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....makers.
* It is not the case that American manufacturers stopped producing flu vaccine when liability lawsuits made that market financially untenable for them, and UK and Canadian manufacturers (supposedly not subject to American liability laws) then picked up the business. There are currently only two flu vaccine manufacturers, Chiron and Aventis Pasteur, and neither of them is a UK or Canadian company. (Chiron is based in the U.S., and Aventis Pasteur is French.) Moreover, most American pharmaceutical companies got out of the flu vaccine market because a variety of factors (not related to lawsuits) made it an unattractive line of business:
o Flu viruses mutate easily, so new flu vaccine formulas have to be made up every year.
o Because a different flu vaccine is used each season, unsold doses cannot be saved and end up being destroyed (along with any potential profits).
o The production of flu vaccine (and the requirement of meeting Food and Drug Administration standards) is a labor-intensive process. Flu vaccine is made by injecting virus into fertilized chicken eggs — each egg must be hand-inspected and hand-injected and produces only 4 or 5 doses of vaccine.
o Because flu vaccine is a commodity (i.e., the same product can be made by many different companies) and much of the available supply is bought up in large orders by the government, the market price of vaccine — and the profit to be made from selling it — has been quite low. As the Weekly Standard noted:
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.
(The global market for vaccine is about $6 billion a year, while the global market for drugs is about $340 billion a year. Which of these two markets a pharmaceutical company should concentrate on is a no-brainer.)
o Sometime within the next several years, the flu vaccine industry will switch to growing vaccine in cell cultures rather than eggs, a much easier and cheaper process. No new entrant to the flu vaccine market is going to spend several years and millions of dollars investing in a process that will soon become obsolete.
A recent article in the Washington Post chronicled the travails of Wyeth, one of many companies that has abandoned the flu vaccine market in the last few years:
For two decades, Wyeth made injectable influenza vaccine at a plant in Marietta, Pa. For the winter of 2002-03, it made 21 million doses in a labor-intensive, time-crunched process and shipped them to clinics and doctors' offices early in the fall.
But it turned out a lot fewer people wanted it. Flu vaccine can't be saved from year to year. So, sometime the next spring Wyeth threw away 7 million unsold doses, for a loss of $30 million. It then quit making flu shots. It eventually closed the Marietta plant, which once employed 800 people.
But Wyeth wasn't out of the flu vaccine business — yet.
It was a partner with the Maryland biotech company, MedImmune, in making what they considered the flu shot of the future — a "live" virus vaccine squirted up the nose. They made 5 million doses of FluMist for last winter, the product's inaugural season. But FluMist never found its market. Only 450,000 doses were sold; the rest were thrown away.
Over three seasons, Wyeth lost $50 million from unsold flu vaccine. It was also facing millions of dollars in required improvements to keep its plant up to standards required by the Food and Drug Administration.
Last April, Wyeth pulled out. It was done with flu vaccine.
Wyeth's decisions go a long way toward explaining why the United States — the world's richest market for medical products — finds itself with only half the amount of vaccine it needs to protect its population against a disease that may contribute to more than 50,000 deaths this year.
The company's exit 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."
Litigation against vaccine manufacturers (not over flu vaccine specificially, but vaccines in general, particularly those that used thimerosal as a preservative) did create some shortages prior to the mid-1980s, but the passage of the National Childhood Vaccine Injury Act of 1986 eliminated most of those lawsuits through the creation of the Vaccine Injury Compensation Program (VICP), a no-fault compensation alternative to suing vaccine manufacturers and providers for people injured or killed by vaccines.
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