Vaccines for Children: Investment in Immunizations Yields Big Dividends
By Linda Demkovich
In 1993, four years before it enacted the five-year, $24 billion Title XXI block grant, otherwise known as the State Children's Health Insurance Program, Congress made a much smaller but vitally important investment in the health of America's kids: the Vaccines for Children (VFC) program. Included in the Omnibus Budget Reconciliation Act and funded initially at $500,000, VFC's charge is to assure that poor and uninsured youngsters have access to free immunizations to protect against the array of vaccine-preventable diseases, from measles and mumps to polio to hepatitis B.
Under the program, which was implemented in October 1994 as part of President Clinton's Childhood Immunization Initiative, the federal Centers for Disease Control and Prevention (CDC) buys vaccines at a discount and distributes them to states, which in turn distribute them at no charge to private physicians' offices and public health clinics. To be eligible, children must be on Medicaid, be uninsured or be an American Indian/Alaska Native. (The underinsured, meaning that their parents' private insurance doesn't cover vaccinations, also qualify, but they must get their shots at federally qualified health centers or rural health clinics.) With 30,500 private provider sites and 10,700 public clinics now enrolled, VFC has helped keep children in a "medical home," by reducing physician referrals to public clinics.
And with immunization coverage rates up dramatically-90 percent of two-year-olds now receive the most critical doses of vaccines-and the most virulent infectious diseases virtually eradicated in the U.S., it can claim a large share of credit for the gains. VFC "is one of the great success stories of the 1990s," said Dean Mason, chief of the program support branch of CDC's National Immunization Program. "It represents a superb partnership between the federal government and private physicians, public clinics and states. What more could you ask?" Since VFC's passage, added Tom Pendergrass, M.D., who practices at Children's Hospital in Seattle and chairs the American Academy of Pediatrics' state government affairs committee, the nation "has achieved the highest rates of vaccinations for kids ever, in part because of the focus it brought to the issue" and in part because of improvements in the delivery infrastructure.
But with the high cost of new vaccines and a flat budget for the Section 317 program-a companion to VFC in the president's strategic initiative, it gives grants to states to develop and maintain the immunization infrastructure-there's concern that the gains could be in peril. Outreach and surveillance and upkeep of registries are costly endeavors that need constant attention, said Barbara Levine, a consultant to the Association of State and Territorial Health Officials. "It's not enough simply to provide the vaccine."
Promises and Problems: Looking to the Future
As the cornerstone of the Childhood Immunization Initiative, VFC has helped states boost vaccination rates for some of their most vulnerable youngsters. Supply policies differ, however. CDC's latest count looks like this: 18 states and the District of Columbia supply publicly purchased vaccines only for VFC-eligible children; 17 supply them for VFC-eligibles and the underinsured; and 15 are "universal purchasers," which means they supply all recommended vaccines to all providers, public and private, for all kids, including those who are insured, augmenting VFC with Section 317 funds and general revenues under the CDC-negotiated contract.
The agency doesn't insist that universal policy states label vials of VFC-purchased vaccines and inject them into the arms of VFC-eligible children, explained Patty Hayes, legislative policy director in the Department of Health in Washington, which is one of the 15, but it does require "aggregate accountability." In the case of Washington, that means the federal government will pay for vaccines only for the 52 percent of kids eligible for the program. Thanks to VFC, immunization rates for Washington two-year-olds have doubled, from 40 percent to 81 percent, Hayes said, and "no [state] contract can match the discount we get under the federal program," which averages 40 percent of private-sector prices. (See page 5 for a cost comparison.) Still, she said, with the addition of costly new vaccines like Prevnar, which protects against pneumococcal infections, and many others "in development," states will be increasingly pinched. For universal purchase states, which use some of their Section 317 funds to buy vaccines for non-VFC eligibles, the pinch could be very painful.
