Tests, vaccine supply for future pandemics requires taxpayer subsidies under Biden plan


Last year, amid consecutive surges of coronavirus infection, Americans couldn’t find enough tests. Now, as infections have plummeted, kits are piling up on pharmacy shelves and in people’s homes. Of 700 million tests the Biden administration intends to give away through the mail, 270 million have been ordered, according to the White House.

The boom-and-bust swing in demand for tests encapsulates a broader challenge facing the Biden administration: how to persuade companies to maintain manufacturing “surge capacity” for tests, vaccines, treatments and protective equipment when needed to confront new coronavirus variants or a future viral threat.

Businesses want predictability to make investment decisions, but pandemics are anything but predictable. Demand for tests closely tracked omicron cases, say experts, with extraordinarily fast fluctuations.

“We are not in a position of normal market dynamics, and we’re finding that these surges are making forecasting very difficult for everyone,” said Sean Parsons, chief executive officer of Ellume, an Australian firm that set up the Frederick plant with almost $232 million from the federal government. “Retailers have a whole lot of product that is sitting on shelves and that is not moving.”

But even in the midst of a crisis that has killed almost 1 million Americans, government funding is proving unpredictable. A proposal for $15.6 billion in short-term emergency supplies was put on hold after Republican senators objected. After the White House warned it won’t have enough money to purchase more tests, vaccines and other supplies, a potential $10 billion compromise emerged in the Senate this week.

The health-care industry needs clarity over what level of support government will provide for long-range health emergency readiness, said Mark McClellan, the former commissioner of the Food and Drug Administration and founding director of the Duke-Margolis Center for Health Policy at Duke University.

“With that much uncertainty, it’s hard to know what to do,” he said. “A lot of people aren’t going to make investments.”

In the past two years, faster, more strategic deployment of tests could have slowed the spread of disease and given officials clearer warnings about where outbreaks would strike next. Avoiding supply bottlenecks of bioreactor bags, vials and syringes could have sped production and distribution of vaccines and saved lives.

In recognition of those sorts of shortfalls, a Biden blueprint unveiled this month outlines in broad terms ideas for strengthening the health system, including creating industrial capacity to produce more tests and up to 1 billion more coronavirus vaccines a year.

But what the pandemic has showed, officials say, is that things can go wrong without heavy government subsidies to sustain emergency manufacturing capacity. Last summer, Abbott responded to slack demand by slashing production of its BinaxNOW home tests and laying off workers. Then, scrambling in the face of new waves of coronavirus cases, Abbott rehired workers and ramped up production in the fall.

“We saw and heard from companies that had really difficult times in the scale-up, because they would have to rapidly hire people to keep up with demand. Then they would have to lay them off. Then they had to try to hire them again because they couldn’t keep up with demand,” said a senior Biden administration official who spoke on the condition of anonymity because of ongoing negotiations. “It’s obviously a big challenge to have an industry that can move up and down like that really quickly.”

The administration has put out requests to industry for ideas about how government spending can be used to create reserve manufacturing capacity.

“Abbott has had conversations with administration officials and members of Congress on the importance of maintaining rapid test manufacturing capabilities in the U.S.,” said Abbott spokesman John Koval in an email. He declined to disclose details. Abbott, with its own money, built test manufacturing lines in Maine and Illinois that now employ 5,000 people, he said. It is making about 100 million BinaxNOW tests per month.

AdvaMed, the trade and lobbying organization representing test manufacturers, offered key suggestions to the Biden administration in a letter on March 15. It called for more funding for the Strategic National Stockpile, the cache of medical supplies maintained by the government. Funding should be allocated for stockpile supplies over 10 years instead of the current five, it said. And it recommended that companies should be given responsibility to manage the stockpile, rotating stock in and out to allow for innovations as well as account for expiration dates.

Crucially, the government also should pay vendors to maintain emergency production capacity over the long term, AdvaMed said. It said the industry urged the Biden administration to make such a move last summer, when demand plunged.

“Without a strong market for testing, the diagnostics industry encouraged government policy to hold manufacturing capacity. Policy was not put in place and some companies were forced to scale back manufacturing capacity, capital expenditures, and workforce,” AdvaMed said.

In response to AdvaMed’s statement, the administration cited its large-scale purchases of tests later in the year, plus ongoing investments in manufacturing capacity, amounting to $4 billion in investments. “In total, we used the funding and the tools we had to build and sustain manufacturing capacity through ups and downs of demand for testing,” the senior administration official said.

