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CHILDHOOD IMMUNIZATION INITIATIVE
Briefing for the First Lady
March 20, 1995
I. The Childhood Immunization Initiative- An Overview
II. Progress to Date
III. Current Issues
Vaccine Delivery Contracts
Upcoming GAO Report on Vaccines for Children Program
Federal Vaccine Pricing
Oral Polio Vaccine--Federal Contract Issues
Congressional Issues
April 20, 1995
IMMUNIZATION EVENT
AT MARY'S CENTER FOR MATERNAL AND CHILD CARE
DATE:
Friday, April 21
TIME:
10:00 am
LOCATION:
Mary's Center for Maternal
and Child Care
FROM:
Liz Bowyer, Jennifer Klein
I.
PURPOSE
To promote the importance of early immunization and recognize National Infant
Immunization Week by visiting Mary's Center for Maternal and Child Care with
Secretary Shalala, Dr. Henry Foster and Eleanor Holmes Norton.
II.
BACKGROUND
This visit to Mary's Center, a maternal and pediatric health clinic in Adams Morgan,
will serve as the kick-off event for National Infant Immunization Week (April 22 -
29). Your visit will include a tour of the center's immunization facilities and a
roundtable discussion with parents, Dr. Foster, Secretary Shalala and Eleanor Holmes
Norton. The primary purpose of this event is to:
Promote the importance of age-appropriate immunization (with a particular
emphasis on parent education);
Highlight a successful, community-based immunization effort in the District;
Emphasize the Clinton Administration's commitment to children's health and
the President's goal to eliminate vaccine-preventable diseases in children
nationwide.
This event is also an opportunity to show the Administration's support for Dr. Foster
before his nomination hearings begin on May 2nd. The event will allow the public to
see Dr. Foster as a doctor and educator, participating in an initiative that he would
be involved in as Surgeon General.
National Infant Immunization Week
As you know, President Clinton signed a proclamation recognizing National Infant
Immunization Week at a Rose Garden ceremony last April, as part of the
Administration's outreach campaign to promote early immunization.
The slogan of this year's National Infant Immunization Week is "At Least Eleven
Shots by Two: How Sure Are You?". The week is built around a "seven days of
immunization" theme, with each day aimed at encouraging a particular sector of
society - including volunteer, community and business groups, religious and service
organizations, schools, the media and others - to participate in community-based
immunization efforts (see attached outline).
Mary's Center for Maternal and Child Care
Mary's Center provides a range of maternal and pediatric health services - including
primary pediatric care, preventive health programs, family planning and midwifery-
based prenatal care and deliveries -- to a low-income, predominantly Hispanic
population in Adams Morgan. Mary's Center has a reputation for providing high-
quality, cost-effective care in an atmosphere that is sensitive to the cultural and
linguistic needs of Spanish-speaking families.
According to the center, most clients have an annual income of $18,000 or less, and at
least 90% lack private health insurance or Medicaid coverage. In addition to health
services, the center also provides various social services, including case management
and referrals, and assistance in applying to Medicaid and other entitlement programs.
Immunization Efforts at Mary's Center
Mary's Center has an aggressive immunization program and has achieved remarkable
success. The center has an immunization rate of 95%, as compared to a national
average of 67% and a citywide rate of 45%. This success is due, in large part, to an
approach to immunization that mirrors the Administration's goals in the VFC
program -- to immunize children where they get other health care services and when
they come in for these services. Mary's Center checks a child's immunization record
every time he or she enters the clinic -- even if the scheduled appointment is for a
prenatal visit for the child's mother -- and immunizes the child then and there, if it is
medically indicated.
Mary's Center is a private, non-profit health center that receives free vaccine from the
District of Columbia through the VFC program. That means that the center is
guaranteed a steady supply of federally purchased vaccine -- even as D.C. faces a
budget crisis and may be forced to cut essential services. In addition, the center
participates in the computerized registry supported by the Administration's
Childhood Immunization Initiative that allows any doctor across the country to
access a child's immunization record (thereby ensuring that even if a family moves or
loses a child's records, an accurate immunization record is available).
The center also uses a number of innovative strategies to educate parents about the
importance of age-appropriate immunization and get children immunized. For
example, the center congratulates parents whose children have received all
recommended vaccines in a local Spanish-language newspaper.
Discussion
After a brief tour of the center's immunization facilities, you will proceed to a
roundtable discussion with Dr. Foster, Secretary Shalala, Eleanor Holmes Norton and
approximately eight mothers with small children. Maria Gomez, executive director of
the center, will open up the discussion and introduce Dr. Foster. Each of you will
make brief opening remarks, followed by a discussion with the parents, all of whom
are regular clients at Mary's Center and have had their children immunized there.
The remarks have been divided into the following topics:
Del. Norton: Brief remarks about Mary's Center
Dr. Foster: The importance of preventive health, particularly early immunization
Sec. Shalala: Overview of the Childhood Immunization Initiative and National Infant
Immunization Week
HRC:
The immunization effort as part of the Administration's larger
commitment to investing in America's children
The discussion will focus on the importance of preventive health in general and
immunization in particular. The parents will talk about the preventive and primary
care services they have received at Mary's Center, and discuss barriers to proper
immunization, including lack of parental education, language barriers, limited access
to primary health care, overburdened public health clinics and inconvenient clinic
hours.
III.
PARTICIPANTS
Tour
HRC
Dr. Foster
Secretary Shalala
Del. Norton
Maria Gomez, executive director, Mary's Center
Discussion
Tour participants and approx. eight women (see attached list)
Note: The list currently includes 10 mothers, but will be narrowed down to about six
or eight on Thursday night. A seating chart will be provided Friday morning.
Note: Secretary Shalala will be accompanied by her cousins, Hugh and Ellen Maher.
IV.
SEQUENCE OF EVENTS
HRC arrives and proceeds to tour of Mary's Center
Maria Gomez gives overview of the Center's services in waiting area
Maria Gomez escorts HRC, Sec. Shalala, Dr. Foster and Del. Norton from
waiting area to immunization room
Group views examining rooms and proceeds to conference room for discussion
HRC/intros Maria Gomez Eleanor Holmes Norton
Gomez gives brief welcoming remarks and intros Dr. Foster
Dr. Foster gives brief remarks and intros Sec. Shalala
Sec. Shalala gives brief remarks and intros HRC
HRC gives brief remarks and opens discussion
Discussion with parents
Maria Gomez closes discussion
HRC pauses for photo op with clinic staff upon departure
V.
PRESS
Tour: Closed press
Discussion: Pool press
VI. REMARKS
Prepared by Lissa Muscatine.
POSSIBLE Q & A
Question:
I've heard that the Clinton Administration's vaccine program isn't working.
Why is that?
Answer:
The Vaccines for Children Program -- which is only part of the
Administration's effort to increase awareness about the importance of getting
children immunized at the right ages and to improve immunization rates -- is
actually providing the free vaccines to eligible children at Mary's Center. So
far, about 13 million doses of vaccine have been shipped to States through the
VFC program. Vaccine is being delivered to public providers in all States and
to private offices in 35 States. And, while there are still private doctors who
do not participate in the program, we are committed to getting a delivery
system working for private doctors in the remaining states.
With this effort and the good work being done at health centers like this one,
we can reach our goal of immunizing all of our nation's children by the age of
two.
PROFILES OF DISCUSSION PARTICPANTS
APRIL 21, 1995
A Latina young woman, Maria Paz (Poz) brings her four year old
daughter, Suleyma (Soolema) Mary's Center for Pediatric care and
is proud that Maria is fully immunized. Maria says that she
loves gentle, personalized care and attention provided by the
pediatric nursing staff, physician, physician's assistant and
social worker. Suleyma is in pre-kindergarten at Emory school
and Maria is a full-time loving mother.
Enrolled in Mary's Center's pediatric program, Jonathan Sun is
the son of a Chinese couple studying in the United States. His
mother, Ruoli (Rooli) is an engineer and his father, Qingping
(Chingping) is a biochemistry graduate at American University.
A Latina woman, Delmee Reys (Delmee Reyes) has a five year old
daughter, Diana, who routinely comes to Mary's Center for
pediatric care, including well-baby visits and vaccinations. She
loves that the Center is conveniently located in the
neighborhood, the Spanish-speaking staff and her feeling of being
able to freely express concerns and ask questions.
Originally from the United States, Paula Yando (Yando) just
arrived in Washington D. C. one week before entering the prenatal
program. Throughout her pregnancy, she held a job. Paula's
husband participated actively in her prenatal care and now in
health care and vaccinations for the baby which are provided
through the pediatric program. They both hold jobs and share
child care responsibilities.
Oscar Jiminez (Himinez) was born to Melina Jiminez (Himinez), a
bicultural (African Latino) when she was fourteen in 1990. Our
pediatric social worker was able to secure child care for Oscar
so that Melina could return to Upper Cardozo High School. Oscar
is now five years old and doing well in school. The pediatric
team continues to work with Melina to assist her in learning
constructive methods of discipline for Oscar.
A Medicaid recipient, Brittany was born to Helen Dye, an African-
American woman in 1989 and is presently enrolled in Mary's
Center's pediatric program. During Brittany's last pediatric
visit, her Denver screening and nutritional assessment yielded
good results while her physical exam was completely normal. She
is fully up to date on her immunizations and always looks forward
to her visits with the pediatric assistants.
Aisha (Ayeesha) Holgate is a sixteen year old African-American
mother who delivered her baby through Mary's Center's adolescent
program. Through her participation in the Latin American Youth
Center's Teen Parents Program, Aisha returned to high school and
is now on the honor roll. Her baby continues to come to Mary's
Center for preventive and primary pediatric care and is up to
date on immunizations.
A married woman from the island of Dominica, Curly Edwards has
two children born through Mary's Center's prenatal program and is
the patient representative on Mary's Center Board of Directors.
Curly's children love to come to Mary's Center, even on days when
they receive their shots.
Maria Selces is a Bolivian child care worker who brings her young
son to Mary's Center for pediatric care, including timely
immunizations. Although separated, both father and mother share
the care of the little boy.
Elba Varela and her husband, both Latino, delivered a healthy
daughter through our prenatal program. During her second
pregnancy, she was expecting Siamese twins and therefore was
hospitalized as the University of Maryland in Baltimore until
delivery. Post-delivery, her babies were surgically separated.
The twins are now pediatric patients at Mary's Center.
Maria Ramirez gave birth on August 17, 1995.
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REMON
DEPARTMENT OF HEALTH & HUMAN SERVICES
Public Health Service
:
Centers for Disease Control
and Prevention
National Infant Immunization Week
April 22-29, 1995
THE SEVEN DAYS OF IMMUNIZATION
"At Least Eleven Shots by Two: How Sure are You?"
T
he immunization rates for children under two years of age are far too low, and all members of
our communities can play a role in making sure that all of our youngest children are properly
immunized. Thousands of lives are jeopardized by preventable diseases, and hundreds of
thousands of dollars have been spent on the care of stricken children whose illnesses could have
been avoided. National Infant Immunization Week (NIIW) offers an opportunity to reach
audiences who can help make certain that our nation's children are fully immunized by the age of
two.
