Flu Vaccine

Off Topic Politics and World Issues
1

Pretty good post by anti-Bush blogger Kevin Drum on the possible reasons for the vaccine shortage - I have to say I agree with him on the FDA. I’ve argued for a long time the FDA is too strict – you can basically have two types of errors: letting a bad (as in unsafe or as in it doesn’t work) drug in, or keeping a good drug out. Both have costs – our system is biased very far toward preventing the first type, which ends up magnifying the second type in various ways:

http://www.washingtonmonthly.com/archives/individual/2004_10/004936.php

THE GREAT FLU VACCINE SHORTAGE…As everyone knows by now, the proximate cause of the flu vaccine shortage was contamination at a plant in England owned by Chiron, one of only two companies that manufacture flu vaccine for the U.S. market (the other is Aventis Pasteur). But why are there only two manufacturers of flu vaccine in the first place? After reading a slew of articles, here’s a rundown of all the explanations on offer:

  For starters, it's a pretty small market. The total vaccine market (for all vaccines, that is) is about $6 billion out of a market of $340 billion for drugs of all kinds.

  The flu vaccine business is risky: some years you sell out, but other years you make 50 million doses and only sell 20 million. That makes it fairly unattractive, especially since....

  It's a commodity market, so profit margins are thin to begin with.

  What's more, the biggest buyer is the government, which buys in bulk at a very low price. So profit margins are even thinner than they might be.

  FDA regulations have gotten tighter over the years, and vaccine makers have had an increasingly hard time meeting them because it requires expensive plant upgrades.

  But nobody wants to invest a lot of money to upgrade their flu vaccine plants because there's new technology coming down the road in a few years that will render the current manufacturing technique (which uses chicken eggs) obsolete.

  Finally, huge awards in liability lawsuits have scared vaccine makers out of the market. About 50-70% of the cost of most vaccines is taken up by the cost of liability insurance.

I got all this from reading about half a dozen different stories purporting to tell the story of the flu vaccine shortage. But something important was missing from all of them: with two exceptions, all of these explanations apply to every country in the world ? but the United States is the only one with a problem. So most of them don’t actually explain anything.

That leaves the two exceptions, and only one of them seems to hold water. Explanation #7, liability costs, is certainly something that could be unique to the United States, but liability costs wouldn’t drive companies out of the flu vaccine market unless liability insurance were unavailable, and this must not be the case since both Chiron and Aventis presumably have liability insurance. It might be expensive, and therefore drive prices up, but it wouldn’t force companies out of the market. (It would ? potentially ? be a big problem if the price of the vaccine were capped, but while that’s the case for some vaccines, flu vaccine is not price capped.)

That leaves explanation #5, and at first glance it seems the most likely to be the real deal. The FDA has a famously tight regulatory regime, made even tighter in the late 90s, and as a result the United States has only two approved manufacturers of flu vaccine while Britain has half a dozen. (Although, ironically, it’s worth noting that a breakdown of the regulatory regime seems to be a more likely explanation for Chiron’s immediate problem.) The bottom line is that there are other flu vaccine manufacturers besides Chiron and Aventis, but they don’t sell into the U.S. market because the cost of complying with FDA regulations is higher than the narrow profits they could expect to make from selling flu vaccine.

Anyway, that’s my best guess, although it’s practically impossible to be sure since not a single article I read even attempted to make an international comparison even though it’s the most obvious question to ask. If anybody can point me toward a more authoritative report that explains what makes the U.S. market so much different from every other country’s, leave a link in comments.

Here’s another explainer blaming the FDA’s regulatory regime for the flu vaccine shortage:

http://cafehayek.typepad.com/hayek/2004/10/the_cause_of_th.html

2

BB:

Interesting Blog!

I think that you have a “triple-whammy” that would be a killer for any buisness venture:

  1. Over-regulation

  2. Low Margins

  3. High Litigation Cost

As I was thinking about this blog, I actually thought about the Auto and Pharmaceutical Industries, and how that IF just one of these variables could be overly favorable, USUALLY an investment can remain viable. Examples:

The Pharmaceutical Industry is over-regulated (in the ways you pointed out), has high litigation cost BUT their margins on Drugs are almost obscene…so they continue on BUT ONLY WITH SELECT DRUGS! (Which is why they don’t produce and export drugs that could control many diseases seen in third-world Countries).

