 
opportunity to say we have all, on this side of the isle, 
accused the manufacturers of being bad people. We have never 
said that. He is saying it is terrible we are accusing the FDA 
bureaucrats of maybe not doing the right thing. He doesn't 
believe that. He thinks it is malpractice or liability issues 
that has caused the problem we face today.
    Well, I would submit that it was not the liability laws 
that caused the contamination of vaccine in Liverpool. It was 
the fact that they had unsanitary conditions there. And the 
inspectors from Britain found that out to be the case, and 
eventually our own FDA came to conclude that was the case. And 
I don't consider Dr. Crawford or the FDA to be bad people, but 
my criticism is that the FDA didn't do enough to stay on top of 
this issue. They knew from previous inspections in the year 
before, 2003, that there were problems at that plant, and they 
never went back for another inspection, until after the British 
closed the plant down.
    I disagree with Dr. Crawford's statement that it was 
irrelevant that they found that there was contamination in 
2003. He said there was contamination in 2003, but that wasn't 
the problem in 2004. His inspectors said that was the problem 
in 2004 because it hadn't been corrected in 2003. Well, if you 
take Dr. Crawford's statement, it would have to be they 
corrected it and then they went back into a contaminated state. 
That doesn't follow.
    Now, let me just address the liability issue, because that 
is really a red herring. The gentleman speaks with a great deal 
of ignorance, because in the liability area vaccines were a 
problem; manufacturers weren't making any vaccines for fear of 
liability. And I authored, and the Congress passed, the vaccine 
compensation system. It has been very successful by providing a 
fund to compensate those people who are injured from a 
vaccination. It has been very successful in keeping people from 
going to the courts.
    The flu vaccine is part of that vaccination system. None of 
the drug companies, none of the advisory committees to the FDA 
have come in and said we ought to change the immunization 
problem, liability for immunization, because it is not a 
problem in this case. I will leave to another time to discuss 
the problems of medical malpractice, which I do think is a 
serious problem causing higher prices in the practice of 
medicine.
    I just think it is important, especially if this is on C-
SPAN--I don't know if it is or not, but following his 
statements made with such abandon and such ignorance, I think 
somebody should correct the record.
    I do want to take advantage of the fact that I have my 5 
minutes, and I thank my colleagues for indulging me to do this. 
But FDA has, I think, undergone a very serious change in 
direction in the way they have been responding to a number of 
the problems not just in this area, but this area is emblematic 
of it.
    Well, we have a chart over there, it is the ``Warning 
Letters for Biological Manufacturing Violations.'' They have 
dropped sharply since the fall of 2001. You can see in 1997 
there were 17; in 1998, 19; and then after 2001 there was 1, 2, 
and 1. A big drop. We have seen the warning letters to 
manufacturers who are making false and misleading statements in 
their advertising. They have dropped dramatically. I would 
submit that FDA is just not enforcing the law. I was concerned 
that they just didn't even enforce the food labeling laws, 
which I also had a part in authoring.
    Dr. Crawford, why do you think that is happening at FDA? 
Why is there a precipitous drop of enforcement actions?
    Mr. Crawford. Well, there are not as many people to 
regulate, not as many companies, as was stated earlier. But we 
have not lessened our profile in terms of evaluating these 
companies. But there is variability. If you take it back a long 
period of time, you will see that some years it is up, some 
years it is down.
    Mr. Waxman. Well, we see a dramatic----
    Mr. Crawford. But if we still had 20 manufacturers, it 
would be up higher.
    Mr. Waxman. Well, I am not talking about just vaccines. But 
even for the false and misleading statement by all 
pharmaceutical companies in their advertising, an 80 percent 
drop in any kind of enforcement actions to be sure the public 
is not mislead.
    Mr. Crawford. Well, we do have fewer drugs that are on the 
market that have prescription status and are still in patent, 
also, so that would account for it. But we have not lessened 
our attention to this kind of activity.
    Chairman Tom Davis. Thank you.
    The gentleman's time has expired.
    Mr. Deal, you are recognized for 5 minutes.
    Mr. Deal. Thank you, Mr. Chairman.
    Dr. Gerberding, thank you for being here. We appreciate the 
fact that you and the CDC in my State of Georgia are doing such 
a good job.
    I would like to ask you just briefly you have outlined what 
you have done in this rather critical situation of a shortage 
of the flu vaccine in terms of trying to make sure that what is 
available is delivered to the most critical places. What role, 
if any, would the CDC play in a normal situation? Do you 
participate in those decisions in the absence of a shortage?
    Dr. Gerberding. Unlike childhood vaccines, the flu vaccine 
market is almost entirely in the private sector, so CDC only 
purchases a very small amount of the vaccine. Therefore, we 
have only a limited capacity to target or direct our supply to 
the appropriate individuals. In the last 5 years of vaccine 
production, every year vaccine doses have gone unused. So, in 
general, the private sector distribution has targeted to the 
people who are willing to take vaccine. This year, of course, 
we are expecting the profile to be very different.
    What we do is work with our expert advisory committee, the 
ACIP, to make the recommendations, the science-based 
recommendations about who will benefit from vaccine and how 
they should be vaccinated and when they should be vaccinated; 
and then the adult immunization mechanisms in the health care 
delivery system and in the public sector at the State and local 
level kick in to actually administer it.
    This is one of the things that we are looking at, is 
opportunities to improve our typical coverage of this vaccine, 
which has never been ideal. We would like to have a higher 
demand for flu vaccine and we would like to assure that 
everybody who needs a dose gets it.
    Mr. Deal. You mentioned something about the fact that it is 
fragile. What is the shelf life of the injectable vaccine? I 
assume it can't be frozen and preserved in that fashion. What 
is the shelf life for a vaccine?
    Dr. Gerberding. With this particular vaccine, the shelf 
life, assuming that the cold storage is maintained properly, is 
not very relevant because the virus changes every year. So the 
shelf life is longer than a year, but it doesn't help us very 
much because we need to make a brand new vaccine every single 
year; and that is part of the challenge that this particular 
infectious disease presents to us. That is part of why Dr. 
Fauci's comments about the need for modernizing the vaccine is 
so very critical. Imagine if we didn't have to get a flu shot 
every year. We would be in a very different situation than we 
are right now.
    Mr. Deal. There are obviously disagreements and opinions as 
to why we have so few manufacturers. Am I correct that one of 
the earlier statements, that there is no domestic U.S. 
manufacturer of an injectable vaccine for the flu? Is that 
correct, there is no American domestic producer?
    Dr. Gerberding. Aventis is producing vaccine in America, 
but their headquarters are in France. So the actual 
manufacturing does occur in the United States for the product 
that we are using.
    Mr. Deal. How long have we been in a situation of having 
only two major suppliers? How many years has that situation 
existed?
    Dr. Gerberding. Ten years ago we had five suppliers, and 
there has been a gradual attrition over that period of time 
until just the two injectable suppliers this year.
    Mr. Deal. You know, you would think normally the old adage 
of supply and demand would work in this environment. Obviously, 
the normal forces are not at work here. And I would assume that 
there are some truths to the allegations that the issues of 
liability play a factor in the fact that we have so few 
manufacturers available.
    Is it simply not a profitable business? And perhaps the 
second panel is more appropriate, perhaps, to ask that, and we 
will try to ask it there. But from your perspective, is it the 
lack of profitability that is limiting the supply?
    Dr. Gerberding. We have a few big problems. One is that we 
don't have a guaranteed market for the vaccine, and we have 
unpredictable demand. The second is the manufacturers need a 
fair price for the product that they are manufacturing; they 
need to have a business case. The third issue is that making 
this vaccine is risky, as Chiron discovered this year. This is 
a very difficult manufacturing process; you start out with a 
bio burden, and by the end you are supposed to end up with a 
product that is sterile enough for use, and it is fraught with 
opportunities for things to go wrong. While liability has 
played a role, this is the first year that we have recommended 
flu vaccine for children, which makes it eligible for the 
vaccine injury compensation program. In past years, because we 
hadn't recommended it for children, it was not on the list for 
liability protection. And even that doesn't completely remove 
all of the concerns about liability, it only covers the things 
that are in the table.
    So it is a complicated set of problems, and the bottom line 
is the manufacturers need to know that they can make a strong 
business case for producing this vaccine.
    Mr. Deal. Thank you, Mr. Chairman.
    Chairman Tom Davis. The gentleman's time has expired. Thank 
you.
    Mr. Van Hollen, you are recognized for 5 minutes.
    Mr. Van Hollen. Thank you, Mr. Chairman, and thank you for 
holding another hearing on this important issue. I want to 
thank all the witnesses as well.
    My first question is obviously this year we have to make 
the best of the situation that we have before us, and we have 
to relocate the existing vaccine to those people who are most 
vulnerable. My question is what is the administration's plan, 
if any, to prevent this kind of shortage from happening next 
year and into the future? That is one question.
    The second set of questions relates to the issues that Dr. 
Fauci mentioned, with respect to the avian flu and the 
pandemic, which is something obviously we need to be preparing 
ourselves for not just as a Nation, but as an international 
community. And my questions there are, No. 1, to what extent do 
we have cooperation from many of the Asian countries, where 
this flu is originating, that allows us to detect it early 
enough to prevent it from spiraling out of control, to the 
point where we can't isolate it and it becomes a pandemic? And 
what recommendations, if any, do you have to make sure that we 
have an early warning system in place, on the ground? I know a 
number of people at CDC have been working on this and have been 
frustrated by their lack, for example, of cooperation from the 
Chinese. So that is one set of issues, the early detection.
    The second set of issues relate to a vaccine, and whether 
or not we are moving ahead as quickly as possible in coming up 
with a vaccine; whether mutations in the avian influenza would 
defeat the work that we are doing; and even assuming that we 
are on the right track with respect to manufacturing a vaccine, 
what are we doing in terms of the production capability, 
because we haven't prepared adequately to have a supply of flu 
vaccine where we know we have certain strains of flu, and at 
what time would we be prepared from the vaccine production 
point of view to confront an avian influenza pandemic?
    I know that is a lot of questions, but these are obviously 
big issues.
    Dr. Gerberding. I will start, and then we will start the 
baton down the table.
    In terms of the scenario planning, worst case scenario 
planning for next year, our Team B is working on this from a 
CDC perspective, and the Secretary has also called a special 
task force at the Department to really dig in to what can we do 
now and what can we do soon to obviate this situation.
    One major thing is to work with the existing manufacturers 
to see what can be done to support the largest possible 
production. And Dr. Crawford has already mentioned that Aventis 
and MedImmune are looking at ways that they can increase their 
production next year. Getting Chiron back online is clearly a 
high priority for everyone. We may have vaccine available from 
international manufacturers on an IND, an investigational drug 
status, and that can allow us to get more doses in, and we are 
working out the mechanisms for that as we speak. And also we 
will certainly focus on prioritization early in the season and 
make sure that we get the targeting when the first dose of 
vaccine is available, not waiting until more than half of it 
has been distributed, as we did this year.
    So there are some short-term things we can do, but we 
really look forward to working with the administration and with 
Congress to figure out if there are additional incentives to 
help expand the market and get the production up to where we 
need it to be.
    Dr. Fauci. Let me just extend that, Mr. Van Hollen, and 
talk about what we are actually doing right now in preparation 
for pandemic flu; and I alluded to it in my opening statement, 
but let me just summarize it briefly for you.
    We know now that there are a couple of circulating avian 
influenza viruses. The one that is causing us the most concern 
is H5N1. Another is H9N2, H7N7, a few others over the years. 
But let us just focus, for the purpose of an example, on H5N1. 
What we are doing now is we are assuming--and it may not be 
correct, but the assumption I think is an appropriate thing to 
do, because it will set into motion the machinery that will 
prepare us if we have to switch in midstream. So we are 
assuming that the H5N1 is something that we need to worry 
about, so we are developing two things in parallel. The first 
are pilot lots. We have isolated it by that rapid method of 
reverse genetics, and we are in the process of making pilot 
lots in small amounts, 8,000 to 10,000, from two companies; and 
we are doing that in order to put them into the clinical trial 
to determine things: one, is it safe, because we have not 
vaccinated people with H5N1; we assume it will be because the 
methodologies essentially stay the same; and, second, how much 
do you need to inject to get an adequate immune response, is it 
going to be one dose, two doses, or more?
    In parallel, in the assumption that we will have an H5N1 
problem, we have contracted with Aventis-Pasteur to get us 2 
million commercial lot doses; and that is critically important 
because the process that gets you the 8,000 to 10,000 doses is 
not something that you can scale up to 10, 20, 30, 40 million, 
but the 2 million of the commercial lot doses will set the 
process in motion that if indeed we do need to scale up, it is 
much easier to scale up.
    Now, on the scenario that perhaps the virus will change so 
much that the vaccine that we are making is not specifically 
going to target that virus that now is spreading efficiently 
human-to-human, the very process of scaling up with an avian 
virus vaccine is going to put us in good stead to go and meet 
that challenge.
    So we are already doing it now.
    Mr. Shays [presiding]. The gentleman's time has expired.
    Your mic is not on.
    Mr. Van Hollen. The issue of international cooperation. I 
know it was a big question and a lot to cover.
    Mr. Shays. If there could be a quick answer, I would be 
happy to entertain it, but not a long one.
    Dr. Gerberding. I can give you a quick answer.
    We have a system called the global detection network, and 
we are investing in laboratories around the world and scaling 
up our ability to get those isolates and get them to CDC for 
sequencing and onto the seed vaccine development process. We 
are also sequencing all strains that are coming in.
    Mr. Shays. Technically, I am next in line, but I notice we 
have a number of colleagues in the democratic side of the isle, 
so I will defer my questions and go to you, Ms. Norton. I think 
you are next.
    Ms. Norton. Thank you very much, Mr. Shays.
    Two questions. One has to do with the kinds of issues local 
jurisdictions are going through now to think of what they can 
do now. I asked the District of Columbia Department of Public 
Health to use its authority to issue its own regulations in an 
effort to avoid panic and because, as you know, most of the 
vaccine is in private hands and does not go to public health 
authorities. They did so. As you know, every State in the 
United States--this would also be the case in most cities--has 
the authority, that you apparently don't have, to proceed on 
its own to avoid a public health crisis. I want to know if you 
have asked public health authorities to use their own local 
authority to issue such regulations as they deem suitable, to 
advise them that would be an appropriate thing to do in light 
of what you know about our supply and the delays that are 
already being experienced by local jurisdictions getting 
whatever supply is available.
    Have you asked those who do have authority to use their 
authority? For example, a private physician who has regular 
patients may well be under some very special pressure to give 
the vaccine to people who are not in high-priority groups. It 
would be much easier for that physician to say regulations 
indicate I can't do it then to say that the CDC, who has no 
authority over me, said I can't do it. So I want to know, since 
you didn't have the authority, since you left us all out here, 
whether you have at least asked local public health authorities 
who do have the authority to use their authority.