The slogan for NIIW 1995 is "At Least Eleven Shots by Two: How Sure Are You?", supported
by the theme: "We need you to get all our babies shots by two." This theme reinforces the need
to get all members of our communities involved in appropriately immunizing our children. The
"Seven Days of Immunization" provides a guideline for community activities during NIIW,
Each of the seven days focuses on a particular sector of the community and helps to demonstrate
that everyone can play a role in making certain that all of our children are protected against
vaccine-preventable diseases.
April 22 and 23 . Religious Leaders Lead the Way
Religious leaders play an important role in the community and reach a loyal audience every
week. By incorporating immunization messages into their weekly service, religious leaders can
potentially affect a large audience.
April 24 - Elected Officials Voice Their Support
Elected officials, such as governors, mayors. members of Congress, state legislators, and city
council members, have the ability to reach and mobilize broad cross-sections of the population.
On this day. elected officials could highlight the importance of disease prevention and Identify
childhood immunization goals for their respective state, district or city. Their participation can
illustrate the entire community's commitment to our youngest children, and reinforce the
message that discase prevention can be measured in both economic terms and health benefits.
April 25 - Community Partnershipe: A Key Element
Public-private partnerships, including health care providers, community-based organizations,
businesses, civic and service groups, the media and numerous others, play crucial roles in state
and community-based immunization efforts. This day of the week provides an opportunity to
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COMM. RESEARCH:#
highlight some of these pre-existing partnerships. Through the attention focused on the
partnership activities, it is hoped that new partners will be encouraged to join these efforts.
April 26 . Disease Prevention: The Children's Perspective
For this day of the week. we are suggesting use of a school setting to focus on children's
understanding of disease prevention. Teachers and children can provide a direct link to parents
and younger siblings. The days' activities present an opportunity for teachers and children to
cducate parents and peers. As a long-term benefit, schools may incorporate disease prevention
education as an ongoing part of their curriculum.
April 27 - Provider Spotlight: Innovative Strategies
Health care providers play the central role in Immunizing children. In addition to administering
vaccine, many health care providers participate in community-based partnerships and undertake
innovative efforts to increase immunization coverage rates. These efforts include extending
office hours to accommodate working parents, making reminder phone calls, and auditing their
own patient records to check the immunization status of all children under their care. This day of
the week provides an opportunity to acknowledge these activities and encourage others to adopt
similar efforts.
April 28 - Childhood Immunization Across the Nation
One barrier to raising childhood immunization rates is the public's lack of awareness that the
problem is 50 serious and wide-sprcad. Friday's activities are designed to demonstrate that
under-immunization is a national issue that affects all of us. In addition, this day's activities
provides an opportunity to highlight the different strategies used by states and communities to
address the under-immunization problem.
April 29 - Community Mobilization: Reaching out for Children
Having built up momentum throughout the week, the final day of NIIW will focus on bringing
together existing partners for a "grand finale" event - highlighting the fact that everyone has a
role to play in raising immunization rates. One suggested activity includes volunteers,
community groups and health care providers combining forces to organize phone banks or
canvassing efforts to reach as many parents as possible to discuss the importance and specific
timing of the necessary immunizations. Reminding parents of the specific timing for needed
immunization has proven to be an effective method for raising infant immunization rates. The
community mobilization activities provide a vehicle to recognize existing efforts, recruit more
volunteers to these pre-cxisting efforts, increase public awareness, highlight effective ways to
raise immunization rates, and possibly make the reminder/recall effort an ongoing activity in the
community.
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HAVICES
DEPARTMENT OF HFAI & HUMAN SERVICES
Public Health Service
/
Centers for Disease Control
and Prevention
Childhood Immunization
Suggested Talking Points
Vaccines are the most powerful and cost-effective way to prevent nine infectious diseases.
Childhood vaccines prevent nine infectious diseases: polio, measles, diphtheria, mumps,
pertussis (whooping cough), rubella (German measles), tetanus, hepatitis-B. and Hib (the most
common cause of spinal meningitis).
More than $21 are saved for every dollar spent on the measles/mumps/rubella vaccine. $29 are
saved for every dollar spent on the diphtheria/tetamus/pertussis vaccine and over $6 are saved
for every dollar spent on the polio vaccine.
Failure to immunize children on time led to the 1989-1991 measles epidemic causing over
55,000 cases, 11,000 hospitalizations and 136 deaths -- over 60 of these deaths were children
under two years of age. Various studies indicate that the measles outbreak resulted in over
$150 million in direct medical costs.
A
third of America's youngest children are under-immunized.
33 percent of two year-old children are under-immunized, and in some cities and urban areas
over 50 percent are not fully immunized.
To bc fully immunized, children should receive 80 percent of their vaccinations (between 11
and 15 doses) by age two. This is the period when a child is most vulnerable to contracting
these diseases. Receiving all needed doses requires about five visits to a health care provider.
Parents understand the Importance of childhood immunizations, but are unaware when the
shots should be administered.
Parents generally understand the importance of immunization and are aware that their children
must be fully immunized before they enter school: but, they often do not realize that 80
percent of immunizations should be administered before the child's second birthday.
Studies show that many parents who thought their children were fully immunized were
mistaken. Parents need to help assure their child is immunized by keeping a current
immunization record. bringing it to every health care visit and asking the health care providers
to make sure their child is fully immunized.
March 1995
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DEPARTMENT OF HEALTH & HUMAN SERVICES
Public Health Service
Centers for Disease Control
and Prevention
The Childhood Immunization Initiative
Ensuring that our youngest children are safe from vaccine-preventable diseases is the mission
of the Childhood Immunization Initiative (CII). In the United States, more than 96 percent of
children are fully vaccinated when they enter kindergarten. However, only 67 percent of 2-year-
old children are fully immunized, and it is during the first two years of a child's life that 80
percent of vaccine doses (11-15 doses) should be administered. Although immunization levels
for 1993 were the highest levels ever recorded, about two million 2-year-old children were still
inadequately protected against vaccine-preventable discases.
Recognizing the need to protect our youngest children, the Childhood Immunization Initiative
was launched. The CII is a comprehensive effort to:
climinate most childhood vaccine preventable diseases
increase vaccination levels for 2 year olds to at least 90 percent for the initial and most
critical doses by 1996
establish a sustainable system to ensure that at least 90 percent of all 2 year olds receive
the full series of vaccines by the year 2000 and beyond
The CII is designed to marshall and coordinate efforts of the public and private sectors,
healthcare professionals and volunteer organizations. The CII includes the following five broad
areas:
Improve the Quality and Quantity of Vaccination Delivery Services
In October 1993, $129 million ($83 million in new federal resources) was provided to states and
large local health departments, based on plans they developed, to improve and expand existing
immunization services. These resources are being used at the discretion of each area to contend
with the immunization barriers that the local community faces, such as expanding immunization
clinic hours to make it easier for working parents to take children to visit a health care provider.
Reduce Vaccine Costs for Parents
In October 1994, the Vaccines for Children (VFC) Program was initiated. This program is
designed to (1) reach more children with free vaccine than ever before and (2) allow more
parents to receive free vaccine for their children at a private healthcare provider. The VFC
program means that cost will no longer be a barrier for our neediest children and parents can
obtain these vaccinations at the provider of their choice.
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Increase Community Participation, Education and Partnerships
The National Outreach Program strives to (1) increase awareness concerning age-appropriate
immunization (an awarcness that 80 percent of all immunizations should be adminstered before
a child's second birthday; that waiting until school age is insufficient protection) and (2) establish
and reinforce community-based immunization efforts. Through regional meetings and outreach
staff working at the state and local level, the Centers for Disease Control and Prevention (CDC)
has helped bring together and encourage all sectors of society -- including volunteer. community
and business groups, religious and service organizations, schools, the media and other public or
private organizations -- to participate in long-term community-based immunization efforts. CDC
activities also encourage healthcare providers to check their patient's immunization records and
use every opportunity to vaccinate children who are not up-to-date.
Improve Systems to Monitor Diseases and Vaccinations
CDC has expanded its ability to assess immunization rates at the local, state and national levels
in order to pinpoint which populations are not receiving the benefits of infant vaccination. The
ability to monitor immunization coverage levels using local, state and national data allows
targeted interventions to be put in place quickly. Evaluating the outcome of federal and state
programs addresses an essential component of the CII, which is to focus accountability for
program results.
Concurrently, a surveillance network to look out for cases of vaccine-preventable disease and
rapidly report them is also being intensified. Looking for cases -- even rare cases -- of vaccine-
preventable diseases will help public health providers take fast action to prevent widespread
outbreaks of disease. Epidemics begin in populations with low immunization levels. Finding
pockets of low immunization today helps health care providers target efforts to prevent
tomorrow's epidemic.
Improve Vaccines and Vaccine Use
CII emphasizes the development and licensure of new, safer, and more effective vaccines,
including combination vaccines to help simplify the vaccination schedule. Improved vaccines
mean children are better protected from disease earlier in life. The CII has already helped unity
the childhood immunization schedule, through close collaboration between CDC, the Advisory
Committee on Immunization Practices (ACIP), and major health care provider organizations.
CII also supports applied research into new vaccines to reduce the number of shots children must
receive. Although vaccines are very safe and effective, CDC is working with states and
selected healthcare provider institutions to improve monitoring of vaccine safety and to evaluate
the role vaccines may play in rare adverse events following inoculation.
4/5/95
To: Jen
From: Melanne
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS
MADISON, N.J. 07940
(201) 660-5008
JOHN R. STAFFORD
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
May 16, 1995
Mrs. Hillary Rodham Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mrs. Clinton:
Thank you very much for meeting with us on May 5th to discuss our concerns regarding
erosion of the private market for childhood vaccines as a result of the Vaccines for Children
(VFC) program. We hope that the meeting represents the beginning of a constructive
dialogue.
First, we would like to respond to the question we were not able to answer adequately at the
meeting: what is the Medicare reimbursement methodology for influenza vaccine, and why
is that methodology less problematic for industry than the VFC's? In Medicare, in contrast
to the VFC program, our company sells no vaccine directly to the government. Instead, we
sell to physicians at trade price with no difference in price between vaccine that ultimately is
received by Medicare beneficiaries and that received by others. The physicians who
purchase our vaccines are reimbursed for them by Medicare, private insurance or self-
payment by the patient, as the case may be. When Medicare reimburses physicians for
influenza vaccine, payment is made pursuant to Part B--i.e., charge-based--methodology
except that, unlike most Part B items or services, the influenza vaccine is reimbursed 100%
without deductibles or coinsurance. Thus, Medicare pays market price for influenza vaccine
in sharp contrast to the deep discounts and frozen prices characterizing the VFC program.
We understand that Medicare's reimbursement policy for influenza vaccine was established
based on the demonstrable cost-effectiveness of the vaccine.
2
Second, you asked for suggestions that might promote the idea of a medical home for
children better than the purchase-oriented VFC program. Here we have no original ideas,
but we can share some that have come from experts in the field:
Some experts, including the Institute of Medicine, suggest a system of bonus payments
to physicians who have fully immunized their patients, an approach that has been
successful in England (Senator Bumpers has express interest in such bonus payments
as a means of avoiding missed opportunities for immunization);
Dr. Irwin Redlener urged at the recent Finance Committee hearing that any physician
receiving free vaccine be required to take every Medicaid and uninsured child who
presents at his or her office;
In Maryland, the Aid to Families with Dependent Children (AFDC) program has
developed a series of penalties and rewards related to the immunization status of
children, with resulting impressive increases in immunization rates; and
A program previously considered by the Centers for Disease Control and Prevention
(CDC) would provide "one-stop shopping" for federal benefits and require
coordination of AFDC, WIC and food stamps benefits with immunization status.
