Vaccine for Children Act is the real bad guy

William Tucker’s Weekly Standard article La Grippe of the Trial Lawyers is getting a lot of favorable play in the conservative blogosphere. No big surprise. Tucker takes aim at the popular conservative target of trial lawyers -- this time blaming them for the flu vaccine shortage.

If Kerry thinks he can solve the flu vaccine problem, he need look no further than his own running mate, trial lawyer John Edwards. Vaccines are the one area of medicine where trial lawyers are almost completely responsible for the problem. No one can plausibly point a finger at insurance companies, drug companies, or doctors. Lawyers have won the vaccine game so completely that nobody wants to play.

There’s no doubt that the opportunism of some trail lawyers taking advantage of “liability without fault” played a major role in the decimation of the American vaccine industry -- just as it might be argued that an opportunistic Enron took advantage of structured finance and special purpose entities to hide assets and debt from the general investing public.

And just as the we should be careful in the latter example not to rush into rounds of legislation that turn worthwhile projects into economically unviable ventures, we should be careful when making “tort reform” a campaign issue.

Is it really in the best interest of a free society to have the federal government step in and tell citizens who they may sue and for how much? Remember that a precedent set in an administration that conservatives trust, can also be expanded in an administration that lacks that trust.

That being said, Tucker overstates when he says “trail lawyers are almost completely responsible for the [vaccine shortage] problem.” He understates the blame that ought to be placed on the Hillary Clinton socialized medicine trial balloon, the 1993 Vaccines for Children Act.

In theory, prices might have been jacked up enough to make vaccine production profitable even with the lawsuit risk, but federal intervention made vaccines a low-margin business. Before 1993, manufacturers sold vaccines to doctors, doctors prescribed them to patients, and there was some markup. Then Congress adopted the Vaccine for Children Act, which made the government a monopsony buyer. The feds now purchase over half of all vaccines at a low fixed price and distribute them to doctors. This has essentially finished off the private market.

Actually under the Vaccine for Children Act, 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.

“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.

Contrary to Tucker's contention, in this regard one can plausibly point a finger at insurance companies, drug companies and doctors -- with three fingers pointing back at ourselves. Legislation can be repealed or -- as in the case of the Kerry/Dayton Medicare monopsony power -- prevented from ever becoming law in the first place. And a lot of that responsibility falls on “we the people.”

Trial lawyers are an easy target. But before conservatives adopt the liberal tactic of controlling free market activity, better to attack the vaccine shortage at its source -- government control through legislation. Conservatives ought to take the offensive and not only call Kerry to account on the Medicare negotiation issue, but also rally around repeal of the Vaccine for Children’s Act.