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U.S. Policy Regarding Pandemic-Influenza Vaccines


Investing in New Capacity for Production

Current manufacturing capacity for the only licensed pandemic-influenza vaccine in the United States is about 25 million doses, or enough vaccine to protect about 12.5 million people (see Table 1-4). The goal the Department of Health and Human Services set for vaccine production in an influenza pandemic is 24 times the amount available in the United States—manufacturers would have to produce enough vaccine for each of the nation’s 300 million people. (In an influenza pandemic, a course of immunization would consist of two doses for each person). Policymakers at HHS do not believe the goal can be achieved solely by expanding capacity for egg-based production. However, because it is the dominant technology, the agency has awarded contracts to domestic manufacturers of egg-based influenza vaccines to substantially expand capacity (see Table 3-1).

Table 3-1. 

HHS’s Funding for Capacity to Produce Influenza Vaccine

(Millions of dollars)
Provide Year-Round Egg Supply
Retrofit Existing Egg-Based Manufacturing Facilities
Build New Cell-Based Manufacturing Facilities

Source: Congressional Budget Office based on Robinson (2008).

Notes: HHS = Department of Health and Human Services, TBD = to be determined. HHS has not yet awarded contracts to build new facilities for manufacturing cell-based vaccines. HHS has stated that it will award $600 million for that purpose.

Another goal is to shift the production of influenza vaccine from egg-based to cell-based technology. Manufacturers of cell-based vaccines developed under the advanced-development contracts will be eligible for additional funding from HHS to build new facilities. Cell-based technology does not work substantially faster than egg-based methods, however, and shortened production time is another goal of HHS’s plan. In the ideal case, HHS calls for the new egg- or cell-based capacity that is being funded today to be retired when next-generation vaccines are ready to come to the market or, in the case of capacity for cell-based production, put to some other use. It is expected that the new vaccines will be produced more quickly than are current formulations and that they will provide broader protection against many or even all strains of influenza viruses.

The process of putting manufacturing capacity into place is more difficult for vaccines than it is for most other drugs. During the final phases of clinical development, the manufacturer must seek approval of the proposed manufacturing facility from the Food and Drug Administration. The vaccine maker also must expand the capacity of its production processes from that used for quantities required in clinical trials to that appropriate for commercial production. The FDA’s approval process includes facility inspections and it requires the company to demonstrate that its product elicits immune responses that are consistent from batch to batch. That requirement for dual certification limits manufacturers’ flexibility in altering either the process or the facility to boost production. HHS hopes to provide manufacturers with incentives to begin now to assemble new facilities in advance of an influenza pandemic. Then, if a pandemic occurs, the new vaccines can be produced within six months of the onset.

Egg-Based Manufacturing Capacity

HHS has taken several actions to increase domestic capacity for egg-based manufacturing of influenza vaccine. In 2004, the agency signed a $43 million contract with Sanofi Pasteur to ensure a year-round supply of eggs for that company’s domestic manufacturing facility, to stockpile other vaccine-manufacturing supplies, and to supply pandemic-influenza vaccine for clinical trials. A year-round supply of eggs makes it possible for Sanofi Pasteur to produce pandemic vaccine even if a pandemic occurs outside of the company’s annual production cycle. Because that contract expires in 2008, HHS has requested $42 million for 2009 to maintain a year-round egg supply for the next five years.

In 2007, HHS signed contracts totaling $133 million with two companies (about $77 million to Sanofi Pasteur and $55 million to MedImmune) to retrofit their domestic vaccine-manufacturing facilities. The facility upgrades will allow Sanofi Pasteur to produce prepandemic vaccine for the stockpile year-round. Currently, Sanofi Pasteur produces prepandemic vaccine for the stockpile only during the three months of the year that it is not producing seasonal vaccine. MedImmune does not produce prepandemic vaccine for the stockpile. Its live, attenuated vaccine (made with a weakened form of the virus) against H5N1 has not been successful in early clinical trials (WHO 2008). Furthermore, there is fear that stockpiling prepandemic vaccine made with a live, attenuated virus could increase the chances of a pandemic’s occurring by providing the opportunity for a virus with pandemic potential to mix with a seasonal strain, creating a deadly transmissible virus (McKenna 2007a).

