Flu Vaccine Blues
Edition: December 2004 - Vol 12 Number 12
Author: Mark Thill
It wasn’t exactly pretty. Reports of price-gouging, outright theft of dosages and instances of scoundrels in low-risk categories trying to get vaccinated sullied the airwaves this fall. Yet a huge public information campaign and almost daily coverage by the nation’s newspapers and news programs helped keep a lid on what could have been a bad situation.
The Great Flu Vaccine Shortage of 2004 kicked off Oct. 5, when British regulators announced that they had closed down Chiron Corp.’s Liverpool, England, plant, where the company manufactured its Fluvirin influenza virus vaccine. With that one action, the entire U.S. supply of vaccine was roughly halved, from about 100 million doses to about 50 million. That left the only other supplier – Aventis Pasteur – to fill the gap. (A third supplier, MedImmune, upped its production of FluMist nasal spray vaccine in response to the shortage. But even so, it could only muster 3 million doses for the season.)
Medical products distributors benefited from the publicity. Even though their reps might be the bearers of bad news, at least they wouldn’t be held responsible for what was out of their control.
“It’s one thing if a rep has to go in and explain the situation,” says PSS President Gary Corless. “But the fact is that Katy Couric and Tom Brokaw are saying the CDC was caught by surprise. Customers know it’s a U.S. healthcare issue, not a PSS issue or that of any other distributor.”
But the shortage hurt distributors financially. Publicly owned companies such as Henry Schein had to adjust their earnings estimates. PSS took a $40 million hit, or approximately 4 cents per share. Yet Wall Street was tolerant. “The market said this is a one-time event, which no one could control,” says Corless. Not surprisingly, the market was less tolerant of Chiron, whose stock dropped from $45.42 a share on Oct. 4 to under $32 at press time.
Distributors expected to make up some of their losses through increased sales of infection control products, such as masks, gloves and sanitizers; flu tests; and antiviral medicines, such as Tamiflu by Roche Laboratories. And as exclusive distributor of FluMist, Schein was confident it could recoup at least a fraction of its losses while offering its customers an alternative product.
Indeed, Quidel Corp. in San Diego was expecting increased sales of its QuickVue influenza rapid test in the coming months. “We’re preparing for the eventuality that the lack of vaccine will cause more people to contract influenza,” says Quidel president and CEO Caren Mason. “If that occurs, we’ll see ERs and physicians’ offices with more patients than normal.” In addition, early detection of flu through rapid tests ensures that patients receive prompt treatment with antivirals, which are most effective if administered with 48 hours or so of onset.
Even so, no one believed that sales of these related products would cover the losses brought about by the Chiron shutdown. “Fifty million doses at eight dollars each – that’s a lot of dollars that aren’t in the channel this year,” says Doug Shaver, vice president of marketing for McKesson Medical-Surgical, Richmond, Va.
What’s more, distributors were probably going to be sitting on some excess inventories of needles, syringes and alcohol prep pads.
Distributors of Information
Although aided by the publicity in the consumer press, Repertoire readers were leaving little to chance. Almost immediately after the Chiron announcement, distributors notified their sales reps and, in many cases, the end users of the situation.
McKesson Medical-Surgical executives held a conference call with their sales reps to talk about the shortage. The company also gave its reps a letter to give to their customers explaining that McKesson had no vaccine, but that the company would continually update them as it received new information. In addition, the company distributed materials about products customers might want to buy in the absence of the vaccine, such as hand sanitizers, masks, gloves, low-waste syringes, flu tests and antiviral medications.
Likewise, PSS sent letters to its customers to apprise them of the situation. “For now, we’re a distributor of information, not product,” said Corless in late-October. (PSS had pre-booked 6 million doses from Chiron earlier in the year.)
Actions such as these were meant in part to prevent sales reps from being on the receiving end of angry accusations or misguided pleas for product.
Corless likened the sales reps’ plight to that of a ticket agent for an airline forced to cancel a busy Friday night flight due to weather. Even though the agent isn’t responsible for the delay, he is a convenient target for tired, frustrated passengers.
“We’re professional, we’re not defensive,” says Corless. “We never blame Chiron. Instead, we want people to understand that this is a U.S. healthcare issue.”
At press time, medical-surgical distributors were awaiting word from the Centers for Disease Control and Prevention (CDC) and Aventis about what their role might be – if any – in distributing the remaining dosages of Aventis vaccine. Those people at high-risk of developing complications or even dying from influenza were to be first on the list. They included people over 65, children between the ages of six months and 23 months, pregnant women, healthcare workers, nursing-home residents and those with underlying chronic medical conditions.
Plans announced by the CDC and Aventis Pasteur on Oct. 29 called for the remaining 16.5 million remaining doses of vaccine to be shipped to public and private vaccine providers at a rate of about 2.5 million to 3 million doses per week, through early-December.
But with an estimated 42 million to 50 million people considered high-risk, someone would have to make some hard choices as to who would get the vaccines. It was unclear who would do that or how.
The Rep effect
During the fallout of the flu vaccine shortage, sales reps have had a lot of explaining and informing to do with their customers, as well as re-budgeting of their own checkbooks. Following are a few comments from Repertoire readers regarding discussions with clients and effects on their commissions.
“A small percentage of customers blamed me or my company, because we had them book Chiron instead of Aventis – especially if another physician in their building had the Aventis flu vaccine and was able to service their patients.”
“Of course, this affects the commissions of all of our sales reps. But, we keep [our clients] up-to-date on flu testing, strep testing and the obvious, surface disinfectant products.”
“We lost customers in the first flu shortage a few years ago. They were looking for someone to blame, and there was no way around that.”
“Commissions lost are just part of the effect. The flu vaccine shortage has dramatically affected our sales and profit for this last quarter.”
“I had to tell all my best accounts and, for the most part, they handled it well with all the news stories going on at the time. The smaller accounts who ordered just a few vials were more upset and just did not seem to care.”
“I have lost 8 percent of my anticipated annual earnings. Regardless of what I sell, I could have also had $150,000 of flu vaccine sold.”