The States of Georgia and Mississippi and the City of San Antonio have significantly
improved immunization rates through techniques such as auditing providers to
determine which practices require correction and following the immunization status of
individual children through computerized tracking systems.
We share your goal of protecting all of America's children from disease through timely
immunization, but we believe that this goal can be better achieved by restoring a balance in
federal funding between vaccine purchase and delivery infrastructure. Such balance would
have the additional benefit of supporting a vibrant research-intensive American vaccine
industry. By virtue of American research investment, Hemophilus influenzae type b (Hib)
meningitis, with an annual price tag of $2.5 billion, has been practically eradicated. If
industry continues to invest in research and development, we will do the same for otitis
media, infant diarrhea and pneumonia. Research will also make possible the combining of
numerous antigens into a single injection, thus reducing cost and trauma as well as enhancing
immunization compliance.
However, our research and development effort cannot be sustained if the federal government
remains the dominant purchaser. In considering possible revisions to the VFC program, we
are urging that equivalency be reinstated between the public and private sectors, with
government purchases limited to no more than 50% of the total market. Only in this fashion
will vaccines be able to attract capital and inspire investor confidence to enable research and
development to continue.
3
We appreciate your time and your willingness to hear our views on this issue of critical
importance for the health of America's children, both present and future.
Again, my personal thanks for the meeting.
Sincerely,
JRS:MH
Joch stappord
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FOR HEALTH
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DRAFT
MEMORANDUM FOR THE HONORABLE LEON PANETTA
This memorandum describes several options for addressing the
Congressional challenges to the Vaccine for Children (VFC)
program.
As you know, the VFC program provides all necessary childhood
vaccines to four groups of entitled children: Medicaid eligible,
American Indians and Alaskan Natives, uninsured, and underinsured
(if they are served by a Federally Qualified Health Center).
Both House and Senate reconciliation bills repeal the VFC
program. Both bills would include in each state's "Medigrant"
the amount of federal Medicaid funds that were spent in the state
in FY 1994 (prior to VFC). The use of FY 1994 as the base
reduces federal funds for childhood vaccine purchase by
approximately $200 million each year during the period FY 1996
through FY 2002. The bills also include a requirement that each
state cover immunizations (as selected by the state) for children
made eligible by the state.
OPTIONS:
The VFC is a critical part of the President's Childhood
Immunization Initiative (CII) because it provides the funds to
purchase vaccine for low-income and, otherwise, needy children.
(The other four parts of the CII are infrastructure support,
education and outreach, monitoring and research on better
vaccines.) Without adequate funds for vaccine purchase, it is
unrealistic to expect the CII to reach its immunization goals for
1996 and 2000.
We need to develop a strategy to assure the continued
availability of needed vaccine. Here are three options that will
accomplish this objective, with the pros and cons of each.
OPTION #1: RETAIN THE VFC PROGRAM
PROS:
*
The VFC has been implemented and is doing well. The
VFC is in public health departments in every state and
in private doctors' offices in 42 states.
11-07-95 03:11PM
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TO 94562878
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DRAFT
Page 2 - The Honorable Leon Panetta
The VFC is not purchasing the large quantities of
vaccine initially projected by the states; therefore,
VFC costs are lower and the impact on vaccine companies
is less than they claim.
CONS:
*
Opponents will insist on changes in VFC.
*
The VFC will continue to be controversial with
Congress.
Vaccine companies will continue to attack the program
claiming it erodes the private market.
OPTION #2: Significantly modify the VFC program while retaining
the individual entitlement. Changes would (1) establish a limit
on the total amount of vaccine CDC could purchase from vaccine
companies -- thereby guaranteeing the size and stability of the
private vaccine market; (2) eliminate coverage for underinsured;
(3) eliminate authority of states to become universal purchase by
buying additional vaccine at capped price; and (4) if necessary,
eliminate current price caps on older but most critical vaccines
(OPV, MMR, DPT).
PROS:
*
Retains most important feature of VFC - guaranteed
vaccine for most needy children.
Addresses vaccine company concerns with regard to
market stability.
CONS:
*
Increases cost to states to continue their current VFC
programs - although we believe state health officials
are prepared to accept higher costs to eliminate
controversy about the program.
*
Vaccine companies would continue to oppose VFC due to
fear of future governmental restrictions to assure
entitlement costs do not grow excessively.
*
Opponents will not view as adequate compromise.
OPTION #3: Significantly modify the VFC program making it a
state entitlement. Option 3 would entitle the states to receive
sufficient funds to purchase all necessary childhood vaccines for
all children in families below a certain percent of poverty
level. States would receive funds only if they enter into a
performance partnership agreement which would specify the state's
185% 01 pov = 47% whort of birth
11-07-95 03:11PM
FROM IMMED. OFFICE ASH
TO 94562878
P004
DRAFT
Page 3 - The Honorable Leon Panetta
plan (including ite use of Section 31% appropriated funds for
immunization) for reaching the 1996 and 2000 immunization goals.
States would be limited in the volume of vaccine that could be
purchased through CDC. In effect, states would design their own
immunization programs with technical assistance from CDC.
PROS:
*
Retains most important feature of VFC -- guaranteed
vaccine for most needy children.
*
Could garner support from key Democratic supporters and
states.
*
May not be opposed by vaccine companies
*
By removing individual entitlement could improve
opportunity to reach compromise with Congressional
Republicans. Program would still accomplish
President's objectives.
CONS:
*
Pediatricians and other advocacy groups supporting an
individual entitlement may oppose, especially because
it sets precedent for rest of Medicaid.
Does
not
*
Increases cost to states to continue their current
efforts - - although we believe state health officials
resernase of
are prepared to accept higher costs to eliminate
controversy about the program.
program?
HOW TO PROCEED:
Given the pending Congressional action, the VFC will be a major
factor in reconciliation negotiations between the Administration
and Congress.
Prior to engaging in any negotiation with Congressional
Republicans, we should develop an Administration position through
discussions with key Senate and House Democratic supporters --
Senators Bumpers and Breaux and Congressmen Waxman and Dingell.
Those discussions would strengthen our position in negotiations
with Congressional Republicans and assure the support of these
key Democratic allies for our implementation of the program that
results.
I recommend that we select a preferred option and immediately
begin discussions with these key Democrats.
Donna E. Shalala
CC:
Carol Rasco
DEAR
BE GOOD LOR
THE SEAS TOME so
WIDE AND
MYBOATIS
so SMALL
MEMORANDUM
TO:
Carol Rasco
Children's Defense Fund
FROM:
Marian Wright Edelman
DATE:
July 31, 1995
The next few weeks should determine whether the Vaccines for Children program (VFC)
survives. As you know, VFC has taken a battering in hearings on the Hill and in the press in
the last couple of months. I know that the Administration has been working hard to counter this
campaign. At CDF we also have been working for VFC. Among other activities: we held a
conference call with a dozen editorial boards two weeks ago; did the Diane Rehm show; placed
an op-ed in the New York Daily News; have been talking to ASTHO about state activities; and
have been making a number of Hill visits.
I am desperately worried, however, that just at the time this program is beginning to
produce real gains for children, we are entering a period of maximum danger for VFC. It is
apparent that members of Congress hostile to the program--most but not all of them
Republicans--will try in the context of Reconciliation to block grant, eliminate totally, or
otherwise cut the heart out of the VFC program. I am concerned not only that we may not have
enough support on the Hill to stop this, but that the Administration, with so much else
(legitimately) on its platter in Reconciliation, may be unable to focus on VFC if it waits too
long.
I hope, therefore, that the Administration can spend the next few weeks before
Reconciliation heats up, both accelerating the campaign for the program (using the growing
evidence of its positive impact at the state level), and conceptualizing and getting agreement on
a possible compromise that would preserve all of the most essential parts of VFC (including
purchase of vaccines for private doctors to dispense to Medicaid and uninsured children) yet also
produce support before mark-up among some of the current Democratic, Republican. press and
corporate critics. We have specific thoughts on some approaches that we very much want to
share in the days ahead.
VFC is simply too important a program for children to let it disappear from sight in the
huge political storms we all expect this fall. When Medicaid heats up in September, it will be
harder for any of us to focus adequately on the VFC piece. By resolving as many issues as
possible now, the Administration would be in a better position to lead on this issue in
September, and to slow the momentum of the VFC opponents.
CDF stands ready to work with you to preserve VFC.
25 E Street, NW
Washington, DC 20001
Telephone 202 628 8787
EXECUTIVE OFFICE OF THE PRESIDE
15-Aug-1995 10:22am
TO:
Jennifer L. Klein
FROM:
Diana M. Fortuna
Domestic Policy Council
SUBJECT: Here's the revised memo that went to Carol FYI
August 15, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
Carol Rasco
SUBJECT:
Immunization Program
You had asked where we are on the Vaccines for Children (VFC)
program.
Background: As you know, VFC is part of the Childhood
Immunization Initiative, and provides a Federal entitlement to
vaccine for uninsured and Medicaid-eligible children, as well as
underinsured children served at federal clinics. It uses 100%
Federal funds to purchase vaccine for participating providers,
including private physicians who enroll in the program.
Critics (especially Senator Bumpers) charge that VFC is misguided
because cost is not a significant barrier to immunization. They
argue that free vaccine has long been available at public
clinics, and that VFC funds would be better spent on shoring up
these clinics. We have responded that the high cost of vaccines
leads private physicians to refer children to public clinics,
leading to missed opportunities for immunization. Critics also
charge that VFC is not well run, with problems delivering vaccine
and ensuring accountability for vaccine purchase.
Drug companies vigorously oppose VFC because it gives HHS the
right to purchase vaccine at below-market prices. Prior to VFC,
the industry negotiated a low price with HHS for the 50% of the
market that HHS then purchased. Under VFC, HHS's share of the
market would grow to 70-80% at that same low price. In some
cases, the discrepancy between the HHS price and the market price
is very significant. Manufacturers allege that the loss in
revenue will significantly limit research into new vaccines.
States tend to support VFC because it eliminated the state share
of Medicaid for vaccine purchases.
Strategy: In the fall, the manufacturers and certain members of
Congress will attempt to eliminate the program. Rather than an
outright repeal, they are more likely to try to fold it into a
Medicaid block grant.
Therefore, we have developed a two-part strategy. The first part
is to continue to support the program publicly. To that end, HHS
is working in concert with the American Academy of Pediatrics,
state health officials, and the Children's Defense Fund to get
out the word that VFC is a valuable program that is filling a
critical need. Second, we are preparing a compromise that we
could back on in the fall, with two key goals in mind. First, we
will have to limit public purchase of vaccine in some fashion.
This is critical to the manufacturers, but it means that VFC
would serve fewer children. Second, we will make it a priority
to preserve some part of the purchase program, even though we
might restructure VFC as entitled grants to states.
