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Childhood Vaccine Finance And Safety Issues
The U.S. national immunization system has been extraordinarily successful. But financing of vaccines is fragmented, and the supply of vaccines has become unreliable. Growing public concern about vaccine safety places additional stress on this system. Because vaccines are given to healthy children, adverse events can be particularly troubling. But excessive public concern can negatively affect vaccine supply and delivery by complicating the job of immunizing children and reducing the incentive to produce vaccines. This paper explores a range of vaccine financing and safety issues—and the linkages between them—and considers recent Institute of Medicine studies and recommendations.
Vaccines are at a crossroads. Scientific and clinical understanding of vaccines and immunization is accelerating dramatically and holds enormous potential to reduce the human and monetary burden of disease. Recombinant science is revolutionizing vaccine technology, making new and better vaccines possible. Whole new categories of therapeutic and cancer-preventing vaccines are on the horizon.
By contrast, the system for financing and delivering vaccines to the public presents a mixed picture. Insurance coverage for immunization is highly fragmented and uneven. Physicians are burdened with determining patients’ eligibility and receive payments that do not reflect the growing demands of immunizing patients. As a result, physicians often send patients to public clinics for immunization. In addition, the supply of vaccines itself is unreliable. The number of vaccine suppliers has declined markedly in recent years, and today only five firms produce all childhood vaccines for the entire United States. Eight of those vaccines are produced by a single supplier (Exhibit 1
There are also bright spots in the immunization picture. A sustained public health program has been successful in delivering vaccines to the daily U.S. birth cohort of 11,000 babies before they become vulnerable to infectious disease. The result is a high national rate of immunization for children: Between 75 percent and 80 percent of two-year-olds have received the basic 4:3:3:1 vaccine, and rates for some individual vaccines exceed 90 percent.1 Disparities in immunization rates across geographic regions and demographic groups have greatly declined. This public health success stems from several factors: the leadership of the National Immunization Program of the U.S. Centers for Disease Control and Prevention (CDC); effective public awareness campaigns and targeted eradication efforts; school laws that require immunization for enrollment; the enactment in 1992 of the federal Vaccines for Children (VFC) entitlement, which reduced financial barriers for the ten million children that it serves; and the avid support of pediatricians and other physicians. Clouding this picture is the recent emergence of public concerns about vaccine safety as a major public policy consideration. So far, these concerns have had only a limited adverse impact on population rates of immunization, but over time they have the potential to blunt the impact of hard-fought public health campaigns, such as the national commitment to school entry requirements. Tensions between public health goals and private-sector needs are reverberating throughout individual states and the country as a whole, calling into question some of the basic policy assumptions that have shaped the immunization system as we know it. For example, the need to counsel parents about vaccine safety has complicated the physician’s job of immunizing. Because one of the principal concerns about vaccine safety is the cumulative effects of multiple vaccinations, additions to the immunization schedule exacerbate the problem. Vaccine safety issues also endanger the already fragile supply of vaccines by increasing the risk of litigation, limiting public demand, and creating an increasingly hostile environment for vaccine producers. This paper explores these issues by first providing an overview of the components of and financing for the immunization system. It then describes current issues and evidence in vaccine safety and explores the intersection of vaccine safety and finance issues. It examines recommendations advanced by the IOM in several related studies and considers how the nation might address these problems. What emerges from this analysis is a complex web of public policy issues that reflects the intersection of government policy, public-good economics, health care delivery models, consumerism, and science. Vaccines provide an important lens through which we can view the emerging relationships and interactions among scientific, social, and economic forces that will shape child health and welfare into the future.
