NCPA - National Center for Policy Analysis

Federal Policies Have Decimated the Vaccine Industry

December 17, 2003

If Democrats (and some Republicans) get their way, the flu vaccine shortages will soon spread to medicines for other diseases, says Robert Goldberg, director of the Manhattan Institute's Center for Medical Progress.

That's because Democrats want to apply the policies that produced the shortages -- federal bulk purchase and distribution of old vaccines at government-controlled prices, combined with a refusal to pay for new technology in the name of cost containment -- to every drug used for every disease, no matter how fatal.

The current mismatch of immediate demand and available supply can be blamed on the federal Vaccines For Children Program -- Hillary Clinton's dry run for national health care:

  • The vaccine program buys up nearly 70 percent of all childhood vaccines at government-set prices and then distributes them to states according to a federally set formula.
  • The result is vaccines have gone to where the outbreaks aren't, and price controls have discouraged vaccine makers from producing more than what the government orders.
  • The program has blocked the purchase of more than 4 million doses of an easy to administer vaccination through the private sector.

The risks and costs of developing new medicines are hard to predict, and the pace of future innovation depends on how the free market values a product and not what a single government purchaser wants to pay in order to save money, explains Goldberg. That's why the federally price-controlled bulk purchase of vaccines has decimated the vaccine industry. Vaccine prices have remained stagnant since 1994, while new regulations and lawsuits have driven up the cost of producing old vaccines and developing new ones.

Source: Robert Goldberg, "Vaccinating against disaster," Washington Times, December 17, 2003.


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