U.S. Vaccine Supply: Understanding and Combating Shortages

VACCINES ARE ONE of the greatest success stories in medicine’s history. Smallpox, once claiming countless lives worldwide, is eradicated from the planet.¹ Polio, much-feared in the United States during the 1950s, has been eliminated in this country.² Influenza, too, is held at bay by annual vaccines, with some 145 million Americans vaccinated during the 2015–2016 flu season.³ And, hundreds of millions of Americans are spared each year from contracting serious illnesses such as measles, diphtheria, whooping cough and pneumonia, all thanks to vaccinations, many of which are given during childhood. Seventy-two percent of children 19 months to 36 months old receive the combined seven-vaccine series against nine infectious diseases, including chickenpox, mumps, hepatitis B and rubella. Ninety percent of American parents, in fact, vaccinate their children against various illnesses — most following the Centers for Disease Control and Prevention’s (CDC) recommended schedule, which includes up to 28 immunizations before a child’s second birthday.⁴

High vaccination rates, which boost “herd immunity,” protect the general public from such crises as the 2013 New York City measles outbreak. Rather than infecting the entire city, the outbreak remained in the Brooklyn area because most New Yorkers who came into contact with the virus had been vaccinated. According to infectious disease specialist Jane Zucker, MD, “If we didn’t have the high vaccination levels that we do in New York City … I can promise you we would have had hundreds, if not thousands, of [measles] cases.”⁵

Suppose, however, that our country suffered a severe dearth of vaccine supplies to inoculate children and adults against multiple serious but preventable illnesses. What, then, stands between Americans and a pandemic such as the Spanish flu outbreak of 1918? In other words, how much does the average healthcare provider or researcher understand and appreciate the quantity and allocation of our nation’s vaccine supply? Since vaccines are the best defense against infectious diseases, knowing more about their allocation could help providers purvey the importance of vaccines and advocate for adequate future supplies.

Vaccine Distribution at a Glance

It is important to remember that there are both private and public sector vaccine distribution avenues, and the two occasionally overlap. The private sector (physician offices serving privately insured patients, for example) has several ways of obtaining vaccine, including directly through the manufacturer, ordering from a distributor who purchases from the manufacturer or even buying vaccine from a distributor that is more than one step removed from a manufacturer. However, private sector providers may be impacted by public supplies of vaccine, since many physicians serve both privately insured patients and those in federally funded, public sector CDC programs.

As Jeanne Santoli, MD, branch chief of vaccine supply and assurance at CDC, explains: “On the public side, which CDC manages, there are two large vaccine programs: Vaccines for Children [VFC], which has 44,000 enrolled providers, and the Section 317 program, which primarily serves targeted groups of adults. About 50 percent of the pediatric vaccine in the country goes through the VFC program. For adults, we purchase far less. Across the board, though, we play a very large role in the public sector supply chain for the distribution of vaccine.”⁶

Vaccine Shortages

While Dr. Santoli says there are not specific vaccines necessarily more vulnerable to shortage from a biological standpoint (biologic substances can be repeatedly manufactured through specific processes), shortages do occur due to other reasons. A manufacturer, for example, might not be able to produce vaccine quickly enough to meet demand. Or a manufacturer’s supplier may be unable to send vaccine out promptly. Each vaccine may have its own specific reasons for shortage, but there are often common factors, including economic, regulatory and legal issues. In the event of shortage, however, CDC works with vaccine manufacturers to lessen the impact on public and private sectors as much as possible. “There are times when the shortages are harder to mitigate,” Dr. Santoli explains. “If only one manufacturer makes a vaccine, then I can go to the national vaccine stockpile, but I cannot talk to other manufacturers. It’s harder to manage a shortage when there is a single manufacturer.” Dr. Santoli, once again, assures physicians and the general public that no particular vaccine is more susceptible to shortage.⁶

Vaccine shortages have occurred since at least the 1960s, although since the year 2000, the country has endured many series of shortages of vaccines against various diseases.⁷ Most shortages have been passing and relatively easy to minimize, lasting only a few days to a week. A few, however, have caused more disruption, including shortages of pediatric vaccines for tetanus, diphtheria, pneumococcal conjugate, trivalent inactivated influenza and meningococcal conjugate. 8 During such times, CDC informs healthcare providers how long the shortage will last and how to distribute current vaccine supply. In most cases, there is still vaccine available, but there are simply fewer doses than usual.