Childhood immunization against infectious diseases is one of the great public health achievements of the twentieth century. Disease morbidity rates declined dramatically for nine vaccine-preventable diseases (VPDs): smallpox, polio, diphtheria, pertussis, tetanus, measles, mumps, rubella, and Haemophilus influenzae type b (Hib).2 Smallpox and polio have been eradicated throughout the United States (and almost worldwide), and each of the other seven diseases occurs only sporadically within U.S. borders (Exhibit 2  ).3
The U.S. immunization system has been described as a "national treasure that is too often taken for granted."4 Yet this "system" is, in reality, a highly decentralized operation consisting of multiple components, including federal, state, and local public and private health sectors; individual physicians and health professionals; health plans and insurance companies; employers and others who purchase health benefits; the vaccine industry; and individual consumers and families. Each group within the system has distinct incentives and resources that affect its capacity to perform its role in achieving high rates of immunization. The number of vaccines recommended for children has grown steadily—from only four in the 1950s (polio, pertussis, diphtheria, and tetanus)—and that number could triple in the next twenty years.5 The CDC now recommends twelve distinct vaccines for routine administration to children.6 Several of these are administered in combination form: MMR (measles-mumps-rubella), and DTaP (diphtheria-tetanus-acellular pertussis). Additional vaccines are in the research and development (R&D) pipeline, including respiratory syncytial virus, streptococcus, and para influenza. To complete the childhood immunization schedule, children must now receive up to twenty-one doses of vaccines before eighteen months of age and up to twenty-nine doses to be fully immunized by age six.7 As the number of vaccines has increased, so has their cost. Because newer vaccines are priced much higher than older vaccines, the addition of vaccines has disproportionately increased the total cost of immunizing a child. For example, the list price of the most recent new vaccine, pneumococcal conjugate, is $61 and requires four doses. In contrast, DTaP and MMR cost $20 and $32, respectively, for three separate antigens; Hib and polio vaccines cost $22 and $21, respectively.8 Consequently, the cost to fully immunize a child more than doubled between 1999 and 2002. It is not known how important low vaccine prices were to the early success of public health campaigns to increase immunization. But this environment of higher vaccine costs raises concerns about the country’s capacity to achieve further gains in immunization.
Immunization is financed through private health insurance, public safety-net programs, and patients’ out-of-pocket spending. Just over half (51.8 percent) of all children ages 0–5 (the most important years for immunization) are covered for immunizations by private insurance. About 35 percent of children are covered in public programs, such as VFC. The remaining 13.8 percent are underinsured—these children have private insurance that does not cover immunizations.9 These numbers do not reflect the limitations on private coverage attributable to patient cost sharing in the form of deductibles and copayments. Such costs are typically small, but they affect a large number of children.10 Recent surveys document a noticeable trend toward increased cost sharing in private insurance plans.11 The VFC program shored up public coverage for poor or uninsured children. Building on the creation of universal purchase programs in a growing number of states in the 1980s and early 1990s, the federal government created VFC as a federal entitlement in 1993. Initially proposed as a program that would provide free vaccines to all children, VFC and its legislative compromise established criteria for eligibility: Recipients needed to be children under age eighteen who were (1) uninsured; (2) eligible for Medicaid; (3) Native American or Alaskan Natives; or (4) recipients of vaccines in federally qualified health centers (FQHCs). VFC enables the CDC to negotiate the purchase of large quantities of recommended childhood vaccines for designated populations of disadvantaged children on a routine schedule. The CDC then ships the vaccine products to each state, avoiding the uncertainties and delays commonly associated with the annual state legislative process for public health budgets. The program allows states to extend their own public health funds to support outreach and education efforts, to staff clinics in underserved areas, and to develop innovative approaches to improving immunization rates. However, VFC coverage has several critical limitations. The most important is the exclusion of coverage for underinsured children. This exclusion applies not only to children in private health plans but also to children who are in certain State Children’s Health Insurance Programs (SCHIP). A ruling by the Centers for Medicare and Medicaid Services (CMS) asserted that children in SCHIP Medicaid-expansion programs can receive VFC vaccines, but children in SCHIP stand-alone programs (such as California’s) cannot. In addition, VFC covers vaccines but not the fees for physicians administering them. This practice contributes to a wide range of payment policies and rates across states, complicates the billing process for physicians, and can ultimately dilute the positive impact of free vaccines. Timing issues can also cause confusion and reimbursement problems for physicians. For example, time gaps between the recommendation of a vaccine and completion of the negotiation of a contract by the CDC has resulted in physicians’ having to purchase VFC vaccines in the interim with uncertain prospects for reimbursement.12 Finally, the size of the federal purchasing program, which now represents 55 percent of all childhood vaccines, may disrupt economic incentives and contribute to underinvestment in vaccines. The government uses its purchasing power to negotiate the lowest possible prices for vaccines and enforces price caps for several products. This arrangement has resulted in flat inflation-adjusted prices for older vaccines over the past two decades and may also contribute to the exodus of firms from the vaccine business. In addition to VFC, a federal program