The Auto Industry is regulated (but not overly so); it also has high litigation cost; it is EXTREMELY profitable per unit sold.

So both continue on…

Vaccines are a complex issue. If not for the government stepping in a few years ago, ALL companies were going to stop making them, as the Liability rose to ridiculous levels…and to the anti-vaccine people? You DO not want polio, tetanus, diphtheria, purtussis, measles and chicken pox becoming the killers and lamers they once were in the U.S. and STILL are in some places in the world.

Mufasa

3

By the way…

Does anyone agree or disagree about the Auto industry NOT being over-regulated?

Just curious…

Mufasa

4

Mufasa:

W/r/t “obscene margins” by the pharmaceutical companies on drugs, don’t forget that you are only seeing the manufacturing costs compared with the price of the drug – at most you might see the development cost of that particular drug included in the calculation.

However, the pharmaceutical companies also have to pay for the development of all the compounds that failed to become successful drugs. This covers everything from the R&D cost of patenting molecules to the huge expenses involved with navigating FDA regulatory requirements to bring drugs to market. The further a drug gets along the process before it fails, the more expensive the failure is – and then there’s the marketplace risk of producing a drug people don’t really want or need (or not enough people want or need). Basically, the pharmaceutical companies pay for countless expensive failures with a few “home run” successes.

Really, their model for success is a lot like that of a venture capitalist investing in seed-stage companies – 19/20 will fail, and they need to produce a return for their investors from that huge home run that is the 20th.

The fact that the U.S. doesn’t step in and control the pricing of the home run drugs is the reason we have so much R&D here, and why our drug companies lead the world in coming up with new medicines.

Now, of course, this is wholely separate from whether U.S. customers should subsidize drugs for the rest of the world, which is basically what is happening now…

Now, back to your point – I think that with vaccines (and medicines that are off patent), it comes down to fixed costs of doing business in the U.S. market. As pointed out above, regulatory costs of operating in the U.S. drug market are huge – any medicine not on patent is a commodity (low-margin). Demand fluctuates, and governments are the main buyers.

There are a few things we could do in the long run to help out. 1) Cap liability costs for negligence; 2) Get the government out of the market for buying the products, except for the most at-risk populations; 3) Loosen up the FDA standards, at least with respect to demanding improvements in areas with no demostrated problems.

Actually, you can see what would happen (and what has happened in a lot of countries) when the government steps in as the purchaser of health care in general through the microcosm of the vaccine example. Shortages happen and quality suffers, but people generally have access to the available supply (as long as it lasts).

5

[quote]Mufasa wrote:
By the way…

Does anyone agree or disagree about the Auto industry NOT being over-regulated?

Just curious…

Mufasa[/quote]

BTW, I do think the automobile industry is over-regulated (at least in certain areas).

6

BB:

As always, great insights!

With all that the Pharm Companies spend on marketing and advertising, it seems like they could (should?) do a better job on their image!

Yep…they DO spend a LOT on R&D…they DO have a lot of misses…and they have come up with amazing innovations…but their “image” is one of greed…

They need to work on that…

Great post, BB!

Mufasa

7

Just so everyone understands what all the fuss is about, the Flu kills over 40,000 Amercans each year:

Flu kills thousands more in USA than thought

"About 47,000 Americans, thousands more than previously thought, die each year from flu and another common respiratory virus called RSV, a study shows.

As the elderly population increases, the death toll from these two illnesses could soar, experts fear. "

http://www.usatoday.com/news/health/2003-01-07-flu-usat_x.htm?POE=click-refer

8

So does cancer. So do car accidents. That doesn’t make flu vaccines a matter of Presidential concern.

However, running a campaign to scare old people is a good way to get some high-level attention during an election year…

9

[quote]BostonBarrister wrote:
So does cancer. So do car accidents. That doesn’t make flu vaccines a matter of Presidential concern.

However, running a campaign to scare old people is a good way to get some high-level attention during an election year…[/quote]

I agree with your whole statement, but it’s not like Bush hasn’t been using scare tactics also.

10

There are no vaccines against cancer or car accidents.

