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 / Autumn 2008 / Issue 52(originally published by Booz & Company)


Smarter Medicine

Funding Woes
When the VFC program was first rolled out, each state health department and those in a handful of larger cities, 64 in all, acted as independent distributors of vaccine. They operated their own storage depots, where the vaccine was to be stored at the proper temperature. More than 430 depots were spread across the country. At the county and municipal level, orders for vaccine were re­ceived from 44,000 sites and more than 100,000 pediatricians and clinicians. Some orders were approved at the county or city level before they were forwarded to the state for another step in the approval process. The CDC approved bulk orders from the states and some large cities. It was also responsible for allocating money several times a year on the basis of the requests received from the 64 immunization projects. Funding consisted of 64 lines of credit against which vaccine could be purchased. Several times a year, the states and cities that were responsible for these lines of credit would make their pitch to the CDC for grants and ultimately the vaccine they thought they needed to serve their population.

Each of the 64 projects managed the VFC program differently. For example, some states required that a doctor’s representative pick up the vaccine at a local storage depot. Other program managers, like those in Chicago, had a crew deliver the vaccine to providers’ offices. Still others contracted with third-party com­mer­cial distributors to drop off the vaccine where it would be used. Orders were received from doctors’ offices by fax, phone, and U.S. mail. The turnaround time from order to delivery varied from hours to weeks, depending on the intended location. Some states, like Washington, offered universal vaccine coverage, which meant every child could receive vaccine from the VFC program. Others, like California, restricted access to the program; only children without private insurance were eligible.

For all that variability, thanks to the heroic efforts of thousands of public health workers, children were getting vaccinated in greater numbers than ever before. But as the years went on and new vaccines were added to the program, getting children immunized through VFC took more and more effort. As a result, the fragile system was easily thrown off the rails. By 2000, the time required to fill a state’s request for money had increased to six weeks. “That kind of wait time was normal,” Lane says. “It was all these legacy systems and approvals that we had put in place.” Says Gimson, “We had built an elephant.”

The program might have continued in the same form were it not for a confluence of events, including those of September 11, 2001. Those attacks, followed by anthrax scares, the greater threat of bioterrorism, and, later, pandemic flu fears drove the public to demand greater responsiveness of every government agency, including the CDC. CDC officials had to face the fact that the variability in the system made it impossible for them to get a clear and comprehensive picture of the overall vaccine landscape.

From 2000 through 2002, the nation went through an unprecedented period of vaccine shortages. First there were shortages of vaccine for flu, then for chicken pox, and, in 2002, a shortage of a new vaccine to prevent ear infections. Some doctors had plenty; some pro­viders had none. “It was very clear there was this in­equity, but we couldn’t tell how much vaccine was in the pipeline,” says Lane. “We had to rely on the states for answers, which meant we had to literally ask all 64 project offices to fax us their inventory logs so we knew approximately how much supply was out there.” Meanwhile, congressional representatives were on the phone, asking, “Why can’t children in my state get this vaccine?”

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  1. Bill Jackson and Conrad Winkler, “Building the Advantaged Supply Network,” s+b, Fall 2004: Collaborative strategies with examples from aircraft, consumer products, and auto manufacturers, plus advice for step-change planners.
  2. Dan Jones and Jim Womack, Seeing the Whole: Mapping the Extended Value Stream (Lean Enterprise Institute, 2000): Practice guide with diagrams and techniques for mutual analysis and lean thinking.
  3. Keith Oliver, Dermot Shorten, and Harriet Engel, “Supply Chain Strategy: Back to Basics,” s+b, Fall 2004: The best practices of companies that do supply chain management well. 
  4. Association of Immunization Managers Web site: Further information about immuni­zation policy development, partnerships, programs, and program management.
  5. Centers for Disease Control and Prevention Web site: Provides background and resources on the CDC’s goals and operations, including detailed information on vaccine and immunization programs.
  6. For more articles on supply chains, sign up for s+b’s RSS feed.
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