funded by Section 317 of the Public Health Service Act provides grants to states. Section 317 funds consist of two separate accounts: financial assistance (FA) grants, which fund vaccine purchases, and direct assistance (DA) grants, which support the public health infrastructure for immunization within each state. Although delivery of immunization is largely left to states, federal assistance is usually required to help each state maintain sufficient public health capacity, respond to unexpected circumstances, and prevent infectious disease transmission across state borders. Federal assistance to the states for the development of immunization infrastructure programs rose more than sevenfold, from $37 million in 1990 to $261 million in 1995, but infrastructure grants declined by more than 50 percent in the five years between 1995 and 1999.13 Most states continued to spend their own revenues in support of public health programs (total state-level annual expenditures were estimated in 2000 as $109 million for vaccine purchase and $231 million for program operations).14 But the reductions in the federal grants program led to reductions in state programs, affecting areas such as clinic hours and mobile sites, immunization outreach performance assessment, information and program management, and linkage with community-based programs. These funding cycles fostered an atmosphere of unpredictability about federal support for state immunization programs. Spurts of growth in the Section 317 funds were frequently stimulated by outbreaks of infectious diseases (such as the measles epidemic of 1989–1990); cutbacks often followed periods when states had difficulty spending out allocations for new programs or initiatives associated with prior-year increases. This uncertainty has fostered caution on the part of states in adopting new strategies that require sustained public and private partnerships. The result is delay in the development of strategic responses designed to foster disease prevention, improve immunization coverage levels for specific populations and age groups, reduce coverage disparities between low-income groups and the general population, and ensure vaccine safety.
The IOM’s involvement in vaccine finance and safety spans two decades, beginning with the report Vaccine Supply and Innovation.15 Published in 1985, this report examined the early wave of exit from the vaccine industry as a result of escalating vaccine injury litigation and suggested federal intervention, which led in part to the enactment of the National Vaccine Injury Compensation Act. Two recent IOM reports reexamine vaccine finance policy for state infrastructure support and vaccine purchases in light of new trends. Calling the Shots (2000) addresses the instability in federal funding for vaccine infrastructure and the resulting disruption in state immunization programs.16 Since most disadvantaged U.S. populations now receive their vaccines in "medical homes" within the private health care sector, public health agencies have shifted their roles from the delivery of direct health care services to assessment, assurance, and policy development. The IOM report concludes that effective performance of these public health roles requires a stable and sustainable finance base so that public agencies can monitor and be alert to changes in immunization coverage levels and respond to disparities in access to immunization resources, particularly during periods when the number and types of vaccines are changing. The study committee further concludes that states cannot sustain adequate investments in immunization infrastructure and that additional federal assistance is necessary to prevent further erosion. Consequently, the IOM recommendations called for a substantial increase and greater stability in federal funding for state immunization programs. The second recent report, Financing Vaccines in the Twenty-first Century (2003), focuses on the financing of vaccine purchase and supply.17 The report concludes that an important relationship exists between the way vaccines are purchased and the viability of the vaccine supply. According to the report, vaccines are greatly undervalued by society, and this leads to policies that discourage vaccine companies from investing aggressively in both new and existing vaccines. These policies cut across many areas. The CDC seeks the lowest prices in negotiation of federal vaccine contracts. The U.S. Food and Drug Administration (FDA) exercises extreme caution, which can impose costly requirements for research, drug approval, and manufacturing processes. And sizable gaps remain in public funding for vaccine infrastructure and purchase in serving the needs of hard-to-reach populations. To address these concerns, the IOM report recommends major changes in the way vaccines are purchased. The CDC would focus on guiding vaccine policy, building state and federal immunization capacity, and recommending new vaccines for general use or special populations. The role of purchasing vaccines, however, would shift to the states and the private sector (through providers and health plans). The federal government would require immunization coverage for selected vaccines in all public and private health plans and would provide a subsidy to reimburse purchasers for all vaccines as well as provider fees. Uninsured people would be awarded a federal voucher that could be used to reimburse providers for the costs of their vaccines. To encourage vaccine development, the committee suggests that the government subsidy for each new vaccine be calculated in advance and set at a level high enough to reflect the vaccine’s societal value. Although this approach would increase costs, the current global expenditure on vaccines is approximately $6 billion per year, about what is spent on one of several blockbuster drugs.18 The committee is clear that given the extraordinary social benefits of vaccines, society should be willing to spend much more on them than we do. But the IOM report also suggests that we pay more attention to the costs and benefits of vaccines and concentrate on those that have the highest value, especially those with strong spillover effects—that is, those whose use by one person benefits others by preventing contagious transmission. This is especially important as new therapeutic vaccines are developed for diseases that are not contagious.
