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$1 Billion Awarded For Flu Vaccine

Solvay Pharmaceuticals, based in Belgium, received $299 million, and the Swiss drugmaker Novartis AG was awarded $221 million.

MedImmune's Mott said the payback for the U.S. taxpayer is more rapid achievement of a high-priority goal set of the president's pandemic plan. "We have clearly sped up by years this conversion from egg-based to cell-based manufacturing," he said. "We would not be able to do that without collaborating with the government."

MedImmune's FluMist never caught on in the market despite a $25 million ad campaign. Patients balked at the high price. Doctors did not like the requirement that FluMist be stored in a freezer instead of a refrigerator, as flu shots are stored. The product also was approved for only healthy people ages 5 to 49, leaving out a key market -- infants and very young children.

But MedImmune stood by the product, confident that its novel mechanism made it better than the standard flu shot. It set to out to win approval for a new refrigerated version and to show once and for all that it was better than a flu shot. Earlier this year, MedImmune announced results from a large study showing that the vaccine was 55 percent better at preventing the flu in children ages 6 months to 59 months.

In the past 15 years, vaccine companies have slowly dropped out of the U.S. flu market. Most of the ones that remain make their vaccine outside the country.

In addition to GSK and MedImmune, the other companies that made flu vaccine for the U.S. market this year were California-based Chiron, which recently was bought by Novartis, and Sanofi Aventis, with headquarters in Paris. Chiron's production plant was in Liverpool, near MedImmune's. Only Sanofi made flu vaccine in the United States -- in Swiftwater, Pa.

The conversion to cell-culture gives vaccine makers far more flexibility than they have now.

In cell culture, virus grows in large tanks that contain cells floating in a nutrient broth. It is somewhat like brewing beer, and capacity can be added with relative ease. In the current method, virus is injected into the living tissue of fertilized eggs, where it grows and from which it must be harvested. Adding capacity requires getting more eggs, among other things.

To create "surge capacity" for flu vaccine, the Health and Human Services Department in 2004 paid Sanofi $10 million to add more egg farmers to its supply chain. Maintenance of the enlarged egg supply through 2008 may cost $41 million.

A chief goal of Bush's pandemic plan is to increase the country's baseline capacity for making seasonal flu vaccine. That could then be switched immediately to pandemic vaccine if new strain, such as the H5N1 bird flu virus circulating in Asia and Europe, started to spread easily in human populations.

The amount of seasonal flu vaccine in the United States increased to 88 million doses last year from 77 million doses in 1999. It could be as high as 120 million doses next season.

Seasonal flu vaccine contains three virus strains, each grown separately and then blended. During a pandemic, factories would grow only the pandemic strain. Consequently, their production capacity would be three times that of the seasonal vaccine.

Staff writer Michael Rosenwald contributed to this report.

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