H1 N1 Vaccine Production

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H1N1 Vaccine Production Namrata Uberoi - Andrew Helicher HPA 545 December 1, 2009

Transcript of H1 N1 Vaccine Production

Page 1: H1 N1 Vaccine Production

H1N1 Vaccine Production

Namrata Uberoi - Andrew HelicherHPA 545

December 1, 2009

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DrugCo:Who We Are

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Bio-technology company

Established manufacturer of the seasonal flu vaccine

Situated in the United States

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Agenda

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Problem Definition

Risk Assessment

Profitability Analysis

Recommendation

Problem Definition

Risk Assessment

Profitability Analysis

Recommendation

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H1N1Global and National Environment

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Late April, 2009

• WHO announces the emergence of novel influenza A virus

June 11th, 2009

• WHO raises influenza pandemic alert to phase 6

October 25th, 2009

• President Barack Obama officially declares H1N1 a national emergency

World Health Organization, 2009.Flu.gov

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H1N1 Options

1. Utilize existing capacity

2. Build a vaccine plant

3. Purchase an existing vaccine plant

4. Do not enter the market

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Agenda

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Problem Definition

Risk Assessment

Profitability Analysis

Recommendation

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H1N1 Vaccine Production

Gerdil, C. (2003)

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Oct Dec

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Associated Risks

Demand is highly unpredictable

Virus production

Costs

Legal liability

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Risk Mitigation

Government involvement

Pre-order payment

Other revenue streams

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Agenda

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Problem Definition

Risk Assessment

Profitability Analysis

Recommendation

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Profit Equation

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Revenue (Price x Quantity)

- Cost . (Fixed + Marginal)

Profit (Market Forces)

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Market Forces

1. Herrick, D., 20042. Wikipedia, 20093. Danzon, P. et al., 2005 12

Profit ↓ Profit ↑

Vaccines are commodities

Bertrand Paradox2

Monopsony1

Fixed Cost to Market Size3

Hershaft index

Govn. price based on AWP3

Regional shortages1

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Demand Curve Shifts

1. Putting Influenza H1N1 in its Place, 20092. Yoo et.al, 20093. Orenstein, W. et al, 20084. Danzon, P. et al., 2005 13

Shift Out – Price ↑ Shift In – Price ↓

WHO Pandemic Alert Level 61

Severe in early months2

Recommended population3

Government subsidies

Extended vaccination timeline3

1 dose needed (vs. 2)

Virus responds to antivirals

Fear of getting sick from vaccine3

Mild winter perception3

Winner’s curse4

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Supply Curve Shifts

1. Danzon, P. et al., 20052. Orenstein, W. et al, 2008 14

Shift Up – Price ↑ Shift Down – Price ↓

Manufacturing issues1

Market restrictions

Input shortage/price increase

Aging technology

Government subsidies

New firms enter market (H1N1)

New technology Nasal spray2

Cell-culture1

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Cost Considerations

1. Brown, D., 200415

Fixed Costs Marginal Costs

Factory

Management

Regional regulations

Small market1

$6B vs. $340B (pharma)

Inputs (eggs)

Labor-intensive

Technology

Distribution channels

Economies of Scale Economies of Scope

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Agenda

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Problem Definition

Risk Assessment

Profitability Analysis

Recommendation

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Recommendation

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Use existing capacity- determine optimal mix of seasonal and pandemic vaccine manufacturing

Lobby for supply-side and demand-side subsidies Supply-side: pricing, inventory buy-back, liability Demand-side: insurance, public health, mandates

Invest in new technology: cell-based culture

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Questions?

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References

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Bertrand Paradox. Retrieved from http://en.wikipedia.org/wiki/Bertrand_paradox_(economics). 2009 Nov. 29.

Brown, D. (2004 Oct. 17) How U.S. Got Down to Two Makers of Flu Vaccine. Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/articles/A38776-2004Oct16.html.

Collin, N. & Radigues, X. (2009) Vaccine production capacity for seasonal and pandemic (H1N1) 2009 influenza. Vaccine. Vol. 27, 5184-5186.

Danzon, P., Pereira, N. & Tejwani, S. (2005) Vaccine Supply: A Cross-National Perspective. Health Affairs. Vol. 24, No. 3.

Feeney, M. (2006) Flu Vaccine Case Study. The Electronic Hallway. Retrieved from www.hallway.org

Gerdil, C. (2002) The Annual Production Cycle for Influenza Vaccine. Vaccine. Vol. 21, 1776-1779.

Herrick, D. (2004 Oct. 28) What’s Behind the Flu Vaccine Shortage. National Center for Policy Analysis. No. 493.

Orenstein, W. & Schaffner, W. (2008) Lessons Learned: Role of Influenza Vaccine Production, Distribution, Supply, and Demand—What It Means for the Provider. The American Journal of Medicine. Vol. 121, S22–S27.

Preparation for Pandemic: Influenza A H1N1. (2009 May 8). The Lancet – Leading Edge. Vol. 9, June 2009.

Putting Influenza H1N1 in its Place. (2009 May 8). The Lancet – Leading Edge. Vol. 9, June 2009.

Osterholm, M. (2005) Preparing for the Next Pandemic. The New England Journal of Medicine. May 5, 2005. Vol. 352, Iss. 18.

Yoo, B., Kasajima, M., Fiscella, K., Bennet, N., Phelps, C., Szilagyi, P. (2009) Effects of an Ongoing Epidemic on the Annual Influenza Vaccination Rate and Vaccination Timing Among the Medicare Elderly: 2000-2005. American Journal of Public Health. Suppliment 2, 2009, Vol. 99, No. S2.