Questions about the safety of vaccines have plagued public policy for centuries; the introduction of the smallpox vaccine, which was derived from scraping the sores of diseased calves, brought on public fears and protests. A famous political cartoon of the day showed half-animal, half-human people and believed that getting "natural infection" was superior to this "unnatural" means of protection. The past few decades have brought very public discussions in the United States and other countries, such as Great Britain and Japan, about whether the risks of vaccines could be worse than the risks of natural infection. Illnesses and childhood deaths that followed vaccination were ascribed by some parents and pediatricians to vaccinations, and refusal of vaccination began to rise. Increases in vaccine-preventable diseases such as pertussis (whooping cough) followed. Increasing numbers of lawsuits against vaccine manufacturers drove several companies out of the market, leaving the country vulnerable to the problems of price, competition, and shortages described earlier. There are many reasons why some people question the safety of vaccines. First, some vaccines do have harmful consequences. For example, the oral polio vaccine and the smallpox vaccine have well-established consequences directly related to the effects of the live virus used in the vaccine. But even though risks are real and sometimes deadly, serious adverse reactions to vaccination are rare. Second, as vaccine-preventable diseases decrease in response to vaccines, the benefits of vaccination recede from public memory, and the risks of the intervention loom large. People forget or have never witnessed the seriousness of polio or measles infection. The very success of vaccines leads some to question their necessity. Vaccines are given to healthy people to protect against diseases they might or might not contract, compared with drugs that are given to sick people who stand a high, demonstrable chance of therapeutic benefit. The benefits of vaccination in a highly vaccinated population are as much for society as for the individual, if not more so. Some parents question why they should subject their children to a risk with potentially no benefit. An extensive literature on risk perception bears on this problem and has been reviewed by the IOM’s Vaccine Safety Forum and others.19 Third, vaccination is mandatory for school entry and for participation in most day care settings. Religious and philosophical exemptions are allowed by some states, and the number of people seeking such exemptions is rising, although they are relatively rare. Although states control school mandates, federal and national advisory committees, such as the Advisory Committee for Immunization Practices of the CDC and the Infectious Diseases Committee of the American Academy of Pediatrics, make the recommendations for universal use that guide state mandates. Parents who question the safety of childhood vaccines perceive these mandates as coercive acts that take away their right to determine the medical care of their children. Most public health and medical practitioners believe, and evidence supports, that without mandates, vaccination rates would fall, endangering both the children whose parents chose not to vaccinate and others who could not be vaccinated because of underlying medical conditions or who did not respond to vaccine with appropriate immunity. As basic science triumphs lead to more opportunities to develop vaccines against diseases, vaccine safety concerns will likely increase.20 The United States supports mandatory vaccination of all infants and children under age two against twelve diseases with up to twenty-two separate injections. How many more vaccinations will parents, physicians and nurses, and insurance providers tolerate? Is the goal to develop vaccines for every infectious disease or only for serious diseases? How serious should a disease be to warrant a vaccination program? Who is to judge the seriousness of a disease? At some point, this health promotion and disease prevention strategy could wear out its welcome with the population at large. It has already done so with some segment of society. The United States lacks a comprehensive scientific and policy approach to explore fully the ramifications of the increasing number of vaccines that will soon be available.21 Some legislative relief to the increasing lawsuits came in the form of the 1986 National Childhood Vaccine Injury Act (NCVIA, P.L. 99–660), which established key components of the