One of the roles of the president is to protect the public. How can we expect Bush to protect us against biological warfare if he can’t even protect us from the FLU?

The most pathetic part of this story is that it is the elderly who will suffer because of Bush’s inaction (Team Bush were warned of the risk of upcoming vaccine shortages years ago).

11

[quote]Lumpy wrote:
There are no vaccines against cancer or car accidents.

One of the roles of the president is to protect the public. How can we expect Bush to protect us against biological warfare if he can’t even protect us from the FLU?

The most pathetic part of this story is that it is the elderly who will suffer because of Bush’s inaction (Team Bush were warned of the risk of upcoming vaccine shortages years ago).[/quote]

No, Lumpy, there’s not a vaccine for car accidents. However, I suppose that since the President is supposed to protect us from everything in your explanation above, he should have a solid plan for improving airbag technology and enforcing seatbelt wearing. Likewise, the President should come up with a strategy to stop smoking and cut down on obesity, which leads to preventable heart disease.

The President is Commander in Chief – he is in charge of efforts to protect the U.S. against foreign powers and terrorists. Bioterrorism would be something under this rubric. The flu is not. The President is not in charge of procuring vaccines for the flu.

You see, we have this wonderful document called the Constitution – perhaps you’ve heard of it? It lays out the President’s powers generally, and we have a history of how Presidents have used particular powers.

Under which of the President’s enumerated powers do you find: “provide flu vaccines”? Where exactly do you fit that into the Commander in Chief power? Or perhaps you find it in the Appointment Power? The Veto Power?

As I said in another thread, this whole thing reminds me of the single most assinine comment I have ever heard – it was in the form of a question posed to Bill Clinton in one of his Presidential campaigns by some milksop, and the gist of it was “Think of all of us as your children – what would you do to help your children?”

BTW, your comment about being warned of an influenza vaccine shortage for this year “years ago” only highlights your ignorance of both the specific problem (this year’s vaccine shortage) and the process by which we generally obtain vaccines.

To the extent you are only misremembering that the possibility of a flu vaccine shortage was brought up earlier this year, I refer you to this little fact-check gem from the New York Times:

Flu Vaccine

Over the weekend, Mr. Kerry began ridiculing Mr. Bush about the vaccine shortage, and his campaign began a television spot calling the problem “a George Bush mess.” Yesterday, Mr. Kerry offered his plan, including a government promise to buy excess serum from manufacturers and create a stockpile.

Mr. Kerry is correct about warnings of a shortage over the last year. But like Mr. Bush, he never raised the issue until it erupted. Mr. Bush said in the debate last week that the ultimate cause of the shortage was manufacturers’ fears of lawsuits.

Experts said that was not a main reason to halt production, because a law already offers government protection against such liability.

Mr. Kerry’s camp spread the word yesterday that the National Vaccine Advisory Committee of the Health and Human Services Department had reported the litigation threat was not a cause of the shortage.

That report was dated January 2003. It said, “Current vaccine shortages do not appear to be liability related.” Two sentences before that, it said, “Today, litigation again threatens stability of the vaccine program in the form of class-action lawsuits.”

12

If I can step in without stepping on any right vs left political landmines, there is another effect of the FDA/drug company situation.

Only drugs that are patentable will be researched. This leaves a lot of cheap and safe supplement based, those based on natural occuring food products, totally ignored. There is no incentive to look into them.

Worse, the FDA and the drug companies consider them a threat. They are waging a war against supplements and cheaply available alternatives to drugs. If a cheap and natural supplement is available, who the hell wants a “drug”?

While drugs have benefits and are important, they aren’t even in the same ballpack as natural and preventative supplements. At the very least, people should be able to research these issues and make their own informed decisions about them if they wish.

So, avoiding the right versus left landmines, I am willing to jump into a different political minefield. The profit motive isn’t “everything”. Yes, the profit motive gives you a very efficient economy, but it doesn’t do a good job of protecting issues that can’t be measured in simple dollars.

Where do ethics come into the picture? If ethics cost you profits, should they be dumped? Where does health come into the picture? If you make toxic products that kill your workers or customers, should they be dumped? Where does the environment come into the picture?

