How flu vaccine makers' profits
were boosted by exaggerated government claims
BY TARA SERVATIUS

The national near-panic in the fall of 2003 over the supposed spread of a deadly flu epidemic and a shortage of flu vaccine was little more than a joint government/ industry PR campaign -- an operation that greatly increased flu vaccine makers' profits while scaring the bejesus out of millions of Americans.

The U.S. media let itself be led down the garden path without checking into the stories they were being told about the extent of the flu. Perhaps if the health reporters at the big news outlets had talked to the business reporters last fall, someone might have put it all together before 82 million Americans took a needle in the arm.

Instead, media-driven hysteria over what was supposed to be the deadliest flu season in decades drove the American public to set two national records -- one for flu vaccination and another, less widely known, for corporate vaccine profits -- in an industry with a long history of losing money hand over fist on the flu.

Only two things didn't live up to all the flu hype. One was the flu season itself, which in the end was utterly unremarkable. Two was the desperately sought-after flu vaccine, which studies later showed was only about 14 percent effective in preventing the flu.

Suffice it to say, if Americans had known what Wall Street and the U.S. Department of Health and Human Services had riding on this flu season, the tens of millions of otherwise healthy people who stood in line waiting for a flu shot might have thought twice about it. Instead, panicked parents drove for hours, seeking out clinics in neighboring cities or states when those near them ran out of vaccines. In some states, they jammed doctors' offices at 10 times the normal flu season rate, dragging sniffling children behind them, terrified that the colds they normally let pass without the hassle of a doctor's visit might be the "killer" flu strain they'd been hearing about. Mayors and governors, pressured by constituents the clinics turned away, called Washington to demand more vaccines.

Driving it all was seemingly nonstop media coverage of what was supposedly the worst flu season in decades. For months, the most trusted names in television and print journalism screamed about the flu, using words like "deadly," "severe" and "worst in decades" in their news reports to describe a growing epidemic that they speculated could be made all the more lethal by a killer Fujian flu strain no one had anticipated until it was too late.

What the public didn’t know
Across the country, people, especially children, were dying earlier in the flu season and in higher numbers than the experts had seen before. At least that's what they said, and since they were nationally respected experts with impeccable qualifications, no one questioned them, nor the high-ranking government health bureaucrats who shared the microphone with them at press conferences about the flu. After all, what would these well-meaning people have to gain personally by misleading the public about the flu?

As it turns out, quite a lot. All it took to ignite a media feeding frenzy over the flu was a few well-placed suggestions by a few well-qualified people that this season could turn out to be far more deadly than usual. The media did the rest.

What the public wasn't told was that the handful of experts who drove the story, by predicting doom and gloom in national news reports, either worked directly for the flu vaccine companies or served on the boards of special interest groups whose activities those companies funded. The public was also never told that the same pharmaceutical companies, which had peppered Congress with millions in political contributions over the last three years, were pressuring the U.S. Department of Health and Human Services -- and ultimately its sub-agency, the Centers for Disease Control (CDC) -- to increase the number of people who bought their vaccines.

And even though nearly all the literature put out by the U.S. Department of Health and Human Services this season promoted the intra-nasal FluMist vaccine, which debuted on the market this year, no one bothered to mention that the department's researchers spent 20 years helping develop FluMist, the profits for which all go to the private companies selling and distributing it. (Although it helped improve the drug, which was originally invented by a University of Michigan researcher, the federal government holds no legal claim to any profits it generates.)

Often, what these so-called experts and health officials didn't say publicly was at least as important as what they did. A lot of the panic over the flu, which was driven by coverage of child deaths from the disease in the Midwest, would have been quelled if federal health officials and their friends, the ethically compromised flu experts, had emphasized that since this was the first year the CDC had required states to track child flu deaths and verify the flu as the cause of death with a test, there was no way to tell if the 111 child flu deaths the CDC eventually tallied represented an increase or a decrease. That important fact didn't make the cut in a single one of the CDC's press releases on the flu, nearly all of which pushed the use of FluMist.

By early to mid-December, when the CDC and the flu experts were still driving the flu craze in the media with their dire warnings, they had to have been aware, since they were experts, that the CDC's mortality rate estimates, while higher than the previous two years, still lagged behind those of the 2000 season for the same period. Once again, instead of reassuring the public, the CDC put out press releases again urging healthy people to get vaccinated and promoting FluMist.

Yet another important fact was left out of all the "sky is falling" press conferences that predicted the flu would reach epidemic levels this season: the CDC's epidemic threshold is so low that deaths from the flu reach "epidemic" levels nearly every year, as they have for the last three years. The fact that federal officials and flu experts in the employ of the vaccine makers didn't mention this helped stoke the public frenzy -- and, of course, increased the vaccine makers' profits.