    Dr. Gerberding. We have indeed recognized the statutory 
authority of the State health officers, as well as the local 
health officials, to make decisions to protect the health of 
people in their jurisdiction, and that is exactly why we have 
been able to provide them with the detailed information about 
their high-risk populations and the vaccines that are there.
    Ms. Norton. I am sorry, I didn't get the answer to my 
question. Has the CDC specifically advised local authorities 
that it might be beneficial--not saying that you should do it, 
but that it might be beneficial--for them to use their own 
local authority to handle this public health crisis?
    Dr. Gerberding. Yes.
    Ms. Norton. Would you indicate to me whether that has been 
in a written directive? Could I get a copy of it? How was that 
advice given? What have you advised them to do specifically?
    Dr. Gerberding. The State health officials have worked with 
CDC to develop the criteria for vaccine allocation; they are 
receiving the----
    Ms. Norton. See, you are not answering my question, and I 
have another question.
    Dr. Gerberding. I am sorry.
    Ms. Norton. I know you have been working with them to 
develop the criteria. I have asked you something else; it has 
to do with their legal authority to issue their own regulations 
so that people know that you are not supposed to give these 
doses outside of the priority groups. Now, I am not talking 
about developing and whatever, I am saying very directly have 
you said you have authority? We are not sure what you would 
want to do with that authority, but when you have a public 
health crisis, you should at least consider using that 
authority if you think that authority would help alleviate the 
crisis. I have given you the kind of circumstance I am talking 
about, and I am asking a direct question and I want a yes or no 
answer.
    Dr. Gerberding. Yes.
    Ms. Norton. Or if not a no--and if a yes answer, then my 
followup question was what did you say? Give me a copy of it. I 
don't know that my authority has received anything; at least 
they have not reported any such thing to me.
    Dr. Gerberding. We would be happy to provide you that 
information.
    Ms. Norton. Well, what did you say? I am asking you a 
question here.
    Dr. Gerberding. We said we encourage you to exercise your 
statutory authority to make decisions about vaccine allocation 
for your district. And we have also provided them with 
information from our public health law program, which gives 
them the legal guidance from the statutes that are applicable 
to them.
    Ms. Norton. Well, that is certainly at variance with what I 
was told. Therefore, I am asking, by the end of the day, would 
you provide me with a copy of that? We were told that you all 
did not consider it appropriate to do so. And I am very pleased 
if you have reconsidered.
    Dr. Gerberding. We consider it appropriate for them to use 
their authorities as they see fit.
    Ms. Norton. Well, obviously as they see fit. I am not 
asking you to demand what you can't demand. I would like to 
have a copy before the end of the day so I can make sure my own 
public health authority knows that has been your 
recommendation.
    Mr. Shays. Time has expired and we need to move.
    Between Mrs. Maloney and Mr. Sanders, have you worked out 
who goes next?
    Mr. Sanders. She won.
    Mr. Shays. OK.
    Mrs. Maloney, you are next.
    Mrs. Maloney. Thank you.
    First of all, I would like to thank the witnesses for your 
testimony.
    Just to underscore how critical this challenge is, two flu 
outbreaks in New York City alone have led to the death of four 
people and 13 hospitalizations in the past few weeks. Our 
mayor--and I congratulate him for this action--has reached out 
to purchase, along with New Mexico and Illinois, 200,000 doses 
of flu vaccine from European suppliers. And while this is not 
enough to cover everyone in New York City, it would cover our 
high-risk residents and it would supply roughly 570,000 doses 
of vaccine.
    I wrote a letter, along with other members of the New York 
delegation, in a bipartisan way, to Commissioner Crawford, 
asking FDA to expedite the process for the review for these 
doses, and I really want to know where that is. We need to get 
this vaccine. We have wholesalers that are available in Europe 
that will sell to us. How soon can we get it approved?
    Mr. Crawford. We are going through a process which 
involves, first of all, getting the lot numbers of the vaccine, 
which the Governors and the mayor have kindly provided. The 
company that manufactures the vaccine has authenticated those 
lot numbers, they are in fact legitimate production from their 
facilities. And what we are now doing is getting what is called 
the pedigree, and that is where the vaccine has been, where it 
has been shipped to and whether or not it has been kept 
refrigerated. We should have all that information in the next 
few days and we should be able to make a determination of 
whether or not it is suitable very shortly after that. I can't 
give you a specific date, but we have up to 750,000 doses 
nationwide that we are dealing with, including the 200,000 for 
New York City, and we should be able to do all of them at the 
same time.
    Mrs. Maloney. I would like to ask CDC what the 
justification is that you have for not buying the many doses of 
vaccine that is available from wholesalers in Europe right now? 
That vaccine is available, unlike the vaccine from 
manufacturers which may not be available until January, which 
may be too late for many high-risk patients.
    Dr. Gerberding. I think the answer is the same as the 
answer that Dr. Crawford provided. We can't purchase vaccine 
until it has been verified that it meets the importation 
criteria and has been handled in a way. The vaccine in question 
has already left the manufacturer, so it is out in the 
wholesale arena, and we are not allowed to purchase that until 
we know that it has been properly stored and maintained, and 
that its safety can be guaranteed.
    Mrs. Maloney. So you are reviewing wholesale production and 
sale at this point, CDC?
    Dr. Gerberding. We are working with FDA to do everything we 
can to get international vaccine sources into this country 
safely and quickly.
    Mrs. Maloney. I would like to go back to the timing of the 
review. The Wall Street Journal this week quoted John Taylor, 
FDA's Associate Commissioner for Regulatory Affairs, and he 
said that in 2003 FDA's Liverpool inspection showed systemic 
quality control issues at the Chiron facility. And yet, even 
though FDA knew that they had these problems, you never 
returned to the plant to verify that things had been rectified 
and that the vaccine would meet minimum safety standards, and 
you relied on Chiron's assurances that they had corrected it. 
And even after Chiron announced on August 27th that it had 
identified contamination in some of the flu vaccine, you still 
did not schedule an inspection.
    So my question is if FDA had responded quickly to the 
August 27th announcement, could we have avoided the severity of 
the problem, if you had gone in there early and worked with 
them and corrected it, instead of waiting? And then, second, if 
you had alerted Aventis, the second company that is verified to 
produce the vaccine, of the problem, could FDA have redirected 
their vaccine to the high-risk individuals? By the time the 
announcement came to Aventis that we had a challenge and that 
there was a shortage, they had already shipped almost 60 
percent of the vaccine; but it had not been shipped before 
August 27th.
    So, in short, I think that the American people deserve more 
from FDA in their management in a proactive way of making sure 
that the vaccine was there and checking on it in advance. But 
from this timetable that we have, you didn't even go for an 
inspection, you didn't followup, you didn't alert Aventis. And 
then there comes another question: Why do we only have two 
companies with this vaccine? I shudder to think if it had been 
small pox vaccine and we had a breakout of some terrible 
disease.
    Chairman Tom Davis [presiding]. The gentlelady's time has 
expired.
    Dr. Crawford.
    Mr. Crawford. Actually, we don't control how many companies 
want to enter the U.S. market. There is not much we can do 
about that. We wish we had the 20 manufacturers we formerly 
did.
    We did followup on what we found in 2003, and, actually, 
the vaccine for that year, which was the subject of that 
inspection, turned out to be OK, and it was used. Then a new 
batch of vaccine was prepared for this year, during this year. 
It was too late in August for them to start over again, because 
it takes from roughly January or February until it finally 
comes offline for it to be produced. But we have, once we got 
the information, gone to other manufacturers, and we have been 
able to find millions of more doses, and we are still looking 
with the cooperation of Governors in States and elsewhere to 
complete as large a quantity of vaccine as we possibly can.
    Chairman Tom Davis. OK, Mr. Sanders, you are recognized for 
5 minutes.
    Mr. Sanders. Thank you very much. Mr. Chairman, the issue 
that I want to pursue is a very simple one, and that is the 
Federal Government and numerous States, including the State of 
Vermont--Dr. Crawford, you and I chatted about this very 
briefly, and I discussed it with Secretary Thompson as well 
very briefly.
    Mr. Crawford. Yes.
    Mr. Sanders. The Feds and the States have identified over 5 
million flu vaccine doses that are available in Canada and in 
Europe. And we are not talking about obviously fly by-night 
companies, we are talking about Aventis, we are talking about 
Glaxo, we are talking about ID Biomedical in Canada. And to the 
best of my knowledge, these flu vaccines have already been used 
and distributed in Europe and in Canada, like a new product.
    My question is, given the crisis that we face--Mrs. Maloney 
mentioned that people in New York are already dying; the fear 
is that there could be a serious outbreak of flu--why does it 
take so long? I mean, you have reputable companies in countries 
which are well regulated, Europe and Canada. You have a product 
which has already been distributed to the people in those 
countries. Why, last month, did you not send a host of 
inspectors there to make the check of the plan, of the dosages, 
and get them out to the people? Dr. Crawford.
    Mr. Crawford. It won't take very much longer. The process 
is basically threefold. These vaccines, although used in other 
countries, are not approved for use in the United States, so we 
have to speed up that process. The way we do it is we contacted 
these three manufacturers, got their production records, and 
also what is called their master file of how they produce the 
vaccine.
    Mr. Sanders. That is the first day. What did you do on the 
second day?
    Mr. Crawford. The second thing is we sent inspectors, and 
they have now all completed their inspection of these 
facilities. They will file their reports with me. The first 
one----
    Mr. Sanders. I don't mean to be rude. We don't have a lot 
of time. I understand all that. That is legitimate. That is 2 
days' worth of work. Why has it taken it a month?
    Mr. Crawford. No, it is about a month worth of work.
    Mr. Sanders. Why?
    Mr. Crawford. Because you have to get these master files. 
First you have to get the cooperation.
    Mr. Sanders. Yeah, we have things like email; you have 
planes to get you over there.
    Mr. Crawford. No, no, no. Let me explain. You have to get 
the cooperation of the company; they have first got to decide 
that they want to give it to us. That took a lot of stuff.
    Mr. Sanders. We have talked in Vermont to some of these 
companies; they want to sell their product. You are not giving 
me a good--briefly, why does it take----
    Mr. Crawford. And then, finally, we have to give them 
approval to bring it in under what is called an investigational 
new drug application.
    Mr. Sanders. All right, I will give you 3 days. This does 
not take a month. You have people in my State who are very 
concerned. All over this country they are concerned.
    Mr. Crawford. I can assure you we will get it as quickly as 
we possibly can.
    Mr. Sanders. But you see, I want to raise a question, and 
tell me that maybe I am being overly concerned here. Some of 
us, including the majority in the House, believe in 
prescription drug re-importation. We think that it is insane 
that Americans have to pay two, three, five times more for the 
same product that our friends in Canada and Europe do. If we 
had prescription drug re-importation, those products would be 
in this country a month ago. I hope very much that, given the 
administration's opposition to re-importation, you are not 
making this more difficult than it should be. Could you comment 
on that?
    Mr. Crawford. If the question is are we making it more 
difficult than it should be, the answer is no.
    Mr. Sanders. But you still haven't given me a reason why, 
with all of the resources at the FDA's command, why we have not 
approved those medicines and why we have not distributed them.
    Mr. Crawford. Well, I told you we are doing it as quickly 
as we can, and that it is a matter of days away before we make 
a determination about these particular products.
    Mr. Sanders. Then how long does it take you to make a 
determination?
    Mr. Crawford. Well, it depends on what the data is we get, 
how we evaluate it, whether or not we can----
    Mr. Sanders. All right, explain to the people who are 
watching this. You have a product that has been widely 
distributed in Europe and Canada; you are inspecting these 
facilities of major drug companies, above-board, reputable. How 
long is the determination going to take and why is there so 
much question?
    Mr. Crawford. It is variable. It is normally about a 
month's time before we reach an evaluation, because we have to 
get all the records, we have to visit the plant, we have to 
make a determination. We have to be sure that the vaccine 
brought in won't injure the American people.
    Mr. Sanders. Well, of course.
    Mr. Crawford. By law, it has to be done on an 
investigational new drug application, and that is the way it 
is.
    Mr. Sanders. How long is this determination process going 
to take?
    Mr. Crawford. It is just about over.
    Mr. Sanders. So you think you can make a decision within a 
week?
    Mr. Crawford. I wouldn't be held to a week, but I think it 
could be quicker than that in one case.
    Mr. Sanders. All right, now, my question is--and I know you 
and I chatted about this----
    Chairman Tom Davis. The gentleman's time has expired.
    Mr. Sanders. Thirty seconds.
    Chairman Tom Davis. If he can state his question quickly.
    Mr. Sanders. Thirty seconds.
    Chairman Tom Davis. State the question.
    Mr. Sanders. All right.
    Are you going to allow States and cities to go forward or 
are these European and Canadian drugs going to come into the 
United States and you guys will distribute it?
    Mr. Crawford. We have been working with the States. Some of 
them want to bring them in directly, and they already have made 
contacts and so forth, so we will work with them on an 
individual case-by-case basis.
    Mr. Sanders. Thank you very much.
    Chairman Tom Davis. If I could just followup. I think you 
testified earlier you believe that some of these drugs from 
foreign manufacturers are going to be certified and be able to 
come in the country.
    Mr. Crawford. Some of these vaccines, yes.
    Chairman Tom Davis. Vaccines, right. Thank you very much.
    Who is next over here? Mr. Tierney, have you asked 
questions yet? I think you were here. Would you like 5 minutes? 
We still have a couple questioners here.
    Mr. Tierney. Thank you, Mr. Chairman.
    Dr. Crawford, let me ask you a set of questions here about 
Chiron's plant in Liverpool, England. It was subject to an 
inspection both by the FDA and by the British counterpart, the 
MHRA. Now, you have repeatedly stated that both agencies 
responded to the August 2004 reports of contamination in a 
similar fashion. I think at the committee's October 8th hearing 
you said that both FDA and the MHRA performed inspections that 
were about the same thing. In a later press conference with 
Secretary Thompson, you stated, ``We would have, 5 hours later, 
made the same conclusions as the British; we were in synchrony 
with them.''
    So I want to just ask about some of the differences between 
the British and the U.S. approach to that August Chiron 
announcement of contamination. When the initial contamination 
was reported, it was the United States, and not the U.K., that 
immediately lost several million doses. It was the United 
States, and not the U.K., that was depending on Chiron for 
about half of its vaccine supply. Yet, it was the British, who 
had, I think, much less at stake with this vaccine facility 
than the United States, that sent an inspection team to the 
facility within a few weeks of the August 25 announcement, and 
the British who also sent a second inspection team to the plant 
at the end of September. Why didn't our FDA respond forcefully 
to the August contamination by sending inspectors to the plant, 
as did the British?