I am by no means a tree hugger, but you do have to balance a lot of issues with the policies put into place. So, to come back to the thread topic, is the FDA part of the problem with respect to restricting foreign competition to American drug companies? Maybe. Does it have to protect American citizens? Yes. Is there a balance to be found? Yes.

Do the drug companies and the FDA work together to promote policies that profit American companies? Yes, it is in their mandate. Do they sometimes get the balance wrong? Yes. At some point folks, you’ll want to think about ways to encourage free enterprise and to also manage other issues effectively as well.

I’m not offering any solutions, but you can’t just assume all programs put out there for some reason other than pure profit motive are socialistic. Profits aren’t the only thing we entrust the government to protect for us. Is it? Sure it’s good to offer financial incentive to drug companies to research solutions, but it would be good to find a way that doesn’t penalize other alternatives other.

13

[quote]BostonBarrister wrote:
No, Lumpy, there’s not a vaccine for car accidents. However, I suppose that since the President is supposed to protect us from everything in your explanation above, he should have a solid plan for improving airbag technology and enforcing seatbelt wearing. Likewise, the President should come up with a strategy to stop smoking and cut down on obesity, which leads to preventable heart disease. [/quote]

Actually, YES. It would be great to have a president who could actually LEAD on issues like smoking and obesity.

[quote]The President is Commander in Chief – he is in charge of efforts to protect the U.S. against foreign powers and terrorists. Bioterrorism would be something under this rubric. The flu is not. The President is not in charge of procuring vaccines for the flu.

You see, we have this wonderful document called the Constitution – perhaps you’ve heard of it? It lays out the President’s powers generally, and we have a history of how Presidents have used particular powers.

Under which of the President’s enumerated powers do you find: “provide flu vaccines”? Where exactly do you fit that into the Commander in Chief power? Or perhaps you find it in the Appointment Power? The Veto Power?[/quote]

DUH? When I referred to TEAM BUSH in my post, that may have been a hint. The head of the FDA is a Bush apointee. Bush apoints incompetents.

When YOU say that Bill Clinton had a chance to ‘get’ Bin Laden, did you mean that you expected to see Bill Clinton tackle Osama Bin Laden and then personally shoot him?

DUH?

If the shoe fits, kick yourself with it.

I guess I had it wrong, Bush had warnings of a Flu vaccine shortage beginning in January 2003.

Is the Flu vaccine shortage a major election issue? No, but it’s part of an ongoing trend of incompetence at the White House.

14

[quote]Lumpy wrote:

Actually, YES. It would be great to have a president who could actually LEAD on issues like smoking and obesity. [/quote]

No, Lumpy, it wouldn’t. The President has a certain job, and it doesn’t involve getting into the minutua of our daily lives. Once again, take a look at the Constitution for a clue.

Not to mention that having a President involved in micromanaging such little issues would involve taking his attention away from the job he is supposed to be doing. Micromanaging even all the things under the executive branch is a horrible idea – see the entire Carter presidency as an example.

It is patently obvious to me that you have no idea what a Chief Executive does – to you, the Chief Executive is just someone to blame for whatever is associated with the overall organization – in this case, the country.

[quote] DUH? When I referred to TEAM BUSH in my post, that may have been a hint. The head of the FDA is a Bush apointee. Bush apoints incompetents.

When YOU say that Bill Clinton had a chance to ‘get’ Bin Laden, did you mean that you expected to see Bill Clinton tackle Osama Bin Laden and then personally shoot him?

DUH? [/quote]

Hmmm. I don’t believe the FDA is tasked with procuring vaccines either. The FDA’s job is to make sure drugs that come to the U.S. market are safe and effective, and to establish market procedures and regulations. The Center for Disease Control and Prevention (CDC) is in charge of overseeing the safety of vaccines.

The CDC is an expert agency – it is set up so that experts in the field can craft policy. This sort of idea goes back to the Progressive Era, and the idea is that politicians would NOT stick their noses in and craft policy – they would leave it to the experts.

You are so ignorant on this topic I can’t believe I’m even arguing this with you.

Do you even know whether the government generally procures flu vaccines or whether it’s insurance companies? Whether, if it is the government, it’s state or federal?

I’m going to go out on a limb, based on the large body of knowledge you have demonstrated, and say “No.”

