July 19, 2005 Walter A. Orenstein, M.D. Professor of Medicine Director, Emory Vaccine Policy and Development Associate Director, Emory Vaccine Center Purchase Options For Influenza Vaccines in the Setting of a Pandemic

Topics to be Covered  The 2002 efforts to develop purchase options  Current Process  Assumptions  Underlying Principles  Options with Key Pros and Cons  Stakeholder Opinions  Issues not addressed

2002 Efforts to Develop Purchase and Distribution Efforts  Calls completed with 25 stakeholders  Vaccine Manufacturers  Vaccine Distributors  Healthcare Providers  Community Vaccinators  State and Local Health Agencies  Department of Defense and Veteran Affairs  An open meeting on August 22, 2002

Options Developed in I Option 1 Federal purchase similar to interpandemic seasons Medicare and Medicaid to function in usual fashion Option 2 Federal purchase for “traditional” public healthcare recipients i.e., uninsured, the military, children eligible for VFC

Options Developed in II Option 3 Federal purchase for above plus high priority groups (i.e., essential workers and highest risk of morbidity and mortality) Option 4 Federal purchase of all vaccine with distribution to State and Local health departments

Current Process of Development of Option  Sent out document from 2002 with 4 options and pros and cons of each to the PIWG  Comments collected, document modified  Revised document sent out and stakeholders asked for preferences  On 7/15/05, conference call conducted with PIWG members. Document revised.

Guiding Principles - I  There are 4 key steps in a pandemic influenza vaccination program:  Vaccine purchase  Vaccine allocation  Vaccine distribution  Vaccine administration  Determining who shall control purchase and allocation of available influenza vaccines during a pandemic is critical for planning

Guiding Principles - II  Options developed are for purchase during a pandemic  Options do not apply to interpandemic period  When pandemic is over, purchase reverts to system that existed prior to pandemic

Other Underlying Assumptions - I  Initial supply likely to be inadequate to meet initial demand  As time from initial detection of the pandemic strain increases, supply will become adequate to meet demand  State and Local Public health departments will be responsible for distribution of public purchased vaccine to their populations. They will work with key public and private sector stakeholders to determine the best distribution system

Other Underlying Assumptions - I  Federal agencies responsible for serving their usual populations  Allocation of Federally purchased vaccine made by Federal government to:  States  Federal Agencies providing direct health services  Distribution systems may involve manufacturers, 3 rd party distributors, and public distributors  Administration may involve both private and public providers

Underlying Principles  Equitable access to vaccine within each priority group. Eliminate financial barriers to access  Reconsideration of purchase and distribution at time of and during a pandemic  Focus limited vaccine supplies to high priority groups. Minimize use in low priority populations  Rapid and efficient distribution of vaccine

Some Other Critical Factors in Achieving Optimal Vaccine Purchase and Distribution  Rapid availability of funds for whatever quantities of vaccine are purchased with Federal funds  Liability protection of manufacturers and providers

Four Options for Initial Federal Vaccine Purchase in the Event of a Pandemic - I Option 1 Federal purchase similar to interpandemic seasons Option 2 Federal purchase for traditional groups covered by public health for the uninsured, persons served directly by federal agencies (e.g., military, VA), children eligible through VFC (up to about 48 million people) Allocation based on distribution of high priority people served by public versus private sectors

Four Options for Initial Federal Vaccine Purchase in the Event of a Pandemic - II Option 3 Federal purchase to include highest priority groups – up to 114 million people total Federal government gets priority until high priority needs met Federal purchase for lower priority groups it traditionally services – total served up to 143 million people Option 4 Federal purchase of all vaccine during the pandemic. Distribution in line with underlying assumptions. System reverts to pre-existing mixed public/private system when pandemic declared over

Option 1 – Usual System Pros – Market oriented philosophy – Uses existing distribution system – Does not require new public health capacity – No additional appropriations needed

Option 1 – Usual System Cons – I – Some targeted people may be unable to pay – Limits ability of public health officials to control and target vaccine – Does not ensure equitable distribution – Leaves burden of removing financial barriers to state and local authorities – Potential grey market – Dependent upon which manufacturer orders are placed with