The Children's Defense Fund has expressed an interest in working
with us on this strategy. Our support for any compromise must be
unveiled delicately SO that we do not alienate our allies,
particularly the states.
From a legislative standpoint, we expect to fare better in the
Senate than in the House. We plan to reach out cautiously to the
more reasonable drug companies and to key members of Congress to
discuss the outlines of a potential compromise. We are also
working to develop a strategy to approach Senator Bumpers.
CC:
Leon Panetta
Alice Rivlin
Melanne Verveer
Pat Griffin
Marcia Hale
TO:
Hillary Rodham Clinton
Melanne Verveer
FROM:
Jennifer Klein
DATE:
6/14/95
RE:
Immunization
I know that we are all overwhelmed by the budget roll-out, but I wanted to lay out
an immunization option for you.
I also wanted to let you know that there is a hearing on the VFC program scheduled
for tomorrow in the House Commerce Committee. The hearing will focus primarily on the
GAO Report, which will be released at the hearing. David Satcher's testimony provides an
excellent response. We also have the same process in place to generate support as we did
for the Senate hearing, but this one is expected to be tougher.
VACCINES FOR CHILDREN PROGRAM OPTION
Decisions about the Vaccines for Children (VFC) program must address: (A)
possible changes in eligibility; and (B) options for restructuring the program.
(A) Eligibility
To reach agreement with the vaccine manufacturers, it is probably necessary to
reduce public purchase of vaccine by limiting eligibility. VFC currently covers children
who are Medicaid-eligible, uninsured, Indian, and underinsured if they are immunized at a
federally qualified health center (FQHC). In addition, states use section 317 (of Medicaid)
to buy vaccine for underinsured children who are immunized at public health clinics.
Fourteen states also have taken advantage of the option to purchase vaccine at the low
federal price for all children in their state.
The public market for vaccine could grow under VFC from about 50 percent (the
current market share for CDC purchased vaccine) to as much as 80 percent (if more states
take advantage of the option to purchase vaccine for all children in a state). The
manufacturers claim that they will be unable to stay in the vaccine business and continue to
do research if they are paid the public price for so large a share of the market. While
American Home Products and other manufacturers have said publicly that they can afford
to be paid the low public price for only 50 percent of the market, privately they have
acknowledged that they would accept as high as 60 percent.
In order to address these concerns, we could:
(1)
Limit eligibility to uninsured, Medicaid-eligible and Indian children.
Uninsured children
Most people agree that it is important to preserve coverage for the
neediest children -- the uninsured. However, prior to VFC these
children could get immunized at public clinics, and they still can. It is
not clear that they will be seen by private doctors even if the doctors
receive free vaccine for them, so the charge that VFC is not reaching
our neediest children may be most true of this category.
Medicaid-eligible children
Children covered by Medicaid received free vaccine before the VFC
program through the Medicaid section 317 program. It would seem
logical to eliminate eligibility for these children under VFC and leave
them to Medicaid. The manufacturers would be particularly pleased
1
because under Medicaid they are paid catalog price rather than the low
VFC price.
However, states now expect the federal government to pay the total
cost. Some states (including Texas) have used their Medicaid savings
to expand immunization programs. Since the states are the strongest
supporters of the VFC program, it would be difficult to ask them to
absorb their Medicaid matching share of the costs again.
(2)
Eliminate eligibility for children served at FQHCs.
Federally qualified health clinics will continue to immunize the
children they serve. This part of the program has been severely
criticized because it does not prevent wealthy children whose
insurance does not cover immunizations from getting free vaccine at
these clinics. In reality, however, underinsured children of wealthy
families do not seek care at these clinics. Eliminating this category of
eligibility therefore allows us to avoid the charge that the program
serves those who can afford vaccine while catching the needy children
who are actually served by FQHCs.
In addition, there has been some discussion of federal legislation
mandating that all insurance policies cover immunizations for children.
This would obviously eliminate the category of underinsured children,
but it is probably unlikely.
(3)
Freeze state optional purchase or allow states to purchase vaccine for all
children in the state at a price that is higher than the Federal price based on a
sliding scale.
This would go a long way toward appeasing the manufacturers.
However, states may complain about losing optional purchase
(although no new states have indicated interest in taking advantage of
it).
(B) Structure
As the Congress considers significant structural changes to Medicaid, we must also
address the structure of the VFC program. In addition, critics of the VFC program have
charged that -- by focusing resources on getting free vaccine to children in doctors' offices
-- the program does not address the most significant barriers to immunization and does not
help the neediest children (who are rarely seen by private doctors).
If Medicaid is not block granted, we could maintain the individual entitlement but
2
cap total purchase. This option does not really address questions about how best to
allocate immunization dollars. It does prevent the program from becoming "another
out of control" entitlement, as some have charged.
If Medicaid is block granted, we could provide "entitled" grants to states for
immunization. States could either be required to use the funds for vaccine purchase
or could be allowed to spend the money as they saw fit (e.g., infrastructure rather
than purchase). In either case, states would be required to demonstrate that eligible
children -- not just a minimum number of children -- were being immunized.
In either case, we could add new features to the program, like "parental
responsibility" -- by requiring that welfare parents show proof of immunization in
order to receive benefits. Programs in cities, including Chicago, New York and
Dallas, as well as in states, most notably Maryland, have shown an increase in
immunization rates among poor children of 40 to 80 percent.
3
Should we limit the ability of the CDC's Advisory Council on Immunization
Practices (ACIP) to add new vaccines to the VFC program?
4
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS
MADISON. N.J. 07940
(201) 660-5008
JOHN R. STAFFORD
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
January 25, 1995
Mrs. Hillary Rodham Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mrs. Clinton:
Let me thank you once again for being so generous with your time to help the New York
United Cerebral Palsy. As you know the dinner was a great success, obviously, in large
part, due to your presence. On a personal note, Mrs. Stafford and I enjoyed being with you,
and I especially appreciated the chance to talk a bit of shop during dinner. I do hope you
and your family come back to Martha's Vineyard where, as I'm sure you know, you are very
welcome.
With your permission I would like to reiterate some of the points we discussed concerning
the impact of the Administration's Vaccines for Children (VFC) program. As I told you,
American Home Products' recent acquisition of American Cyanamid included its vaccine
division, Lederle-Praxis Biologicals (LPB). At present, only two major vaccine
manufacturers are American-based, but American research, including substantial contributions
by LPB, has led the world in vaccine innovation.
With the advent of biotechnology, many more new vaccines are now feasible. Our company
introduced three new vaccine products during the first four years of the decade, including a
vaccine to prevent bacterial meningitis in infants, a less reactive version of pertussis vaccine
to address parent concerns about side-effects, and a new combination vaccine that halved the
number of injections necessary to protect against four major childhood diseases. These are
products that would not have been possible just a few years ago without the benefit of
biotechnology; other vaccines in our pipeline have the capacity to revolutionize disease
prevention and to save billions in medical and other costs.
Vaccine innovation, however, is currently at risk in the United States because of the VFC
program. The legislation permits essentially unlimited purchases of childhood vaccines by
state and federal governments at extremely low, statutorily-fixed prices. If not amended
2
substantially to limit public purchases, the VFC program will completely destroy our private
market, which is the sole source of revenue supporting its research and development efforts.
Even prior to enactment of VFC, the economics of the vaccine business were extremely
difficult. (A principal reason why only two U.S. based companies are in the vaccine
business.) In fact, American Home Products made a decision several years ago not to
remain in the childhood vaccine market, at least in part, because of concerns over excessive
government purchases. With the LPB acquisition we are once again in a position which
requires us to assess this market. Our greatest concern is the ability to continue the
outstanding research program of LPB.
I shared with you the exciting prospect of a vaccine to protect children against otitis media
(chronic ear infection that can cause deafness), which is the single largest reason for infant
pediatric visits. Obviously, this product offers the potential of tremendous savings for the
nation. Without substantial capital investment and continued clinical research, however, LPB
will not be able to move this vaccine from the product pipeline into pediatricians' offices.
Already LPB officials tell me that progress toward approval of the otitis media vaccine has
been delayed by a year or more by uncertainties engendered by the VFC program. This is
understandable because uncertainty is the absolute enemy of stable investment. But the loss
to the country, in terms of both unnecessary illness and lost opportunities for savings, from
just one year of delay is a tragedy.
I would like to request a meeting with you and the White House staff to discuss how the VFC
program might be revised to support our shared goal of improved childhood immunization
without undermining vaccine research and development. We can, no doubt, provide for
today's needy children without depriving tomorrow's children of the promise of greatly
enhanced prevention and freedom from disease through new vaccines.
Of course, I would also welcome an opportunity to discuss other areas of the pharmaceutical
and biotechnology research-based industries if you or your staff should desire to do so.
Thank you again for the opportunity to be with you at last week's dinner, and I look forward
to continuing our dialogue in a meeting anytime at your convenience.
Sincerely,
Jach stepoul
JRS:MH
TO:
Hillary Rodham Clinton
FROM:
Jennifer Klein
DATE:
5/4/95
RE:
Meeting with Jack Stafford
Background for Meeting
On Friday, May 5 at 10:00 a.m., you are meeting with Jack Stafford, the Chairman,
President and CEO of American Home Products. Mr. Stafford will be accompanied by Dr.
Ran Saldarini, the President of Wyeth-Lederle Vaccines and Pediatrics, and Leo Jardot,
Vice President for Government Relations of American Home Products.
As you may remember, Stafford wrote in January asking for a meeting to discuss his
concerns about the VFC program. (See attached letter.) American Home owns Lederle,
which produces oral polio vaccine and other vaccines. (See attached list of vaccines and
description of Lederle's vaccine business.) Their major concern is that prices under VFC
are too low, and that the VFC program will force them to curtail research or even leave the
vaccine market. Lederle is in a more difficult than other manufacturers because they agreed
to sell oral polio vaccine at a severe discount ($2 a dose rather than the private market price
of $10). However, they do sell other vaccines to the program at more reasonable rates.
Incidentally, Lederle has threatened to leave the vaccine market many times (long
before VFC). In fact, the Vaccine Compensation Act of 1986 -- that provided no fault
compensation for children injured by vaccines -- was passed in response to Lederle's
concerns.
I have also heard that Lederle is circulating a proposal that would fold VFC funds
into block grants to states to be used for immunization efforts (but not necessarily for
vaccine purchase). The funds would be a capped entitlement to states. States would be
held responsible for ensuring that eligible children received immunizations. As I have
noted before, I do not think this would be a terrible outcome (especially in the context of
overall Medicaid block grants). However, Lederle has also noted that eligibility under the
program is too broad. The proposal might therefore eliminate eligibility for uninsured
children. I would recommend that we oppose this part of the proposal. In addition, I do
not think that we should signal interest in any proposal now. Instead, we need to continue
to fight for the program.
Beyond expressing their concerns, Stafford plans to tell you that he wants to work
together to fix the VFC program. He may even outline their proposal. As you know, they
expect you only to listen and do not anticipate any commitment. You might explain that
while you have heard that there have been discussions about changes to the program and
that we want to work with them, this program is extremely important to you and the
President.