Yet you’re certain it’s a failure of the Bush Administration somehow that Chiron muffed its production of this year’s order of influenza vaccine? That the vaccine samples ordered through it were contaminated and declared unsafe by the FDA?

Here’s some info for you, directly from the testimony to the Senate Special Committee on Aging of Janet Heinrich, the Director of Health Care - Public Health Issues on September 28, 2004:

"Producing influenza vaccine is a complex process that involves growing viruses in millions of fertilized chicken eggs. This process, which requires several steps, generally takes at least 6-8 months from January through August of each year, so vaccine manufacturers must predict demand and decide on the number of doses to produce well before the flu season. Each year’s vaccine is made up of three different strains of influenza viruses, and, typically, each year one or two of the strains is changed to better protect against the strains that are likely to be circulating during the coming flu season. The Food and Drug Administration decide which strains to include based on CDC surveillence data, and the FDA also licenses and regulates the manufacturers who produce the vaccines.

In a typical year, manufacturers make vaccines available before the optimal fall season for administering flu vaccines. Currently two manufacturers – One in the U.S. and one in the U.K. – produce 95% of the vaccine used in the U.S. …

Currently, flu vaccine production and distribution are largely private sector responsibilities. Like other pharmaceutical products, flu vaccines are sold to thousands of purchasers by manufacturers, numerous medical supply distributors and other resellers such as pharmacies. THese purchasers provide vaccinations at physicians’ offices, public health clinics, nursing homes, and less traditional locations such as workplaces and various retail outlets. Most influenza vaccine distribution and administration are accomplished by the private sector, with relatively small amounts of vaccine purchased and distributed by the CDC or by state and local health departments."

I’m not surprised at your strident ignorance though – this basically encapsulates most of what I see from you: Take a big, complicated issue you don’t understand but you know something went wrong with, and without any idea about causation blame “Team Bush.” You’d be a favorite juror for a plaintiff’s lawyer…

When you are completely ignornant on a subject, you really shouldn’t have such a strident opinion…

[quote]
As I said in another thread, this whole thing reminds me of the single most assinine comment I have ever heard

If the shoe fits, kick yourself with it.[/quote]

I was talking about the issue generally, and you proved it by kicking yourself right in the ass with your ignorance.

[quote]
I guess I had it wrong, Bush had warnings of a Flu vaccine shortage beginning in January 2003. [/quote]

No, the report from January 2003 was assessing the relationship of lawsuits with possible shortages. They make vaccine on a yearly basis - however, the article wasn’t clearly written on that point. There had been warnings of the shortage earlier this year.

More like an example of political demagoguery combined with ignorance in a certain segment of the electorate.

15

BB,

You are being deliberately obtuse.

Certainly, if he chose to do so, the president could decide that there was some type of health crisis. Having done so it would be perfectly within his purvey to create policy initiatives to deal with the problem.

Policy initiatives are created based on the leadership of the president and/or the administration all the time. Should we go to mars? Should we protect the environment? Should we protect consumers via a body known as the FDA? Should farmers be paid not to grow food? Should the airlines have tightened regulations? Should research money be used for stem cell research?

At the same time, yes, you do have a point, obviously the president is not involved in every decision at every level at all times. However, the president does appoint people, for whom he can take credit or blame when they are effective or ineffective.

If his appointees are not effective or have been instructed to follow policies that are not appropriate then he certainly can be criticized for it. If you like, ask Lumpy to clarify why he feels that the president should be held accountable for the situation described. I’m honestly not sure the link is there for this particular issue.

However, where a valid link can be drawn, it isn’t fair to hide under the blanket issue of micromanagement. The Bush administration is always trying to hide under this blanket and you are always trying to tuck them in.

[…edited to refer to the right person…]

16

[quote]BostonBarrister wrote:
No, Lumpy, it wouldn’t. The President has a certain job, and it doesn’t involve getting into the minutua of our daily lives. Once again, take a look at the Constitution for a clue.
[/quote]

Remember the President’s Council on Physical Fitness?

Was that part of the Presidential duties as spelled out in the Constitution?

17

[quote]Lumpy wrote:
BostonBarrister wrote:
No, Lumpy, it wouldn’t. The President has a certain job, and it doesn’t involve getting into the minutua of our daily lives. Once again, take a look at the Constitution for a clue.