Option 1 – Usual System Cons – II – Manufacturers may have to ration vaccine to usual customers to provide more equitable access – If no Federal guarantees, manufacturers may not want to risk large scale production – Private providers at risk for ordered vaccines they do not administer – Local health departments cannot promise low priority vaccines later

Option 2 – Federal Purchase for Traditional Public Health and Federal Agencies Pros – Removes financial barriers to vaccine for the poorest Americans including uninsured – Consistent with market oriented philosophy – Existing distribution system used – Limited need for enhanced public health capacity – Less expensive than more extensive purchase options – Allocation based on public health priority groups and voluntary manufacturer compliance

Option 2 – Federal Purchase for Traditional Public Health and Federal Agencies Cons – Need to institute insurance screening – Manufacturers may need to limit vaccine to usual customers to assure equitable distribution – If no guaranteed purchase, may discourage manufacturers from producing at high capacity – Public sector has limited control in a shortage situation – Possible two tiered system with public and private sector competing – Local health departments cannot promise vaccines to low priority groups later

Option 3 - All High Priority Groups and Proportion of Lower Priority Groups Traditionally Covered Pros – Gives public sector control to target and eliminate financial barriers – Gives flexibility for each state to use existing distribution system and modify it to meet their needs – Eliminates need for state and local resources to purchase for high priority groups – Allows for private sector market once high priority needs are met – Allows states to redistribute vaccine to the private sector if there is public sector excess – Relies on private sector for low priority groups

Cons – Does not ensure equitable distribution to lower priority groups especially if total population vaccination is recommended – May not be seen as fair by public – May raise questions of priority designations – If government does not guarantee purchase for all, production may be inadequate – Low priority groups may face financial barriers – Local health departments cannot promise vaccine to low risk groups Option 3 –Plus All High Priority Groups and Proportion of Lower Priority Groups Traditionally Covered

Option 4 – Federal Purchase of All Vaccine Pros – Best facilitates targeting – Eliminates needs for state and local purchase – Prevents price gouging – Eliminates dual public/private purchase and decreases inconsistent compliance – Gives states and localities maximal control to equitably distribute and monitor vaccine – Guarantees manufacturers purchase of total national need quantities

Option 4 – Federal Purchase of All Vaccine Cons – Requires greatest Federal appropriations and eliminates other parties from paying (i.e., insurance companies) – May be opposed by manufacturers who fear losing the private market – Could be delays in getting a timely appropriation – State and local health departments may lack infrastructure to handle all vaccines – Most public health authorities have limited relations with private sector influenza providers

Preferences of Key Stakeholders for Federal Purchase of Influenza Vaccine during a Pandemic as of 7/15/05 - I  Option 1 – Current System - NONE  Option 2 – Traditional Public Health Populations including Uninsured – NONE  Option 3 – All High Priority Plus Traditional Low Priority – HRSA – sanofi pasteur – Medimmune * * Could be 3 or 4 depending on how LAIV would be used

Preferences of Key Stakeholders for Federal Purchase of Influenza Vaccine during a Pandemic as of 7/15/05 - II  Option 4 – Total Federal Purchase AAFPAMAIDSA AAPAPICIHS ACPASTHOGSK AHACDCNACCHO AHIPCSTEVA Medimmune * * Could be 3 or 4 depending on how LAIV would be used

Selected Concerns of Stakeholders - I AMA – Need to be full partner in planning allocation, distribution, and administration ASTHO – Funds for Federal purchase must not be taken from existing programs IHS – wants to be in charge of the distribution system for their population IDB – too many questions unanswered to make a preference. Need to guarantee vaccine produced will be purchased

Selected Concerns of Stakeholders - II Medimmune – Need clarity of role of LAIV sanofipasteur– Take advantage of existing infrastructure which is primarily private sector rather than develop whole new system

Issues Not Addressed  Mechanism to secure Federal funds  Details of how contracts would be negotiated  Federal guarantees for vaccine production  Details of vaccine allocation, distribution, and administration  Administration fees  Transition to present purchase and distribution systems

Summary of Purchase Options Discussion Two major options emerged 1.Federal purchase for all high risk, purchase for lower risk persons traditionally served by public sector including uninsured Preferred by 2-3 stakeholders 2.Universal Federal purchase during the pandemic Preferred by stakeholders Preferred by stakeholders