Junto Boys

WHY FLU VACCINE SHORTAGE?

From the Weekly Standard. . .

In 1967 there were 26 companies making vaccines in the United States. Today there are only four that make any type of vaccine and none making flu vaccine. Wyeth was the last to fall, dropping flu shots after 2002. For recently emerging illnesses such as Lyme disease, there is no commercial vaccine, even though one has been approved by the Food and Drug Administration.

All this is the result of a legal concept called "liability without fault" that emerged from the hothouse atmosphere of the law schools in the 1960s and became the law of the land. Under the old "negligence" regime, you had to prove a product manufacturer had done something wrong in order to hold it liable for damages. Under liability without fault, on the other hand, the manufacturer can be held responsible for harm from its products, whether blameworthy or not. Add to that the jackpot awards that come from pain-and-suffering and punitive damages, and you have a legal climate that no manufacturer wants to risk.

In theory, prices might have been jacked up enough to make vaccine production profitable even with the lawsuit risk, but federal intervention made vaccines a low-margin business. Before 1993, manufacturers sold vaccines to doctors, doctors prescribed them to patients, and there was some markup. Then Congress adopted the Vaccine for Children Act, which made the government a monopsony buyer. The feds now purchase over half of all vaccines at a low fixed price and distribute them to doctors. This has essentially finished off the private market.

SWINE FLU EXAMPLE

WHEN AN UNUSUAL EPIDEMIC occurred at Fort Dix, N.J., in 1976, for example, the federal government decided to vaccinate the whole country against the new "swine flu." To the astonishment of Congress, the insurance companies refused to participate. Senator Ted Kennedy charged "cupidity" and "lack of social obligation." The Congressional Budget Office predicted that with 45 million Americans inoculated, there would be 4,500 injury claims and 90 damage awards, totaling $2 million. Congress decided to provide the insurance.

As Peter Huber recounts in his book Liability, the CBO's first estimate proved uncannily accurate. A total of 4,169 damage claims were filed. However, not 90 but more than 700 suits were successful and the total bill to Congress came to over $100 million, 50 times what the CBO had predicted. The insurance companies knew their business well.

JUNK SCIENCE

Adding to the problem are the predictable panics about vaccines that spread among parents and are abetted by trial lawyers. In 1974, a British researcher published a paper claiming that the vaccine for pertussis (whooping cough) had caused seizures in 36 children, leading to 22 cases of epilepsy or mental retardation. Subsequent studies proved the claim to be false, but in the meantime Japan canceled inoculations, resulting in 113 preventable whooping cough deaths. In the United States, 800 pertussis vaccine lawsuits asking $21 million in damages were filed over the next decade. The cost of a vaccination went from 21 cents to $11.

Every American drug company dropped pertussis vaccine except Lederle Laboratories. In 1980, Lederle lost a liability suit for the paralysis of a three-month-old infant--even though there was almost no evidence implicating the vaccine. Lederle's damages were $1.1 million, more than half its gross revenues from sale of the vaccine for that entire year.

THE RESULTS

All this has made the flu an epidemic waiting to happen. Each year flu viruses circle the globe, moving into Asia in the spring and summer and back to North America in the winter. Surface proteins change along the way so that the previous year's vaccine doesn't work against the following year's variation.

Each year in February, the Centers for Disease Control meets with the vaccine-makers--all two of them--and decides which strain of the virus to anticipate for next year. Then they both make the same vaccine. Last year the committee bet on the Panama strain, but a rogue "Fujian" strain suddenly emerged as a surprise invader. A mini-epidemic resulted and 93 children died, only two of them properly vaccinated.

With several companies competing in the field, as was once the case, somebody would have been more likely to produce a dark horse vaccine. If that rogue strain emerged, the dissenting company would hit the jackpot, and there would be ample supplies of an effective vaccine, at least for those most at risk. In the "planned economy" of the CDC, however, there is no back-up for an unexpected turn of events. This year there isn't even a front line.

The market is greedy and heartless and all the rest, but it somehow saves lives in a way trial lawyers and government regulations do not.