Troubled Maker of Flu Vaccine Can Resume Work

Published: March 3, 2005  (must register to view original article)

After a five-month shutdown that disrupted the nation's supply of flu vaccine, the Chiron Corporation received permission yesterday to resume production, potentially in time to avoid a shortage next winter.

The action was taken by health regulators in Britain, who early last October suspended Chiron's manufacturing license because of bacterial contamination and quality-control problems at its plant in Liverpool, England, where nearly half the United States' supply of the vaccine was to have been made.

The resulting sudden and severe shortage caused long lines at flu clinics across the country and set off a wholesale examination of what many experts called a fragile supply system, which was dependent on only two main producers of the vaccine.

In a statement yesterday, the British government said Chiron had made "satisfactory progress" in rectifying its problems in Liverpool.

But while the company can now begin producing vaccine again, it still needs approval from the Food and Drug Administration in the United States before selling it here.

"This is extremely encouraging and kind of a milestone in the process," Dr. Jesse L. Goodman, the director of the drug agency's branch in charge of vaccines, said in an interview. But he added, "They do still have a number of things to do to convince the F.D.A. and make us comfortable that the vaccine they produce will be as safe and effective as we expect."

Dr. Goodman said that once manufacturing had resumed, probably in the spring, his agency would conduct a comprehensive inspection.

Dr. Jeanne M. Santoli, an immunization official at the Centers for Disease Control and Prevention, was cautious.

"We absolutely cannot count on Chiron being able to supply vaccine for the U.S. based on the news today, although it is good news," Dr. Santoli said in a telephone interview.

Still, the F.D.A. has been working closely with its British counterpart, the Medicines and Healthcare Products Regulatory Agency. So analysts said Chiron was likely to provide at least some vaccine to the United States this year.

Chiron (pronounced KY-ron), a biotechnology company based in Emeryville, Calif., had said it would need to be back in production by early spring to be able to supply vaccine for the coming fall and winter. So the lifting of the suspension has perhaps come in time.

But some analysts said that Chiron was still starting somewhat late and that production might be hampered by further inspections and factory upgrades and by its own desire not to strain its facilities.

"They are able to come back, but they are coming back in somewhat unusual circumstances, like they are on probation," said Geoffrey C. Porges, an analyst at the equity research firm of Sanford C. Bernstein & Company. Mr. Porges estimated that the company would produce 30 million doses this year, well below the 50 million it intended to produce last year.

Chiron said it would have to provide the British agency weekly updates on its progress and might undergo further inspections.

"Our employees have worked tirelessly, and we are extremely proud of this result," Howard Pien, the company's chief executive, said in a statement. "In this new beginning, we remain focused on continuing to remediate and improve so Chiron can successfully deliver on the results required to supply influenza vaccine for the 2005-6 season."

After Chiron's suspension, the federal government scrambled to make up for the shortfall by getting other suppliers to increase production. The nation ended up with about 61 million doses, far less than the 83 million that had been used in the 2003-4 flu season. Federal officials urged that the limited supplies be reserved for those most at risk.

But shortage turned to surplus in parts of the country, as the reports of long lines apparently discouraged some people from seeking vaccinations. In addition, the flu season has been relatively mild, at least so far.

Dr. Santoli said that it was too early to determine the number of people who had become ill from influenza or even died of it during the 2004-5 season. Even when that information becomes available later this year, she said, "it will be very difficult to determine what proportion" of illness and deaths was due to lack of a flu shot, in part because the severity of the disease varies each year.

Last autumn's shortfall led to some changes that could reduce problems later. In addition to officials' scrambling to recruit new suppliers, the F.D.A. said it would now inspect flu vaccine plants every year instead of every two years.

The agency also says it is now in closer contact with its counterparts in Britain and other countries. Some members of Congress had criticized the agency for not following up on problems it had found in previous years at the Chiron plant and for therefore being caught by surprise when the British suspended the license. After the British action, the F.D.A. conducted its own inspection and agreed with the British decision that the vaccine's safety could not be guaranteed. It issued Chiron a warning letter.

The situation for next flu season is still somewhat uncertain. Sanofi Pasteur, the largest supplier, can make 50 million doses a year, or perhaps up to 60 million, said Len Lavenda, a spokesman. That company's factory, in Swiftwater, Pa., started production in December, Mr. Lavenda said.

GlaxoSmithKline, which sells a flu vaccine overseas, has said it hopes to enter the American market this year and could supply 10 million to 15 million doses. A Canadian company, ID Biomedical, wants to enter the American market but is less certain it will be able to do so this year.

If Chiron supplies 30 million doses and if Glaxo enters the market, the total will be at least 90 million, more than enough in a typical year.

Even if Chiron returns to the market, it may not do as well as it once hoped, given the new competition. Some of its customers may be reluctant to depend so heavily on the company.

So the American flu vaccine business may not be the moneymaker Chiron envisioned when it entered that business in 2003 by paying $878 million to acquire PowderJect Pharmaceuticals, the British company that owned the Liverpool plant.

The plant was an old one that had been through a series of owners, and inspections over the years had found numerous sanitary and procedural problems. Chiron probably made the situation worse by trying to increase production rapidly.

After its license was suspended, Chiron assembled a team of 70 insiders and outside experts to fix the problem. Just last week, John Lambert, who had headed Chiron's overall vaccine business, resigned. The company is still facing investigations by the Justice Department and the Securities and Exchange Commission.

Chiron's stock rose yesterday by $2.27 a share, or 6.4 percent, to close at $37.69. That is still 29 cents below its closing price on Oct. 5, the day the suspension was announced.