Drugmakers demand, government delivers
The real flu crisis this fall, the one that didn't make headlines, was the tug of war between the CDC and the three big pharmaceutical companies that manufacture flu vaccines. In 2002, when 12 million of the 95 million doses of flu vaccine produced by the nation's pharmaceutical companies went unused, the drugmakers absorbed a loss of $120 million. By the fall of 2003, a couple of consecutive mild flu seasons, paper-thin profit margins, and declining vaccination rates had taken their toll. In less than two years, the number of flu vaccine manufacturers in the market had dropped from five to three. The pressure mounted on the CDC to ensure a profitable flu vaccination season by "expanding" the vaccine market. By that, corporate leaders meant that they wanted the CDC to recommend vaccination for young, healthy people, people for whom the CDC didn't recommend a vaccine -- until this year. People who, it could be argued, don't need a flu shot.

The three pharmaceutical manufacturers in the flu vaccine business, all of whom successfully market other drugs, made it clear that if the government failed to find enough arms and noses for their vaccines, they might reduce supply or exit the business, leaving the public vulnerable to a true vaccine shortage.

Drug company executives aren't exactly shy about the issue.

"Raising demand is key to raising supply," Howard Pien, president of Chiron Corporation, told the House Government Reform Committee this month. James Young, president of research and development at MedImmune, Inc., which makes FluMist and other flu vaccines, even went so far as to tell the same government officials that if the CDC would recommend universal vaccination, vaccine manufacturers might then be willing to guarantee that there would be enough flu vaccine to meet routine demand on an annual basis.

Increasing vaccination rates among those vulnerable to the flu, a longtime goal of CDC, is one thing. Increasing demand for flu vaccine regardless of who gets it is another.

Dr. Walter Ornstein, director of the CDC's National Immunization Program, made the agency's goals for last fall clear in a slide presentation in June 2003. The agency would "increase vaccine demand" by "enhancing" its communication efforts and extending its vaccine campaign past the end of November, when flu vaccination typically winds down across the nation.

The result? About $450 million in additional profits for vaccine manufacturers in a single flu season.

FluMist: a government baby
The main factor that dissuades people who can afford to do so from getting flu shots is a distaste for needles. For 20 years, researchers at the National Institute of Allergy and Infectious Diseases (NIAID), a government agency that is part of the Department of Health and Human Services, worked on an invention they believed would remedy the problem. It was a nasal spray made from a live but weakened version of the virus, and from the moment the corporation Aviron began preparing it for market, Wall Street loved it. So did MedImmune, which bought Aviron last year, and drug marketer Wyeth, which joint-ventured with MedImmune to market it for the 2003 flu season.

The companies launched a $25 million marketing campaign, and when stock analysts learned that FluMist would be released in time for the 2003 flu season, MedImmune's stock soared to 63 times the company's earnings at $43.32 per share.

In the case of FluMist, it's hard to tell where the government ends and a corporate marketing campaign begins. NIAID, the National Institutes of Health (NIH) and the CDC, all of which are sub-agencies of the U.S. Department of Health and Human Services, each put out what can only be described as promotional press releases announcing that FluMist would enter the vaccine market. While NIAID and the NIH were open about the Department of Health and Human Services' role in developing FluMist, the CDC -- the hub from which the national flu vaccination campaign is run -- left out that factoid in its promotional materials and neglected to mention it at press conferences during which CDC officials regularly promoted FluMist as a needle-free alternative to vaccination. Consequently, none of the media's flu coverage last fall mentioned the Department of Health and Human Services' role in developing the vaccine.

Nearly all of the CDC's patient educational materials recommended FluMist, including flu pamphlets it distributes to doctors. But the CDC didn't stop there. As the public scrambled to buy up cheaper, injected vaccines, the agency put out press releases recommending that healthy individuals request FluMist in order to save dwindling supplies of the needle-delivered vaccine for those most at risk from the flu.

From an ethical standpoint, the CDC should have actively pointed out its ties to FluMist when it promoted it, said Calvin College Professor Hessel Bouma, a medical ethicist who studies healthcare's thorniest quandaries.

Despite the joint industry/government marketing campaign, by late September, things weren't exactly going well for FluMist. Executives at MedImmune and Wyeth knew FluMist was in trouble. Wal-Mart had backed out of a distribution agreement and the public was shying away from the drug's price tag, which at $50 or higher per dose was more than five times the cost of an injected vaccine. Within weeks, MedImmune would issue a financial report adjusting its earnings estimates for FluMist downward by $60 million. In addition, with millions of unsold doses still on their hands, injectable vaccine makers Aventis and Chiron weren't faring much better. Something had to give.