vaccine safety system in place today. The law established, among other things, the creation of the National Vaccine Injury Compensation Program (VICP), a voluntary system of passive reporting of vaccine adverse events; the establishment of the National Vaccine Advisory Committee; and IOM involvement in the scientific assessments of vaccine safety. Although the IOM had a history in vaccine safety debates (the relative risks and benefits of the oral, live-attenuated polio vaccine and the injected, killed polio vaccine), the NCVIA mandated the involvement of the IOM in a specific policy: compensation for vaccine-induced injury.22 The IOM has convened two committees specifically mandated under P.L. 99–660 and two subsequent committees, the Vaccine Safety Forum and the Immunization Safety Review Committee. Combined, these four committees have issued fourteen reports since 1991. The primary and best-known focus of these committees has been describing the scientific evidence bearing on the question of causality: Can a specific vaccine cause a specific adverse event? These reports have played a major role in the evolution of the Vaccine Injury Table, the list of conditions to be considered in the VICP under a "presumption of causation" standard, as well as in the individual cases coming before the VICP through the "off-table" or "causation-in-fact" mechanism of argumentation about causality in front of the Special Masters in the Court of Federal Claims. The reports also review the literature dealing with the mechanisms by which vaccines could induce pathophysiological responses that could lead to adverse health outcomes. This is sometimes referred to as biological plausibility. All of the reports lay out research questions to be pursued. The eight reports of the Immunization Safety Review Committee include, in addition to the scientific assessments of causality and biological mechanisms, recommendations about policy review and analysis, as well as communication. We now highlight some of the key findings and challenges in these areas.
Four IOM committees have reviewed thousands of epidemiological studies as the foundation of the IOM’s conclusions about causality. These four committees concluded that the evidence supports a causal association for twenty vaccine-adverse events and no association for fifteen such events (Exhibit 3 ). For the vast majority of adverse outcomes studied, the committee concluded that the evidence is "inadequate" to know one way or the other. The most vexing of these findings are those in the "inadequate" category. For some adverse events reviewed, few studies exist; for others, many studies have been published, but they do not "add up" to a definitive conclusion. This leaves the public and policymakers frustrated. It also raises the question of why there is so little research (when such is the case) and whether there should be more. Resource limitations and the limitations of science mean that not all vaccine-safety hypotheses will be pursued. This has led the IOM committees to include other considerations in recommendations for future vaccine-safety research. However, there is no coherent framework for prioritizing the research needs within vaccine safety or between vaccine safety and other important public health and pediatric problems.
A key consideration in the criteria for causality includes what is called "biological plausibility."23 Although IOM committees consider biological plausibility as part of their general assessment of causality, the Immunization Safety Review Committee also has considered biological plausibility as a separate component that influences the scope of their recommendations about future research and policy reviews. In the absence of definitive epidemiological information about the causal association between vaccine and adverse event, evidence that the effect is biologically plausible, or that there is evidence of physiological effects of vaccines that are consistent with but not proven to cause the health outcome, can influence the committee to recommend continued research on the topic. For example, IOM committees have found inconclusive evidence from epidemiological studies of association with several demyelinating diseases and vaccination. However, the knowledge that antigenic stimulation can trigger autoimmune processes (in animal models or in cell culture systems) similar to those seen in demyelinating diseases has led committees to support limited continued research to clarify better the possibility that vaccines could trigger such reactions.
