$1 Billion Awarded For Flu Vaccine
5 Companies Get Federal Contract

By David Brown
Washington Post Staff Writer
Friday, May 5, 2006

The federal government yesterday awarded $1 billion in contracts to five pharmaceutical companies to help them develop modern methods of producing influenza vaccine that would replace the current slow, laborious and unpredictable technique.

The awards mark a huge step forward in the Bush administration's $7.1 billion effort to plan for an influenza pandemic, which many experts believe is likely in the next decade.

"The capacity simply does not exist in the United States to produce vaccine of sufficient quantity to vaccinate everybody. But that's about to change," Michael O. Leavitt, secretary of health and human services, said at a signing ceremony.

Two local companies won contracts: MedImmune Inc., a Gaithersburg biotech firm, was awarded $169 million; and DynPort Vaccine Co. of Frederick received $41 million. The rest of the funding will be split by companies in Belgium, Switzerland and Britain.

The companies each agreed to build or expand a vaccine plant in this country. Each will seek to grow flu vaccine virus in cell cultures rather than in fertilized chicken eggs and apply for Food and Drug Administration approval for its vaccine. Each company is also investing large amounts of its own money -- some have done so already -- although few executives yesterday were willing to say how much.

In five years, if all goes as planned, the companies together should be able to make about 300 million doses of vaccine in six months -- enough to immunize every U.S. resident.

For MedImmune, the government's contract is the latest bit of good news for FluMist, a product that had a disastrous launch. Unlike flu vaccines that contain killed virus, MedImmune's product is a live, weakened strain of influenza. It is squirted into the nose and stimulates a more natural and broader immune response than the conventional flu shot.

MedImmune plans to use the award money in part to convert to cell-based vaccine production a factory in Frederick. It now makes a drug to treat a form of viral pneumonia seen in premature infants and people with immune disorders. That drug will be made in a new plant.

MedImmune now grows its vaccine virus in Liverpool, England, and finishes the product in Philadelphia. Its annual capacity is 90 million doses; the new plant should be able to make 150 million doses in six months, said David M. Mott, chief executive of MedImmune.

The huge U.S. investment does not buy the government a single dose of vaccine or ensure that future purchases will come at a favorable price. Instead, it is an effort to induce the pharmaceutical industry to direct time, manpower and money toward a goal it might not otherwise pursue.

The executives said after the signing ceremony that they plan no price or other concessions in exchange for the government largesse.

"The concession is that we are going to do this in the U.S. That is the big concession," said David M. Stout, pharmaceutical operations president of GlaxoSmithKline PLC, which was awarded $275 million. The company's headquarters is in Brentford, England, near London. The flu vaccine it sells in the United States is made in Dresden, Germany.

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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