Immunization Hearing
The immunization hearing today actually went well. Senator Breaux was very
positive (Mack did speak with him this morning), and Packwood was more positive than
expected. Moseley-Braun gave very strong support. Moynihan was quite critical despite
the assurances we had heard from his staff. However, his "facts" (e.g., "We don't have a
problem in New York because New York has provided free vaccine for over a century.")
were contradicted by the New York State First Deputy Commissioner of Health -- who
testified that only 58% of two year olds in New York are adequately immunized and that
VFC has been essential in improving immunization efforts in the state.
The basic question at the hearing was whether the cost of vaccine is a barrier to
childhood immunization. The basic message from all witnesses was that cost is a factor,
and that there are other important barriers (like the lack of access to health care and
inadequate funding for infrastructure) as well. The more negative witnesses concluded that
the VFC dollars would be better spent on infrastructure. The more positive witnesses said
that this program is an important part of the effort to improve childhood immunization
levels. Several witnesses (obviously including Satcher) pointed out that VFC is just one
part of the Administration's investment in improving immunization rates.
Bliley has also asked for a hearing on the VFC program. This hearing will be less
balanced.
cc:
Melanne Verveer
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS
MADISON. N.J. 07940
(201) 660-5008
JOHN R. STAFFORD
CHAIRMAN. PRESIDENT AND
CHIEF EXECUTIVE OFFICER
January 25, 1995
Mrs. Hillary Rodham Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mrs. Clinton:
Let me thank you once again for being so generous with your time to help the New York
United Cerebral Palsy. As you know the dinner was a great success, obviously, in large
part, due to your presence. On a personal note, Mrs. Stafford and I enjoyed being with you,
and I especially appreciated the chance to talk a bit of shop during dinner. I do hope you
and your family come back to Martha's Vineyard where, as I'm sure you know, you are very
welcome.
With your permission I would like to reiterate some of the points we discussed concerning
the impact of the Administration's Vaccines for Children (VFC) program. As I told you,
American Home Products' recent acquisition of American Cyanamid included its vaccine
division, Lederle-Praxis Biologicals (LPB). At present, only two major vaccine
manufacturers are American-based, but American research, including substantial contributions
by LPB, has led the world in vaccine innovation.
With the advent of biotechnology, many more new vaccines are now feasible. Our company
introduced three new vaccine products during the first four years of the decade, including a
vaccine to prevent bacterial meningitis in infants, a less reactive version of pertussis vaccine
to address parent concerns about side-effects, and a new combination vaccine that halved the
number of injections necessary to protect against four major childhood diseases. These are
products that would not have been possible just a few years ago without the benefit of
biotechnology; other vaccines in our pipeline have the capacity to revolutionize disease
prevention and to save billions in medical and other costs.
Vaccine innovation, however, is currently at risk in the United States because of the VFC
program. The legislation permits essentially unlimited purchases of childhood vaccines by
state and federal governments at extremely low, statutorily-fixed prices. If not amended
2
substantially to limit public purchases, the VFC program will completely destroy our private
market, which is the sole source of revenue supporting its research and development efforts.
Even prior to enactment of VFC, the economics of the vaccine business were extremely
difficult. (A principal reason why only two U.S. based companies are in the vaccine
business.) In fact, American Home Products made a decision several years ago not to
remain in the childhood vaccine market, at least in part, because of concerns over excessive
government purchases. With the LPB acquisition we are once again in a position which
requires us to assess this market. Our greatest concern is the ability to continue the
outstanding research program of LPB.
I shared with you the exciting prospect of a vaccine to protect children against otitis media
(chronic ear infection that can cause deafness), which is the single largest reason for infant
pediatric visits. Obviously, this product offers the potential of tremendous savings for the
nation. Without substantial capital investment and continued clinical research, however, LPB
will not be able to move this vaccine from the product pipeline into pediatricians' offices.
Already LPB officials tell me that progress toward approval of the otitis media vaccine has
been delayed by a year or more by uncertainties engendered by the VFC program. This is
understandable because uncertainty is the absolute enemy of stable investment. But the loss
to the country, in terms of both unnecessary illness and lost opportunities for savings, from
just one year of delay is a tragedy.
I would like to request a meeting with you and the White House staff to discuss how the VFC
program might be revised to support our shared goal of improved childhood immunization
without undermining vaccine research and development. We can, no doubt, provide for
today's needy children without depriving tomorrow's children of the promise of greatly
enhanced prevention and freedom from disease through new vaccines.
Of course, I would also welcome an opportunity to discuss other areas of the pharmaceutical
and biotechnology research-based industries if you or your staff should desire to do so.
Thank you again for the opportunity to be with you at last week's dinner, and I look forward
to continuing our dialogue in a meeting anytime at your convenience.
Sincerely,
Jack stepoul
JRS:MH
Major Childhood Vaccines and Who Markets Them
In the United States
Lederle (American Home Products) :
oral polio vaccine (OPV)
diphtheria/tetanus/pertussis (DTP) combination
Haemophilus influenzae type b (Hib) [HboC]
DTP/Hib combination (TETRAMUNE™)
acellular pertussis combined with diphtheria/tetanus (DTaP)
Merck
measles/mumps/rubella (MMR)
Hib vaccine [PRP-OMP]
hepatitis B [Hep B]
varicella, or chicken pox, vaccine
Connaught (Pasteur-Merieux - Connaught)
inactivated polio vaccine (IPV)
DTP vaccine
Hib vaccine [PRP-D]
DTP and Hib vaccines mixed [PRP-T]
SmithKline Beecham
hep B vaccine
American Home Products
Lederle Vaccines
American Home Products (AHP) has long been a leader in
production of pharmaceuticals, but in recent years has also
made substantial investments in biotechnology. With its
purchase of a majority interest in Genetics Institute, AHP
has become the second largest investor in biotechnology
research among U.S. companies.
Last year AHP also acquired American Cyanamid and its
Lederle vaccine business. Lederle is the largest U.S.
manufacturer of childhood vaccines.
AHP had a long history in the vaccine business, dating back
to 1882, but had steadily decreased its involvement in
childhood vaccine manufacturing and research as a result of
liability concerns.
With the acquisition of the Lederle vaccine business, AHP
now has a substantial product line of childhood vaccines
with a number more in various stages of development.
At present, AHP, through Lederle, markets the following
major vaccines for children:
oral polio vaccine (OPV) ;
diphtheria/tetanus/pertussis (DTP) combination;
Haemophilus influenzae type b (Hib) ;
DTP/Hib combination (TETRAMUNE™) i and
acellular pertussis combined with diphtheria/tetanus
(DTaP)
Lederle OPV is responsible for eradicating polio in the U.S.
Several decades ago, there were a number of OPV
manufacturers, but all others left the market for reasons of
liability or low profit margin. Lederle stayed the course,
and the Lederle formulation of OPV is used to break
epidemics of polio when they occur in Africa, Asia or the
Middle East.
Like OPV, the Lederle DTP vaccine is considered the "gold
standard" worldwide. As with OPV, Lederle stayed in the
U.S. DTP market when other manufacturers -- especially those
from foreign countries -- left the market (and then returned
when the liability crisis abated). .
In 1990, Lederle became the first company to obtain approval
of a new biologically engineered vaccine to protect against
Haemophilus influenzae type b (Hib) in infants. So-called
Hib disease caused meningitis that left thousands of
- 2 -
children dead, thousands of children deaf (including the
current Miss America) and thousands mentally retarded. It
was in fact the greatest single source of non-congenital
mental retardation in the U.S. CDC estimated the total U.S.
cost of Hib disease at $2.5 billion annually. Less than two
years after introduction of that vaccine, Hib disease had
almost been eradicated.
In 1991, Lederle introduced a new acellular pertussis
version of DTP to address concerns of parents and
pediatricians about possible adverse reactions to whole cell
pertussis. This vaccine had been designated the number one
priority for vaccine development by the Public Health
Service, and Lederle rose to that challenge.
In 1993, Lederle was the first company successfully to
combine DTP and Hib vaccine, thus reducing by half the
number of injections required to protect against four major
childhood diseases. The Lederle vaccine remains to this day
the only one that comes already mixed and ready to use in a
single vial.
Lederle vaccine research leads the world in vaccine
innovation. Among the products in Lederle's pipeline are
vaccines to protect against severe infant diarrhea caused by
rotavirus, otitis media (acute ear infection) caused by
pneumococcal bacteria and infant pneumonia caused by
respiratory syncytial virus.
TO:
Hillary Rodham Clinton
FROM:
Jennifer Klein J.H.
DATE:
5/2/95
RE:
Immunization
On Thursday, the Senate Finance Committee will hold a hearing on the Vaccines for
Children (VFC) Program. The witnesses will be: Dr. David Satcher from the CDC, a
representative from GAO, representatives from the New York State and Mississippi
Departments of Health, Irwin Redlener, and Dr. David Wood (a pediatrician from Cedars-
Sinai Medical Center).
As I know more, I will give you summaries of the expected testimony from each
witness and information about advocacy groups' and States' plans for publicly supporting
the program on Thursday. I am working with CDC on Satcher's testimony (especially to
add good, hard facts about the success of the program and the rest of the Childhood
Immunization Initiative).
About Irwin
I have no idea why he is testifying, and -- after calming myself
down when I found out today -- I spoke with him. As you know, he was critical of the
program last month at an AEI conference. On Thursday, he will say that he supports the
VFC program. However, he plans to raise four concerns (which he will describe as issues
that must be addressed to ensure the continuing success of the program). They are:
(1) more funding must be allocated for infrastructure development; (2) VFC should better
target children without "medical homes"; (3) private providers should not be required to
serve all eligible children; and (4) maintenance of effort provisions should be put in place
so that VFC does not act as a disincentive for insurance companies to cover immunization.
I don't have any problem with his raising (3) and (4). I told him that (1) and (2) are
dangerous points because they can so easily be used to argue that this money should be
spent elsewhere. My sense is that he will make all of these points but he will emphasize
that it is important to fix these problems, not to repeal the program. I will be in touch with
him again tomorrow.
I am attaching the memo that Leon mentioned to you last week. The memo
provides two alternatives for addressing the problems in VFC; one would make the program
a means-tested, capped entitlement and the other would change VFC to a discretionary
program. Both options would eliminate the cap on the price of vaccine under the program
and would limit the ability of states to buy vaccine at the low federal rate.
I am also attaching a (not public) proposal by SmithKline. As you can see, they
would (among other things) also reform VFC by limiting eligibility.
The Children's Health Fund
Board of Directors
April 7, 1995
Paul Simon
Co-Founder
Jerry Klepner
Irwin Redlener, MD
Co-Founder, President
Assistant Secretary for Legislation
Robert F. Tannenhauser, Esq.
Department of Health and Human Services
Chairman
200 Independence Avenue, S.W.
Jeffrey S. Maurer, Esq.
Treasurer
Washington, DC 20201
Karen B. Redlener
Secretary
Dear Jerry:
Ann Druyan
Fred Francis
Steven J. Green
Dan Klores
Robert C. Osborne
Thank you for a very informative and productive meeting regarding the
Marvin S. Rosen
Ray Schulte
Vaccines for Children program.
