As go vaccines, so go pharmaceuticals?

ALEXANDRIA, Va. ? There is virtual panic among many doctors worried that their patients won’t be able to get a flu shot this year. In response, some have called for nationalization of the vaccine supply.


They should think again about the consequences of getting the government any more involved in the vaccine industry.


How could the U.S. have been pushed into the corner of relying on a factory in England to produce nearly half of our flu vaccine supply?


A plant in Liverpool operated by the California-based Chiron Corp. was making 48 million of the estimated 100 million doses of flu vaccine for the U.S. But the plant recently was cited by British authorities who found some of its vaccines had abnormally high levels of bacteria, and the U.S. Food and Drug Administration has rejected allowing any of the vaccines to be used.


It takes up to eight months to make the vaccine, which is grown in chicken eggs, and there’s no time to make millions more doses in time for the winter flu season. Most of the supply that will be available has been made by Aventis Pasteur in its vaccine plant in Pennsylvania.


The Centers for Disease Control says that an average of 36,000 people die every year from the flu. Tens of thousands of people now are at risk.


While Sen. John Kerry is blaming the Bush administration for the shortage, the crisis actually is the result of a series of policy decisions dating back at least a decade that have led to a diminished manufacturing capability for all vaccines in the U.S.


In 1994, First Lady Hillary Clinton led an effort to enact the Vaccines for Children program. As a result, the government now purchases 60 percent of all pediatric vaccines through “government negotiated prices.”


The government has dictated prices for pediatric vaccines to manufacturers that are often below costs, and many suppliers have been forced out of the market, unable to make a profit at 15 cents a dose, in some cases.


At the same time, the cost of manufacturing and the cost of complying with increasingly burdensome regulation have gone up.


Other manufacturers watched and saw that this clearly is not a good business to be in.


Just two decades ago, there were a dozen companies making vaccines, most of which have left the market or been driven out by a variety of pressures.


Henry Miller, a physician and former FDA official with Stanford University?s Hoover Institution, said this “should be the golden age of vaccine development” because new biologic technologies are available. “But,? he adds, ?there is scant enthusiasm for vaccine development in the drug industry.”


This is a clear warning to those who would try to impose price controls on the pharmaceutical industry. They would predictably force many companies out of business, supplies would be dislocated and even vanish, and, most importantly, research for tomorrow’s medical miracles would dry up.


The practice of making vaccine in chicken eggs has changed little since the first flu shot was introduced in the 1940s. There is good news in emerging technologies for vaccine development that could allow production costs to decline and safety to improve through more efficient manufacturing processes. These new biologic technologies would allow vaccines to be grown in cell cultures that can be produced more quickly and less expensively.


This new technology is now likely to become a higher priority in the FDA as regulators focus on certifying the new processes, but that will take time.


In the meantime, political leaders will be focused on making sure that the flu vaccine shortage isn’t repeated next year. But rather than using even more heavy-handed techniques, they should recognize the damage that burdensome regulation and government-negotiated prices have already done to the vaccine industry and instead, find ways of providing new incentives to keep vaccine manufacturers in business.



 

Grace-Marie Turner is president of the Galen Institute (www.galen.org), a non-profit research institute that focuses on free-market ideas for health reform. Readers may write her at P.O. Box 19080, Alexandria, VA, or e-mail her at galen@galen.org

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ALEXANDRIA, Va. ? There is virtual panic among many doctors worried that their patients won’t be able to get a flu shot this year. In response, some have called for nationalization of the vaccine supply.


They should think again about the consequences of getting the government any more involved in the vaccine industry.


How could the U.S. have been pushed into the corner of relying on a factory in England to produce nearly half of our flu vaccine supply?


A plant in Liverpool operated by the California-based Chiron Corp. was making 48 million of the estimated 100 million doses of flu vaccine for the U.S. But the plant recently was cited by British authorities who found some of its vaccines had abnormally high levels of bacteria, and the U.S. Food and Drug Administration has rejected allowing any of the vaccines to be used.


It takes up to eight months to make the vaccine, which is grown in chicken eggs, and there’s no time to make millions more doses in time for the winter flu season. Most of the supply that will be available has been made by Aventis Pasteur in its vaccine plant in Pennsylvania.


The Centers for Disease Control says that an average of 36,000 people die every year from the flu. Tens of thousands of people now are at risk.


While Sen. John Kerry is blaming the Bush administration for the shortage, the crisis actually is the result of a series of policy decisions dating back at least a decade that have led to a diminished manufacturing capability for all vaccines in the U.S.


In 1994, First Lady Hillary Clinton led an effort to enact the Vaccines for Children program. As a result, the government now purchases 60 percent of all pediatric vaccines through “government negotiated prices.”


The government has dictated prices for pediatric vaccines to manufacturers that are often below costs, and many suppliers have been forced out of the market, unable to make a profit at 15 cents a dose, in some cases.


At the same time, the cost of manufacturing and the cost of complying with increasingly burdensome regulation have gone up.


Other manufacturers watched and saw that this clearly is not a good business to be in.


Just two decades ago, there were a dozen companies making vaccines, most of which have left the market or been driven out by a variety of pressures.


Henry Miller, a physician and former FDA official with Stanford University?s Hoover Institution, said this “should be the golden age of vaccine development” because new biologic technologies are available. “But,? he adds, ?there is scant enthusiasm for vaccine development in the drug industry.”


This is a clear warning to those who would try to impose price controls on the pharmaceutical industry. They would predictably force many companies out of business, supplies would be dislocated and even vanish, and, most importantly, research for tomorrow’s medical miracles would dry up.


The practice of making vaccine in chicken eggs has changed little since the first flu shot was introduced in the 1940s. There is good news in emerging technologies for vaccine development that could allow production costs to decline and safety to improve through more efficient manufacturing processes. These new biologic technologies would allow vaccines to be grown in cell cultures that can be produced more quickly and less expensively.


This new technology is now likely to become a higher priority in the FDA as regulators focus on certifying the new processes, but that will take time.


In the meantime, political leaders will be focused on making sure that the flu vaccine shortage isn’t repeated next year. But rather than using even more heavy-handed techniques, they should recognize the damage that burdensome regulation and government-negotiated prices have already done to the vaccine industry and instead, find ways of providing new incentives to keep vaccine manufacturers in business.



 

Grace-Marie Turner is president of the Galen Institute (www.galen.org), a non-profit research institute that focuses on free-market ideas for health reform. Readers may write her at P.O. Box 19080, Alexandria, VA, or e-mail her at galen@galen.org

SHARE THIS ARTICLE

About the author