“During a shortage,” Dr. Santoli adds, “doctors receive orders through the health department for VFC patients, whose vaccines are controlled. Doctors will receive an amount of vaccine that they are known to need, but they won’t be able to get more because that is what keeps distribution equitable, which is the very best thing for minimizing the impact of a shortage.” When doctors order from a manufacturer, that manufacturer will have a similar process in place. “If it’s very much different from what a physician has been ordering previously, they will discuss that because, again, they don’t want anyone to accumulate doses,” explains Dr. Santoli. “A lot of providers who are impacted by a shortage are actually impacted by their public supply and their private supply, since in pediatrics, most of the doctors in our program are private providers who also serve insured patients.”

To prevent shortages, CDC closely monitors vaccine supply across the country. Because they purchase large amounts of vaccine, their contracts with manufacturers are very detailed in terms of what is required. For one, manufacturers are mandated to give as much advance notice as possible of any supply issues. When a manufacturer anticipates an order might be inadequate, CDC has various actions it can take to mitigate the impact. It will begin by estimating the extent and length of the vaccine supply gap expected, and then it will look at its own stockpile. “Through the Vaccines for Children program, the government owns and maintains stockpiles of routinely recommended pediatric vaccines,” explains Dr. Santoli. “The program started in 1994, and over time, we have built up our stockpiles in order to be able to serve as a safety net. So if a manufacturer says they expect a certain amount of gap of this amount of doses over this period of time, the very first thing we’ll do is look in our stockpile and see if that can be brought to bear.”

Sometimes, the stockpile is sufficient to bridge the gap. If it is insufficient, though, CDC asks permission from the manufacturer to privately speak to other licensed manufacturers of alternative products that could be used. Then, CDC, and specifically Dr. Santoli, will approach an alternate manufacturer in confidence to see what they might be able to do to make additional doses available. “That takes a little bit of thinking,” says Dr. Santoli. “They will respond back to me, and then, depending on what they say, we can put a plan into effect. Depending on what we anticipate, we might put a vaccine in controlled ordering. That is on CDC’s side, with our states getting specific caps, and them working with providers to get vaccine equitably distributed. The manufacturers will often do something similar. We do it differently because we have the middleman, the state immunization programs, but controlled order usually happens across the board. That is the way we can fairly make sure that the public sector and the private sector and all the providers in it get the amount of vaccine that is their fair share so we can get through a time of what we think is going to be tight supply.”

However, Dr. Santoli is quick to point out that “though not nearly as common, there’s another strategy for more severe shortages. Say a manufacturer calls CDC to tell us about a shortage. We look at what’s in the stockpile, and we see if we can do something there. We go to another manufacturer, and we see if we can do something there. But what happens if there is still a gap? In other words, suppose we need 100,000 doses a month to serve the nation, but it really looks like there will be only 50,000 a month. There’s going to be an ongoing gap for a period of time. CDC will pull together its infectious disease experts and explain, for example, that a vaccine regularly given on a four-dose schedule could be decreased. So, maybe we don’t have enough to give everyone the full four doses, but we could decide that we’ll give people two doses. Then, when the shortage is over, we’ll be recalling those children and giving them the doses that they missed.”⁶