Nancy Waldbaum
Corporate Council
As was discussed, The Children's Health Fund strongly supports Vaccines for
David R. Bethune
Chairman
Children, particularly in its capacity to provide medically underserved children
Senator John D. Rockefeller IV
with access to critical immunization services. As you know, we continue to
Honorary Co-Chairman
have concerns regarding certain program provisions. We feel that these can
Senator Christopher S. Bond
Honorary Co-Chairman
be addressed through modification of VFC to ensure the following:
Joe Boyd
Robert Essner
o
Gordon Douglas, Jr., MD
allocation of sufficient funding for infrastructure development
Edward V. Fritzky
Thomas Kalinske
and support to facilitate adequate provision of services in
Gerald M. Levin
James W. McLane
medically underserved communities
Don Panoz
Ronald J. Saldarini, PhD
Hiroshi Shikata
Robert Wallach
funding for vaccine purchase be targeted to address the
David Williams
immunization crisis in disadvantaged communities
Advisory Board
Paul Simon
Chairman
private providers participating in VFC serve as access points
Ron Anderson, MD
for all medically underserved children in need of immunizations
Ron Berger
Senator Bill Bradley
Neil Braun
Michael 1. Cohen, MD
maintenance of effort provisions be put in place to ensure that
Hon. David N. Dinkins
Senator Christopher J. Dodd
VFC does not act as a disincentive for insurance companies to
Esther R. Dyer
Dick Ebersol
provide coverage for immunization
Honorable Mike Espy
Patrick Ewing
Zachary Fisher
Herbert B. Fixler, Esq.
The Children's Health Fund mission has always been that medical care for
Spencer Foreman, MD
H. Jack Geiger, MD
children works best within the medical home context. Vaccines for Children
Rod Gilbert
Paul A. Goldner
must strive to meet that threshold. We look forward to working with HHS to
Robert J. Haggerty, MD
Dave Herman
make VFC work to improve the level of childhood immunization within that
Gloria Janata
Samuel A. Keesal, Jr., Esq.
framework. Please let us know how we can be of assistance.
Joel Lamstein
Don Mattingly
Jewell Jackson McCabe
Bill Mclntosh
Sincerely,
Paul Metselaar
Senator George J. Mitchell
Billie Heller Monness
Jane Pauley
Steven Ricchetti
Senator John D. Rockefeller IV
Carl Sagan
Susan Saint James
Irwin Redlener, MD
Susan Taylor
Joseph W. Werthammer, MD
Director, Division of Community Pediatrics
Senator Harris Wofford
Ronald Wolfgang
Associate Professor of Pediatrics,
Albert Einstein College of Medicine - Montefiore Medical Center
The Children's Health Fund
317 East 64th Street
New York, New York 10021
Telephone 212-535-9400
FAX 212-535-7488
THE WHITE HOUSE
WASHINGTON
May 3, 1995
MEMORANDUM FOR LEON PANETTA
FROM:
Diana Fortuna
DF
Domestic Policy Council
SUBJECT:
Hearing Tomorrow on Vaccines for Children Program
In Carol Rasco's absence, I wanted to make sure you were aware of
tomorrow's Senate Finance hearing on the Vaccines for Children
(VFC) program. We became aware of the hearing this week, but we
are working with OMB and HHS to try to ensure that it goes well.
The Administration's witness is Dr. David Satcher, Director of
CDC. Dr. Satcher's draft testimony has problems that we and OMB
are working to address. It needs to explain better how the
program will help us reach our immunization goals; demonstrate
that we have adequate protections against over-ordering of
vaccines and fraud; and show progress on getting vaccine
delivered to private providers in all 50 states.
Also testifying are GAO, the states of Mississippi and New York,
Dr. Irwin Redlener of the Children's Health Fund, and David Wood
of Cedars-Sinai Medical Center. We have heard that Senator
Packwood wants to make this a balanced hearing; the list of
witnesses could certainly be worse than this. We believe New
York State will be positive, and we are trying to ascertain the
positions of the other witnesses. We have spoken to Dr.
Redlener, who has been critical of VFC for not doing more, to
explain that attacking the program in this setting will not help
our immunization efforts. GAO will be under pressure to reveal
its findings, which were not expected for another couple of
months.
At the hearing, HHS is planning to release letters of support for
VFC from several organizations, including the Association of
State and Territorial Health Officials, the Children's Defense
Fund, the American Academy of Pediatrics, the State Medicaid
Directors, and possibly SmithKline. In addition, HHS is working
with Democratic Senators to help them defend the program.
Senator Breaux has been particularly helpful, although apparently
he could use some encouragement.
CC: Carol Rasco
Mark Gearan
Pat Griffin
Alice Rivlin
Melanne Verveer
TO:
Hillary Rodham Clinton
FROM:
Jennifer Klein
DATE:
4/11/95
RE:
Immunization Meeting
As you know, on Monday HHS ended negotiations for delivery contracts with the
vaccine manufacturers. Leon and Carol have called a meeting to discuss our plan for
dealing with the "cut-off" as well as our longer term strategy.
The agenda for the meeting includes: (1) plans for defending the program (i.e., State
and provider support); (2) plans for fixing the problems (i.e., new delivery contracts,
provider accountability, manufacturers concerns about price); and (3) legislative strategy.
HHS continues to believe that, although the manufacturers are publicly asking for
repeal, the Members will be unwilling to repeal the program and that we should continue to
defend it as is. While I agree that we should continue to defend the program, I think that
the following questions should be addressed internally: (1) Are there changes to the VFC
program that we might accept (i.e., should we and can we reach a settlement with the
manufacturers and the Hill)?; and (2) Assuming that the discussion of Medicaid block
grants continues, will VFC be preserved as a separate program and, if not, how can we
protect immunizations for children?
I have attached the memo that you received this weekend about the cut-off.
THE WHITE HOUSE
WASHINGTON
April 7, 1995
MEMORANDUM FOR LEON PANETTA
FROM:
Carol RascoltR
SUBJECT:
Cut-off of Negotiations in Vaccine Program
HHS has just informed us that the Centers for Disease Control cut
off negotiations today with the vaccine manufacturers to add
delivery of vaccine to their existing vaccine purchase contracts.
HHS tells us that the Procurement Integrity Act prevented them
from informing us of this action in advance. The letters to the
manufacturers formally announcing the end of the negotiations
were put in the mail today, which allows HHS to divulge details
of the negotiations. They plan to make this information public
on Monday; they have informed no one else today. As you know,
HHS indicated earlier that the negotiations were not going well,
and we had assumed this cut-off was a possibility.
Background: As you know, the Vaccines for Children (VFC) program
entitles children who are uninsured, on Medicaid, or treated at
public clinics to immunization by providing free vaccine to
private and public sector providers who enroll in the program.
From the beginning of VFC, delivering vaccine to private
physicians has been a stumbling block. Currently this problem
prevents the program from operating in the private sector in 14
states. HHS has encouraged states to deliver the vaccine, and 35
are now doing so, with the remainder expected to join over the
next year or so. To fill the gap in the meantime, CDC began
negotiations with the vaccine manufacturers in September to amend
their existing contracts for vaccine purchase by adding delivery.
According to HHS, the manufacturers were unreasonable during the
negotiations.
The rationale for cancelling the negotiations is that -- since
these were to be amendments to contracts that begin expiring on
June 29, and the companies say it would take up to three months
to get the system up and running -- it is now too late for them
to be of any use. CDC now proposes to seek bids from contractors
other than the manufacturers.
Next Steps: On Monday, HHS plans to alert the manufacturers, the
states, the Hill, GAO, and other interested parties. HHS will
also talk to the AP on the theory that this is less risky than
letting the manufacturers shape the story. HHS hopes to persuade
the manufacturers to react in a measured way to the announcement,
but it is quite possible that the companies will use this as an
opportunity to criticize HHS for continuing to run the VFC
program ineptly. If this happens, HHS would criticize one or two
2
of the manufacturers for being particularly unreasonable during
the negotiations.
Obviously this could easily raise questions on the Hill about the
future of the program. The manufacturers are still calling for
repeal of the entire program, although privately they are
probably interested in compromise.
Following a meeting I had with Tom Downey and his client (Merck)
yesterday, I have serious concerns about whether this program
will survive. I believe you need to convene a meeting very early
next week with our communications staff, legislative affairs,
DPC, and whoever else is appropriate.
CC: Hillary Rodham Clinton
draft 4/10/95 noon
Dear Colleague:
I write to update you on the status of the efforts by the Centers
for Disease Control and Prevention (CDC) to negotiate delivery
contracts with vaccine manufacturers for the Vaccines for
Children (VFC) program for those states that do not wish to
deliver vaccines to public and/or private providers themselves.
For several reasons, which I will explain, CDC is canceling the
solicitation for these delivery contracts with the vaccine
manufacturers. This does not affect the vaccine purchase
contracts that remain in effect.
As part of the VFC legislation enacted by Congress, CDC has
sought to establish a vaccine distribution system for those
states which choose not to deliver vaccine to all providers. In
early September 1994, CDC contacted the four major vaccine
companies--Connaught; Lederle-Praxis; Merck, Sharp, and Dohme;
and SmithKline Beecham--and asked them to consider adding private
provider delivery to their existing vaccine purchase contracts.
Following these discussions, we issued written "Requests for
Proposals" (RFP) on September 15-16, - 1994. Based on discussions
with the companies in September, it was anticipated that vaccine
deliveries could begin in December 1994.
Although negotiations for vaccine delivery immediately got
underway with all four vaccine companies, we have been unable to
reach signed contracts with all of the manufacturers. CDC has
now made the decision to discontinue its current efforts to
establish a vaccine distribution system for FY 1995 for the
following reasons:
1.
An effective distribution system requires CDC to have
delivery contracts with all four vaccine companies.
Although we have reached final agreement with one
company, we have no realistic expectation of final
agreements with all four companies in time to deliver
vaccine under the current vaccine purchase contracts.
2.
Even if delivery contracts with all vaccine companies
were signed this month, we estimate that at least three
additional months would be required before all
manufacturers would have in place the necessary
mechanisms to begin receiving electronic orders for
vaccine. Because our current vaccine purchase
contracts are due to expire as early as June 29, 1995,
new delivery arrangements made through modifications of
these contracts could not be made before some of the
vaccine purchase contracts expire.
3.
As of March 30, 1995, thirty-five States have informed
CDC that they are delivering vaccine to all enrolled
public and private providers who request vaccine. Each
of the fourteen remaining states has reported to CDC
that they are planning to deliver vaccine to all
providers in the future. Ten of the fourteen reported
that they would begin providing vaccine to private
providers this year. The remaining four plan to
deliver to private providers as soon in 1996 as
feasible. (Alaska is not participating in the VFC
program.)
4.
Under these developing circumstances, it would be
difficult for CDC to guarantee the manufacturers the
minimum number of deliveries that are specified in the
RFPs, given the decreasing number of states that are
requesting direct vaccine delivery to providers.
The cancellation of the delivery contract solicitation does not
alter CDC's commitment to the establishment of a delivery system
for those states which do not wish to deliver vaccine themselves.
CDC's ability to serve those states, however, is affected by the
fact that SO few states now want CDC's assistance with delivery.
Under these new circumstances, consultation by CDC with states,
including state health departments and immunization program
directors, vaccine manufacturers, private provider organizations,
commercial distributors and other interested parties will help
determine the most efficacious way to deliver vaccine in those
states.