    Mr. Crawford. We had inspectors in the plant on August 25, 
and----
    Mr. Tierney. But if I could just interrupt for a minute. 
You had somebody there by coincidence, who was inspecting an 
entirely separate and discreet issue?
    Mr. Crawford. Yes. They were getting up a different line. 
But they were there and they were alerted by Chiron. They went 
over some records and made some recommendations. Subsequent to 
that, we, along with the CDC arranged for a series of calls, at 
least once a week, to find out how they were doing with their 
bio burden in that plant. Things appeared to be going well up 
until the final reports, which came to the British and also 
came to us in virtually the same amount of time. They scheduled 
an inspection, as did we.
    Mr. Tierney. But your inspectors over there did not do the 
same kind of thorough inspection that the British team did when 
it went in.
    Mr. Crawford. I can't speak for the British.
    Mr. Tierney. Well, you can speak for yours, and you know 
that they did a more thorough examination. Your person did a 
somewhat cursory look at some records, but didn't actually have 
a full-blown inspection that you ordinarily would have had in 
response to this type of an emergency.
    Mr. Crawford. Well, we would have come to the same 
conclusion based on our lot release program; we would not have 
allowed the product into circulation. And I made that decision 
following an inspection that took place onsite.
    Mr. Tierney. Let me look at another point of difference on 
this. The British received a draft of the Chiron inspection 
sometime in mid-September, before even their second inspection. 
Yet, on the other hand, we never received the report until the 
British actually shut down the facility, sometime in October. 
How do you explain that the British got that inspection report 
so much more quickly than the FDA did?
    Mr. Crawford. We were getting a weekly update from the 
company, and we were scheduled for the final report on October 
5. The Chiron facility was under instruction from the U.S. 
Government to quarantine the product, which they did, so none 
of it could be released, starting on August 25. So I believe we 
had control. In fact, we did have control, because none of it 
got out.
    Mr. Tierney. But there was a serious gap, and the British 
seemed to be on top of this thing. They are getting a report 
before their second inspection; we get it weeks later. I mean, 
it would seem to me like they were a lot more aggressive, even 
though they had less at stake than we did, and I am wondering 
why it was.
    Mr. Crawford. Well, we got a report every week, but the 
final report was scheduled for October 5 for both governments, 
because that was the end of the run. You can't get a final 
report until they finish.
    Mr. Tierney. Well, is it fair to say, though, that the FDA 
was caught a little flat-footed about the British closing of 
that plant, that the FDA didn't even know it was going to 
happen until after the fact?
    Mr. Crawford. Well, by law, they could not communicate with 
us, and we did not know that they were going to do that on 
October 5, no, that is correct.
    Mr. Tierney. The law that you are mentioning is a British 
law, right?
    Mr. Crawford. It is.
    Mr. Tierney. But that can be waived. We know that because 
it was waived after the fact.
    Mr. Crawford. Well, the British issued a press statement 
about 3 days after the October 5 determination, in which they 
said they were constrained by their law from communicating to 
us or the other 98 countries.
    Mr. Tierney. But it could be waived, and it was waived 
after the fact.
    Mr. Crawford. Well, now we are able to work together 
because of the company's willingness to share it.
    Mr. Tierney. So my question, I guess, is this. It is a very 
important source of supply for us.
    Mr. Crawford. Yes.
    Mr. Tierney. We had a lot at stake. Why would we rely 
simply on the company's analysis or report of facts, or 
whatever? Why hadn't we asked for a waiver from the company, 
which tells us now that they would have certainly cooperated? 
Why didn't we ask for information from more than one source as 
this thing was developing? Why not say to the company ahead of 
time we need a waiver; we want to not only find out from you 
what is going on, we want to talk to our British counterparts 
and we want to have our own inspections, we want to stay on top 
of this thing because we have so much at stake?
    Mr. Crawford. We were getting all the information we were 
asking for; there was no need to do that.
    Chairman Tom Davis. I thank the gentleman.
    At this time, Mr. Cummings, you have 5 minutes.
    Mr. Cummings. Thank you very much, Mr. Chairman. I really 
appreciate it.
    Let me just ask you this. I just want to make sure we are 
clear. Did FDA make any mistakes?
    Mr. Crawford. FDA is not perfect. We followed our situation 
here as we traditionally do, and at the end of the time we got 
the final report on schedule, October 5. We sent an inspection 
team over, and then we had to make the determination that this 
vaccine was not usable; therefore, it never got the U.S. 
population.
    Mr. Cummings. So you are saying that made----
    Mr. Crawford. So, therefore, it was a success.
    Mr. Cummings. Whoa, whoa, whoa. Excuse me. Are you telling 
us that FDA made no mistakes?
    Mr. Crawford. In this vaccine thing?
    Mr. Cummings. Yes.
    Mr. Crawford. No. It never got on the market.
    Mr. Cummings. I can't hear you.
    Mr. Crawford. It never got on the market.
    Mr. Cummings. FDA rejected the recommendations of the 
inspectors and decided not to pursue official enforcement 
action against Chiron in June 2003. As a result, the problems 
at the facility were not public, and told investors that the 
inspection showed the plant was really ``in very good shape.'' 
Was that a mistake?
    Mr. Crawford. On the 2003 vaccine production, we asked them 
to make some corrections; they did. That vaccine was fine.
    Mr. Cummings. So you are saying you didn't make a mistake 
there.
    Mr. Crawford. No, because the vaccine was fine.
    Mr. Cummings. FDA failed to reinspect the facility to find 
out if any of the problems were corrected or the company's plan 
was being implemented as proposed. Yes or no, was that a 
mistake?
    Mr. Crawford. We reinspected by taking information from 
them all along, so, no, we did not violate our procedures.
    Mr. Cummings. So again you didn't make a mistake.
    FDA declined to meet with Chiron after it requested a 
meeting ``as soon as possible'' to discuss plans to respond to 
the June 2003 inspection. This meeting could have helped the 
company understand the severity of the problems. Was that a 
mistake?
    Mr. Crawford. We met with Chiron.
    Mr. Cummings. FDA delayed sending a copy of the full 
inspection report to Chiron by 9 months, from September 2003 to 
June 2004. By the time the report arrived, the time to 
implement some of the recommendations mentioned had already 
passed. You didn't make a mistake again?
    Mr. Crawford. That was a mistake.
    Mr. Cummings. Upon hearing of the actual contamination of 
vaccine this summer, FDA neither conducted a prompt inspection 
nor reviewed the company's records. As a result, FDA was caught 
completely by surprise by the British enforcement action. Was 
that a mistake?
    Mr. Crawford. We did review the company's records.
    Mr. Cummings. So no mistake there?
    Mr. Crawford. No.
    Mr. Cummings. You know, we have a major problem here. We 
have people in my district who cannot get these flu vaccines 
that are begging for them; seniors, many of them standing in 
long lines. But FDA made no mistake. The reason why I asked you 
these questions is that we cannot deal with a problem unless we 
accept the fact that we have one, that we made mistakes.
    Mr. Crawford. We are working to get more vaccine.
    Mr. Cummings. So FDA made no mistakes.
    Mr. Crawford. Look----
    Mr. Cummings. Yes or no?
    Mr. Crawford. The vaccine was contaminated in the final 
fill. There was no way to know that until October 5, when the 
final report came through. You can't do that until it gets 
finished. We didn't make a mistake because we condemned the 
vaccine; it did not go into U.S. circulation. That was not a 
mistake. I would do it again.
    Mr. Cummings. So you are saying to the people of the United 
States, as they watch you on C-SPAN, that you all made no 
mistakes.
    Mr. Crawford. As I said, we condemned the vaccine----
    Mr. Cummings. Yes or no?
    Mr. Crawford [continuing]. And it did not get here. We make 
mistakes, but we followed the procedures----
    Mr. Cummings. No, I am talking about with regard to this.
    Mr. Crawford [continuing]. And we took the right action.
    Mr. Cummings. No mistakes.
    Mr. Crawford. The vaccine didn't get into circulation.
    Mr. Cummings. Fine. Apparently, you don't want to answer my 
question. I asked you a question. I said did you make any 
mistakes. Did FDA make any mistakes with regard to this?
    Mr. Crawford. I already----
    Mr. Cummings. Sir, let me tell you something. I have to go 
back to my district and I have to explain to them why we have a 
Federal agency that, to me, made some mistakes, but refuses to 
admit it. At least just say no.
    Mr. Crawford. I already told you we made a mistake.
    Mr. Cummings. No.
    Mr. Crawford. We made a mistake. I can tell you no.
    Mr. Cummings. You did? What were the mistakes that you 
made, so that we can correct them?
    Mr. Crawford. We didn't get the report back to them on time 
in 2003; we were late by a few months, and our procedures call 
for it to get there in time. We have corrected that procedure, 
but that was a mistake.
    Mr. Cummings. Let me ask you one last question. During the 
campaign season I noticed one interesting thing that happened. 
Every time this flu vaccine came up in my district, my opponent 
jumped up and said that there are not more companies producing 
it because they are afraid of liability. I heard that over and 
over again. And then I read in the Washington Post that one of 
the main reasons why they didn't produce it is because it has a 
short life span, and they were afraid of spoilage and losing 
money.
    Is that true? Which one is true?
    Mr. Crawford. I don't know why they don't enter the U.S. 
market. I don't know about liability; I think that could be a 
factor. But they have to remake the vaccine every year, and I 
am sure that is a factor.
    Mr. Cummings. But you are saying you don't know why they 
don't enter the U.S. market?
    Chairman Tom Davis. The gentleman's time has expired. Thank 
you.
    Mr. Cummings. He said no. I just want to make sure that is 
on the record. He doesn't know why they don't enter the U.S. 
market.
    Chairman Tom Davis. The gentleman's time has expired. And I 
don't think it is productive for Members to be screaming at 
witnesses that are here on their own volition. We all have 
questions of this.
    Mr. Cummings. Mr. Chairman.
    Chairman Tom Davis. Now I am going to take my 5 minutes.
    The FDA basically followed your standard practices in 
waiting for the failure investigation report, right?
    Mr. Crawford. Yes.
    Chairman Tom Davis. Before proceeding to inspect the 
Chiron. And Chiron never did produce the report to you until 
after its license was suspended by the MHRA on October 4th.
    Mr. Crawford. That is correct.
    Chairman Tom Davis. The FDA and MHRA have both told the 
committee that Chiron had no reason to expect its license would 
be suspended until it completed its failure investigation 
report that was provided in draft to MHRA on September 24th.
    Mr. Crawford. That is correct.
    Chairman Tom Davis. Once Chiron's license was suspended, on 
October 4th, U.S. access to the report and investigation by 
U.S. authorities was a moot point, although further inspection 
confirmed the judgment of MHRA, is that correct?
    Mr. Crawford. Yes.
    Chairman Tom Davis. The problems at Chiron are not 
longstanding ones that FDA should have recognized long ago; 
Chiron's license was suspended for systematic problems in the 
facility, such as lack of oversight and execution, but not the 
specific contamination or other issues addressed in 2003, as 
you have stated, and as we have gone through and I think the 
reports are clear, is that correct?
    Mr. Crawford. Yes, that is correct.
    Chairman Tom Davis. The FDA didn't reject the initial 
recommendation of the team biologics to refer official action 
on the June 2003 issues?
    Mr Crawford. No, we did not.
    Chairman Tom Davis. And further discussions resulted in 
full agreement by all of those involved that voluntary action 
was appropriate, isn't that correct?
    Mr. Crawford. That is correct.
    Chairman Tom Davis. Was there any dissension in that?
    Mr. Crawford. No. The team biologics has a very good peer 
review of the process, and then they reach a consensus.
    Chairman Tom Davis. And there is no evidence that anyone 
involved in the process disagreed with the final decision, is 
there?
    Mr. Crawford. No, there is not.
    Chairman Tom Davis. OK. I appreciate it.
    Mr. Mica, did you want to ask.
    Mr. Mica. Thank you.
    Chairman Tom Davis. Well, I am in my 5 minutes. Mr. Shays 
will get 5 minutes.
    Mr. Mica. You know, you have been hammered. You still 
haven't understood this, because you are the bad guy, and we 
have to prove you bad.
    Mr. Crawford. I am beginning to get the picture, though.
    Mr. Mica. OK. But this 2003 mistake that you admitted to, 
in not responding in time, now the batch of vaccine, when was 
that produced that proved to be bad, was that in 2003?
    Mr. Crawford. That was with reference to the 2003 vaccine, 
which proved to be good, actually.
    Mr. Mica. OK. So the 2003 mistake that you admitted to had 
nothing to do with the batch in 2004.
    Mr. Crawford. Nothing, absolutely nothing.
    Mr. Mica. OK. Well, but see, you are bad, and you have to 
pay, because we don't have the drug companies around; we have 
less people. Pretty soon you are not going to have anybody to 
send warnings to. What the hell are you guys going to do over 
there?
    Mr. Crawford. It will be a lonely time for us.
    Mr. Mica. But it is kind of sad that it has evolved to 
this.
    I think Mr. Van Hollen had a very good point, though. He is 
gone now, but we do have lots of seniors that want that. We 
should be manufacturing this in the United States. And Mr. 
Waxman is right. Even though he attacked me personally, I have 
to say he is right. We don't have a liability problem now 
because we have just about run out of people to sue. So he is 
right on one account. But you have to adjust liability.
    Dr. Gerberding, she went down all of the problems: you have 
a short shelf life; you don't have a guaranteed market, so 
people don't produce it; you have regulations that impede the 
production in the United States; you have a guaranteed purchase 
program of childhood vaccines that actually pays less than I 
think the cost, and that has also inhibited the manufacturing 
in the United States. So it is a host of these issues. And 
until Congress addresses these issues and changes some of the 
law regulations that we have in place, in fact, we won't be 
producing these vaccines in the United States.
    Just a quick question, doctor. Wouldn't it be a lot easier 
for you to keep tabs on these manufacturers if they were in the 
United States, rather than far-flung around the globe?
    Mr. Crawford. It certainly would be easier to get to them. 
We don't have any overseas locations at FDA, we have to 
dispatch our teams of inspectors from here.
    Mr. Mica. OK.
    And guaranteed purchases, Dr. Gerberding, that is also 
something that needs to be addressed?
    Dr. Gerberding. I don't have the right formula for a 
solution, but everything is on the table right now, and in 
order to guarantee a market, that would be one strategy that we 
could look at to ensure the manufacturers that their vaccine 
would be purchased.