Dire Warnings
In early November, much of the news about the flu was confined to the business pages as analysts sounded warnings about MedImmune's troubles and speculated about how vaccination rates would affect the market. But by the end of the month, the flu "epidemic" made an amazing migration from the business pages to the front page as flu experts were suddenly everywhere, speculating about how high the death toll could climb and how many more children would fall to the flu.

With few exceptions, much of the propaganda that drove the flu story and kept it in the headlines can be traced back to one of three places -- the U.S. Department of Health and Human Services, the payrolls of FluMist manufacturer MedImmune or drug marketer Wyeth, or a nonprofit immunization advocacy organization called the National Foundation for Infectious Diseases (NFID), whose pro-flu immunization activities are largely funded by the flu vaccination companies.

By mid-November, a small handful of highly qualified flu experts, all of whom had connections to one of the groups listed above, fanned out across the television and print media, preaching doom and gloom. They made headlines at press conferences and were quoted in most of America's daily newspapers. Television and radio news breathlessly carried their predictions and a single, unified message came through -- everyone must be vaccinated.

"We will probably see more excess deaths this year than we saw in the 1968 [Hong Kong flu] pandemic," Dr. W. Paul Glezen, director of the Influenza Research Center at the Baylor College of Medicine told the Pittsburgh Post Gazette on Nov. 30.

Despite unremarkable weekly CDC death toll estimates, by December 12, Glezen was predicting 65,000 to 71,000 excess deaths from the flu in media interviews. "That's pretty bad," he told the Washington Post. "Unfortunately, it looks like there could be a lot of children this year."

What the articles didn't mention was that when Glezen wasn't giving interviews about the potential deadliness of the flu, he spent his time running FluMist trials as a clinical investigator working for MedImmune.

The same thing happened in an Associated Press story by medical editor Daniel Haney which ran in dozens of papers across the country, warning that the flu posed a particular danger to children this year.

"The fact that there are deaths among children without serious underlying health problems is very unusual," Haney quoted a Dr. Robert Belshe as saying.

Although the Dec. 18 article referred to him as "Dr. Robert Belshe of St. Louis University," which was accurate, what wasn't mentioned was that Belshe had done clinical research on FluMist and had intellectual property licensed to Wyeth, which markets FluMist.

Like Glezen and Belshe, Dr. Bill Schaffner, chairman of the Department of Preventive Medicine at Vanderbilt University in Nashville, Tenn., and a liaison member of the (CDC's) advisory committee on immunization practices, spent a considerable amount of time this fall stumping for flu immunization.

This year's flu season would shape up to be "a very noteworthy epidemic," he predicted to a CNN reporter in early December.

"School closures are one thing, but hospitalizations with pneumonia and death is another," the Associated Press quoted him as saying. "Mostly what we are concerned about are severe illnesses that bring people into the hospital ... at risk of dying."

Schaffner serves on the board of The National Foundation for Infectious Diseases (NFID), whose flu awareness activities are largely funded by flu vaccine makers Aventis Pasteur, Wyeth Pharmaceuticals, MedImmune and Chiron, among others, and generally promote the use of the vaccines the companies make and distribute. Representatives of all three companies sit on NFID's board of Trustees. Creative Loafing repeatedly asked NFID officials how much of the group's budget, which averages $2 million to $3 million a year, is donated by the flu manufacturers and distributors. The dollar figures they repeatedly promised were never forthcoming, though they did admit that unrestricted educational grants from the companies fund many of NFID's immunization promotion activities.

Dr. Kristin Nichol of the Minneapolis Veterans Affairs Medical Center was another popular flu source with the media last fall. Nichol spent this flu season warning the elderly that flu immunizations could cut their risk of death from heart attack and stroke.

Young people should also get vaccinated, she told MSNBC and others, "because they underestimate the extent to which they put other people at risk."

That Nichol conducted FluMist studies and is the head of the National Coalition for Adult Immunization, an NFID subgroup, was never listed among her credentials in any of the news reports.

Once again, medical ethicist Bouma says, they should have volunteered their ties to the vaccine industry when commenting on issues that could directly affect its profits.

Death Comes Early in Colorado
Every year, experts estimate that 36,000 Americans die from the flu. According to the CDC's website, the vast majority of those people have weakened immune systems from other illnesses. While tragic, these deaths typically don't draw much media attention, even when the victims are children, which, while rare, does happen.

