Sunday, October 17, 2004
[Wyeth's exit from flu vaccine production] is part of a long, slow industry-wide flight away from flu vaccine, which has simply become more trouble than it's worth.
"It shouldn't be surprising to anybody," said Gregory A. Poland, director of the vaccine research group at the Mayo Clinic, in Minnesota. "In fact, I marvel that there are companies willing to stay in the business."
As a practical matter, there is no money in the production of flu vaccine. Despite all the wringing of hands and gnashing of teeth, neither the government nor private insurers value flu vaccination enough to pay enough to make the business profitable. As a result, one company after another has abandoned the business. While it may be the case that we could guarantee adequate vaccine by entering into long-term cost-plus contracts with pharmaceutical companies, it is sort of hard to imagine that the Democrats, bent on destroying the profitability of the pharmaceutical industry, would support such an arrangement.
The management of this whole process has been a major government screw-up, and the spitting contest that has ensued is reminiscent of various debates in the 1970's where candidates argued as to which party was responsible for starting more of the country's wars (Bob Dole might have started the debate).
The bottom line is that there's been poor planning. There's similar poor planning in the plasma industry, a low-margin business if there ever was one. With respect to vaccines,the government has to do a better job of ensuring a supply, and your suggestion not only is a good one, it's one that any administration will have to embrace, Republican or Democrat.
Yes, the Democrats are hammering away at the drug industry, even in NJ and PA, where there is a big pharma presence, but they'd still have to act prudently on a national health concern.
I think Robert Goldberg got it right in the following op-ed in the Washington Times last year. Thanks Hillary:
…The current (12/17/2003) mismatch of immediate demand and available supply can be blamed on the federal Vaccines For Children Program — Hillary Clinton's dry run for national health care. The vaccine program buys up nearly 70 percent of all childhood vaccines at government-set prices and then distributes them to states according to a federally set formula. The result is no surprise to those of us who lived through the policy-induced gasoline crises of the 1970s. Vaccines have gone to where the outbreaks aren't, and price controls have discouraged vaccine makers from producing more than what the government orders…
…But the risks and costs of developing new medicines are hard to predict, and the pace of future innovation depends on how the free market values a product and not what a single government purchaser wants to pay in order to save money. That's why the federally price-controlled bulk purchase of vaccines has decimated the vaccine industry. Vaccine prices have remained stagnant since 1994, while new regulations and lawsuits have driven up the cost of producing old vaccines and developing new ones.
Thanks to these policies, there are now only four developers of childhood vaccines — down from 20. As a result, there have been periodic shortages of the 11 shots for vaccine-preventable childhood diseases for several years in a row…
…The flu vaccine shortage is a result of the kind of policies Democrats want to impose on Medicare. Killing the incentive for producing vaccines and medicines not only kills future research, it kills people, too…
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