    Mr. Mica. And the government now buys 60 percent of the 
pediatric vaccines. Is that still the case? That is the 
information that I have.
    Dr. Gerberding. I believe that is correct, but I can get 
you the exact percentage.
    Mr. Mica. Thank you.
    Chairman Tom Davis. OK, we are just about up. Thank you.
    Let me just add. We had an old saying when I used to 
practice law, that if you have the facts, you pound the facts; 
if you have the law, you pound the law; and if you have 
neither, you pound the table. I think in this it is pretty 
clear from the record that you have set out earlier today that 
you followed the appropriate procedures, you followed the 
appropriate protocols. We may need to tweak those protocols a 
little bit. I mean, we need to make sure what happened this 
year should never happen again.
    Mr. Crawford. Absolutely.
    Chairman Tom Davis. And I think we need to have that dialog 
of how best to prevent it. It seems to me that the most basic 
thing we can do is make sure there are more suppliers. As Mr. 
Sanders and others have pointed out, there are foreign 
suppliers who haven't asked for U.S. recognition, but we need 
to get them into our markets and have you out there inspecting 
them. And if we do that, at least we have some guarantee of 
alternate sources of supply. There are other issues we need to 
look at, but we will talk about that.
    Mr. Shays has 5 minutes a little later, and we will talk 
about that.
    Ms. Watson has not had her 5 minutes yet. Diane has been 
patiently waiting over there.
    Ms. Watson, you are recognized for 5 minutes.
    Ms. Watson. Thank you, Mr. Chairman, very much.
    And thank you, doctor, for being willing to sit on the hot 
seat. We are not going to talk about that or good guys. I just 
would hope that you would clarify some things for us. So I am 
going to raise two issues, and then you can just address them 
together.
    The first thing, I understand that Chiron is based in my 
own State of California, yet we manufacture in the United 
Kingdom for the U.S. market, and I am wondering why we could 
not start building a plant in California, why Chiron could not. 
That ought to be something that we ought to be talking to them 
about. And Aventis, I understand, is a French firm, but they 
manufacture in Pennsylvania.
    So is it possible to produce the supplies that we are going 
to need? And I will imagine our need will be greater in 2005 in 
California and Pennsylvania. You can answer that after I finish 
with my next comment.
    The next comment is that I understand in June 2003, after 
the inspection, the company asked to meet with the FDA. Is it 
true or not that the FDA refused to meet with Chiron to discuss 
its problems? So can you clarify what is going on? It is 
essential, if they are one of two producers for the U.S. 
market, that we be communicating with each other.
    So can you clarify those issues for me, please?
    Mr. Crawford. Yes. We did meet with them. I have actually 
met with them myself, so that is not correct.
    Ms. Watson. Can you give me a time?
    Mr. Crawford. We can supply that for the record, yes.
    Ms. Watson. Has it been after 2003?
    Mr. Crawford. Yes. And with respect to the fact that there 
are no vaccine production facilities owned by American firms in 
the United States, I believe Chiron is going to testify on the 
next panel, and you may wish to ask them. I think what guides 
them to seek facilities elsewhere is because the facility is 
available. In other words, I believe in mid-2003 Chiron 
actually acquired this plant from another company, and they 
didn't even own it until that point. The facility that is in 
Pennsylvania I also believe was previously owned by another 
corporation. So I think even though a French company 
manufactures there is because the plant was present.
    Now, what do we do about getting plants built in the United 
States? That is beyond my authority or expertise, but I would 
think what we are doing will help some, and that is we are 
engaging the CEOs of all the companies in the world that 
produce flu vaccine, and we are telling them that FDA has a 
commitment to help them get up-line and get moving to either 
enter the U.S. market or to build a facility in the United 
States. We will help them with whatever we can do. We can't 
force them to do that, though, and that is why I responded as I 
did to the last questioner.
    Ms. Watson. I think that as the Federal Drug 
Administration, and with the threat of maybe a biological war, 
a threat of biological vaccines coming in that are very toxic, 
I would think that the FDA would want to suggest that we have 
legislation requiring that we develop our own plants under the 
regulations that you already have. I see the need as being 
tremendous, with the threat that is facing the United States 
and the rest of the world from the terrorists. We need to be 
ready. I would think that would be a readiness plan that would 
be recommended from the FDA. We should never find ourselves in 
this position again.
    And as Elijah Cummings said, people are coming into my 
office in the center of Los Angeles in tears, and they are 
rushing around to see if they can find a place to get their flu 
shots. And I am telling them don't get one, it probably will 
give you the flu, because they do inject some of the, as I 
understand, the microbes.
    But please, please, as FDA, don't wait for us as the 
legislators to do it; you need to come with a strong 
recommendation and we need to get the building of the plants 
and the distribution of these needed vaccines right here in the 
United States.
    Thank you, Dr. Crawford.
    Mr. Crawford. Thank you.
    Dr. Gerberding. Mr. Chairman, may I just say one thing?
    Chairman Tom Davis. Yes, Dr. Gerberding. Sure.
    Dr. Gerberding. I would just like to emphasize that the 
injectable flu vaccine does not contain live virus that causes 
the flu; there is no risk of getting the flu from the vaccine. 
The nasal vaccine does contain a weak flu virus, so there is a 
theoretical risk of getting flu from that product, but not the 
injectable vaccine.
    Ms. Watson. Let me just respond by saying regardless, I 
think they ought to be manufactured here, the nasal or the 
injectable. We ought not to depend on other nations for our 
tremendous need.
    Dr. Gerberding. I absolutely agree with you on that. Thank 
you.
    Ms. Watson. Thank you.
    Chairman Tom Davis. Mr. Shays, you are recognized for 5 
minutes.
    Mr. Shays. I thank the gentleman.
    It is a wild circumstance. We have an American company 
whose product made in England and we have a French company 
whose product is made in Pennsylvania. And what I am interested 
to know, Dr. Crawford, is if you had realized even 5 months 
earlier that we had a problem, there would have been no 
solution, or would we have been able to go out and request 
vaccines from other places and been able to deal with this 
problem?
    Mr. Crawford. The eggs, which are chicken eggs, are 
actually----
    Mr. Shays. I need a short answer.
    Mr. Crawford. It started too early, so we couldn't have 
done anything about it.
    Mr. Shays. So it speaks to a much bigger issue.
    Mr. Crawford. Absolutely.
    Mr. Shays. I just want to align myself with Mr. Davis and 
also Mr. Mica. This is a huge problem, but the fault does not 
rest at your doorstep; it rests right here in Congress, working 
with the three of you.
    I would like to ask Dr. Gerberding, on October 25, 2004, 
the CDC introduced a secure electronic system to display 
influenza vaccine dosage distribution information called the 
Flu Vaccine Finder. This dataset is only available to State 
health officials. Has the Flu Vaccine Finder proven to be an 
effective tool for States to identify and reallocate available 
vaccines?
    Dr. Gerberding. The Flu Vaccine Finder is an unprecedented 
way for States to see the proprietary information about vaccine 
delivery in their jurisdiction. I believe they are finding it 
to be extremely helpful. The feedback we have received so far 
has been enthusiastic and with great relief. They can finally 
get their hands on the information about distribution planning 
that they need. We are working to make that same kind of 
information available to people at the local health department 
level as well; that just takes longer because there are several 
thousand of them.
    Mr. Shays. Before I ask you the next question, I want to 
say that the imminent biological threat facing the United 
States I think is pandemic influenza, as a mutated viral form 
has caught the world unaware in the past, and it will do so in 
the future. SARs was a huge opportunity for us to see how we 
would deal with this issue. It was involuntary and it was life-
threatening, and it was extraordinarily serious. I think it 
points out persistent weaknesses in public health surveillance 
and vaccine production surge capacity to meet emerging threats, 
and I would like to know if you agree.
    Dr. Gerberding. I agree. But I also think that the 
investments we have made and the lessons we learned from SARs 
have been very helpful to us in dealing with this current flu 
season situation, and we are learning lessons from this 
situation that will help us be even more prepared for a 
pandemic flu. In fact, that is part of our mission right now, 
is to look at the distribution process, to look at our 
detection capabilities, look at our surge and make sure that we 
are learning from that so that if we see pandemic flu emerge, 
we can be better prepared.
    Mr. Shays. So what I want to ask the three of you is I am 
asking do we need a new mechanism, new incentives to guarantee 
to that adequate numbers of safe and effective flu vaccines are 
produced and delivered annually? Just in this more particular 
case I guess the answer is yes. And then with the very short 
period of time remaining, tell me what that is.
    Dr. Fauci. One of the things from a research standpoint, 
very briefly, is to provide the advanced technologies to allow 
the companies to be able to get a head start, since we 
obviously have to partner with them to get the vaccine 
developed and out in an emergency situation. I mentioned a 
couple of them in my presentation. And that is one of the ways 
we can do it, by providing the technology through the science. 
That is one of several ways.
    Mr. Shays. And provide economic incentives that they are 
willing to do that.
    Dr. Fauci. Oh, absolutely. And that gets to the point that 
you were making There are four or five issues that we need to 
do. It is a risky business; it is not a high profit business. 
We have to not only provide the technologies that I mentioned, 
but some of the things that Dr. Gerberding early on mentioned 
and Mr. Mica questioned, something like guaranteed purchases, 
cutting down some of the red tape which we call regulatory 
relief. And liability fits in there. It may not be the biggest 
one, but it is one of several things we can do.
    Mr. Shays. I agree.
    Chairman Tom Davis. Thank you very much.
    Well, let me say to this panel thank you. Dr. Crawford, 
that is it. We don't have any more questions. I know you are 
sorry to hear that. You have accorded yourself well. All of you 
have. And we appreciate very much your time and your expertise 
on this. You are no strangers to this committee. We look 
forward to working with you in the future as we consider these 
issues. Thank you very much.
    The committee will take about a 3-minute recess as we get 
ready for our next panel.
    [Recess.]
    Chairman Tom Davis. Thank you. We are moving to our next 
panel.
    I want to thank our witnesses for appearing. Invited to 
join us on our second panel are two vaccine manufacturers to 
discuss vaccine production capacities to respond to the 
shortage crisis in ways to ensure a stable annual flu vaccine 
supply. Dr. Howard Pien, who is the president and chief 
executive officer and chairman of the board of Chiron, will be 
providing testimony. We also have Kathleen Coelingh of 
MedImmune, which manufacturers the nasal spray vaccine, 
FluMist, which was referred to earlier. And Dr. Robert Stroube, 
who is the Virginia State health commissioner, also joins us. 
He is here on behalf of the Association for State and 
Territorial Health Officials to provide an assessment of State 
and local public health departments' ability to respond 
adequately to the vaccine shortage. And last but not least, Dr. 
Jerome Klein is here from the Boston University School of 
Medicine. He will be providing a more academic perspective into 
issues surrounding the annual influenza vaccine.
    It is our policy that we swear everybody in before you 
testify, so if you would rise with me and raise your right 
hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Thank you.
    Let the record show everybody is here on their own 
volition. We appreciate very much your being with us today. I 
think you know the rules; your entire testimony is in the 
record. You have 5 minutes to say whatever you want. I think 
you know when the lights come up.
    Dr. Pien, we will start with you. And I know this has been 
an interesting 6 months or so for you, but we appreciate your 
working with us, working with our committee staff here and in 
London, and we are pleased to have you here. Thank you.

STATEMENTS OF HOWARD PIEN, PRESIDENT, CHIEF EXECUTIVE OFFICER, 
  AND CHAIRMAN OF THE BOARD, CHIRON CORP.; KATHLEEN COELINGH, 
SENIOR DIRECTOR, REGULATORY AND SCIENTIFIC AFFAIRS, MEDIMMUNE, 
 INC.; DR. ROBERT STROUBE, VIRGINIA STATE HEALTH COMMISSIONER, 
ASSOCIATION OF STATE AND TERRITORIAL HEALTH OFFICIALS; AND DR. 
JEROME KLEIN, PROFESSOR OF PEDIATRICS, BOSTON UNIVERSITY SCHOOL 
                          OF MEDICINE

    Mr. Pien. Thank you, Chairman Davis and members of this 
committee. I welcome the opportunity to appear at this hearing.
    In light of Chiron's strong tradition of commitment to 
global public health, our vaccine division's inability to 
provide influenza vaccine to the United States for this season 
has been a painful experience from which we are all learning a 
great deal. As we have said on numerous occasions in the past, 
we profoundly regret that we have been unable to supply 
influenza vaccine for this season. And we appreciate the 
opportunity to engage in these very important discussions.
    I respectfully suggest that the lessons learned from this 
year's experience provide an excellent opportunity to reflect 
on the critically important policy initiatives that the 109th 
Congress should consider to ensure a reliable and stable 
influenza vaccine supply for the United States in the future.
    I will focus my remarks on three key messages: what we are 
doing, what is our prospect, and what are the policy 
considerations that have emerged from this experience.
    First, Chiron Vaccines is proceeding expeditiously in 
implementing internal changes and devoting resources to enable 
it to regain its U.K. vaccines manufacturing license and to 
address the concerns raised by the FDA. In the past several 
weeks, Chiron Vaccines has developed a plan to implement a 
series of fundamental personnel changes that will restructure 
the management of our Liverpool operations. These personnel 
changes will leverage the strength of Chiron's existing global 
management team and will be supplemented by new management to 
help take us forward in managing the Liverpool facility. These 
changes will maximize our ability to enhance our prospect to 
meet the challenge of returning to influenza vaccine 
manufacturing for the 2005-2006 season.
    We have assembled a world-class international team of 70 
internal and external individuals with expertise in quality 
control, quality assurance, manufacturing, and regulatory 
standards to conceptualize and implement a remediation plan. We 
have retained external consultants who have substantial 
experience with the United States and the U.K. regulatory 
standards. Most importantly, upon the approval of the 
implementation plan by our board of directors, this team will 
be empowered to make changes that will restore the confidence 
of our regulators, both here and in the United Kingdom.
    Also, effective November 3rd, I reorganized Chiron's senior 
management team to allow me to focus more attention on 
overseeing the Vaccines Division's remediation activities at 
Liverpool. To that end, I have appointed an interim chief 
operating officer of Chiron in Jack Goldstein, previously our 
president of the Blood Testing Division. Starting November 4th, 
Jack began overseeing our operations other than those related 
to Fluvirin remediation.
    To my second point. By devoting these resources to the 
remediation of our Liverpool facility, we expect to meet and 
exceed the required responses to the MHRA and the FDA 
observations raised in their respective inspections.
