NCPA - Daily Policy Digest - In Search of Vaccines

NATIONAL CENTER FOR POLICY ANALYSIS
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In Search of Vaccines

Why are there nationwide shortages of vaccines for children's diseases -- in a rich country that spends 13 percent of its gross domestic product on health care? Hint: The government cut their prices.

Health care professionals are scrambling to find vaccines for such serious childhood diseases as diphtheria, whooping cough, measles, mumps and chicken pox.

Federal and state governments combined buy more than half of the country's childhood vaccines.

With all that purchasing clout, governments are able to obtain vaccines for diphtheria, tetanus and whooping cough at 60 percent of the market price; 55 percent for vaccines covering measles, mumps and rubella; and as little as 38 percent for some other vaccines.

As a result, the number of vaccine manufacturers has dropped from 37 in the mid-1960s to just four major manufacturers today -- with only two headquartered in the United States.

In the 1970s and 1980s, the open-ended threat of tort suits scared pharmaceutical companies out of vaccine manufacture.

Congress responded in 1986 by setting up a system of no-fault compensation for people injured by childhood vaccines. Then lawmakers put the government more deeply in the market.

Now, in 15 states, the government provides free vaccines to every child -- no matter how wealthy or well-insured the parents are.

With profit margins slim, the few remaining manufacturers maintain just enough production capability and inventory to meet demand -- if all goes well. But in a process as complex as manufacturing vaccines, it rarely does -- thus, shortages.

Source: Ira Carnahan, "Duh!" Forbes, March 18, 2002.

For text
http://www.forbes.com/forbes/2002/0318/050.html

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