Federal Accounting Rules Discourage Pharmaceutical Companies From Contributing to Pediatric Vaccine Stockpile

Main Category: Pharma Industry / Biotech Industry
Article Date: 20 Apr 2005 - 3:00 PDT

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Some pharmaceutical firms have declined to sell vaccines to the... Pediatric Vaccines Stockpile, which has become "nearly empty" and is "without immediate prospects of being filled," in part because of federal accounting rules, the Washington Post reports. Under the rules, vaccine makers cannot count as revenue money they receive for selling vaccine to the stockpile until the vaccine doses are delivered to the government in an emergency. According to the Post, vaccines for the stockpile are stored in company warehouses and "are considered unsold in the eyes of auditors, investors and Wall Street." A Securities and Exchange Commission report in 1999 on revenue recognition led to the current policy.

Current Stockpile Levels
The stockpile, which Congress created in 1983, is intended to hold enough vaccine to supply the nation's needs in an emergency for six months. The "vaccine situation came to a head late last summer when CDC asked the manufacturers to make new sales to the stockpile," according to the Post. Merck agreed to sell additional vaccine doses to the stockpile, but Sanofi Pasteur, Wyeth and GlaxoSmithKline declined. As a result, the stockpile currently contains 13.2 million doses of vaccine, less than one-third of the goal of 41 million doses. The stockpile includes no doses of two vaccines, including DTaP, which protects against diphtheria, tetanus and pertussis.

Reaction
Rep. Henry Waxman (D-Calif.) said, "It's inexcusable that even though the administration had the money for this, they haven't made any progress." Waxman said he might sponsor legislation that would create a legal exception to the accounting rules that would allow companies to recognize revenue from sales to the stockpile. However, "[o]ne of the companies ... said its problem is not with 'revenue recognition' but with the details of managing the vaccine inventory," the Post reports. Phil Hosbach, a Sanofi vice president, said the shortage was "really a threat to public health." Jerome Klein, a pediatrician at Boston University School of Medicine and a member of the National Vaccine Advisory Committee, said, "If it was up to me, I'd start the meeting at 1 o'clock, lock the door and wouldn't let anyone leave until they found a solution" (Brown, Washington Post, 4/17).

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