Healthy Skepticism Library item: 1548

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Publication type: news

Agovino T.
Rough flu season highlights economic problems of vaccine industry
Canadian Press 2003 Dec 19

Full text:

It’s no comfort to people scrambling to find a flu vaccine to learn that last year Aventis Pasteur ended up discarding five million extra doses of the 43 million it produced.

This year, the drugmaker again produced 43 million doses – 35 per cent more than were ordered – and it sold out. It isn’t supposed to be this way. The flu vaccine business is supposed to be predictable: Customers place orders so manufacturers know how much to produce and they don’t lose money throwing away unwanted product.

But it seldom is that easy. Over the past few years there have been shortages of several vaccines, either caused by a severe flu season or by a manufacturer ending production.

Every time there is a vaccine shortage, doctors lament how public health is dependent on for-profit companies. That reliance is considered especially problematic for vaccines, since drugs help individuals but vaccines protect the public.

Part of the problem is that low profit margins, complex manufacturing and a challenging regulatory environment have driven vaccine makers from the business.

“There are a whole array of barriers keeping companies from the business,” said Dr. William Schaffner, chairman of the department of preventive medicine at Vanderbilt University Medical Center.

“And there are no simple solutions,” Schaffner added.

Vaccine production is a difficult business because immunizations are made from live viruses or bacteria, which are trickier to work with than the chemicals used to make most drugs. Vaccines have low profit margins and don’t offer repeat business, like drugs.

The risk of litigation also is higher. Unlike drugs, vaccines are given to healthy people. So while a cancer patient may be willing to endure side effects from a drug, the same doesn’t hold true for someone getting a flu vaccine.

In 1986, the U.S. government set up the National Childhood Vaccine Injury Compensation Program, which compensated people for injuries or conditions that might have been caused by vaccines recommended for children. The program was intended to provide an incentive for manufacturers to continue making vaccines. Yet the vaccines for polio, chicken pox and measles/mumps/rubella have only a single manufacturer each, because the government buys 56 per cent of childhood vaccines and caps the prices it pays.

Public health officials worry about what would happen if a company making one of those vaccines quit the business or experienced production mishaps.

Drug company executives say adding more manufacturers, even if intellectual property wasn’t an issue, isn’t a solution.

“We don’t believe we need to create more competition in the vaccine industry. It would just create redundancies in the market,” said Chris Grant, vice president for public policy and government affairs at Aventis Pasteur. “We think we need to have more routine stockpiling of vaccines to guard against any problems.”

Aventis Pasteur spokesman Len Lavenda admited the company makes more money from the flu vaccine than it did a few years ago when there were five manufacturers. Now there are three, and two are new.

Chiron Corp. entered the flu vaccine market earlier this year when it purchased PowderJect Pharmaceuticals PLC, a U.K.-based company that makes 30 vaccines but markets only two in the United States.

“We want to be a fuller player in the United States, but it is expensive and it takes a long time to conduct clinical trials,” said Chiron spokesman Martin Forrest.

The other new entrant is FluMist, a nasal inhalant made by MedImmune Inc. and marketed by Wyeth, which stopped making its own flu vaccine last year.

FluMist’s struggles illustrate why it is so difficult to enter the vaccine industry. MedImmune believed patients and insurers would be willing to ante up $46 US a dose for a vaccine that would let people avoid a pinch in the arm. It was wrong.

Another problem was that the vaccine was recommended only for people five to 49 years old, eliminating two huge sections of the market: small children and senior citizens.

Earlier this year, MedImmune downgraded its outlook for 2003 based largely on sagging FluMist sales. That may change now that there is a shortage, but the company is still offering a $25 US rebate to those who buy the product.