Pendergrass agrees. One plus of VFC, he said, is that it requires payment for any vaccine approved by the Advisory Commission on Immunization Practices. While that may be "good public health policy," he said, "it does raise its head in the financing arena." In Washington, for example, adding Prevnar to the immunization schedule will translate into a shortfall of up to $15 million. Overlaying the cost concerns is what Pendergrass calls "a philosophical issue. People say, 'Why should I pay for shots for Bill Gates' kids?'"
In California, officials also applaud the VFC program. Statewide, there are 3,000 participating sites, involving up to 5,000 private physicians "who don't have to put up the money for vaccines and wait for reimbursement," John Dunajski, assistant chief of the Department of Health Services' immunization branch, noted. That means doctors no longer refer as many kids to public health clinics for their shots, resulting in many fewer "missed opportunities." Though there's no firm count, he estimates that "hundreds of thousands" of California kids have benefited from the program. VFC "is a great success story out here."
Universal purchase isn't an option, however-it would require another $100 million in state funds, Dunajski said, "and we simply can't afford it." To make matters worse, the government has ruled that VFC coverage doesn't extend to kids enrolled in Title XXI, unless they're in a Medicaid expansion program. For California, which implemented both a Medicaid expansion and a state-only plan, that means a sizable coverage gap.
By law, no additional states may seek the universal purchase designation for purposes of getting the CDC contract rate. Even so, vaccine manufacturers worry that other expansions of the population base-through multistate purchasing programs, for instance-will undermine their ability to provide their products at the deep discount to what amounts to more than half the market. (According to CDC data, 57.5 percent of all vaccine purchases in 1997 were made through the agency's federal contracts and 33.2 percent of total market purchases were made with VFC funds.)
As it was initially proposed by the administration, VFC "would have effectively nationalized the industry," destroying the "delicate balance" between the private and public markets, said Isabelle Claxton, spokeswoman for the vaccine division of Merck & Co., Inc. When that threat evaporated, companies elected to take part, even though vaccines "aren't the most profitable part of our business," Claxton noted. "We did it because of the [program's] importance to public health."
Fifteen years ago, she noted, a dozen American companies were involved in the research and development and marketing of vaccines. Today, the number is down to four, and only two, including Merck, are located in the U.S. The discount that manufacturers now give to public programs like VFC is about as far as they can go, she suggested.
"The moral of the story" of VFC, Claxton said, is that access, not price, is the barrier to immunizations. "It's a matter of educating parents and physicians" and of cementing community commitment to a critical public health concern.
Infrastructure Issues
Because of the drop in infrastructure grants, however, states' ability to fulfill those tasks may be in jeopardy. In a June report, for example, the Institute of Medicine warned that the immunization system "is beginning to show signs of strain." To shore it up and to integrate public and private vaccination efforts, it called for a $1.5 billion, five-year investment by states and the federal government-an annual increase of $175 million over current spending -and urged Congress to improve "the targeting and stability" of Section 317 by replacing discretionary grants with formula grants to reflect a base level as well as the need, capacity and performance of individual states.
As an entitlement, the VFC budget grows to meet demand. For FY 2001, the proposed budget for vaccine purchases is $608 million, though that may have to be increased to accommodate Prevnar. The Section 317 budget, on the other hand, has eroded-it's now $139.5 million, a 50 percent drop over the last five years-in part because states didn't spend all the money in early years, and Congress was loath to appropriate more.
Beyond education and outreach, states must maintain immunization registries, monitor for disease outbreaks and on occasion, conduct vaccine recalls, Levine said. Most states have used up carry-over Section 317 funds, and if the budget stays flat, their ability to carry out those functions will be "severely limited."
For states like Washington, which use Section 317 monies to buy vaccines as well, the situation is especially dire. The program is "integrally linked" to VFC, Hayes said, and is critical to its success. "You can't continue to cut the budget and expect states to add new vaccines, meet accountability standards" and finance other infrastructure tasks like staffing distribution warehouses and overseeing the proper storage of the vaccine products, she declared.
Richard Levinson, associate executive director of the American Public Health Association, said one solution might be to combine funds for VFC and Section 317. Success in the supply and distribution of vaccines"is a matter of money and money flow, and the flow should not be interrupted."
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