But the fruit of much of that spending arrived in January, after demand for tests had already soared with the surge of delta and omicron variants. In the midst of the omicron case spike, Americans hunted for limited supplies of tests online and in retail stores. Senators complained of reports of price-gouging, with boxes of two tests that should cost $25 being sold for as much as $70. The administration’s rapid test buying spree included large purchases from two Chinese manufacturers. Andon, the Chinese parent company for iHealth tests, said on Jan. 14 it received orders for 250 million tests from the federal government for $1.28 billion.

The job of preparing for future pandemics is complicated by the expiration dates for vaccines and tests. Pfizer-BioNTech and Moderna vaccines, which also have experienced a sharp drop in demand in the last month, expire in seven months (Moderna) to nine months (Pfizer). Rapid tests on the market now expire a little more than a year after they are manufactured, although companies are seeking FDA authorization to extend them up to two years.

The United States needs a much more robust testing strategy to combat the coronavirus and other potential viral threats, including domestic emergency surge capacity of 1 billion rapid tests a month, according to a new pandemic roadmap published by a group of leading experts. Co-author Michael Mina, an epidemiologist who recently left his job as an associate professor at the Harvard School of Public Health to become chief science officer at testing company eMed, said the coronavirus revealed gaping holes in America’s ability to effectively monitor spread of disease. eMed has a “test-to-treat” system that provides guidance to home testers through an app and, if the test is positive, links them for a telehealth visit with a provider who can prescribe antiviral medication.

“It’s how we see the virus. It’s how we have eyes on this thing and be able to know where we are in the pandemic,” Mina said. He expressed dismay at congressional deadlock over further coronavirus funding. Political leaders need to treat preparation as they do military spending, he said, committing to prepare strong defenses against infectious threats.

“We can’t come out of this pandemic and at the first sight of cases dropping assume the pandemic is behind us and forget about it,” he said. “We have just gone through one of the most catastrophic events our country has ever faced.”

Interviews with executives involved in making test kits showed how the Biden administration hopes public investment will promote steadier supply.

MilliporeSigma, the North American arm of Germany-based Merck KGaA, received a $137 million U.S. government contract in December to build a new factory in Sheboygan Falls, Wis. The facility, scheduled to begin production in 2024, will make the key component in rapid tests: nitrocellulose strips, where the chemical reaction to detect virus takes place.

The test strips are also used for at-home pregnancy tests and a variety of infectious diseases, including HIV, influenza and malaria. When the pandemic hit, MilliporeSigma, which makes the strips in Ireland and is one of only several makers of nitrocellulose in the world, was forced to delay fulfillment of orders for some manufacturing customers, said Jean-Charles Wirth, head of applied solutions for the life science business of Merck KGaA.

“It has been painful,” he said. “We said the number one priority is to go to covid, and then we go for product that impacts humans, and then the product with a long-term contract with a customer.”

The $135 million government contract tipped the balance to the United States for its next plant, instead of potential sites in Asia. Siting the factory in the United States will allow the government to invoke the Defense Production Act in the event of future emergencies, said Wirth, requiring MilliporeSigma to sell its domestically produced strips for use in government fights against health threats.

In Frederick, Ellume is currently sourcing nitrocellulose strips from India, said Parsons, the Ellume chief executive. By mid-2022, it expects the plant to produce 15 million tests a month. Ellume’s coronavirus tests have a 15-month expiration date, which may be expanded, pending FDA approval, to 21 months, Parsons said.

The company believes demand will remain strong, despite the current glut in overall covid antigen test supply, because its test includes use of an app that automatically transmits the result to the user’s phone, where the data can be sent to a health-care provider for prescribing and health authorities for pandemic tracking.

Also, the company is interested in expanding use of its at-home tests for influenza, strep and respiratory syncytial virus, a common cold-like illness that can be dangerous for infants and the elderly, so it will have demand even without a national health emergency. Still, that would not negate the need for ongoing government financial support.

“There is a limit to the amount of risk that industry can take in terms of maintaining this capability for the medium to long term,” Parsons said. His team has been studying ways to stockpile tests for faster production ramp-up in the event of a new epidemic.

Parts of the test kits, such as swabs and the plastic casings, could be assembled in advance and stored. If a new health emergency strikes, test strips with custom reagents could be added and new boxes printed up relatively quickly, he said. “The goal would be to get to max production ASAP.”

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