    Chiron Vaccines acquired the Liverpool facility in July 
2003. Although both the regulatory community and ourselves 
recognized it was a somewhat older facility, we promptly 
committed to replacing the influenza vaccine production plant 
with a state-of-the-art adjacent facility estimated to cost 
$100 million, which is under construction. We also proceeded to 
address a number of the concerns identified by the FDA in its 
June 2003 inspection conducted when Liverpool was under 
previous ownership. At present, in coordination with both the 
MHRA and the FDA, we are close to finalizing a detailed 
remediation plan for our Liverpool facility. The plan covers a 
range of enhancements to our manufacturing processes, quality 
systems, and structure for management oversight. Subject to the 
concurrence of both regulatory authorities and approval by our 
board of directors, we will implement this plan expeditiously, 
with the hope and the aim of supplying influenza vaccine next 
season.
    Our ability to regain our U.K. influenza vaccine 
manufacturing license in time to participate in vaccine 
production next year is mission-critical for Chiron Vaccines. 
This plan addresses quality systems in a holistic manner and is 
proposed with the aim of exceeding the specific regulatory 
observations made last month by the MHRA and the FDA. The plan 
covers personnel, processes, equipment, systems, and 
infrastructure. The organizational changes will enable us to 
entrench a culture of quality where employee performance is 
correlated clear and quantitated performance metrics.
    To successfully achieve its remediation objectives and to 
be able to provide influenza vaccine next year, extraordinarily 
close coordination between the MHRA and the FDA will be needed. 
In the meetings that we have held with these regulatory 
authorities since October 5th, we are heartened by the 
encouragement we have received. Having said that, it is 
important to add two cautionary notes. In light of the broad 
and ambitious scope of our remediation plan, there can be no 
conclusive assurance that we will be able to meet expectations 
of the MHRA and the FDA by March 2005, which will be the start 
of full-scale manufacturing season. Moreover, because the 
regulators' GNP standards are ever-rising, we cannot say 
definitively whether we will be able to meet them in future 
years.
    To my third and final point. This year's experience 
provided lessons that can enable us to strengthen our national 
public policies with regard to interpandemic and pandemic 
influenza. We know we must address short-term and long-term 
policy objectives that assure a stable supply of influenza 
vaccine that drive uptake for vaccine and that establish 
manufacturing capacity within the United States. In the so-
called normal influenza season, a stable vaccine supply for the 
U.S. market is dependent on diversifying the manufacturing 
base, which is in turn driven by an environment conducive to 
multiple manufacturers. This environment should have the 
following characteristics: (1) sufficient demand to enhance 
production capacity; (2) pricing and reimbursement that justify 
investments in maintaining and expanding existing production 
capacity; (3) a regulatory pathway that fosters innovation in 
new technologies; and (4) mechanisms to reasonably protect 
vaccine manufacturers from liability claims.
    Marketing of influenza vaccine is dependent upon an 
effective public and private partnership that improves 
vaccination rates by raising awareness, dispelling myth, and 
extending the immunization season. In the long-term in order to 
effectively address our public health needs in the event of a 
global influenza pandemic, a strong public-private partnership 
is paramount, particularly to prioritize and allocate influenza 
vaccine in the event of a supply challenge. The essential 
ingredients for meeting this challenge are evident: 
information-sharing, partnership, frequent communication, and 
hard work. The public health system is coping with the 
challenges, and I believe will emerge stronger from this 
experience, with a clearer focus on strengthening our influenza 
immunization infrastructure and creating a sustainable 
influenza market. The men and women of the public health 
service have demonstrated incredible leadership in addressing 
public distress and in getting vaccine to those who need it 
most in the current supply shortage.
    With that as a backdrop, to increase manufacturing capacity 
in the United States, the government should begin now to invite 
additional manufacturers into the U.S. market and to provide 
appropriate financial incentives and clear regulatory guidance. 
Experience teaches us, as you said, Mr. Chairman, that 
establishing this capacity likely will take several years. 
However, events occurring with regard to the avian flu in the 
pacific realm indicate that the pandemic clock is already 
ticking; thus, we cannot afford any delay.
    I ask, respectfully, that my written testimony be also 
included as part of the record, and I am prepared to answer any 
questions.
    Chairman Tom Davis. Without objection, the entire testimony 
of all of you will be a part of the record.
    [The prepared statement of Mr. Pien follows:]
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    Chairman Tom Davis. Dr. Coelingh, thank you for being with 
us.
    Ms. Coelingh. Good afternoon. My name is Dr. Kathleen 
Coelingh, and I am the senior director of regulatory and 
scientific affairs and MedImmune, a Maryland-based vaccine 
company that manufactures the innovative intranasal influenza 
vaccine, FluMist. Approved by the FDA last year for healthy 
persons 5 to 49 years of age, FluMist is the first advancement 
in influenza prevention in 50 years.
    We are at a critical juncture in defining what the 
influenza vaccine market will look like in the future and how 
U.S.-based vaccine manufacturers will meet the needs of this 
country going forward. What will be the incentives for 
companies to build U.S.-based manufacturing facilities? How 
will our government drive vaccine acceptance, utilization, and 
demand, since it is demand that ultimately determines the 
supply of vaccine manufactured? And what will be the incentive 
for continued innovation?
    MedImmune recommends that this committee support and 
encourage two key longer term solutions in the realm of policy 
changes and incentives for innovation. The first recommendation 
is to move toward adoption of a universal recommendation for 
influenza vaccine for all Americans. The current 
recommendations, which are based on age groups and an ever-
expanding list of underlying chronic medical conditions are 
both complicated for the health care provider to follow and are 
confusing to the public. We believe that a universal 
recommendation will stabilize demand for vaccine, thereby 
leading to increased vaccine supply and ultimately to 
substantially lowering the current morbidity and mortality due 
to influenza.
    As an interim step, MedImmune recommends required 
vaccination of school-aged children, who have a very high 
influenza attack rate and spread influenza to younger siblings, 
their parents, and their grandparents. Thus, vaccination of 
school children would directly benefit not only the children 
themselves, but may also have the potential to greatly reduce 
the impact of influenza in our communities. This concept of 
protecting an entire community by vaccinating the school-aged 
children has already been demonstrated in Japan and in studies 
in the United States. In conjunction with this interim step, 
money must be appropriated to expand the education of the 
public and the medical community about the seriousness of 
influenza and the value of influenza prevention.
    The second solution that MedImmune recommends to ensure 
continued influenza vaccine supply is to provide tax incentives 
for scientific innovation and for construction of U.S.-based 
facilities. MedImmune is a primary innovator in the area of 
molecular techniques, termed ``reverse genetics.'' The use of 
reverse genetics is vital to producing seeds for an H5N1 
pandemic vaccine, as we heard from Dr. Fauci earlier. MedImmune 
owns multiple patents in this area and has granted free access 
to its reverse genetics intellectual property not only to 
governmental organizations, but also to other companies who are 
developing pandemic influenza vaccines. MedImmune is currently 
collaborating with the National Institutes of Health to produce 
intranasal pandemic vaccines and to test them in clinical 
trials.
    MedImmune also has core expertise in the innovative area of 
cell culture manufacturing. The main advantages of 
manufacturing using cell culture are elimination of our 
dependence upon egg supplies and more consistent and rapid 
production, which will be critical in the event that the egg 
supply is decimated by the emergence of a pandemic virus. The 
transition from egg-based to cell-based manufacturing will 
require considerable investment in the construction of new 
facilities and potentially additional clinical studies. Tax 
incentives to subsidize the cost of such innovations are 
necessary to guarantee a more stable vaccine supply on a yearly 
basis and when the pandemic comes.
    The government also needs to incentivize manufacturers to 
build manufacturing facilities within the United States. There 
is an increased risk that, with offshore manufacturing, 
companies will face political decisions that may prevent 
vaccine products from entering the United States, particularly 
in the event of a catastrophic pandemic. Tax incentives for 
U.S.-based manufacturing facilities would encourage 
manufacturers to build more facilities in the United States.
    To address what MedImmune has done during the current 
vaccine shortage, since October 5th, we have worked diligently 
with the appropriate authorities to, first, blend and fill our 
excess bulk vaccine to produce an additional 2 million doses of 
FluMist, bringing our total production for this year to 3 
million doses; second, we have supplied the Department of 
Defense with up to 400,000 doses, the CDC with 125,000 doses, 
and we have supplied hospitals with over 60,000 free doses of 
FluMist this year; third, we have supplied the FDA with new 
storage data for FluMist, which they have promptly reviewed and 
approved, allowing the additional 2 million doses of FluMist to 
be stored in a household freezer without the requirement for 
the special freezer box; and, finally, we have worked closely 
with the CDC and the Advisory Committee on Immunization 
Practices to clarify that FluMist is an option for all healthy 
people 5 to 49 years of age who want to consider protecting 
themselves from influenza this season.
    Shifting gears a bit and looking forward to next season, 
you must understand that the influenza vaccine manufacturing 
campaign for the 2005-2006 season is starting right now. We are 
already preparing the new vaccine seeds that we anticipate will 
be in the next year's vaccine, and we are making decisions 
about how many doses of vaccine we will manufacture, including 
deciding how many chicken eggs to order. Thus, the amount of 
FluMist that will be available next season will soon be fixed.
    With some additional regulatory cooperation, MedImmune has 
the capacity to produce between 8 to 10 million doses for next 
season. These regulatory actions include: FDA approval allowing 
for the production of larger lot sizes and filtration; 
acceptance by the FDA of our application to permanently 
eliminate the requirement for the FluMist storage box; and, 
finally, FDA acceptance of recently sumitted data that supports 
the expansion of the FluMist indication to include the 30 
million healthy Americans who are 50 to 64 years old, a group 
that is not eligible for the injectable flu shot this season, 
and may not be eligible again next season, should we experience 
a continuing shortage.
    In summary, MedImmune is clearly at a crossroads in 
determining not only how much FluMist will be available next 
season, but also whether our investments and innovation will be 
recouped in this market. Our level of production for next 
season depends on the occurrence of several immediate 
regulatory actions. But whether MedImmune expands its 
production and whether companies continue their efforts to 
develop influenza vaccines depends in large part upon the 
government's commitment to encouraging innovation and driving 
demand. Requiring childhood influenza vaccination as an interim 
step toward a universal recommendation and legislating tax 
incentives for both scientific innovation and U.S.-based 
manufacturing will go a long way to ensuring an adequate supply 
of influenza vaccine in the near future.
    Thank you.
    [The prepared statement of Ms. Coelingh follows:]
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    Chairman Tom Davis. Thank you for your testimony.
    We will hear now from Dr. Robert Stroube, Virginia State 
health commissioner with the Association of State and 
Territorial Health Officials.
    Welcome, sir, and you are recognized.
    Dr. Stroube. Thank you, Mr. Chairman.
    Mr. Chairman, distinguished members of the House Government 
Reform Committee, my name is Robert Stroube. I am the health 
commissioner in Virginia. I am honored to be testifying before 
you today, and I would like to thank you for convening this 
hearing on this really crucial problem that we are facing.
    The ongoing flu vaccine shortage continues to present many 
challenges for Virginia, as well as the other States. State and 
local health departments have been working nonstop since 
October 5th to address this issue.
    As of today, Virginia Health Department has received a 
total of 159,565 doses of flu vaccine, which we have 
distributed to our local health departments and our long-term 
care facilities for administration to people at high-risk of 
complications from the flu. In addition, the Health Department 
has received 84,480 doses of flu vaccine intended for high-risk 
children who are eligible for the Vaccines for Children 
program. According to recent information from CDC, we are 
expecting another shipment of about 150,000 doses, which we 
will allocate to long-term care facilities, hospitals, and 
other health care facilities with unmet vaccine needs.
    The Health Department is now providing the flu vaccine to 
many more people and providers than we would during a typical 
flu season. You might say that the Health Department is now the 
broker in the management of the flu vaccine to help ensure that 
the vaccine goes where it is most needed.
    We applaud the reallocation efforts of CDC and of Aventis, 
and we are grateful for the timely receipt of the vaccine that 
we have. We firmly believe that as the public health agency for 
Virginia, it is our responsibility to guide allocation 
distribution of vaccine to those who are most in need.
    However, we do want the committee to be aware of the 
immense workload this situation has placed on local and State 
Health Department personnel. During the first week of November, 
the State Health Department distributed more than 77,000 doses 
of vaccine to our 35 local health districts on a population-
based formula. Each health district developed a flu vaccine 
distribution plan based on the needs of the high-risk persons 
in that community. In developing those plans, all the health 
districts had to make difficult decisions on how to distribute 
the limited amount of vaccine. In some areas they opened up 
phone lines and began taking appointments on first call-first 
served basis; some distributed the vaccine to health care 
providers in the community; some pre-identified high-risk 
individuals who were unable to get the vaccine in the private 
sector.
    In Chesterfield County, just outside of Richmond, the 
health department there held a ``drive through'' flu clinic 
this past weekend so that high-risk people wouldn't have to 
stand in line out in the cold. That one clinic required 120 
staff members to manage all of the logistics. The health 
director there estimates this ongoing issue has required more 
than 600 hours of work from senior-level managers, supervisors, 
and other personnel. The health department's time devoted to 
this ongoing flu shortage supply issues means time away from 
other important public health practices.
    Another example is our ongoing distribution of 82,000 doses 
of vaccine to long-term care facilities in Virginia who did not 
receive flu vaccine. In order to accurately determine which 
facilities still needed vaccine, all of our 35 health districts 
surveyed each facility in their community. The health 
department usually does not provide flu vaccine directly to 
long-term care facilities. Most of these facilities ordered 
vaccine this year through a distributor or directly from the 
manufacturer, and most ordered through Chiron Vaccines.
    In our Immunization Program, we typically only need one 
full-time person working on the flu vaccine program. This year 
we have four staff persons working continuously managing the 
issue at the State level. In addition, the issue has required 
the involvement of all our senior-level management, our public 
information personnel, and some of our emergency preparedness 
personnel, which manage State level planning, logistics 
communication and coordination. We owe a tremendous amount of 
gratitude to our hardworking and dedicated public health 
employees who are spending hours planning and executing flu 
vaccine clinics or answering phone calls from our worried 
elderly and our other high-risk citizens. I would like to take 
this opportunity to personally thank each and every person for 
their service to our citizens.
    At the beginning of the shortage, one of our biggest 
difficulties was determining how much flu vaccine was available 
in the private sector. We would like to thank CDC and Aventis 
for their efforts to make this information about vaccine 
distribution in the private sector available to us through our 
secure Web-based data base. This information has helped us to 
identify geographic gaps in vaccine supply and focus our 
distribution efforts to providers in those areas. This system 
is constantly being upgraded, and just this morning, before I 
left to come here, we found out that they have now upgraded it, 
so we will be ordering our vaccine directly and sending it 
through reallocation out over this data base.