During the period of negotiations with vaccine manufacturers, CDC
continued to explore options for a long term vaccine distribution
system that could become effective in FY 1996. We have been
working with Logistics Management Institute (LMI) to explore
possible alternatives. As we consult with you and others, I am
confident that LMI's work will be an important resource in these
discussions.
Finally, I want to express my appreciation to you for your
support and cooperation during this period of implementation of
the Vaccines for Children program. As we all know, the start up
of a new and important public health effort is a complex
undertaking, and we have made great progress since October 1.
Together we can be proud of the many considerable accomplishments
we have achieved SO far. I look forward to continued progress
during our deliberations regarding vaccine delivery. Soon, CDC
will be seeking your participation. I hope you will assist us in
this effort.
Sincerely,
David Satcher, M.D.
draft 4/7/95 8:30 am
Letter to companies:
We have been unable to reach agreements with all manufacturers on
modifications to current vaccine purchase contracts that would
provide for vaccine delivery to private providers. For the
following reasons, we have decided we will no longer pursue these
modifications:
- As of March 30, 1995, thirty-five states have informed CDC
that they are delivering vaccine to all enrolled public and
private providers who request vaccine. All of the remaining
14 states have reported to CDC that they are planning to
deliver vaccine to all providers in the future. Ten of the
fourteen reported they would provide vaccine to private
providers during 1995. The remaining four plan to deliver
to private providers some time in 1996. (Alaska is not
participating in the VFC program.)
- - An effective distribution system requires CDC to have
delivery contracts with all four vaccine companies. We have
reached full agreement with one company; but we have no
realistic expectation of final agreements with all four
companies in time to deliver vaccine under the current
vaccine purchase contracts.
- Even if delivery contracts with all vaccine companies were
signed this month, distribution could not begin until
approximately June 1995, and at least one company may
require what we would estimate to be three months to
establish the necessary mechanisms to begin receiving
electronic orders for vaccine. Because our current vaccine
purchase contracts are due to expire as early as June 29,
1995, the new delivery arrangements made under these
contracts would be in effect for as little as a month.
- -Under the present circumstances, it would be difficult for
CDC to guarantee a minimum number of deliveries, given the
decreasing number of states that are requesting direct
vaccine delivery to providers.
We appreciate your submission of proposals for these services and
your willingness to work with us to establish provider
deliveries.
Sincerely yours,
Mary Ann Bryant
TO:
Hillary Rodham Clinton
FROM:
Jennifer Klein J.R.
DATE:
1/25/95
RE:
Vaccines for Children Program
This memorandum briefly describes the background of the
Vaccines for Children (VFC) program, outlines the program's
problems, and proposes a set of next steps to address these
problems.
The VFC program was designed to reduce the costs for
families of immunizing their children and to improve immunization
rates and continuity of care by enabling private physicians to
provide free vaccine rather than refer children to public
clinics. (Increasing numbers of physicians have been referring
children to public clinics and health departments for their
immunizations because of the rising costs of purchasing vaccine
at retail price. These referrals often result in missed
immunizations and breaks in continuity of care.)
As you know, the VFC program has been vigorously opposed by
vaccine manufacturers and Democratic and Republican Members of
Congress, plagued by serious implementation problems, and
attacked by the press. As you also know, the VFC program is part
of the Administration's Childhood Immunization Initiative, which
includes other (widely supported and quite successful) activities
to improve the public immunization delivery infrastructure in
States and local communities and to educate providers and parents
about the importance of age appropriate immunization.
Background
The Program as Proposed. The Administration originally
proposed a federally-funded entitlement program to immunize all
children in the United States. Vaccine was to be purchased by
the Federal government at prices negotiated with vaccine
manufacturers and distributed free of charge to private
physicians and public clinics. The Administration did not
identify a source of financing for this new entitlement program.
The Program as Passed by Congress. The VFC program passed
by Congress created an entitlement program under which the
Federal government purchases sufficient vaccine to immunize only
specified categories of children -- Medicaid beneficiaries,
Indian children, uninsured children, and some underinsured
children. (Underinsured children -- defined as children who have
health insurance that does not cover immunizations -- are
eligible to receive free vaccine if they are immunized at a
federally qualified health center or a rural health clinic.) The
Federal government pays a statutorily set price that is deeply
discounted below the private market price. States may also
purchase vaccine at this price for children who are not eligible
for the VFC program (known as the State optional purchase
provision).
Problems and Proposed Solutions
1.
Implementation
Problems. One of the biggest problems with the program has
been the failure to set up a workable delivery system. HHS
interpreted an ambiguity in the law as prohibiting the Secretary
from entering into contracts with manufacturers to deliver their
own vaccine. HHS refused offers by Congress to clarify the
legislative confusion and instead chose to set up a Federal
delivery system. The resulting GSA warehouse was criticized as
both unsafe and inefficient from the outset and finally was
closed. As a result, while almost two-thirds of the States have
arranged for their own distribution systems, in the remaining
States no VFC vaccine is being distributed.
In addition, physicians have been over-ordering free
vaccine. This is most likely due to their inability to estimate
accurately how many of their patients are eligible for the
program. However, manufacturers have begun charging that the
program is riddled with fraudulent doctors who get free vaccine,
bill their patients for the retail price, and pocket the money.
Proposed Solutions. The General Accounting Office is
expected to issue a report in the next few weeks exposing this
"fraudulent provider" problem. We can act before the report is
issued to put in place an accountability system to ensure that
physicians and clinics order VFC vaccine only for eligible
children.
In addition, over the next few months, we can negotiate with
manufacturers to pay for delivery of vaccine at or near market
rates. HHS is currently negotiating with manufacturers to
deliver vaccine under the Medicaid program; it is possible that
the manufacturers would be willing to extend any agreement to the
VFC program. (However, because all negotiations are confi-
dential, we do not know what, if any, agreement has been
reached.)
2. Price Discount
Problems. In order to meet budget reconciliation
requirements, Congress abandoned the Administration's initial
plan to negotiate prices with the vaccine industry each year.
Congress instead imposed a statutorily set, deeply discounted
price equal to the price that the manufacturers had agreed to
accept in the early 1980s for vaccine purchased by the Centers
for Disease Control (with an adjustment for inflation). Since
the 1980s, the market share of vaccine sold at the CDC price has
been 50 percent. The manufacturers estimate that with the VFC
program in place (including State optional purchase) they will
now be forced to sell 80 percent of vaccine at a discount. This
will reduce their profit margins significantly and, they claim,
will therefore slow new vaccine research and compromise their
ability to continue to produce vaccine.
The attached chart compares vaccine prices in the private
sector with prices under the VFC program.
Proposed Solutions. We can ease the strain on manufacturers
by reaching a legislative settlement to end State optional
purchase (i.e., prevent new States from purchasing vaccine at the
VFC discounted prices for non-VFC eligible children in their
States). We may also consider offering to manufacturers a price
they consider "fairer" (i.e., closer to market) for vaccine
purchased for the VFC program. However, this second step may not
be necessary and will obviously have cost implications.
Incidentally, while these issues are real, much of the
manufacturers' hostility stems from the extreme ill will that has
developed between the industry and HHS. Even if we do not
address all of their complaints, it would be useful if you and/or
Carol met with the manufacturers to hear their concerns.
3. Perception of the Program
Opposition to the program by Members and in the press has
been highly visible. The program has been attacked as yet
another Clinton Administration "big government" solution -- a
government takeover of the private sector's system of vaccine
delivery. The original Administration proposal (which would have
provided free vaccine to all children in the United States) was
also criticized because taxpayer dollars would have been used to
buy vaccine for children whose families could easily afford to
pay for it. These perceptions are particularly damaging because
there is little data showing that providing free vaccine
increases age appropriate immunization.
Proposed Solutions. While some Members and manufacturers
have called for the repeal of the VFC program, there is growing
pressure to leave it in place. States support VFC because their
Medicaid programs -- which in the past purchased vaccines -- now
receive free vaccine from the Federal government. Many have
already spent this windfall. As early as the fall of 1993, some
Republican Senators opposed elimination of the VFC program
because of concern about their home States' budgets. We should
enlist and publicize the support of Governors, State Medicaid
directors and State health officers in the coming weeks.
Finally, while much of the damage has already been done,
negative perceptions have been severely aggravated by the real
failings of the VFC program. Addressing the implementation and
price issues quickly will go a long way toward improving the
public view of the program. This memorandum outlines possible
first steps to solve these problems. I would be happy to discuss
these in more detail.
cc: Melanne Verveer
JAN 23 '95 01:13PM GWU CHPR
P.6
CURRENT VACCINE PRICES
FEDERAL CONTRACT AND PRIVATE SECTOR
OCTOBER, 1994*
Vaccine or
Centers for
Private sector:
Centers for
Private sector:
product**
Disease Control
cost per dose
Disease Control
Cost for vaccines
(Federal
(Federal
recommended
Contract):
contract):
from birth to age
Cost per dose
Cost for vaccines
two.
recommended
from birth to age
two.t
Oral Polio
$ 2.21
$ 10.47
$ 6.63
$31.41
Vaccine
(3 doses)
(3 doses)
(OPV)
Diphtheria-
$ 5.96
$ 10.10
$ 23.84++
$ 40.40++
Tetanus-Pertussis
(4 doses)
(4 doses)
(DTP)
Measles-Mumps-
$ 15.71
$25.87
$ 15.71
$ 25.87
Rubella
(1 dose)
(1 dose)
(MMR)
Haemophilus
$ 4.17
$ 15.13
$ 12.51 $ 16.68
$ 45.39 $ 60.52
influenzae type B
(3-4 doses,
(3-4 doses
(HIB)
depending on
depending on
vaccine types)
vaccine type)
Hepatitis B
$ 7.09
$ 16.17
$21.27
$ 48.51
(Hep B, HBV)
(3.doses)
(3 doses)
Based on information from the Centers for Disease Control and Prevention, U.S. Public Health Service
Certain vaccines, such as those for high-risk patients. are not shown
Vaccine doses are as recommended by the American Academy of Pediatrics (AAP) and the federal Advisory Committee on
Immunization Practices (ACIP). Doses are to be administered at specified intervals, from birth through 18 months of
age. Additional doses are recommended by ages 4 years to 6 years, before a child enters school, as follows: OPV (fourth
dose); DTP (fifth dosett): MMR (second dose recommended by ACIP: AAP recommends second dose by age 12, preferably
before entry to middle school or junior high).
++ Fourth and fifth doses may be Diphtheria-Tetanus-acellular pertussis (DTaP), at per-dose cost of $9.81 (CDC) or $16.09
(Private sector).
March 16, 1995
MEMORANDUM TO HILLARY RODHAM CLINTON
CAROL H. RASCO
MELANNE VERVEER
FROM:
JENNIFER KLEIN
SUBJECT:
Vaccines for Children Program
In preparation for our meeting on Monday, this memorandum identifies three
important problems with the Vaccines for Children (VFC) program. They are: (1) the lack
of a delivery system in 13 states; (2) the provider accountability problem; and (3) the claim
by manufacturers that they will not be able to produce vaccine if they continue to be paid
such a low price for so large a share of the vaccine market.
