COLUMN -- Vaccine shortage a sympton of ailing system

October 25, 2004

The shortage of flu vaccines is symptomatic of a wheezing national immunization system with a potentially poor prognosis. If politically promised “help” arrives, well . . . learning to scramble for rationed medication might be a handy survival skill to develop.

Given that flu season is nearly as certain as death and taxes, doesn’t it seem strange that the United States relies on just two manufacturers for flu vaccine? Would it strike you as equally unusual that there are only four manufactures of vaccines for major childhood diseases?

Would it surprise you to learn that Minnesota is one of 35 states with recent legislation allowing children with fewer than the required number of immunizations (due to shortages) to attend school?

Unlike the individual health issues of obesity and exposure to secondhand smoke, immunization against communicable disease meets the requirements of a public health issue. Nonetheless, there’s as real a difference between sound immunization policy and unwise government decisions as there is between modern medicines and bleeding with leeches.

Vaccines should be attractive products for manufactures. They are used every year, recommended for virtually everyone, and extremely safe. But while vaccines have a high social value, they provide a low return on investment for pharmaceutical companies, and consequently receive little R&D funding.

“These problems are largely the result of wrongheaded public policy,” says Dr. Henry Miller, a fellow at the Hoover Institution. “Actions by the people who determine much of the Nation’s public health agenda have discouraged research and development; squandered scarce resources; and deprived citizens of important consumer products, while placing them at risk.”

To better understand the current flu vaccine shortage and the dangers of proposed policy changes for the way Americans purchase medication, it’s necessary to understand a bit about vaccine production and pricing.

Unlike pills, vaccines are developed using virus and bacteria cultures, which don’t grow on demand. Adding more people on a production line can’t shorten delivery times any more than nine women working together can have a baby in one month. A vaccine has an 8-12 month production cycle. Add to the mix a regulatory approval process, and the production to shipping cycle for a vaccine might run from 11 to 16 months or longer.

Current production methods are not responsive to changing market conditions. “Unbelievable technology” is available, but high implementation cost and low profit make it uneconomical to implement.

Why the low profit on vaccines? Consider a policy like the 1993 Vaccines for Children (VFC) program. (VFC is similar to the prescription drug program in Canada.)

Under the VFC program, the Centers for Disease Control (CDC) purchases nearly 70 percent of all childhood vaccines at deeply discounted government-set prices. It then distributes the vaccines to states according to a federal formula. The result is some states wind up with a surplus of vaccines (with a limited shelf life) while other areas experience a shortage. Price control plus limited shelf-life discourages vaccine makers from producing more doses than the government orders.

Price controls and consequential low profits discourage pharmaceutical companies from extensive R&D on new vaccines or implementing available new technology that might reduce production cycles.

“The federally price-controlled bulk purchase of vaccines has decimated the vaccine industry,” writes Dr. Robert Goldberg, director of the Manhattan Institute’s Center for Medical Progress.

Goldberg warns that if the policies regularly producing vaccine shortages are extended to prescription drugs -- policies similar to those supported by presidential candidate John Kerry and Minnesota Senator Mark Dayton that enable Medicare to negotiate drug prices -- the “blizzard of fear that families are experiencing trying to protect their children against the flu will extend into a dark winter for Americans suffering from birth defects, cancer, Alzheimer’s, schizophrenia and heart disease.”

Goldberg’s metaphor may ring of a Bulwer-Lytton novel, but his critique of price-control policy does portend a “dark and story night” for health care in this country if policy makers don’t change their mind-set.

Government intervention is necessary, not to control prices and micromanage supply, but to ensure marketplace reward for creating, testing, and producing vaccines commensurate with their value to society (and maintain that environment for prescription drugs).

Americans should never be satisfied with managed mediocrity, especially in health care.

Useful Links

Los Angeles Times -- “Bureaucratic Roadblocks in Vaccines’ Path” by Henry I. Miller

Tech Central Station -- “Bugs in the System for Treating the Flu Bug”

Tech Central Station -- “Public Policy Follies”

Manhattan Institute -- “Solving the Vaccine Shortage: Market Solutions or Government Intervention”

Institute of Medicine -- “Financing Vaccines in the 21st Century: Assuring Access and Availablity”

Medpundit

Vaccination News