    Even with all the flu vaccine now coming to Virginia, we do 
not expect that we will have enough vaccine for every high-risk 
individual in Virginia this year. To help alleviate the 
situation, we continue to provide the public with useful tips 
for preventing the spread of flu in the absence of vaccine, 
such as frequent hand washing and staying home from work when 
sick. In addition, we have been encouraging the use of 
pneumococcal vaccine among the elderly and individuals with 
chronic medical conditions. This widely available vaccine can 
help prevent pneumonia, which in many cases is a secondary 
complication of flu.
    We would like to thank CDC and the Department of Health and 
Human Services for all the work they have done to help manage 
the situation and secure flu vaccine for the State health 
departments. We believe that everyone involved at the Federal, 
State, and local level has done an outstanding job addressing 
the problem.
    But I cannot stress enough how important it is for Congress 
to take steps now to prevent this flu vaccine shortage from 
occurring again. This situation has required an enormous amount 
of time and effort to manage, and has had a major fiscal and 
human resource impact on other important public health 
activities.
    Efforts must commence now at the national level to ensure a 
stable flu vaccine supply. As many of us have stated in 
previous testimony, the present system of vaccine production 
distribution is incapable of effectively and efficiently 
responding to the current demand for the flu vaccine. It is 
imperative that Congress take steps now to support the 
development of a more reliable and flexible vaccine production 
and distribution process. In addition, efforts need to be made 
now to guarantee an ample supply of flu vaccine from multiple 
manufacturers.
    Given the estimated 36,000 people that die each year in the 
United States from the complications of flu and the threat of a 
flu pandemic, I believe addressing the flu vaccine production 
and distribution problem has to be of the highest priority for 
Congress.
    Thank you.
    [The prepared statement of Dr. Stroube follows:]
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    Chairman Tom Davis. Dr. Klein, thanks for being with us.
    Dr. Klein. Thank you very much, Mr. Chairman. I am Jerome 
Klein, a pediatrician, a professor for pediatrics at Boston 
University, and a member of the National Vaccine Advisory 
Committee.
    A robust domestic vaccine capability is a necessity not 
only for old threats such as influenza, but for new and 
virulent microorganisms spread by natural means or by 
bioterrorist activity. The current shortage of influenza 
vaccine underlines the vulnerability of the supply of all 
recommended vaccines in the United States, and I would like to 
touch on four areas that have already been discussed in part in 
the prior discussions: first, the loss of vaccine manufacturing 
capability in the United States; second, the issue of 
stockpiling; three, Food and Drug Administration regulatory 
practices; and, fourth, the liability concern.
    First, the loss of manufacturing capability. Vaccine 
manufacturing is complex, involves uncertainties that do not 
exist in pharmaceutical drug manufacturing. There is no 
question that additional influenza vaccine manufacturers this 
year, if available, would have diminished the effect of loss of 
the Chiron product. Companies leave the marketplace when a 
product no longer provides a reasonable return on investment. 
Appropriate incentives must exist that encourage companies to 
enter and remain in the vaccine business. What is needed now is 
a sustained effort to provide concrete proposals that will have 
a durable effect. A multi-disciplinary group to include all 
stakeholders should be convened to evaluate and propose 
appropriate incentives for manufacturers to ensure supply of 
existing vaccines and stimulate development of new vaccines, 
and that is the encouragement of domestic vaccine producers, 
not seeking vaccine overseas.
    Second, the issue of strengthening vaccine stockpiles. A 
program to stockpile vaccines has been available since the 
1980's. The principle is simple: government purchase of vaccine 
provides a repository that can be called on if there is an 
emergent need. Subsequent to the 2002 workshop held by National 
Vaccine Advisory Committee, there was additional funding that 
was provided to expand the stockpile program. However, no new 
vaccine has been added because of a Securities and Exchange 
Commission accounting regulation that bars vaccine 
manufacturers from claiming sales to the stockpile program as 
revenue until they come out of the stockpile. This impediment 
to a universally approved response to enhance vaccine supply 
should be remedied as soon as possible, because a new influenza 
vaccine is prepared each year and the stockpile concept is not 
applicable. A redundancy of supply has been suggested. The 
government purchase program would be expanded so that 
additional vaccine beyond that required for patients at risk 
would be instituted. Since influenza immunization would be a 
value for healthy children and adults, the additional vaccine 
would not be wasted.
    Three, streamlining the regulatory activity of the Food and 
Drug Administration. The current good manufacturing practices 
need to be dynamic, with changes to maintain or improve 
facilities to current standards, but allow sufficient 
flexibility to ensure continued vaccine production. In 
addition, a review of current GMP and regulation should be 
instituted to consider whether the complexity of manufacturer 
of vaccines and biologics warrants a separate and different 
mode of regulation than that used for drugs, which is the 
practice currently.
    Finally, the liability issue, which, as I understand it has 
little role in the current concern about the contamination 
issue at the Chiron facility. But there is renewed concern 
about litigation associated with the manufacture and 
administration of vaccines. The National Childhood Vaccine 
Injury Compensation Program was established in 1986 to 
compensate quickly and appropriately individuals who suffered 
serious injuries associated with the administration of an FDA-
approved vaccine. The program removed the threat of liability 
from the manufacturer, as well as those who administer 
vaccines, and successfully stabilize the market. The VICP 
should be maintained and strengthened to include additional 
vaccines. When those additional vaccines are added, additional 
staff will be needed. So the VICP program needs to be 
supported. Strengthening the VICP would benefit manufacturers, 
providers, consumers, and further safeguard the Nation's 
vaccine supply.
    The development of safe and effective vaccines during the 
past 50 years, since the introduction of the polio vaccine, has 
been one of the great success stories of American medicine. 
However, there is concern, as has been discussed today, that 
future contributions of the vaccine industry may be jeopardized 
by lack of attention to basic issues. Solutions are not easy to 
come by in a sustained effort. The collaboration of all 
stakeholders and political will will be required.
    Thank you very much.
    [The prepared statement of Dr. Klein follows:]
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    Chairman Tom Davis. Well, thank you, and thank all of you 
for your testimony.
    Let me just, if I could, recognize we have with us today in 
the back of the room Cub Scouts Pack 1134, Den 7, from the 
Chain Bridge District. And we are happy to welcome you here 
today to today's hearing. This is on the flu vaccines in the 
United States and the shortage we are having.
    Let me just start with one question before I recognize Mr. 
Mica; and this goes really to Mr. Pien. Could you tell us what 
happened at Chiron's Liverpool facility that ultimately led to 
the October 5, 2004 license suspension?
    Mr. Pien. Yes, Mr. Chairman. Chiron, as I testified, 
acquired this facility in July 2003, and the acquisition 
actually was conditioned upon a successful satisfactory 
inspection that took place in June 2003. And after we made the 
acquisition, of course, we continued the investment program, so 
about another $50 million got into this current facility. Since 
then, in addition, we recognized that, as the standards of 
quality will be rising, that we need to build a new facility; 
and, therefore, we made the commitment of spending $100 
million, as I testified, to build an adjacent facility, of 
which roughly $30 million have now been spent.
    We had a terrific 2003 season, as Commissioner Crawford had 
indicated; we had a 40 percent increase into the U.S. market 
from that facility over 2002. We had a 30 percent total output 
increase, some of which of course, went to parts outside of the 
United States. We found that the facility was viable. We had 
tremendous confidence in the ability for that facility to 
continue to produce products. And, of course, you will recall 
last year at this time we were sitting here thinking about the 
regionally severe and earlier flu season. So there is indeed a 
demand in the United States. So that takes us into 2004.
    In July 2004 our quality assurance programs identified two 
consequential batches which failed our standards, and they 
turned out to be sterility problems. We then formed a team to 
identify the root cause. In late August I was advised that we 
would likely be delaying the shipment of Fluvirin relative to 
our previous release forecast. We immediately informed both 
regulatory agencies, MHRA and the FDA, of the expected delay 
and our adjusted forecast of supply. This, incidentally, led to 
a press release in August. Since then we have been in regular 
consultation with both agencies to update them on the progress 
of our confirmatory testing program, and has brought us now to 
September 27th.
    On September 27th our internal testing program concluded 
favorably. We expected, therefore, to be able to supply between 
46 and 48 million doses to the United States. We initiated a 
process of reporting the outcome of our confirmative testing 
program to the regulatory agencies, starting with the MHRA. The 
MHRA came to visit our Liverpool facility on September 28th to 
both evaluate our confirmative testing findings and to start 
what turned out to be a 3-day inspection. When the inspection 
was completed on September 30th, we received a one-page list of 
observations and we responded to those observations 4 days 
later, over the weekend; and that took us to October 4th.
    On October 5th the MHRA advised us of their decision to 
temporarily suspend our Liverpool plant license. And as a 
consequence of that decision, our products that were produced, 
that were tested, that were retested could not be and were not 
released to the marketplace.
    Chairman Tom Davis. Thank you very much.
    Mr. Mica.
    Mr. Mica. Thank you, Mr. Chairman.
    Dr. Klein, thank you for your very succinct and direct 
recommendations as to what we need to do to get flu vaccine and 
vaccine manufacturing in the United States. You covered 
incentives, which were also mentioned by the producer of the 
FluMist. You talked about stockpiling a bit. You talked about 
two things that I got into; I didn't have a lot of time: 
regulatory reform and liability reform.
    The other thing, Mr. Chairman, that I think he brought up, 
as well, was a meeting of stakeholders. These hearings are nice 
and they make nice fare; tomorrow it will be a great headline 
to bash the FDA, but it doesn't get flu vaccine or other 
vaccines that are essential on the market. But a stakeholders 
meeting would be very good, where we had people who actually 
manufacture and produce this, maybe with some of the FDA folks. 
I think, Mr. Chairman, that would be an excellent 
recommendation. And, actually, the Virginia health 
representative said that Congress needs to take steps, and we 
do need to take steps. We are already into another season.
    But you pointed out something, too. I am a fairly ignorant 
Member of Congress, as has been pointed out here, but you did 
highlight one area that I am not that familiar with, and that 
is the difference between regulation of a pharmaceutical and a 
vaccine. And maybe it is time, as you pointed out in your 
testimony, that we re-examine the regulatory regime we have. 
And that may be out of the purview of our committee's 
jurisdiction, but it is one of the things that we haven't 
looked at, and you might want to address it. You probably share 
my ignorance in thinking that liability or the threat of 
liability, if we could remove that, would also enhance 
manufacturing, but I guess we are both probably at the school 
and lacking in knowledge.
    But I think you hit the nail on the head, doctor. It is too 
bad you are the last witness, but I think everything you 
pointed out succinctly, again, directly identifies the problem 
and where we need to go. So I thank you for that.
    How would you compose a stakeholder conference or meeting? 
And I think we should do that sooner rather than later, but 
give us your idea so we could do something positive. And 
Congress must act, as Dr. Stroube has pointed out.
    Dr. Klein. Well, I think your remarks are very appropriate 
in the sense that you would like to see action, and you would 
like to have knowledgeable people involved; and that would 
include not only manufacturers, but purchasers, consumers, 
legislators, or legislative staff that would convene a session 
that would have contrary proposals as the goal. Then to bring 
those proposals to this committee or any other body for review 
and potential action. But I think as a citizen without 
legislative background, I think we need action, and we want to 
propose that be moved forward as expeditiously as possible. And 
I think in a way the flu crisis that we have now is an 
opportunity to light a fire, because what is coming could be 
much worse.
    Mr. Mica. And Mr. Pien talked about the pending pandemic.
    Dr. Klein. The pandemic flu problem is inevitable. It is 
not a question of whether----
    Mr. Mica. It is when.
    Dr. Klein [continuing]. Is it a question of when.
    Mr. Mica. Again, you have to excuse my ignorance; I am not 
very knowledgeable about some of the regulatory process. But, 
again, the point that you raised about treating vaccines 
differently from pharmaceuticals--and, again, I am not an 
attorney like some of these folks up here, I am just sort of a 
leftover businessman. But the question I would have is, from a 
technical standpoint, does FDA have the authority to make those 
changes in that regulatory distinction, or is that something 
that would require a change in the law?
    Dr. Klein. I am not sure, but I think FDA----
    Mr. Mica. Oh, another ignorant guy. I am sorry.
    Dr. Klein. But I think they do have the regulatory 
authority to modify----
    Mr. Mica. But I think that is an important question, too, 
that we should look at and maybe we need to address.
    Thank you, Mr. Chairman.
    Dr. Klein. I think they can modify their inspection.
    Chairman Tom Davis. Thank you.
    Mr. Waxman, you are recognized for 5 minutes.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Mr. Pien, when FDA inspected the Liverpool facility in June 
2003, the agency found 20 serious areas of concern. We now know 
that the inspectors believed that official enforcement action 
such as a public warning letter was justified. Had a warning 
letter been issued, the agency would have detailed the changes 
necessary to fix the problems identified. But a warning letter 
was never sent; the inspectors' recommendation was downgraded. 
As a result, Chiron never received from FDA a specific list of 
changes needed to fix the problems at the June 2003 inspection.
    That raises the question of whether Chiron, which was in 
the process of taking over the Liverpool facility, really 
understood what was needed to resolve these concerns. On June 
27, 2003, Chiron wrote to FDA asking for a meeting ``as soon as 
possible'' to discuss the company's response to the June 2003 
inspection. Would this meeting have been an opportunity for the 
company to learn more about what steps were needed to correct 
the problems at the facility?
    Mr. Pien. Mr. Waxman, as I testified before, the inspection 
took place in June 2003, and the Liverpool facility was then 
not owned by Chiron, it was known by an English company called 
PowderJect. Our board of directors conditioned the acquisition 
of the Liverpool facility on what was reported to us to be, by 
the people in Liverpool, a satisfactory FDA inspection. I think 
that most of the correspondence that arose from that inspection 
still had the Evans letterhead on it, which was the name of the 
previous owner relative to the Liverpool facility.
    Since then, my understanding is that there had been 
discussions between our people in Liverpool and the FDA 
relating to the observations that they made in 2003, prior to 
our taking them over. And as I testified before, Chiron made a 
very, very conscious decision that, indeed, we want to 
remediate against any past observations of deficiencies, and 
that was the reason that we followed through with the 
remediation program that went into that facility of $15 million 
that was spent in addition to the new facility that I talked 
about.
    Mr. Waxman. You also, on the same basis, I assume, asked 
for the meeting with the FDA, so you could find out what they 
knew about the plant that you needed to correct.
    Mr. Pien. What I understand, Mr. Waxman, is that those 
conversations did take place. The regulatory contact were based 
in Liverpool, and those conversations did eventually take 
place.
    Mr. Waxman. FDA told us that they never followed up with 
you. So you have a different view of what happened, that FDA 
did followup about the June 2003 inspection?