The Immunization Safety Review Committee has been charged with incorporating scientific assessments of causality and biological mechanism with the importance of the problem for society in formulating its recommendations about the scope of public health response. There are limited data about the breadth and depth of concern in the United States about vaccine-safety issues. In a survey of parents conducted a few years ago, 23 percent agreed with the statement: "Children get more immunizations than are good for them."24 However, most parents do have their children vaccinated, in part because school entry laws require it. One indication of the level of public concern about vaccine safety is the presence of activist organizations devoted to vaccine-safety controversies and of Web sites and Internet discussion groups, particularly about the possibility that vaccines could cause autism.25 Groups also have organized to advocate for increased vaccination.26 Vaccine-safety controversies also command attention by the media and by congressional committees. However, it is difficult to determine or quantify how salient vaccine-safety concerns are to the public at large. Nonetheless, in light of the media attention, presence of the issue in the VICP, and the depth of parental concerns, the Immunization Safety Review Committee has often concluded that the issues retain societal importance, which influences its recommendations for the scope of future activities. The committee was specifically commissioned to make recommendations about policy review and analysis. It has consistently found no reason to recommend that appropriate vaccine policy bodies such as the ACIP or FDA vaccine advisory committees review policies about licensure or use of specific vaccines. However, the committee has occasionally recommended policy analysis. For example, it recommended that the federal government review existing policies that would be invoked in cases of suspected contamination of vaccines and to make the final policies available to the public concerned about vaccines, to increase confidence in the safety system.27 In other reports, the committee recommended that federal advisory committees develop plans for communicating sudden changes in vaccine policy in a timely and effective manner; study lessons from the past, such as the swine flu program; and pursue broader and more explicit strategies that could inform decision making about mandating vaccines in the future, as the number of potentially mandated vaccines soars.28
It is often said that the easy work in vaccine-preventable diseases has been done. Vaccines exist that were easy to develop and that prevented some serious childhood diseases, such as polio, measles, and bacterial meningitis (Hib). Some serious vaccine adverse events, such as VAPP and acute encephalopathy after the whole-cell pertussis vaccine (DTwP), have been identified, and those who have suffered from these adverse effects can receive federal compensation. Vaccination policy has changed in response to these specific adverse effects, with less reactive vaccines now in use in the United States. But these successes are just the beginning. A national conversation remains about which vaccines should be developed by whom and for whom; which unresolved safety concerns should be studied; and which policy options other than universal, mandatory vaccination should be pursued. Vaccines have been a cornerstone of public health, and the decrease in vaccine-preventable disease is a major accomplishment of the twentieth century. Appropriate use of new vaccines to improve children’s health must involve the best science, the best public health and medical practice, and the best governmental policies. The federal policy agenda for vaccines must also take into account the new social and economic environments that are shaping perceptions and concerns about health care services in general, including vaccine safety and vaccine finance. The increasing role of consumer choice in the delivery of health care services has profound implications for traditional prevention practices in public health. Increasing competition in the global market for new pharmaceutical products fosters a need for a stronger federal role in developing economic incentives for vaccines of value to society. Factors that need to be resolved include strategies that can create a favorable climate for vaccine production (including appropriate protection from product liability), reasonable returns on investment, the extent of dependency on foreign firms for vaccine production, and the basic components of a stable delivery system. In addition, tensions within the state and federal partnership in public health in general and immunization in particular still require attention. If states are to bear a greater burden in purchasing vaccines for disadvantaged populations, there needs to be clear policy direction that can help to prioritize society’s needs and reduce disparities, structure incentives for private providers to continue to deliver vaccines, provide reliable information to the public, and assure adequate and stable funding for outreach and delivery services throughout the system. Traditional models of public health practice have served the United States well in reducing the scourge of communicable disease. The challenge today is to sustain the core strengths of these models in meeting public health goals while also adapting them to meet the demands of a new social and economic environment.
Robert Giffin is a senior program officer for the Institute of Medicine (IOM) Board on Health Care Services in Washington, D.C. Kathleen Stratton is a senior program officer for the IOM Board on Health Promotion and Disease Prevention. Rosemary Chalk (rchalk{at}nas.edu) is director of the Board on Children, Youth, and Families, National Research Council and IOM.
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The National Immunization System
Immunization Coverage
