We recently received the following question:
The consensus of health experts is that drug companies won’t do vaccines because it’s unprofitable relative to other health issues, such as cancer. Therefore, the gov’t needs to protect drug companies from lawsuits and agree to buy extra supply in order to assure sufficient vaccine availability. I know little about health care but wonder why making vaccines is unprofitable. The natural suspicion is that prices are being held below market. Do you know anything about this?
The answer: a market distortion, tracing to 1993′s “Vaccines for Children Program,” is to blame. The problem is that government displaced private markets and made market distribution financially unviable–a classic case of perverse results from a program attempting the opposite result. The government even offers a FAQ: “Is there any financial incentive?” The real answer is: not enough to make a difference. But before getting too worked up about the loss of the flu vaccine, see this revisionist view.
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Here is a splendid article by Arthur E. Foulkes on the topic. He shows clearly how FDA officials – in the name of ‘regulation’ – caused heavy & unnecessary losses to the four companies who can still produce these vaccines; one had to withdraw altogether. This of course further deters other companies from trying to enter.The net result is precarious supply.
If not for goverment intervention, vaccine makers would be history for long (and for good!). While mass vaccination causes more harm than good, Goverment excluded vaccine makers from liability. This is the reason for their existence, this is reason for massive advertisement and panic demand for flu vaccine. I wonder what they gonna say in spring, if it turns out that they’ve got wrong virus forecast (vaccine content each year depends on flu forecast from World Health Organization, no responsibility) – just like it happened last year, and happens in about 50% of cases.
Russell Roberts has a nice run-down in his blog about the recent flu vaccine shortage. Not only has the State placed a choke-hold on distribution, but has effectively placed a ceiling on prices. Also, the FDA has tightened its standards on plant conditions for vaccine makers.
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