Sanofi Pasteur is working to triple its production capacity by 2011. The company is set to pay $25 million of the $102 million cost of retrofitting an existing facility, and it has added a second facility, at a cost of $150 million, to its complex in Swiftwater, Pennsylvania (Vaccine Weekly 2007). When both facilities are approved by the FDA—which is expected by 2011—the company’s annual production capacity for seasonal-influenza vaccine will approximately triple, from 50 million to 150 million doses of 45 micrograms each. That expected capacity could allow the manufacturer to produce 75 million doses of its licensed pandemic-influenza vaccine, or enough vaccine for about 38 million people (at 90 micrograms per dose for a two-dose course). If the company’s experimental adjuvanted vaccine proves safe and effective, then its capacity would increase because the amount of antigen (the active ingredient in a vaccine) it had to produce would drop. For example, its expected capacity would be 450 million doses of an adjuvanted pandemic vaccine (at 15 micrograms of antigen per dose), enough to inoculate 225 million people, but even larger capacity increases are also possible. However, additional manufacturing facilities would still have to be built to produce the adjuvants.

By 2011, MedImmune is expected to have emergency capacity to produce 50 million doses of pandemic vaccine.1 MedImmune’s manufacturing facility in the United Kingdom produces bulk seasonal-influenza vaccine for the U.S. market, but it prepares the seasonal seed strain at its facility in California. MedImmune will use its award to retrofit its California facility to produce bulk quantities of pandemic-influenza vaccine in case of an emergency. The company will contribute $14 million to the project.

The contract also included options in later years that would keep the new capacity in reserve and ready to produce in the event of a pandemic by manufacturing at least one commercial-scale lot of vaccine each year to maintain licensure. The size of a lot depends on the facility, but typically it would be hundreds of thousands of doses. The cost of production in the contract is about $15 million per year for a capacity of 50 million doses of pandemic-influenza vaccine.

Cell-Based Manufacturing Capacity

Each of the six companies that won advanced development contracts for cell-based vaccines was required to commit to establishing a U.S.-based cell-manufacturing facility with a production capacity of at least 150 million doses of pandemic-influenza vaccine within the first six months after the onset of a pandemic, although the awards do not cover the cost of building new manufacturing facilities.

HHS does not expect that each of the six contracts will lead to additional capacity that can produce 150 million doses of pandemic-influenza vaccine. Instead, it forecasts the possibility of a total of 475 million doses from the additional domestic capacity, and it plans to award additional contracts totaling $600 million to the most successful companies. That funding will defray the costs of building new facilities for cell-based manufacturing.

Because the expanded capacity would not be needed to meet the demand for seasonal vaccine, some government funding would probably be required to induce producers to build more factories. The contracts for retrofitting the egg-based production facilities involve cost sharing between the government and the two companies, each of which would provide at least 25 percent of the total cost. HHS has said that the contracts for cell-based vaccine facilities will require manufacturers to provide a higher percentage.

Initial Costs

Production facilities for cell-based influenza vaccine are newly under construction, so estimates of the cost to build and obtain the FDA’s approval should be considered preliminary. According to the company, the Novartis plant in North Carolina will cost more than $600 million and will have a production capacity of 50 million doses of seasonal vaccine (Lewcock 2007b; Whalen 2006). That estimate includes the cost of bringing the plant online and the cost of seeking the FDA’s approval for the facility, which can take two years. Other industry sources have estimated a cost of about $320 million—bringing the plant online and obtaining the FDA’s approval would add to that total—to build a plant with an annual capacity of 50 million doses of cell-based seasonal vaccine. On the basis of discussions with industry experts, CBO anticipates that bringing the plant online and submitting to the FDA’s approval process would add 25 percent to the capital cost of that plant, making the total cost about $400 million.

