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USA: Chiron's Public Health Disaster


by Matthew HerperForbes
October 5th, 2004

Chiron's Public Health Disaster
Matthew Herper, 10.05.04, 4:20 PM ET

For the second year in a row, the U.S. may face a profound shortage of flu vaccine. As a result of manufacturing problems, the biotech company that makes half of the flu shots needed in the U.S. said it could not deliver any vaccine at all.

Chiron (nasdaq: CHIR - news - people ), one of only two drugmakers that supply America with flu shots, said British regulators suspended its license for the Liverpool, England, facility where it makes all of its flu shots. As a result, the U.S. may only have half the vaccine it needs--too much for Aventis Pasteur, the only other maker of flu vaccine, to make up for on short notice.

On Sept. 28, Howard Pien, chief executive of the Emeryville, Calif.-based company, had testified before Congress, reiterating the company's expectation that it could provide between 46 million and 48 million doses of its influenza vaccine.

"If we do indeed have a short supply of influenza vaccines, I think it's going to have a significant impact on the public health," says Sara Cosgrove, director of the antibiotic management program at Johns Hopkins University School of Medicine.

"This is a huge issue," says Geoffrey Porges, a biotechnology analyst at Sanford C. Bernstein. "It's going to be discussed in Congress; it's going to be discussed at the highest levels in the [Centers for Disease Control]. There's a real likelihood that we will see some fundamental changes in the vaccine market and in vaccine oversight."

The shortage comes at a time when the number of people the CDC recommends should get the vaccine has actually risen. Infants and their siblings, parents and caregivers are now also supposed to get the vaccine in addition to traditional high-risk groups. To make matters worse, the bird flu, an especially deadly strain, has recently been transmitted for the first time from person to person in Thailand. And regular flu can be bad enough. Says Cosgrove: "People forget how dangerous regular old influenza can be."

Porges estimates that the U.S. was going to need 90 million doses, up from 85 million in a normal year. Aventis Pasteur, a unit of the newly formed Sanofi-Aventis (nyse: SNY - news - people ), can probably provide 50 million doses. MedImmune (nasdaq: MEDI - news - people ), a biotech that sells a flu vaccine called FluMist that is given as a nose spray, can probably provide less than 2 million doses. That leaves the U.S. 38 million doses short. It takes four months to make a batch of influenza vaccine.

What happened? Most big drugmakers abandoned the flu vaccine market, which is far less profitable than that of branded drugs. Last year, Wyeth (nyse: WYE - news - people ) stopped making flu shots in favor of co-marketing FluMist. When FluMist sales failed to take off, Wyeth exited the partnership.

Flu shots are sold mainly to governments, Porges says, and that tends to keep prices low, at about $6 per dose. If flu shots cost $40 each, they might attract more big drugmakers, but insurance companies and government agencies probably couldn't afford the high cost. Instead, Porges says, the U.S. probably will wind up keeping a closer eye on vaccine makers and building a bigger stockpile of vaccine.

Another possibility: make sure more flu shots are manufactured on U.S. soil. Right now, only Sanofi-Aventis (a French company) makes its vaccine in the U.S. In the meantime, those who can't get vaccines turn to Roche's Tamiflu, an antiviral pill that can prevent infection if taken after exposure to the flu. Porges points out that Gilead (nasdaq: GILD - news - people ) gets a royalty on Tamiflu sales.

Johns Hopkins emblemizes the problems the Chiron recall creates for doctors and patients. Cosgrove says her hospital gets most of its vaccine for adults from Chiron, and had ordered 25,000 adult flu doses from the biotechnology company. They had expected to receive the first doses by Oct. 15. Now, they may not come at all, leaving doctors searching for alternatives.

"We're discussing it with the pharmacy now," says Cosgrove, "as I'm sure everyone in the country is discussing with their pharmacy, making pleas for more pediatric vaccine, more FluMist." Unfortunately, there may not be much extra vaccine to be found.







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