Sizing, targeting, and fulfilling vaccine demand

Several have asked very similar questions related to vaccine distribution. I got four more overnight, prompted by last evening’s related 60 Minutes report.  Your questions are entirely appropriate.  Answers are difficult… and often. not — yet — possible. Here are some — deniable — hypotheses meant to be tested, not just accepted.

SUPPLY:  This depends on which vaccines are authorized, when they are authorized, and in what sequence they are authorized. These are all new product-lines, each with different transportation, storage, and administration requirements. Over forty coronavirus vaccines are under development.  BioPharmaDive has been trying to keep track of the “leading” vaccine candidates.  Here is its update as of November 2.

DEMAND: This could be close to the whole non-infant population. What minimum proportion will require vaccination to achieve population-level protection depends (yes, I’m sorry) on the efficacy of the individual vaccines that are eventually authorized.  At a Friday October 30 meeting of the CDC’s Advisory Council on Immunization Practice (ACIP)  the potential US target population was sized as follows: 

  • 21 million healthcare workers
  • 87 million front-line workers
  • 100 million people with preexisting conditions
  • 53 million people over age 65  

This sizing is also expected to be sequenced, starting with healthcare workers and extending to other target populations as supply allows.  Very rough calendar projections suggest healthcare workers being vaccinated as soon as possible late this year and in early 2021. Supply flows for the over-65 cohort (including yours truly) may be available by sometime late Winter or Spring. Specific minimum population targets will depend in part on post-approval studies of efficacy.  In other words, even when vaccinations start we will not be certain of minimum demand needed to be fulfilled. So… given the risk-factors, early targets (e.g. healthcare and front-line workers) will almost certainly be sized to vaccinate close to the whole sub-population.  In the case of many (but not all) vaccines, a second dose must be administered in order to achieve effective mitigation of virus transmission.

It is, however, not certain that there will be sufficient demand in some populations or some localities to achieve meaningful public health benefits.  Some public opinion surveys have found widespread vaccine hesitancy(more). Last week a trucking executive told me that many of his drivers, even older drivers, are reluctant to be vaccinated.  I continue to see the likelihood of demand variability as an ongoing challenge to effective vaccine distribution.

DISTRIBUTION AND DELIVERY: Significant attention has been given to the ultra-cold storage and distribution requirements anticipated for the potential Pfizer vaccine. There is increasing discussion that Pfizer is developing its own distribution channels and methods largely distinct from other vaccine flows.  For now, I suggest that members of the FEMA-NIC Supply Chain Resilience TA cohort might most productively focus on other potential vaccines with less exotic requirements.
The CDC has an existing contract with McKesson to move authorized vaccines from finishing plants to designated vaccination venues (as outlined in the CDC’s Vaccine Program Playbook, Version 2.0).  This is currently outlined primarily as a point-to-point (not hub-and-spoke) distribution network (in supply chain management the analogy might be to Direct Store Delivery (DSD).  On November 3 McKesson’s CEO Brian Taylor explained the role as follows:

We will be the centralized distributor for refrigerated and frozen vaccine types, once approved by the FDA. Ultra frozen vaccines, which are those requiring temperatures of minus 60 degree Celsius or colder are not within the scope of McKesson’s contract with the CDC.In the centralized model, the US Government directs McKesson on the distribution of the vaccines and related supplies to point-of-care sites across the country. McKesson will make no allocation or prioritization decisions and we will not have any influence on which vaccine is shipped to which location. While it’s still early in the process and a vaccine is not yet been approved for distribution, our role in Operation Warp Speed has been and will continue to be our Company’s top priority since we were selected by the CDC in August. We’ve been working to scale up the infrastructure necessary to be ready to distribute approved vaccines as soon as they are available. Given the uncertainty around the timing and volume of vaccines that may become available, future earnings tied to the distribution of COVID-19 vaccines, as a centralized distributor for the US Government, are not reflected in our current outlook.

McKesson was also selected by the US Government to manage the assembly and distribution of the ancillary supplies needed to administer the future COVID-19 vaccines. We’re partnering with the Department of Health and Human Services, or HHS, to help equip healthcare professionals with the supplies they need to safely and efficiently administer COVID-19 vaccines once they’re available. Supplies like syringes, alcohol prep pads, face shields and more will be selected and grouped together as directed by the HHS for future distribution to point-of-care settings across the country.

We quickly ramped up our capacity outfitting and staffing four distribution center locations for assembling and storing the ancillary kits to be used in the administration of the COVID-19 vaccines once approved. Each kit contains enough supplies to be used for the administration of a 100-plus vaccines. Our teams have been hard at work assembling these kits as part of the preparation needed for when a vaccine is approved. 

Third Party Logistics (3PL) providers have also been making investments designed to allow them to support the McKesson, Pfizer, and other potential channels with storage, air cargo, and trucking (more and more and more).

As discussed in my November 2 email, the CDC has also entered into contracts with CVS, Walgreens, and others to specifically support vaccinations in Long-Term-Care-Facilities.  In a November 6 teleconference with financial analysts CVS Health CEO Larry Merlo made the following comment, I have added the italics as emphasis.

“…we are pleased to have been selected to partner with the government in administering COVID vaccines when available for long-term care facilities. And our track record with COVID testing, along with our experience in vaccinations, have demonstrated our ability to rapidly scale services and we expect to play a significant role in all vaccination administration.”

