T he fact that at least some batches of this
year’s flu vaccine, manufactured by Chiron
in England, have turned up contaminated and thus will not be allowed to be used in the United States has created something of a crisis. The United States is now short some 48 million doses of flu vaccine. The Centers for Disease Control estimates that 36,000 people die every year from flu, even when vaccine is available. So tens of thousands of people are probably at risk.
What caused what could well become an annual vaccine crisis? In a nutshell, too much litigation, too much regulation and government price controls.
The first factor is the decline in the number of vaccine makers. “From 1967 to 1984, the number of U.S. vaccine manufacturers fell from 37 to 15, while the number of licensed vaccines declined from 380 to 88,” said Dr. Henry I. Miller in a presentation at the Manhattan Institute in 2002. He is a former Food and Drug Administration researcher who is now at Stanford’s Hoover Institution. “And now, there are four manufacturers in the U.S. and only a few dozen vaccine products,” he said.
Why has this happened? An important reason is litigation, a trend that came to a head about 10 years ago in regard to pediatric vaccines. So many pharmaceutical companies had been sued because of adverse side effects that many simply dropped out of the vaccine business, which is a low-profit sector to begin with.
Another factor is regulation. As Dr. Miller explained in his presentation, when he was at the FDA in the 1980s, a company came up with a formula for a Hepatitis B vaccine genetically engineered by recombinant DNA techniques.
Although safety was a secondary issue because no live viruses were involved, the FDA still forced the longest possible approval procedure, costing tens of millions of dollars and requiring years to complete.
Dr. Miller noted that once the vaccine was approved — which was unnecessarily expensive because of the regulatory hurdles — the incidence of Hepatitis B fell by two-thirds. But during the approval process, some 10,000 Americans unnecessarily contracted Hepatitis B.
In 1994, in the early years of the Clinton administration, the government, largely through the involvement of then-first lady Hillary Clinton, decided to do something about the declining availability of vaccine for children. Unfortunately, the Vaccines for Children program, set up in 1994, consisted of making the government the purchaser of 60 percent of vaccine for children — at deeply discounted prices. This made vaccine manufacturing even less profitable — or money-losing for some companies — and more companies simply got out of the business.
Because flu viruses mutate, a new flu vaccine must be formulated every year. That means a new FDA approval every year, which adds to the cost. Since so few companies now make vaccine, thanks to government intervention into the market, there is almost no competition and little innovation. And as we are discovering now, when one company has problems, more than half the supply can be affected.
Dr. Miller said there is a possible short-term approach to what he called this “government- created debacle”: “The FDA should have started experiments to see if the existing stock of vaccine, from Aventis Pasteur, would still be effective in diluted doses. It probably is, but so far as I know, nobody has begun those tests.”
For the future, Dr. Miller has outlined a seven-point proposal that includes regulatory and litigation reform, reciprocity of vaccine approvals with Canada and Western Europe, ending the government demand for deeply discounted vaccines, tax credits and creative use of longer patent terms for new vaccines. In brief, the best approach would be to reduce the role of government and emphasize the free market in the development and distribution of vaccine.
Unfortunately, the more likely approach will be increased government control, which will mean higher prices and more shortages.