    Mr. Pien. Mr. Waxman, what I understand, what I am told is 
that around September or October there was a telephone contact 
for our people to understand how best to proceed with the 
observations that were made in the June FDA inspection in 2003.
    Mr. Waxman. A year later, in June 2004, Chiron wrote FDA 
again asking for a full copy of the final inspection report. 
While this report does not contain formal recommendations for 
action, it does contain a number of specific details, including 
some recommendations that are not included in initial lists of 
agency observations. Now, according to the FDA staff, this full 
inspection report should have been delivered to the company in 
September 2003. But because of confusion within the agency, it 
was sent 9 months later. I heard that Dr. Crawford even 
accepted, in response to a question from Mr. Cummings, that 
this was a mistake.
    Can you explain the difference in the point of vaccine 
manufacturing cycle between September 2003 and June 2004?
    Mr. Pien. I have not seen that document, so I am not sure. 
I should probably study that document such that I can provide 
an intelligent answer.
    Mr. Waxman. Well, if you get a chance to do that, we would 
welcome your comments for the record.
    Mr. Pien. We shall.
    Mr. Waxman. Would having the full inspection report 9 
months earlier have helped the company understand the FDA's 
June 2003 inspection better?
    Mr. Pien. Congressman, as I testified just now, I 
understand there to have been a contact between our Liverpool-
based people who were charged with the fulfillment of the 
remediation against the 2003 inspections, and my understanding 
is that contact did take place.
    Mr. Waxman. The documents we released today show that FDA's 
regulatory approach from June 2003 to October 2004 was to rely 
on company representations rather than conduct its own 
inspections to make sure the problems were being corrected. For 
example, after you announced a problem with contamination in 
August 2004, FDA chose to rely on a series of conference calls 
with you into October. But this approach did not work. From the 
end of August until the British shut the facility, you were 
telling FDA and the public that the contaminated vaccine was 
limited in amount and you had every expectation that the rest 
of the vaccine was on track for this year.
    The problem with the FDA approach is when what you said 
turned out to be wrong, things were not OK, both British and 
FDA inspectors found systemic problems, including failures to 
address high bio burdens, problems addressing connection 
between tanks and sanitary practices that were found on 
previous inspections. So FDA was taken by surprise when the 
British came in and found out these problems.
    It seems obvious to me if we had known earlier, we could 
have planned for the shortage. But, if you know, why did the 
company provide FDA with information and projections that 
turned out to be wrong; was it deliberate, or would it be fair 
to say the company was not aware of the severity of the 
problems and was optimistic any problems could be overcome?
    Mr. Pien. Congressman Waxman, as I know you know this, the 
making of the flu vaccine is a terribly complicated thing; it 
is a new product every year, it is actually one product made up 
of three components every year. And you start, therefore, with 
a very large number of eggs, you put these seeds of viruses 
into the eggs and you make it grow, and then you harvest it. 
And the process is complex, and that is the reason that you 
would have, as a manufacture, these series of procedures for 
testing and retesting.
    In July 2004, as I testified before, our quality assurance 
program identified two batches of products that had sterility 
issues, and when that occurred, we thought that the scope of 
the problem did not appear to threaten any supply expectations 
that we had at the time, and we began to test and do these 
programs and investigate what caused it, the so-called root 
cause diagnosis and determination. And as you would expect in 
making flu vaccines in the way that I have just described--by 
the way, at the peak of the production season, one can be 
talking about 400,000, 500,000 eggs. So what you alluded to is 
the bio burden issue--I think Commissioner Crawford has already 
testified--happens. The trick is to make sure that you have a 
robust process that, therefore, the end product does not have 
any of this bio burden.
    Therefore, we expected some failures in these internal 
testing programs, and that is why we were performing these 
confirmative tests.
    Mr. Waxman. You thought they were isolated failures.
    Mr. Pien. We did.
    Mr. Waxman. But you didn't think they were systemic 
problems, which, of course, the FDA report seemed to indicate.
    Mr. Pien. We understand that. And as I testified before, 
this came to us as a surprise. When it came on October 5th, 
when the MHRA had, as previously agreed, come to take a look at 
our confirmative testing results, they said they would come; 
they came. The day after we finished the testing program they 
came and looked at our results and did a 3-day inspection. At 
the end of the 3-day inspection we were given one sheet of 
paper showing us some of the observations, which we responded 
to within 4 days; and the day after that the MHRA concluded 
that there are issues with respect to the systems and processes 
of the entire plant.
    Mr. Waxman. Well, my concern--and I see my time is up--is 
that you were taken by surprise, the Food and Drug 
Administration was taken by surprise, and yet there had been an 
evaluation done in 2003 that showed systemic problems. And I 
don't think that the Food and Drug Administration followed 
through. They should have been more on the case. You were 
taking over the company, and they should have been working with 
you together to make sure that these problems were dealt with. 
But when you had an increase in production and systemic 
problems, it just led to what now looks an inevitable, in 
retrospect, breakdown in the system.
    Mr. Pien. Mr. Waxman, if I may point out the obvious. We 
are in a regulated industry. So if you are asking me to 
criticize our regulators, that simply isn't something that I 
can do, will do, or shall do. Look, we have a plant. We have a 
set of procedures.
    Mr. Waxman. Let me interrupt you. I am not asking you to 
criticize the regulators. I will do that job, because I think 
they deserve criticism. But I think it would be interesting to 
know if you had their observations early enough, whether you 
could have done something about the problem. And I would submit 
that it just makes sense that if you are not told there is a 
problem, you may or you may not catch it. But FDA's job should 
have been to be on the case to make sure these problems were 
dealt with.
    Mr. Pien. Mr. Waxman, if I may. Here is our situation now. 
We lost our license for this 90-day period. We are trying to 
get it back. Now, we are going to do everything we can, that we 
can define. Once we define those things that we can, we will do 
those things subject to our assessment that we can actually do 
them. And I think what is extremely encouraging is that both 
the MHRA and the FDA have looked at this issue and this 
situation and this experience, and the two agencies, as I 
testified before, are working extraordinarily closely. So to 
the extent that your observations should inspire some lessons 
for all of us going forward, I think that inspiration has 
already been achieved.
    Mr. Waxman. Well, I thank you for that. That certainly is 
what we want, in the future, to have the problems corrected. I 
just want to make sure that people understand the mistakes that 
were made in the past so that they are never repeated again, 
and that we have a regulator that is doing a good job of 
regulating, because the purpose of it is to protect the public.
    Mr. Pien. We concur.
    Chairman Tom Davis. Thank you.
    Let me say to my friend, Mr. Waxman, in my opinion, after 
listening to everything today, there is no question that had 
the FDA gone in early or the MHRA gone in earlier and alerted 
them, we might have been able to avert this. But that was not 
part of their protocols at the time. I think they followed the 
protocols, as I understand it. It doesn't mean they couldn't 
have done more, or in the future shouldn't. And I think maybe 
one of the lessons coming out of this, particularly for foreign 
vaccine manufacturers, we need to be more vigilant and have 
more rigid protocols.
    Mr. Waxman. If you would just yield to me.
    Chairman Tom Davis. Sure.
    Mr. Waxman. Their protocols call for what they did, but 
they also call for an enforcement letter if it is more serious. 
And I would submit that this is not Rogaine, a product which I 
didn't use in time. But this is a product that is essential to 
the health of millions of Americans to avert the flu and the 
consequences for those who are at risk. And there should have 
been a higher priority and concern over the flu supply than to 
treat it in the same routine way they might treat Rogaine and 
other drugs that don't have the consequences of failure in this 
case.
    Chairman Tom Davis. Well, that is certainly a propecious 
comment. But I think FDA and Chiron have basically said to the 
committee that the inspection didn't show systematic problems 
in 2003.
    Is that correct?
    Mr. Pien. That is our understanding from the people who 
experienced the inspection.
    Chairman Tom Davis. And we may have a difference of 
interpretation here, but----
    Mr. Waxman. Well, we will let the documents that we put out 
today speak for themselves.
    Chairman Tom Davis. Exactly. And it may be an 
interpretation----
    Mr. Waxman. Because the FDA inspectors thought otherwise.
    Chairman Tom Davis. But I think the testimony is pretty 
clear that after they went back, as they do, and examined 
these, the biogenics, and they came back and talked about it, 
they decided it wasn't. But I think the documents will speak 
for themselves. We need to move forward. And I think, Mr. 
Waxman, one thing you have contributed very positively today is 
the fact that we need to be more vigilant in these areas. And 
whatever the protocols were, they need to be tweaked at this 
point, as we move forward. We cannot allow this to happen 
again. And had we had earlier inspections, not only would 
Chiron maybe saved a boatload of money, but we might have had 
more vaccine available to people this year.
    Let me just ask a few more questions, if I can. I haven't 
had my 5 minutes yet.
    Mr. Tierney, go ahead. Then I will wrap up. Go ahead.
    Mr. Tierney. I don't think I am going to take a full 5 
minutes, Mr. Chairman, and I thought you had your 5 before.
    Let us segue into looking forward a little bit.
    Dr. Coelingh, am I saying that correctly?
    Ms. Coelingh. It is Coelingh.
    Mr. Tierney. Coelingh. I am sorry. You talked about what we 
might do in terms of going forward to make sure that we have 
enough vaccine on the market. This, so far, has been an 
industry that has been market-driven, as opposed to government-
driven or having government intervene other than the regulatory 
process. You talked about seeking tax incentives. Well, that 
obviously would take it outside the free market aspect. You 
talk about government stimulating demand. That would take it 
outside the free market aspect on that. So if industry can't 
survive or can't expand in a free market environment, and if 
you are going to ask taxpayers then to sort of use their tax 
dollars to invest in the industry, either by tax incentives or 
by mandatory public purchases, what do you think the industry 
would offer back to those taxpayers or investors as 
compensation or as a dividend for that? Would they offer up a 
share of the profits; would they talk about price controls and 
a guaranteed supply; would they talk about tighter safety 
regulations; would they talk about contributions, as Dr. Klein 
talked about, in terms of a VIP type of situation in case there 
is an error or injury to somebody? Would they talk about all of 
those or some combination?
    Ms. Coelingh. Well, one thing that this industry--I think 
that is really misunderstood about how the vaccine, especially 
the flu industry vaccine operates, is that it really is 
different from a lot of other things where you say a free 
market system.
    Mr. Tierney. You operate for a profit, right?
    Ms. Coelingh. Correct. But what drives this market is the 
recommendations of public health authorities. That is the major 
driving force in deciding who gets vaccinated and who does not.
    Mr. Tierney. Can I just back up for a second? I think what 
drives it is individuals that either subscribe to get the 
vaccine or they don't, and their decision may be driven by some 
comments or decisions that the government makes, right?
    Ms. Coelingh. Correct. It is primarily the Advisory 
Committee on Immunization Practices. They put out a list of who 
should and who should not get vaccine every year. And the 
American Academy of Pediatrics and the American Association of 
Family Practitioners also follow in step with those 
recommendations.
    Mr. Tierney. Is that terribly different than companies that 
sell things for lowering your cholesterol, where the FDA and 
other advisory groups put out a word saying that you ought to 
take these medications to lower your cholesterol?
    Ms. Coelingh. The main difference is when you are ill and 
you need to get a drug to change that situation, it is a lot 
different than--most of us are walking around perfectly 
healthy, there is nothing wrong with us except influenza will 
be coming. So there is an additional----
    Mr. Tierney. Well, I am just carrying forward my example. 
Most people walking around with high cholesterol are feeling 
great and not thinking there is anything imminent there either.
    Ms. Coelingh. True. But those medicines are prescribed for 
a condition; whereas, we are in the area of preventive 
medicine. So there is a higher hurdle to get people to value 
influenza prevention and----
    Mr. Tierney. Now, other industries would advertise.
    Ms. Coelingh. Correct.
    Mr. Tierney. Do you?
    Ms. Coelingh. Last year was our launch season, 2003, and 
during our launch season we did.
    Mr. Tierney. I don't mean to tag it all on your company; I 
am talking about the industry. So I want to remove that from 
anything person on that.
    Ms. Coelingh. Yes, there is some advertising. But primarily 
what happens is the guidance from the CDC and their advisory 
committees tell doctors who gets vaccine and when they get 
them.
    Mr. Tierney. But the industry could advertise, as other 
industries do, if they want to drive a market, right?
    Ms. Coelingh. Correct. Absolutely. But how vaccines are 
used is not usually driven by direct-to-consumer advertising.
    Mr. Tierney. I understand there is some difference on that. 
But if you chose, in a free market environment, to advertise to 
drive your market, then that would be one way to do it. You are 
saying that your industry thinks it better to either have 
taxpayer incentives of some sort or public purchases. So my 
question that we haven't answered yet, and I would like to get 
to, is what would the industry offer back?
    Ms. Coelingh. What the industry offers back is new and 
improved vaccines that really will change how medicine is 
practiced in the United States. We haven't had great changes in 
our vaccine industry----
    Mr. Tierney. Couldn't we get that just by having NIH do the 
research?
    Ms. Coelingh. By having, I am sorry?
    Mr. Tierney. NIH or some other entity do the research.
    Ms. Coelingh. Well, you know, NIH does a great job at doing 
research, but they don't make vaccines.
    Mr. Tierney. Well, we could either give them the authority 
to or establish somebody that does, right?
    Ms. Coelingh. Well, that comes at a price as well.
    Mr. Tierney. But I guess what you are telling me is the 
industry doesn't feel it would owe anything back to the 
taxpayers if the taxpayers became their investors.
    Ms. Coelingh. I am not saying that we necessarily feel that 
the government has to purchase strategic reserves or purchase 
unused vaccine. We would much rather make vaccine and have it 
used than stockpiled and maybe never used.
    Mr. Tierney. But the two things that you did recommend, one 
was tax incentives, which would be a taxpayer incentive; the 
other was public purchases for school children or whatever.
    Ms. Coelingh. It is a universal recommendation for 
children.
    Mr. Tierney. So, again, why are you putting that burden on 
the government for an industry that usually are talking all 
about the free market? Why not advertise and take it upon 
yourselves to use your investment and your stakeholders' 
investments to do that?
    Ms. Coelingh. Well, first of all, we have invested alot in 
this product, and, second, if the U.S. Government invests in 
this product, what they get is they get to not have this kind 
of situation happening again.
    Mr. Tierney. But there are a number of ways to skin that 
cat, right?
    Ms. Coelingh. And you get to not have to face the pandemic 
without having a vaccine as well. So I think those are things 
that are hard to appreciate because you don't worry about them 
until they happen, and that is the whole problem with 
prevention.
    Mr. Tierney. I guess I don't want to drive too fine a point 
on this, but let me just drive a real fine point.
    Ms. Coelingh. OK.