Most vaccine producers are developing adjuvants, substances that can be added to vaccine formulations to reduce the amount of antigen needed per dose. (The first calculations that follow assume that the use of adjuvants will cut the amount of antigen needed from 90 micrograms to 15 micrograms per dose for the pandemic-influenza vaccine.2) That amount, which equals the amount of antigen for each strain of seasonal-influenza vaccine, is easily being bested in published clinical trials (see Table 2-1). To the extent that producers achieved a larger antigen savings than assumed, the costs described here would overstate the cost of the program.

A plant with a capacity of 50 million seasonal-influenza doses (45 micrograms per dose) could produce 150 million pandemic-influenza doses at 15 micrograms per dose. It would take about three plants with that capacity to produce 475 million doses. If the cost of construction, bringing the plant online, and obtaining the FDA’s approval averaged $400 million per plant, the total cost of the expanded capacity would be $1.2 billion. If each plant cost $600 million, the total would be $1.8 billion.

HHS’s goal of diversifying the sources of the U.S. influenza vaccine supply would be met if, in addition to the existing domestic plants that produce egg-based vaccines, three plants were built for cell-based manufacturing. The nation’s reliance on a small number of manufacturers has resulted in several recent disruptions in supply. If adjuvants fulfill the promise of sharply cutting the amount of antigen needed for pandemic-influenza vaccines, policymakers might face a choice between reducing the cost of the program and ensuring a diversity of supply.

If no adjuvanted vaccine proves safe and effective, then the initial costs of construction would rise substantially. It would take 19 plants, rather than 3, to produce 475 million doses (at 90 micrograms of antigen per dose). The initial costs of construction would rise proportionately, to between $7.6 billion and $11.4 billion.

In either case, it is unlikely that enough capacity could be available in time to meet the target date of 2011. Only Novartis has begun construction of a domestic facility for making cell-based vaccine. The company anticipates its plant will be in operation by 2012 and will have an annual production capacity of 50 million doses of seasonal vaccine (Pink Sheet 2007). MedImmune has announced its intention to convert an existing plant in Frederick, Maryland, that currently manufactures monoclonal antibodies into a manufacturing facility for seasonal-influenza vaccine that would serve domestic and international markets with an expected capacity of 50 million to 60 million doses of cell-based seasonal vaccine. The influenza vaccine operations are unlikely to begin before 2012–2013. GlaxoSmithKline has purchased a vaccine-manufacturing facility in Pennsylvania that it plans to modernize to develop and produce cell-based seasonal- and pandemic-influenza vaccines (Megget 2007). Sanofi Pasteur, Baxter, and Solvay have not announced plans to manufacture cell-based vaccine in the United States.

Continuing Costs

If U.S. demand for seasonal-influenza vaccine grows by 4 percent per year (continuing the trend observed from 1999 to 2006; see Figure 1-2), demand will reach nearly 130 million doses of vaccine by 2011. By itself, Sanofi Pasteur’s projected capacity for egg-based vaccine, at 150 million seasonal doses by 2011, would exceed projected U.S. demand. So if all the new capacity for manufacturing egg-based and cell-based vaccines were built as called for by HHS, there would be excess capacity to serve the domestic demand for seasonal vaccine.

Cell-based technology might have technical advantages over egg-based production, but its economic advantages are less clear; the resulting vaccines could be more expensive for the near term (Lash and Wang 2006). Plants that manufacture cell-based vaccines will have alternative uses; plants that make egg-based formulations do not. Consequently, unless they have some federal incentives to remain, the excess capacity in the seasonal-influenza vaccine market could drive manufacturers of cell-based vaccine from the market first. If the costs for cell-based production facilities to remain in reserve are similar to those for producers of egg-based vaccines—$15 million annually per 50 million doses—then the capacity to produce 475 million cell-based doses of pandemic-influenza vaccine would cost about $140 million per year to remain operational at 15 micrograms per dose. If no company developed adjuvanted vaccines, the continuing costs would be about $850 million at 90 micrograms per dose.

