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Executive Summary

Universal vaccine purchase and distribution by the federal government continues to have the support of HHS, Secretary Shalala indicated at a March 3 briefing with reporters. "There ought to be some things that governments provide," Shalala said, referring to the $300 mil. vaccine distribution plan announced by President Clinton last month. "I happen not to be one of those who thinks that everything ought to be free, but on your list of things that we do is...we get the babies in this country started right." Shalala, who has chaired the Children's Defense Fund, cited arguments that a centralized system is necessary to ensure immunization of all American children under two years of age. "Unless you have universal purchase, you cannot do the tracking system properly," she said. "You can't just leave it to the states to fill in the gaps on the tracking system...[universal purchasing is] the first step in an expansive primary care preventive effort." On March 1, Shalala met with vaccine and pharmaceutical manufacturers to hear their concerns and to explain the administration's distribution plan. Specific discussions focused on how the proposed plan would rebuild the vaccine distribution infrastructure -- access, delivery and tracking. At the March 3 briefing, Shalala expressed skepticism about industry's explanations for the increase in vaccine prices in the 1980s. "I happen to think very highly of [Merck Chairman Roy Vagelos], but if he tells me that 80% of their costs are research and development then...someone's got to go in and do the original studies," she told reporters. "I don't have to accept his numbers." Merck has said that 80% of the increased cost of childhood immunization since the early 1980s is attributable to the increased number of government-mandated vaccines and to the excise tax to fund the national vaccine injury compensation trust fund. Shalala noted that the administration backs the reauthorization of the National Childhood Vaccine Injury Compensation Act of 1986, which expired Jan. 1. "We will support a reintroduction of the legislation which protects liability," she said. Speaking at a press conference held after her March 1 meeting with industry representatives, the secretary said that she and Centers for Disease Control and Prevention Director William Roper discussed "what's in the stimulus package and how we intend to spend that money with the states to rebuild the infrastructure." Announced by President Clinton in February, the plan includes approximately $300 mil. for vaccine distribution and delivery of services, rebuilding of public clinics and tracking of immunized children. Shalala, Roper, HHS General Counsel-designate Harriet Rabb and other department officials met with Connaught President David Williams, Lederle-Praxis Biologicals President Ronald Salderini, Merck Vaccines Division President Gordon Douglas, SmithKline Beecham North American Pharmaceuticals President Jean-Pierre Garnier and Pharmaceutical Manufacturers Association President Gerald Mossinghoff. The meeting focused on improving the infrastructure to ensure that vaccines are administered to children who need them. The industry reportedly argued that government purchases currently account for more than 100% of the vaccines needed for complete immunization and that distribution, particularly to rural and inner city children, and tracking is the problem. State Medicaid agencies are said to be pushing for infrastructure, not more or cheaper vaccines. The secretary said the meeting "was the first of what I expect [will be] a number of meetings." Shalala reportedly indicated at the March 1 meeting that the Clinton Administration continues to consider universal government purchase of vaccines, but continued discussions will give the industry an opportunity to dissuade the government from the concept. "We have a lot more work to do," she said. "It was necessary for us to lay out what we're trying to do and why we're trying to do it and to talk about vaccines and the need for people to see the vaccine program within the context of overall health care reform," Shalala said. HHS also wanted "to indicate that we are in fact meeting some of the criticism of the current situation by rebuilding the service delivery system of the structure by which, at least on the public side, young children get vaccinations." Shalala also noted that the March 1 discussion did not address vaccine manufacturers' pricing and potential controls. "There are no commitments" as to pricing, she said, and "we could not get into a specific discussion of pricing because of federal [antitrust] law." However, she added, "we'll continue from this meeting within the context of the law." Connaught's Williams told the press conference that the industry "obviously have at the heart of our business the complete immunization as its goal, and we share that goal with the administration." Merck's Douglas said industry officials "applaud the administration for taking these steps to help ensure that all American children by age two are fully immunized." He added that the low rate of childhood immunization in the U.S. "has been really a national disgrace." The vaccine manufacturers, which support the government's plans to improve infrastructure, had similar discussions with White House domestic policy advisor Carol Rasco and Shalala in early February. The Clinton Administration is said to consider provision of free vaccine as a way to attract families into primary care physicians' offices so that low-income families who do not qualify for Medicaid will not be required to visit clinics to obtain vaccines.

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