    Mr. Tierney. If we make you fabulously wealthy because you 
have all of these new customers or whatever, or you get tax 
breaks, why would a taxpayer not expect something back? 
Apparently you are not going to answer, and that is fine, but 
that would be the question I would have, and I would think a 
lot of taxpayers have. If you are going to go out there and 
make a profit from the taxpayers' investment one way or the 
other, then why wouldn't they get some guarantees back that 
would be of value to them.
    But thank you for your colloquy.
    Chairman Tom Davis. Thank you.
    It would probably be cheaper to do it through tax 
incentives than direct purchase, but that is an economic 
argument that we could get into.
    Let me ask each of you a few questions. Let me start, Dr. 
Coelingh, with you.
    MedImmune right now is looking for universality, is that 
correct, in terms of being able to market it to everyone and 
getting those protections?
    Ms. Coelingh. Correct. We think that is a good solution to 
stabilize the market.
    Chairman Tom Davis. Oh, it would be a wonderful solution. 
You heard the FDA Acting Director today talk about how they 
were working toward that. Are we getting satisfaction working 
toward that? Is there anything we can do to try to move that 
along?
    Ms. Coelingh. Well, the Advisory Committee on Immunization 
Practices started talking about moving toward a universal 
recommendation a couple of years ago, and I think there is a 
lot of support amongst the scientific community and the medical 
community and the public health community. I think there is a 
desire to want to do that because we appreciate what could be 
accomplished by those means. However, I think it comes down to 
it is going to have to be supported by a lot of education for 
people to understand, No. 1, why is influenza a problem, 
because often it is thought of as just a minor cold. We don't 
realize that 36,000 people die in the United States every year 
from complications due to influenza and another 200,000 are 
hospitalized every year. Look at the cost of that to our 
society. So I think we need to educate people so that they 
understand how important it is to protect our citizens.
    Chairman Tom Davis. You also, in your particular product, 
are trying to make sure that this would immunize older patients 
and younger patients. There is no evidence that it doesn't, it 
is just that the burden of proof is on you to show that it 
does, is that correct?
    Ms. Coelingh. We are trying to expand our indication down 
lower, below the age of 5.
    Chairman Tom Davis. And higher.
    Ms. Coelingh. And higher. So we have recently submitted new 
analyses of data that we have to show that the product is 
effective in adults from 50 to 64 years of age, and the FDA 
should be reviewing that soon.
    Chairman Tom Davis. Where is your plant?
    Ms. Coelingh. Well, our manufacturing is done in three 
stages. The first stage is manufacturing of the seed viruses, 
which Mr. Pien has referred to; and we do that in northern 
California, in the Bay Area. So the seeds are made there. Then 
those are shipped to Liverpool and our bulk manufacturing is 
done there. And then the bulks are shipped to our Philadelphia 
plant and they are blended and filled into the nasal sprayers.
    Chairman Tom Davis. These are global viruses, then, as they 
move through. Well, thank you very much. We appreciate 
everything that you are doing.
    Mr. Pien, let me ask, the suspension of your license hasn't 
prevented you from procuring the materials necessary to move 
forward next year. You are planning as if you are going to go 
full boat, correct?
    Mr. Pien. What we are doing is we are defining all of the 
details of the implementation to achieve remediation, and it is 
going to take stages, and the first stage is to get the MHRA to 
come back into our plant, probably in December, to look at 
whether or not they are going to be able to allow the 3-month 
suspension of license to expire.
    Chairman Tom Davis. But you have the eggs lined up and 
everything as if you are ready to go, right?
    Mr. Pien. Yes.
    Chairman Tom Davis. And, in fact, if you don't get 
licensed, you are stuck with a lot of eggs. You will be in the 
chicken business, won't you?
    Mr. Pien. Well, we will be in a different business than 
vaccines, yes.
    Chairman Tom Davis. So we appreciate that is a considerable 
risk for your coming, just moving ahead in a case like that.
    Mr. Pien. We recognize that.
    Chairman Tom Davis. And I think we appreciate and I think 
it shows the can-do attitude here as we move forward, but I 
just wanted to point that out. You feel encouraged in your work 
is that fair to say, with MHRA and the FDA, to ensure that you 
will be able to manufacture for next year?
    Mr. Pien. We feel encouraged in the approach that I have 
outlined in my testimony has received considerable positive and 
constructive feedback from both the MHRA and the FDA.
    Chairman Tom Davis. The issues that were identified that 
led to the suspension of the license were not facility issues, 
were they? Weren't there more management issues, human factors 
issues?
    Mr. Pien. Chairman Davis, that is largely correct. The MHRA 
did make some recommendations as to whether or not this machine 
should be here and that machine should be there, and also made 
some observations about our quality control system and testing 
program. All of those things are in the scope of our 
remediation plan proposal.
    Chairman Tom Davis. And let me just say for the record we 
met with the FDA and we met with the MHRA, and everybody 
working together on this felt pretty good about where we are 
going, but, as you said, there are no guarantees in this 
business.
    Mr. Pien. No guarantees, first of all, but absolutely. And 
I think everybody has heard Mr. Waxman's suggestions about 
learning from our mistakes.
    Chairman Tom Davis. I have heard a lot of them here too.
    Dr. Stroube, how is Virginia doing at this point? Is the 
CDC making sure we are getting enough to take care of our 
vulnerable population?
    Dr. Stroube. We are getting our fair share; they are 
allocating it by population. And with this new data base and 
today triggering the ordering thing, ordering part of it, we 
will be able to do the best we can with the limited vaccine 
that is available.
    Chairman Tom Davis. How is the vaccine dosage distribution 
information on the Flu Vaccine Finder working? It is only 
available to State health officials. Is that working 
satisfactory, from your perspective?
    Dr. Stroube. Yes. It is getting better. Like I said, they 
upgraded it this morning before I left, and I played with it 
some, where you can go in and actually now we can approve the 
ordering of vaccine and direct where it goes to on that system 
through the distribution and through Aventis.
    Chairman Tom Davis. You notice some other States have gone 
out and gone to other foreign manufacturers that are not 
licensed by FDA, but FDA, we heard today, is looking at trying 
to give them some certification so that they can bring it in. 
Has Virginia given any thought to doing that?
    Dr. Stroube. We have talked it over, but we have not done 
that.
    Chairman Tom Davis. You think you can get an adequate 
supply for the vulnerable population without doing that?
    Dr. Stroube. Well, we were worried about the timeliness 
since we were working with what we have to get it out, because 
we were really worried. We have had some cases in nursing homes 
already, so we went ahead and used some of the vaccine that we 
already had gotten for the public health side and just diverted 
it right away to the nursing homes to try to get them 
protected. So we have been working with what we had, and with 
the expectation a foreign vaccine does get approved, it will be 
put through the CDC system, as I understand it, the same way, 
and we should get a share of the 5 million that FDA is working 
on.
    Chairman Tom Davis. Thank you.
    Dr. Klein, current flu vaccine recommendations cover people 
under the age of 2 and over 50 to include people who have 
underlying medical conditions and put them at high risk. Do you 
think the current flu vaccine recommendations are adequate, or 
should they be expanded to recommend it for all Americans?
    Dr. Klein. I think the group is at risk, those that have 
been targeted and those that had the highest hospitalization 
rates, the most morbidity, and the elderly, the mortality, but 
I think it is a matter of cost-benefit for employers who have 
employees who may have to miss work. Certainly we make it a 
matter of importance that all health personnel be immunized so 
not only do they stay on the job during an outbreak, but they 
don't pass on the virus to their patients. And I think the same 
arguments could be made in almost every venue, that the 
importance in preventing disease, in this case respiratory 
disease, does have a cost-benefit and would be beneficial to 
all ages.
    Chairman Tom Davis. So an ounce of prevention is worth a 
pound of cure.
    Dr. Klein. It will be exam times; college students should 
be protected.
    Chairman Tom Davis. Would a universal flu vaccine 
recommendation also help ensure a stable flu vaccine supply?
    Dr. Klein. I think so, in the sense that one of the goals, 
I think, of any program that addresses these issues should be 
to engage additional manufacturers, particularly domestic 
manufacturers, and if they have guaranteed market with some 
price structure that makes it profitable, I think they will 
return to the market and make that vaccine available. And then 
there will be flexibility, so that if there is a problem with 
one manufacturer, it will influence modestly the vaccine 
supply.
    Chairman Tom Davis. You all have heard everybody's 
testimony today, the first panel with the FDA and the CDC and 
everyone else. Are we missing anything here? Is there anything 
else we ought to be doing that hasn't been discussed or 
recommended?
    Dr. Klein. No, but I hope the various authorities, bodies 
of importance, direct long-term measures, not just to put out 
this fire, but to consider that this probably will occur in the 
future; that vaccine shortages have taken place in the past, 
the current one is important, and they will take place in the 
future unless we build in some new safeguards against that. But 
that will take a lot of perseverence and continued interest.
    Chairman Tom Davis. Thank you.
    I would ask unanimous consent that the three statements 
previously submitted to the committee be entered into the 
record. Without objection, so ordered.
    Mr. Waxman, do you have any followup questions?
    Mr. Waxman. I do, Mr. Chairman. It is interesting to take 
note of the fact that we have a crisis right now; we have an 
inadequate supply for the flu season for the vaccinations. 
Yesterday a committee of the Senate held a hearing; today this 
committee is holding a hearing; tomorrow there will be another 
committee in Congress holding a hearing, it is a subcommittee 
over in the Energy and Commerce Committee. Obviously, Congress 
cares a lot about this issue, appropriately so. We want to 
learn from our mistakes.
    But I want to ask you, Dr. Klein. You are one of the 
leading experts in childhood infections and you served on the 
National Vaccine Advisory Committee. We are acting as if this 
has never been an issue, that suddenly we have a whole issue of 
vaccine supply and we never imagined we would have such an 
issue before us. Didn't the Advisory Committee present a report 
in October 2002?
    Dr. Klein. It did, and many of the issues that I addressed 
are those that have been partially addressed, such as there was 
additional funding made available for vaccine stockpile. But 
because of the SEC regulation, that hasn't been implemented. 
But the others, because they are complex and they require 
perseverence, have been managed in a stop gap measure. And we 
need to reinstitute a more durable set of advisory groups that 
will be able to address and propose specific recommendations 
that can alleviate the long-term problems.
    Mr. Waxman. So before October 2002, your Advisory Committee 
was looking at the issue of how to give the right incentives 
for manufacturers to want to invest in producing vaccine, to 
make sure that they would have a sufficient supply, that the 
unsold batches wouldn't be a disincentive for them, for 
example. So the recommendations were made to set up a committee 
to look at and give further thoughts to it, is that what 
happened in October 2002?
    Dr. Klein. Well, actually, the workshop was in February 
2002, and as a result of that there was an IOM report of 
financing vaccines that was issued, but it in itself wasn't 
complete or wasn't sufficiently complete, and was somewhat 
controversial. So you need continuing activity to maintain 
until proposals that are satisfactory can be given to this 
committee and others.
    Mr. Waxman. So the Vaccine Advisory Committee proposed a 
multi-disciplinary committee to be operating on an ongoing 
basis to address these issues of vaccine supply.
    Dr. Klein. That is correct.
    Mr. Waxman. Now, what happened to that recommendation, was 
it adopted?
    Dr. Klein. The recommendation for the ongoing----
    Mr. Waxman. Yes.
    Dr. Klein. The IOM report was issued in the latter part of 
2003. In June 2004 there was an NVAC meeting that was 
specifically held to continue that dialog, and we are 
interested now in progressing further so that something can be 
done. But the Vaccine Advisory Committee is just that, it is 
advisory to the National Immunization Program and the Assistant 
Secretary of Health and Human Services.
    Mr. Waxman. Well, we need the advice from the experts, and 
we had an advisory committee who gave us recommendations; we 
had the Institute of Medicine give us recommendations. But from 
what I can tell, none of these recommendations have been 
followed up on, especially in this area, where everybody is now 
for giving incentives for production of vaccine so we won't 
lose supply and face the problem we are facing now. Even 
Secretary Thompson seems to be talking about the importance of 
financial incentives.
    The point I want to make is we shouldn't wait for a crisis. 
We have advisory committees. In fact, your testimony here today 
is helpful, but it is advisory to us in many ways to have 
Congress act. And if Congress only holds a hearing while there 
is attention paid to the issue, and if the Secretary of Health 
and Human Services only pays a high priority to this issue when 
there is a crisis, and when there is no crisis it is pushed 
aside, it is inevitable we are going to come back and repeat 
the same mistakes over and over again.
    Let me just ask you parenthetically, because you know this 
issue very well. Is liability a strong disincentive for the 
manufacturing of flu vaccine?
    Dr. Klein. No, it is not.
    Mr. Waxman. It is not? Why not?
    Dr. Klein. The flu vaccine, for the most part, has been a 
very safe product; it is made in eggs, so anybody with an egg 
allergy would be excluded from getting the vaccine. And there 
have been minor problems in the past. There was one experience 
with swine flu, where there was a neurologic disability that 
followed. And there are a couple of minor issues that occurred. 
But the reason for this current shortage is not liability, it 
is associated with a problem that Chiron experienced. That 
there are ingenious ways of getting around the current 
legislation and the Vaccine Injury Compensation Program is a 
given, and that is why that program needs to be reviewed 
constantly and assured that it remains as strong as it has been 
in helping the administration of vaccine, those who administer 
vaccines, as well as the manufacturers, be clear of liability 
for approved vaccines.
    Mr. Waxman. Well, I think you are absolutely right on that, 
and I hope we will get to--not on this committee, but on the 
committee that has jurisdiction, although this committee did 
come up with some recommendations on the Vaccine Compensation 
Program.
    Mr. Chairman, I want to thank you for holding this hearing, 
and thank all the witnesses for their testimony. I hope we can 
learn from this experience that we are facing now to do things 
better and to learn from our mistakes, and hope that we don't 
make the same mistakes again, and the ones we do won't have the 
catastrophic consequences that we seem to be facing with so 
many at-risk people having flu vaccine completely unavailable 
to them.
    Chairman Tom Davis. Well, let me thank this panel not just 
for testifying here today and sharing your views, but what you 
are doing outside of this hearing room, trying to get more 
vaccines to people in need. Thank you very much.
    The hearing is adjourned.
    [Whereupon, at 4:55 p.m., the committee was adjourned.]
    [The prepared statements of Hon. Christopher Shays, Hon. 
Tom Lantos, Hon. Major R. Owens, Hon. Edolphus Towns, Hon. 
Carolyn Maloney, Hon. Elijah E. Cummings, Hon. Dennis J. 
Kucinich, Hon. Diane E. Watson, and Hon. Michael C. Burgess, 
and additional information submitted for the hearing record 
follow:]
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