By David Brown
Washington Post Staff Writer
Sunday, October 17, 2004; Page A01

Wyeth Pharmaceuticals doesn't make flu shots anymore, and it doesn't miss them one bit.

For two decades, Wyeth made injectable influenza vaccine at a plant in Marietta, Pa. For the winter of 2002-03, it made 21 million doses in a labor-intensive, time-crunched process and shipped them to clinics and doctors' offices early in the fall.

But it turned out a lot fewer people wanted it. Flu vaccine can't be saved from year to year. So, sometime the next spring Wyeth threw away 7 million unsold doses, for a loss of $30 million. It then quit making flu shots. It eventually closed the Marietta plant, which once employed 800 people.

But Wyeth wasn't out of the flu vaccine business -- yet.

It was a partner with the Maryland biotech company, MedImmune, in making what they considered the flu shot of the future -- a "live" virus vaccine squirted up the nose. They made 5 million doses of FluMist for last winter, the product's inaugural season. But FluMist never found its market. Only 450,000 doses were sold; the rest were thrown away.

Last April, Wyeth pulled out. It was done with flu vaccine.

Wyeth's decisions go a long way toward explaining why the United States -- the world's richest market for medical products -- finds itself with only half the amount of vaccine it needs to protect its population against a disease that may contribute to more than 50,000 deaths this year.

The company's exit is part of a long, slow industry-wide flight away from flu vaccine, which has simply become more trouble than it's worth.

"It shouldn't be surprising to anybody," said Gregory A. Poland, director of the vaccine research group at the Mayo Clinic, in Minnesota. "In fact, I marvel that there are companies willing to stay in the business."

Even under the best circumstances, vaccines have never been very attractive investments. The global market for them is about $6 billion a year, compared with $340 billion for drugs. Thirty years ago, more than a dozen companies made flu shots. Five years ago, the number was down to four.

This year, there were two -- until Oct. 5, when one of them, Chiron Corp., announced that it would not be able to deliver 48 million doses bound for the U.S. market. The British government's drug-regulatory agency had impounded all doses made at Chiron's plant in Liverpool, England, because of bacterial contamination of some lots.

Now there is one left: Aventis Pasteur. Every flu shot that goes into an American arm this season will come from the French company's plant in the northeast Pennsylvania town of Swiftwater.

Wyeth has no second thoughts about being out of the market, even now, when the homely flu shot is the most sought-after medical commodity in the country.

"It was the right decision for us," Peter Paradiso, vice president for scientific affairs, said Friday. The company is concentrating on vaccines -- such as its ones for meningitis and pneumonia -- that have fewer competitors and don't need to be remade every year, he said.

The Centers for Disease Control and Prevention is scrambling to help reapportion what remains of Aventis's 55 million doses of flu vaccine -- about half the 100 million shots that were supposed to be on the market this fall. (There are about 2 million doses of FluMist as well, but it can be used only by healthy people ages 5 to 49.)

CDC director Julie L. Gerberding has repeatedly described the vaccine-production industry in the United States as "extremely fragile -- and getting more so." Flu vaccine isn't the only product that has had to be rationed in recent years. Several childhood vaccines have been in dangerously short supply, too. The current scarcity of flu shots reflects not only a larger problem but also forces unique to this vaccine.

Every year, hundreds of millions of people around the world contract influenza, and hundreds of thousands die. In the 1990s, the infection contributed to about 51,000 deaths each year in the United States, about 8,000 of them directly traceable to the virus, the CDC estimates.

Besides being contagious and deadly, flu virus mutates easily. Each winter gives the microbe a new opportunity to infect humans with slightly different versions of itself. These opportunities are augmented by the fact that three types of virus -- two influenza A strains and one B strain -- are circulating to one degree or another at all times.

The vaccine is made of a weakened strain of virus of each type. Generally, at least one strain each year undergoes so much mutation that it needs to be replaced by an "updated" version in the next year's vaccine. Consequently, a new flu vaccine formula has to be drawn up each year.

That's just one reason flu vaccine isn't very popular with vaccine makers. There are others.

For more than 40 years, flu vaccine has been made by injecting virus into fertilized chicken eggs. It's no accident that Wyeth's shuttered plant, and Aventis's operating one, are both in Pennsylvania, the state with the third-largest egg production in the country. Each egg must be hand-inspected and hand-injected. One egg grows enough virus for 4 or 5 doses of vaccine. Millions are needed. The final shot is three vaccines packaged as one: two strains of influenza A and one of B.