1. The Delivery System Problem
Problem: Thirteen states do not have systems in place to deliver vaccine. HHS is
attempting to negotiate with the vaccine manufacturers for delivery contracts for these
states. However -- although publicly HHS continues to say that the negotations are
continuing -- it seems unlikely that HHS will reach agreement with the manufacturers.
HHS Rationale: HHS says that, because all contract negotiations are confidential, they can
not tell us why the contracts are not in place -- although they continue to blame the
manufacturers who, at this point, want repeal of the program.
Unanswered Questions:
(1)
Does HHS know that they will be unable to reach agreement with the
manufacturers?
(2)
What is HHS's plan for delivery if they are unable to sign contracts with the
manufacturers?
(3)
Do these delivery problems affect the Medicaid (section 317) vaccine program in
any way?
1
2. The Accountability Problem
Problem: GAO is expected to release a report criticizing the VFC program at the end of
March. The most damaging claim in the report will be that physicians are over-ordering
free vaccine. The GAO report will recommend that only "dose-by-dose accounting" will
ensure that only eligible children are receiving free vaccine.
HHS Rationale: HHS says that they have a good accountability system in place that does
not overburden physicians (but admittedly may not catch all over-ordering). They say that
GAO's approach is too burdensome and that they would rather allow over-ordering than
deny any eligible child vaccine.
Unanswered Questions:
(1)
CDC is studying other ways to monitor ordering. Their studies will not be complete
until June. Why are they studying alternatives rather than making changes now?
(2)
What can be done before the report is issued?
Possible Solutions: Whether GAO is right or not, the report will be powerful amunition for
opponents of the VFC program. HHS's rhetoric about erring on the side of protecting
eligible children will fall flat. At the very least, before the report is issued, we can get
physician groups to voice their support for the approaches CDC is studying. We could also
act now (even as an interim measure) to limit the amount of vaccine that private physicians
can order unless they demonstrate that they serve a greater number of eligible children.
3. The Price Problem
Problem: Manufacturers claim that because the vaccine prices set in the statute are so low,
the VFC program will compromise their ability to do research and produce vaccine. The
manufacturers are particularly unhappy because the VFC program allows states to purchase
vaccine at the low VFC prices for children in their states who are not eligible for the VFC
program (the so-called "state optional purchase" provision). The manufacturers estimate
that with this provision in place they will be forced to sell 80 percent of vaccine at a
discount.
HHS Rationale: Bill Corr has pointed out that the prices set by statute do not cover new
vaccines or new combinations of vaccines. That means that those manufacturers who are
currently developing new vaccines will be paid a negotiated, rather than a capped, rate.
(For example, the Advisory Council on Immunization Practices recently added three
vaccines to the recommended schedule; these vaccines are not subject to the cap.)
2
Unanswered Questions:
(1)
Are the manufacturers claims fair?
(2)
Is there anything we can do to satisfy them? Do we think they will be satisfied if
states are no longer allowed to purchase vaccine at the low rates set in the statute?
Will they settle for anything short of repeal?
Possible Solutions: We could negotiate with states and manufacturers to end state optional
pruchase. Bill Corr told us (very confidentially) that HHS is close to reaching a legislative
settlement to do this.
We are raising these issues in large part to see what can be done to strengthen the
program so that when the fight to repeal it begins we are defending a defensible program.
We should, therefore, also ask HHS to fill us in on any discussions they are having on the
Hill and get their sense of when the real push for repeal will begin.
3
TO:
Hillary Rodham Clinton
FROM:
Jennifer Klein
DATE:
3/1/95
RE:
Immunization Update
Here is a short report on the conference call that Melanne and I had with Phil Lee
and Bill Corr. We raised what we see as the three most important problems with the
program. They are: (1) the lack of a delivery system in 13 States; (2) the provider
accountability problem: and (3) the claim (that you heard from John Stafford of American
Home Products) by manufacturers that they will not be able to produce vaccine if they
continue to be paid such a low price for so large a share of the vaccine market.
Melanne and I concluded that while there is not much to be done about the delivery
system problem (beyond a herculean effort to get contracts in place and to encourage States
to set up delivery systems), we can take immediate steps to improve accountability and
relieve the manufacturers concerns about price.
Problems
1. The Delivery System Problem
HHS continues to negotiate with manufacturers for delivery of vaccine in the 13
States without their own delivery systems. Because all contract negotiations are
confidential, Phil Lee and Bill Corr could not tell us why the contracts are not in place
except to say that it is of course difficult to reach agreement with manufacturers who, at
this point, are pushing for repeal of the program.
Bill did mention, however, that seven of the 13 States are beginning work on their
own delivery systems. Melanne and I suggested that HHS help these States in any way it
can.
2. The Accountability Problem
GAO is expected to release their report criticizing the VFC program at the end of
March. The most damaging claim in the report will be that physicians are over-ordering
free vaccine. (The data shows over-ordering - although it is not clear whether physicians
are ordering wrong or simply reporting the amount they are ordering wrong.) The GAO
report will recommend that only dose-by-dose accounting will ensure that only eligible
children are receiving free vaccine.
The current VFC accountability system was designed to monitor vaccine ordering
without burdening physicians. (The overwhelming sense was that private physicians would
not participate in the program if it required significant paperwork.) Physicians must place a
brief form in a child's medical record to verify that the child is eligible (and are subject to
audit at any time). The States are also required to submit accountability plans that may go
beyond the Federal requirements.
Because physicians have been over-ordering vaccine, CDC is currently studying
other ways to monitor ordering. They are considering two approaches: (1) requiring that
physicians complete an audit when ordering new vaccine; and (2) taking a snapshot of the
amount of vaccine that a physician needs in one month to estimate year-long need.
However, these studies will not be complete until June.
At the very least, before the report is issued, we can get physician groups to voice
their support for the approaches CDC is testing. We could also act now to place an upper
limit on the amount of vaccine that private physicians can order (i.e., no more than a
proportion of their practice that is equal the proportion of eligible children in the State).
Physicians who need to order more vaccine could demonstrate that they serve a greater
number of eligible children.
3. The Price Problem
The Statutorily Set Price. As I noted in my first memo, manufacturers claim that
because the vaccine prices set in the statute are so low, the VFC program will compromise
their ability to do research and produce vaccine. Bill Corr pointed out that the prices set by
statute do not cover new vaccines or new combinations of vaccines. That means that those
manufacturers who are currently developing new vaccines are guaranteed a market for those
vaccines because of the VFC program and will be paid a negotiated, rather than a capped,
rate. (For example, the Advisory Council on Immunization Practices recently added three
vaccines to the recommended schedule; these vaccines are not subject to the cap.)
I understand that John Stafford shared with you his concerns about the low price set
by statute. Unfortunately, the fact that the price cap does not apply to new vaccines is not
helpful to Lederle (the vaccine company owned by American Home Products); Lederle
produces only one vaccine (which is subject to the cap), and the company has no plans to
develop other vaccines.
State Optional Purchase. As you may remember, the manufacturers are
particularly unhappy because the VFC program allows States to purchase vaccine at VFC
discounted prices for children in their States who are not eligible for the VFC program (the
so-called "State optional purchase" provision). The manufacturers estimate that with this
provision in place they will be forced to sell 80 percent of vaccine at a discount.
Bill Corr told us that HHS is close to reaching a legislative settlement to end State
optional purchase. This could dramatically improve our relationship with the manufacturers
and might induce them to sign delivery contracts in the States without systems in place.
Other Issues
1. One piece of good news. The Morbidity and Mortality Weekly Report recently
published the attached study demonstrating that significant numbers of primary care
physicians in New York refer children to clinics and health departments for vaccination and
cite the cost to their patients as a "very important" reason for doing so. The editorial note
on the study states that "VFC has allowed New York to increase provision of vaccine to
more children in primary-care settings where they first seek care." This evidence will be
helpful in refuting the expected charge in the GAO report that cost is not a barrier to
immunization. More can be done to encourage State health departments and pediatricians
participating in VFC to be more vocal in their support for the program.
2. Melanne and I think it would be worthwhile for you to meet with John Stafford
to hear his concerns. You might get a sense from him about how satisfied the manu-
facturers would be if we ended the state option to purchase vaccine at the discounted
statutory price.
cc:
Melanne Verveer
TO:
Melanne
FROM:
Jen
DATE:
2/2/95
I decided that the memo sounded too "directive" with the
suggested solutions included. Here (next to the bullets in his
memo and written in bold) are some proposals/questions you could
raise with Phil Lee in conversation.
We do not have a workable delivery system in place. The GSA
warehouse was criticized as both unsafe and inefficient from
the outset. Since it closed, no new system has been
implemented (e.g., delivery contracts with the
manufacturers) As a result, almost two-thirds of the
States have arranged for their own distribution systems,
while in the remaining States no VFC vaccine is being
distributed.
How are we progressing in finding alternative delivery
methods?
Physicians have been over-ordering free vaccine. I have
been told that this is most likely due to an inability to
estimate accurately how many of their patients are eligible
for the program. However, manufacturers have begun charging
that the program is riddled with fraudulent doctors who get
free vaccine, bill their patients for the retail price, and
pocket the money. I have heard that the General Accounting
Office is expected to issue a report in the next few weeks
exposing this "fraudulent provider" problem.
Can we act before the report is issued to put in place an
accountability system (that is not burdensome) to ensure
that physicians and clinics order VFC vaccine only for
eligible children?
According to the manufacturers, the price set in the statute
is quite low. Because such a large share of the market now
pays this low price (especially given the State optional
purchase provision), the manufacturers claim that their
profit margins will be reduced significantly and their
ability to do new vaccine research will end.
Should we agree to end State optional purchase? Will this
satisfy them or do we need to talk about offering a price
that is closer to market?
In addition, States support VFC because they now receive free
vaccine from the Federal government. Some have already spent
this windfall. You might suggest to Phil Lee that we enlist and
publicize the support of Governors, State Medicaid directors and
State health officers in the coming weeks.
CONFIDENTIAL
TO:
Phil Lee
FROM:
Melanne Verveer
DATE:
2/2/95
Per our conversation, here are the concerns about the
Vaccines for Children Program that I have heard from various
sources.
We do not have a workable delivery system in place. The GSA
warehouse was criticized as both unsafe and inefficient from
the outset. Since it closed, no new system has been
implemented (e.g., delivery contracts with the
manufacturers) As a result, almost two-thirds of the
States have arranged for their own distribution systems,
while in the remaining States no VFC vaccine is being
distributed.
Physicians have been over-ordering free vaccine. I have
been told that this is most likely due to an inability to
estimate accurately how many of their patients are eligible
for the program. However, manufacturers have begun charging
that the program is riddled with fraudulent doctors who get
free vaccine, bill their patients for the retail price, and
pocket the money. I have heard that the General Accounting
Office is expected to issue a report in the next few weeks
exposing this "fraudulent provider" problem.
According to the manufacturers, the price set in the statute
is quite low. Because such a large share of the market now
pays this low price (especially given the State optional
purchase provision), the manufacturers claim that their
profit margins will be reduced significantly and their
ability to do new vaccine research will end.
I'm sure that none of these issues come as a surprise to
you. I will call in a few days to talk more about this.