This posting is a follow-up to my previous Supply Chain Matters post providing a supply chain perspective on the current H1N1 vaccine shortage.  Our original posting outlined some causes of the current production shortage problem and some observations relative to where future investments should be applied in vaccine-related supply chains.

While the overall problem related to the shortfall in meeting demand for the H1NI vaccine still continues, efforts are being made by manufacturers to increase production yields and deliveries of the vaccine.  The U.S. government reported that as of October 28, over 16.8 million doses of vaccine have been shipped.  Earlier in the month, the government estimated that about 28 million doses would be available in October, which indicates that shipments are still 11 million doses behind this revised estimate. The original government estimate was to have 40 million doses available.

In a recent New York Times article, A Nation Battling Flu, and Short Vaccine Supplies, the authors point out the fact that U.S. health officials have been consistently and wildly overoptimistic, and have had to ratchet down vaccine availability estimates several times.  As recent as late July, the government was predicting having 160 million doses of vaccine by October. Manufacturers on the other hand indicate that they have kept their government customers well informed regarding production and shipping status.  “All the data is completely transparent to the government” noted Andrin Oswald, the head of the vaccines business at Novartis.  “The contract was always yield-dependent.”

A recent 60 Minutes broadcast airing on the CBS Network profiled the production process at the only existing U.S. production facility, which is the Sanofi Pasteur production plant located in Swiftwater Pennsylvania. This $150 million facility was originally built in 2004-2005 to supply upwards of 100 million doses of influenza vaccine.  The facility was originally planned to come online for the 2008-2009 influenza season, however U.S. FDA approval was not obtained until May of this year, after the previous pandemic outbreak that originated in Mexico.  The plant is quickly ramping-up production to meet the current need, but is based on the older process of growing the virus in eggs. The 60 Minutes program also raised concern as to whether there would be enough trained public-health officials to administer the vaccine, once the shipments of vaccine begin to arrive in larger quantities, as frustrated families seek to have the vaccine administered to high priority individuals and others in the population.  President Obama’s recent proclamation declaring the 2009 H1N1 influenza pandemic a National Emergency enables a waiver of certain statutory Federal requirements for medical treatment facilities, including dealing the surge of patients requiring immunization or treatments associated with the 2009 H1N1 influenza virus.

Let’s once again view the current situation for fixing the current supply-demand imbalance from a supply chain management lens.

First, the U.S. and other government authorities are finally admitting that they were wildly optimistic at estimating vaccine availability, based on the original production yields this summer.  My advice would be that government health officials consult with impartial, experienced supply chain professionals who understand batch production scheduling and order promising methods. These professionals are experienced in determining reasonable order promising estimates based on product yield factors.

Second, there seems to be universal acceptance of the fact that the reliance on fifty year old egg production process is too slow for adequate vaccine response to a pandemic.  Continued research and development into more modern cell-based production techniques is an obvious necessity, and the sooner the better.  As I pointed out in my earlier post, investment in modern supply chain business process practices and more sophisticated IT tools is certainly a further need.

Third, like any other public-health crisis involving severe shortages of preventative vaccine, political influence and arm-twisting on the part of individual governments puts enormous pressures on manufacturers as to which orders get shipped to which countries. U.S. health officials awarded a $100 million contract alone to Sanofi Pasteur to manufacture bulk vaccines from the Stillwater PA facility alone. It seems to me that having only one U.S. resident production facility for vaccine production is a strategy that needs to be re-visited.  Strategic sourcing professionals know the importance placed in not having a single source for a critical commodity.  

New strains of deadly influenza, such as bird flu, may yet appear, and the current crisis would indicate that the U.S,, and multiple countries in our world, are ill-equipped to marshal the production and distribution of high volumes of vaccine when a new, deadly strain develops.

If this crisis in vaccine availability provides any benefit, it will be in the understanding that vaccine related supply chains will be our most critical area for future production, supply chain business process, and technology investments. This crisis should be a wake-up call to all for establishing state-of-the art capabilities across all vaccine-focused supply chains. There are too many lives at stake to do otherwise.

Bob Ferrari