Remember the President’s Council on Physical Fitness?

Was that part of the Presidential duties as spelled out in the Constitution?

[/quote]

I do remember that. That is not a duty or a responsibility – more of a PR program than anything.

Especially now, I think the President should be focusing on that which he needs to do, rather than trying to pander to each and every constituency. While it might be nice to promise everyone “I have a plan” for every little concern, this is neither effective governance nor proper focus of the chief executive.

18

[quote]vroom wrote:
BB,

You are being deliberately obtuse.

Certainly, if he chose to do so, the president could decide that there was some type of health crisis. Having done so it would be perfectly within his purvey to create policy initiatives to deal with the problem. [/quote]

What the President could possibly do, and what he is responsible to do, are two totally different thing.

If there really were an influenza pandemic, I think it would be fair that something of that size would get Presidential attention.

However, this is not something of that size. This is a normal flu season, with a manufacturing glitch with one flu manufacturer. This is not a health crisis.

[quote]

Policy initiatives are created based on the leadership of the president and/or the administration all the time. Should we go to mars? Should we protect the environment? Should we protect consumers via a body known as the FDA? Should farmers be paid not to grow food? Should the airlines have tightened regulations? Should research money be used for stem cell research? [/quote]

Exactly – the President sets broad policy goals, and then specific agencies take over. Would you blame the President if a mission to Mars failed, or would you look to the rocket scientists at NASA?

[quote] At the same time, yes, you do have a point, obviously the president is not involved in every decision at every level at all times. However, the president does appoint people, for whom he can take credit or blame when they are effective or ineffective.

If his appointees are not effective or have been instructed to follow policies that are not appropriate then he certainly can be criticized for it. If you like, ask Lumpy to clarify why he feels that the president should be held accountable for the situation described. I’m honestly not sure the link is there for this particular issue.

However, where a valid link can be drawn, it isn’t fair to hide under the blanket issue of micromanagement. The Bush administration is always trying to hide under this blanket and you are always trying to tuck them in.

[…edited to refer to the right person…][/quote]

vroom, this is the entire point. Generally, a lot of people around here try to blame the President for decisions that are made far down the food chain. In this case, not only is it far down the food chain, but it’s not an area that one would expect or want the President making specific decisions – its the province of experts, much like rocket science.

Blaming the President because you don’t like a particular battle plan or military strategy would not be correct. Blaming him for leaving a military commander in place after demonstrated incompetence would be fair. Blaming him because you don’t like the theory of preemption would be fair.

Just because you don’t like Bush doesn’t mean he should shoulder the blame for everything that goes wrong in every area remotely connected to the executive branch.

If you think Rumsfeld is a failure and you want to blame Bush, or you think Rice is a failure and you want to blame Bush, that’s fine – I might argue about the “failure” part, but it would be fair game.

However, arguing that Bush is repsonsible for some guards humiliating prisoners in an Iraqi jail is not fair game – I picked that since it is one of your favorites.

A lot of the Bush haters on this site want to blame the President for things that the Chief Executive is not responsible for, and for which one could make only the faintest logical link presuming all many necessary assumptions they make are correct. YOu fall into that category quite often, but not as often as does Lumpy.

19

I work in public health and in my opinion the flu vaccine shortage is really just a fluke. Not much other than the government taking over and making vaccine could have prevented this. While this is a big problem, if everyone does what the CDC says (which is what Bush said in the debate) there should be enough for neccessary populations (young, elderly, immune system depressed).

Also in case this is the year of pandemic flu (flu which will kill millions of people around the world), the lack of vaccine wouldn’t make much of a difference because this would be a immune resistant (as well as vaccine resistant) strain.

On the subject of bioterrorism. There has been boatloads of money given to the public health system to deal with this. I can only speak on Michigan but we are doing as much as we can to deal with this possilbe situation. We have plans to deal with smallpox, anthrax, and many other agents. The best thing about our bioterrorism emergency preparedness is that it is also helping the public health system of the United States become prepared to deal with other public health emergencies (such as pandemic flu).

While you can credit Bush for this funding you must remember that public health in this country has been consistantly underfunded with constant unfunded mandates (you have to do this but we will not give you a means to do this) and this money has really just helped us get to where we should have been.

End of rant, the Red Sox just won.