Committee of Public Accounts


Press Notice No. 15 of Session 2003-04, dated 27 April 2004


FIFTEENTH REPORT: PROCUREMENT OF VACCINES BY THE DEPARTMENT OF HEALTH (HC 429)

Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, today said it was very worrying that dependence on a small number of vaccine suppliers is increasing the risk of immunisation programmes being interrupted and urged the Department to minimise the risk of shortages of supply.

Mr Leigh was speaking as the Committee published its 15th Report of this Session, which examined the robustness of the Department of Health's central purchasing arrangements for vaccines, the lessons to be learned from the procurement of smallpox vaccine, and the measures the Department has put in place to avoid or mitigate the impact of vaccine shortages in general. The Department of Health (the Department) and the National Health Service in England spent £195 million on routine vaccine procurement in 2001-02. The limited number of vaccine manufacturers in the market, and the complex manufacturing processes involved, results in shortages in the supply of some vaccines in the UK, with a risk of high prices resulting from near monopolies of supply for certain vaccines.

In April 2002, the Department, with the Ministry of Defence, let a contract for £32.5 million with PowderJect Pharmaceuticals PLC for the supply of 20 million doses of smallpox vaccine. On the grounds of national security, the Department adopted confidential procurement procedures for these supplies. Concerns were subsequently raised about the Department's handling of the procurement and about any link between the political donations made by the then Chief Executive of PowderJect and the award of the contract.

The Committee found that the Department failed to act promptly on a number of reviews of its procurement processes which would have provided an opportunity to achieve significant financial savings much earlier. For example, the Department's procurement unit was under-resourced and had not been able to introduce management information systems to provide readily available data on what was being spent with a particular supplier.

The Department claims general procurement savings of some £5 million per year but has also identified scope for a further £5 million which has yet to be realised. These additional savings arise from the introduction of a new financial and business management system, the co-ordination of procurement activity under the auspices of a newly appointed Commercial Director and a strengthening of its Procurement Policy Advisory Unit. The Department will need to be able to demonstrate that it has achieved the financial savings from successful implementation of these initiatives.

At around the same time the Department was letting a contract for the purchase of the smallpox vaccine, political donations were made by the successful bidder. We found no evidence that these donations had influenced the award of the contract. As in this case, however, officials dealing with contracts need to see that proper procedures are followed and that there is a clear audit trail, so that decisions on the award of contracts can always be shown to follow from an objective evaluation of tenders.

Increasing dependence on a small number of suppliers entails a growing risk of interruptions in the supply of vaccines. To help mitigate this risk, the Department needs to encourage suppliers to stay in the market and make the necessary investment to assure long term vaccine supplies. Greater opportunity for suppliers to influence the development of the Department's immunisation policies, perhaps through the Joint Committee on Vaccination and Immunisation, might enable them to plan more strategically to meet the Department's medium and longer term vaccine requirements.

Vaccines have been very effective in controlling or eliminating major diseases, but important risks remain to be managed. Tuberculosis, for example, is again emerging as a  threat, and the Department and the NHS will need to work closely with other agencies, including the Home Office, Prison Service, Immigration Services, and local authorities to tackle it. The Chief Medical Officer is shortly to publish an action plan setting out the efforts needed to keep this disease under control.

Mr Leigh said today:

"I find it very worrying that dependence on a small number of suppliers is increasing the risk of vaccines being unavailable and immunisation programmes being interrupted. The Department relies on just ten companies for 16 essential vaccines. In most cases supplies have been delivered as required, but there have been shortages of the BCG vaccine against tuberculosis and the Measles, Mumps and Rubella (MMR) vaccine. As a last resort, the Department had to suspend its routine schools-based BCG programme between September 1999 and September 2001, although it was possible to subsequently vaccinate those children who had missed out.

I recognise that the Department faces a global vaccine industry in which there is limited competition. But I urge the Department to minimise the risk of shortages, by making the necessary investment to assure long term availability and providing greater opportunity for suppliers to influence the development of immunisation policies."


Click here to view Report