But this year was different, in part because of an alarm sounded at a joint press conference by the NFID and the CDC, another sub agency of the U.S. Department of Health and Human Services, the government agency that initially developed FluMist. It was the first of many alarms that, over the next two months, would drive hordes of Americans in search of flu vaccines.

At the Sept. 23 conference, CDC officials warned the media for the first time that healthy children may be in danger of complications from influenza. A study of the previous flu season in the state of Michigan documented 10 cases of serious influenza-related illness and four influenza-related deaths among those under age 21, they said. For the first time in its history, the CDC pushed near-universal flu vaccination for healthy children and urged parents to do it immediately. Officials also used the conference as an opportunity to push FluMist as an alternative to injectable vaccines.

What didn't merit much mention was that like many of NFID's "advocacy" projects, the press conference, held at The Press Club in Washington, D.C., was "sponsored" financially by educational grants from Aventis Pasteur, Chiron Vaccines and Wyeth, the same three flu vaccine companies that, at the time, were trying to sell 83 million doses of flu vaccine to the American public, including FluMist. Obviously, both the CDC and the NFID should have actively disclosed their connections to the media, ethicist Bouma says.

In the weeks after the press conference, for the first time in recent memory, child deaths from the flu became front-page news. Though the numbers were small, the impact of these deaths was powerful when viewed under the media's microscope.

By late November, the Associated Press reported, in an article that ran in papers across the country, that there were four child deaths in Colorado from the flu and that the flu was widespread in Texas as well. The Colorado deaths occurred earlier in the flu season than had previously been seen, and since only two to four kids usually die from the flu in an entire typical season in Colorado, panic set in -- and local papers across the country simply lifted the information about the child deaths and the supposed Texas flu outbreak from national articles and worked it into their own coverage without questioning it, all the while speculating that the flu epidemic could spread to other states.

By the time the CDC, NFID and the American Medical Association representatives teamed up again for a Nov. 25 press conference, they had the media's full attention. As they had done the month before, they promoted FluMist and reiterated the danger the flu posed to healthy children and urged the country to get vaccinated. But by then it didn't matter. The scramble for a flu shot was already on. By early December, the government had bought the last 100,000 remaining doses from Chiron and Aventis to help meet overwhelming local demand. Soon, a national vaccination record was set.

Profits Galore
Though it slashed the price of FluMist by half before the end of the flu season, no more than 800,000 of the 4 million doses of FluMist were purchased by the public. Perhaps people believed that $25 was still too much to pay for a flu shot. Or maybe the fact that the flu virus in FluMist is still alive, as opposed to the dead version used in traditional vaccines, scared people. Either way, despite the best efforts of the CDC, the public turned their noses up at FluMist even while they waited hours in line for traditional flu shots.

Aventis and Chiron, meanwhile, fared much better. According to a Chiron press release, company sales of flu vaccines rose 271 percent, from $90 million in the 2002 flu season to $332 million this year. Aventis' U.S. vaccine sales rose 17 percent to $598 million.

It's not enough, they say. According to its financial forecasts, Chiron envisions 150 million flu vaccinations annually in the U.S. by 2008 and sales of over $1 billion.

A bill called the Flu Protection Act, which is now winding its way through Congress, may make that a reality. Aimed at preventing so-called vaccine shortages like the one this season -- and financial losses like the $120 million hit taken by flu manufacturers the year before when vaccination rates stagnated -- the bill gives tax breaks to flu manufacturers and guarantees that the federal government will buy up any unused doses of flu vaccine each year at the end of the flu season.

It also mandates that the CDC conduct an annual campaign to increase flu vaccination -- and provides $440 million to pay for it over the next four years, more money than is typically spent in a U.S. presidential campaign. (The bill's sponsors, Sen. Evan Bayh (D-Ind.), Sen. Dick Durbin (D-Ill.), Sen. Mary Landrieu, (D-La.), Sen. Larry Craig (R-Idaho) and Rep. Rahm Emanuel (D-Ill) together took in over $35,000 from Wyeth and Aventis in the last election cycle according to the Center for Responsive Politics.)

In exchange for all this, which amounts to hundreds of millions of dollars in subsidies for an industry already making double digit profits, the companies merely have to agree to give the government advance warning if they plan to stop making the flu vaccine.

After its losses this season, MedImmune executives are considering dropping out of the flu market. But not Chiron and Aventis. Company spokespeople say the corporations plan to increase the number of flu vaccine doses they'll bring to the U.S. market by up to 50 percent in fall 2004, which they expect will be a banner year for flu vaccination.

Unless the American public catches on, it probably will be.

Contact Creative Loafing-Charlotte News Reporter/ Columnist Tara Servatius at tara.servatius@cln.com.