Each round of production using this old-fashioned technology is known as a "campaign." The name is well-chosen. They have some of the risk, time pressure and uncertainty of political races and military attacks.

The uncertainty, though, isn't just at the production end. It is also in the market.

In 1999, supply and demand were evenly matched -- only 400,000 doses of 77 million went to waste. The next year, though, 8 million were thrown out. In 2001-02, 10 million doses were pitched. The next year (Wyeth's last) the number was 13 million. Last winter, despite a run on vaccine in an earlier-than-usual flu season, 4 million doses, out of 87 million made, were discarded.

The waste is particularly hard for vaccine makers to stomach because their profit margin is small. Flu shots are essentially commodities -- identical products made by numerous companies and differing only in price. Because much of the vaccine is bought in huge orders by government agencies, the price is low.

Over three seasons, Wyeth lost $50 million from unsold flu vaccine. It was also facing millions of dollars in required improvements to keep its plant up to standards required by the Food and Drug Administration.

Getting out of the business "certainly wasn't a no-brainer -- we do not make decisions like that lightly," Wyeth's Paradiso said. But, he added, "We were finding that there was not, in fact, a market for our product."

Chiron, which wouldn't discuss its business strategy for this article, apparently had a different view of the flu market.

Experts say the California-based company saw in the dwindling interest in flu vaccine an opportunity to make money, which it could then funnel into its main work: developing biotech products. This appeared to be possible if it could acquire an existing plant, which it did -- in Liverpool.

The strategy might have paid off handsomely if the company hadn't run into the contamination problems. That's because the market for flu vaccine is big, and growing.

This year, for the first time, the CDC recommended universal flu vaccination for all children 6 months to 23 months old. For several years, it has had a huge campaign to vaccinate the elderly and chronically ill, only half of whom typically get a flu shot. Some experts believe it's only a matter of time before the agency advises every American to get a flu shot each year.

Ironically, though, even that prospect isn't likely to be enough to lure companies back immediately.

The reason is that nobody wants to invest hundreds of millions of dollars and five-to-seven years in building an egg-based vaccine plant when the whole industry is on the verge of switching to a radically new way of making the product.

Sometime in the next decade, flu vaccine will start to be grown in cell cultures, not eggs. It is a technology far more clean, predictable and expandable than the egg-based way of old.

The National Institute of Allergy and Infectious Diseases is trying to speed that day with a $11 million-a-year program in which dollar-for-dollar matching grants are being made to four companies trying to develop commercially viable techniques for growing flu virus in various types of cell culture.

The companies will get the fruits of the research. The taxpayer may get a better and more predictable vaccine supply for its investment.

Merck & Co., which makes seven vaccines and has four new ones in late testing, stopped making flu vaccine in 1986. But that product might begin to look attractive again if there were a way of making it in cell culture, said Adel Mahmoud, president of Merck Vaccines. If research being done elsewhere showed that it were possible to make a flu vaccine that didn't have to be updated each year, that "would be very, very attractive," he said.

But technology and science aren't the only things waiting to mature in the world of flu vaccine, experts said. So is social policy.

Gregory Poland, of the Mayo Clinic, favors a system of incentives: Vaccine makers would make a given number of doses of flu vaccine for the private market at their own risk; a given number for government purchase; and an additional amount that the government would agree to buy back at a specified price if there were unsold stocks at the end of the season.

Other experts agree that only some form of direct government incentive is likely to solve the problem of a small and vulnerable manufacturing base.

Donald Burke, director of the Center for Immunization Research at the Johns Hopkins Bloomberg School of Public Health, favors "a fixed and mutually beneficial relationship" between the government and companies that make vaccines against bioterrorism agents. He's coming to think the same may be the solution for flu, too.

"I think it's in our national interest to promote 'health security' as well as national security," he said last week. "I would be inclined to extend the model of government-industry cooperation to diseases in the 'health security' arena, such as flu, as well."

Paradiso, at Wyeth, concurs.

"It's not that we need a new vaccine. What we need is a stable supply. We need to figure out how to make that happen."

For the foreseeable future, however, Wyeth will not be involved. The Marietta site -- founded by a local doctor in 1882 as the Lancaster County Vaccine Farm -- is up for sale.