Balancing Supply with Price Points and Manufacturer Incentives

Perhaps the worst cause of shortage, other than missed production goals, is a manufacturer deciding to decrease production or stop producing a vaccine altogether because the company’s financial gain is too minimal and drug production costs are too high. Development costs are often steep for pharmaceutical companies, too often leading to a decline in the number of manufacturers producing certain vaccines.⁹ A recent Duke University study found that between 2004 and 2014, an average of almost three out of 22 vaccines suffered a supply gap in the United States. And, in 2007, a full one-third of vaccines were scarce. Duke University economics professor David Ridley, PhD, who headed the study, examined market tensions and price points required to draw vaccine manufacturers into increased production. “The government doesn’t want to overpay,” Dr. Ridley stated in a Fuqua School of Business news release, “but there’s a tension between responsible use of government funds and giving manufacturers sufficient incentive to get into manufacturing — and stay in.”¹⁰

Dr. Ridley and his colleagues also discovered that during the past decade or more, there has been a correlation between vaccine price and shortage probability. More specifically, for every 10 percent increase in price, there was a 1 percent lower probability of a shortage. They looked at the supply and price of 22 vaccines between 2004 and 2013, and found 24 cases of shortage during that time. The shortages were dueto a diminishing supply and low demand. Among vaccines priced at $75 or higher per dose, however, there had been no shortages since 2004.^10,11

While the government has been willing to pay higher fees for new vaccines, the price of older vaccines is much lower, making manufacturers unlikely to invest in expansion or new developments for them. These deflated prices might be too low to sustain certain vaccines because, without that investment, vaccine shortages are increasingly more likely. “You’ll be reluctant to invest in expensive new technology if you’re not going to make any money,” Dr. Ridley added. “It’s expensive to get into manufacturing, so if someone exits, it’s hard for someone to step in and take their place. If you’re not making money anyway, you’re not going to have excess capacity sitting around.”¹⁰

Vaccine prices are often purposely reduced by government programs provided for low-income families that would not otherwise have coverage. In fact, federal and state programs purchase more than 50 percent of childhood vaccine doses at a discount. VFC, the largest federal vaccine program, may adjust prices within a year, but only downward. This constrains changes in what the program pays for, with some vaccines falling below the overall inflation rate. And, although the program keeps a six-month backup supply of vaccines on hand, the average shortage lasts three times that long, according to the Duke study.¹⁰

Commercial market vaccine prices are higher than government ones, but not often by enough to inspire manufacturer investment and prevent shortages of older, less-expensive vaccines.¹² In a 2011 study on the effects of regulation and competition on vaccine supply, researchers discovered the government’s role in purchasing a large portion of vaccines could be to blame, in part, for the small number of vaccine suppliers.¹³

Finding the Best Chance for Adequate Supply

Vaccines are perhaps the most cost-effective treatment available, unlike other medical treatments, since they save money by preventing disease and promoting a country’s healthy productivity. Despite this, the U.S. government seems determined to undervalue vaccines’ prices, though studies have shown that vaccines would still be worth their cost if they were 10 times more expensive. Several studies have found that at even 10 times their cost, vaccines would still save the country money.^14,15

“I think the public has a sense that higher prices encourage investment in research,” said Dr. Ridley. “I think what’s overlooked is that higher prices also encourage manufacturers to invest in capacity and quality. Without those investments, shortages become more likely.”¹⁰

Dr. Santoli’s perspective on vaccine supply is somewhat more encouraging: “Vaccine supply, we understand, is a critical priority. It’s a very effective tool. It’s a cost-effective tool, of course, but it’s also an effective tool for preventing disease. We place a very, very high priority on the planning that we do about how to manage shortages, and to the extent that we can manage them. Then, we can make future shortages least burdensome on providers and on families. There can be a potential shortage beginning, for example, but we can have it all managed so that it won’t even be an issue or a concern that either sector will have to deal with. That’s what we’re always trying to do by having these strategies and using them. Strategies are the cornerstone of being able to prevent vaccine-preventable diseases. Still, we must anticipate that a shortage could happen for any vaccine at any time.”⁶

Perhaps one day scientific research and development on more expensive vaccines can advance vaccine production across the board, improving storability or lessening the drugs’ production time, mitigating the likelihood of future shortages. Today, though, the country’s best chance to supply adequate, equitable vaccine appears to be finding a balance between pharmaceutical company incentives and governmental devaluing of vaccine cost.