The CVS Health Executive Vice President and CFO added, “We have been investing and looking in terms of the testing going forward, readiness around being a vaccine distributor, and to be ready to deliver a vaccine when one comes to market.”

TWO DENIABLE HYPOTHESES:
Some perceive that the point-to-point distribution system as outlined combined with an amplified — and calendar extended —  seasonal flu vaccination network will be sufficient to achieve fundamental public health objectives for the coronavirus.  According to this first hypothesis there is sufficient capacity in the preexisting pharmaceutical supply chain to flex forward into gradually increasing demand between soon and mid-summer. No one expects smooth sailing.  Everyone expects rough waves.  But the race can be won with the ship(ping) that is currently in the channel.

Others are concerned that as vaccination moves beyond healthcare workers and the residents of Long-Term-Care facilities into front-line workers, populations with preexisting conditions, and those above age 65 that a combination of demand variability (especially hesitant demand) and the functional variations among multiple vaccines will spawn accumulating bottlenecks. There is particular concern (more) that vaccines requiring cold-chain storage and transportation cannot be supported at sufficient volumes and velocity to fulfill effective demand. Traditional vaccines have usually required temperature to be controlled between 35 and 45 degrees Fahrenheit. Several of the rapidly developed coronavirus vaccines require temperature control at or below freezing.  With traditional vaccines, temperature control failure is a recurring and significant source of lost volume and wasted product (up to fifty percent globally).

So, there is a second hypothesis that available cold chain capacity will be the key factor in constraining or accelerating vaccine distribution in the United States (how is the bottleneck “fixed” or “exploited”?). Where points-of-care are more distant from points-of-production and where demand varies most, it will be more challenging to maintain necessary volume, velocity, and temperature.  Especially given the short shelf-life of many vaccines, this could seriously complicate and deplete flows. This is the hypothesis that concerns many of you.  How to assess and possibly deal with this potential bottleneck is what most of you are asking about.

Given the current level of uncertainty (e.g. which vaccines from what locations with what temperature requirements, with what shelf-life,  in what quantities…) I do not perceive a meaningful technical assessment of risk is possible.  But the confidence of those who espouse the first hypothesis is not entirely misplaced. The operational analogies with demand-pull and supply-push for seasonal flu vaccines are a reasonable place to start.  But given persisting uncertainty (and product novelty), concerns embedded in the second hypothesis are also not far-fetched.

MITIGATING — EVEN EXPLOITING — COLD-CHAIN BOTTLENECKS
Given the potential cold-chain risks that have been set out, the principles of Supply Chain Resilience encourage looking at sources of preexisting capacity and facilitating opportunities to maximize preexisting capacity.  Most cold-chain capacity in the United States currently exists to transport food instead of pharmaceuticals.  Most cold-chain operators store and move food or pharmaceuticals, but do not move both.  There are several factors including regulatory requirements that serve to keep these two cold-chain flows — food and pharma — in separate channels.  But if the second hypothesis is confirmed,  cross-channel collaboration could be fostered… especially if steps are taken before the second hypothesis is confirmed in real-time.

The principles of Supply Chain Resilience focus on finding geographic clusters or other concentrations of preexisting capacity.  In the United States more than fifty percent of cold-chain capacity (I have been told by knowledgeable insiders that up to 75 percent of cold chain capacity) resides with three firms:

Americold Logistics 
Lineage Logistics
United States Cold Storage  

The Global Cold Chain Alliance provides an online directory where you can search for these and other cold chain operators that serve your region.

There are at least two impediments to accessing this additional source of capacity.  First, in most of the United States the food supply chain is currently experiencing supply volumes and demand velocity well-above recent years.  Second, regulatory certification for food safety is different from certification for pharmaceutical handling.  

Because of both pre-pandemic and since-pandemic demand behavior, the food-focused cold chain has been expanding.  As a result, some operators in some jurisdictions may well have transient excess storage and/or transportation capacity that could be dedicated to vaccine distribution. I am confident that most will be motivated to do whatever they can. As a result, the most stubborn impediment to accessing this additional capacity (if and when needed) will probably be regulatory. Supply Chain Resilience TA participants are especially well-suited to facilitate risk-appropriate regulatory relief through your experience and skills in intergovernmental and interagency collaboration.  Each state has somewhat different regulations.  Working now with your state partners and governors could avoid significant problems in March-April-May when a collision of vaccine supply and demand may be most likely.  

Many cold-chain operators that focus on food already participate in rigorous quality assurance programs — some of which exceed FDA and state minimums.  These quality leaders are often certified under the British Retail Consortium Quality Standards (BRCQS) program and/or the Safe Quality Food Institute (SQFI) program. Focusing on cold-chain providers that are already certified under one or both of these programs could facilitate speedier, more confident regulatory relief where substantive equivalent standards are already being achieved.

Beyond exploiting the cold-chain bottleneck, I also encourage considering how you can develop, encourage, and reinforce effective demand management for your local and regional vaccination programs. Very few have — so far — asked about this, but Supply Chain Resilience begins with characterizing demand, recognizing your most vulnerable sources of demand, and preparing to effectively serve demand despite these vulnerabilities.  There is accumulating evidence that demand management will be key to coronavirus vaccine distribution in 2021. More to come…


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