Purchases of vaccine for the stockpile could go a long way toward supporting the reserve capacity. It could cost between $350 million and $1.1 billion annually to purchase replacement vaccine for the stockpile as the contents expired (as described in Chapter 4). The new manufacturing capacity also could be supported through exports of seasonal vaccine and through increased domestic demand for seasonal vaccine.

Some experts have suggested that the additional cell-based production facilities could be used to manufacture other products during years when there is not an influenza pandemic. Then, if a pandemic did occur, a plant could switch to manufacturing vaccine against the pandemic-influenza strain. The caveat about dual-use facilities involves safety. Manufacturing facilities would have to be cleaned to prevent cross-contamination and then subjected to a new FDA approval process, which could easily take months. If HHS’s objective of a maximum delay of six months from the identification of a pandemic to the inoculation of the public is to be met, the recertification process could prove impractical. It also might not be cost-effective to build dual-use facilities that required specialized equipment and processes for the manufacture of different products.

International Efforts to Build Capacity

An alternative way to encourage private-sector construction of capacity is for governments to sign advance supply agreements with producers. The Department of Health in the United Kingdom has agreements with several suppliers to deliver 150 million doses of vaccine as soon as possible in the event a pandemic is identified (Donaldson 2006). The French government has an agreement with Sanofi Pasteur to deliver 28 million doses of vaccine in the event of a pandemic, and Italy has signed agreements for 36 million doses of vaccine (BBC News 2006; Sanofi Pasteur 2006). Several other countries also have signed such agreements. Although the terms have not been revealed, the Canadian government has signed an agreement with GSK, which has a plant producing influenza vaccine in Quebec. There is no public information about whether the companies have the capacity to produce the vaccines promised in the advance supply agreements.

The European and U.S. strategies for developing and maintaining capacity entail costs and risks. Under the European approach, the manufacturers might not have the capacity to fulfill the advance supply agreements in the event of a pandemic. And despite the U.S. subsidies for vaccine development and capacity building, in the event of a pandemic, the United States would not have a committed supply and would have to spend additional money to buy vaccine. Moreover, the manufacturers could exhaust their supplies in the act of meeting their obligations under the European advance supply agreements and have nothing left to distribute in the United States.

The World Health Organization has made several small grants to help build vaccine-manufacturing capacity in very poor countries (P. Taylor 2007). The funding is limited ($2 million to Thailand, for example) and is not likely to be adequate to support new production facilities. Total funding for such construction in all countries is $18 million, $11 million of which is provided by HHS.

Private companies also are increasing their investments in other countries in response to the growing demand for seasonal-influenza vaccines. Microbix, a Canadian company, has just signed a contract to build a $200 million manufacturing facility in China (N. Taylor 2008a). The project will be jointly financed by the company and the government of China, which has indicated an interest in increasing its seasonal vaccination rate from the current 2 percent to 20 percent of its population. Sanofi also recently completed building a manufacturing plant in China (Whalen 2008b), and press reports indicate that the other major companies hope to garner a share of that market. More generally, Sanofi is expanding its worldwide capacity and has launched a multiyear, multi-billion-dollar construction effort to create vaccine-manufacturing capacity against a variety of diseases, including influenza (N. Taylor 2008b).


MedImmune is not developing an adjuvant. That company’s vaccine uses a live, attenuated virus (a weakened form of the virus), which reduces the amount of antigen needed per dose.


HHS uses that assumption in its contracts for expanding egg-based capacity (HHS 2006a). However, in other planning, HHS has assumed that different amounts of antigen would be required for pandemic-influenza vaccine (Robinson 2008).

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