Vaccine

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Why are there so few vaccine suppliers?

February 7, 2012 in Contagious Disease, Pharmaceuticals, Regulation, Supply of Medical Services, Vaccinations | No comments

In many cases, only a handful of suppliers produce vaccines for a given disease.  In fact, for several vaccine types the U.S. has fewer suppliers than countries with a smaller market and a higher level of government purchase.

One reason for this finding could be strict government regulation.  All vaccines must be approved by the FDA.  Further, the CDC provides guidelines to physicians regarding who should get which vaccines.  The CDC also is a large purchaser of vaccines.  Thus, at first glance, it seems that government regulation may be causing industry consolidation in the vaccine market.

A paper by Danzon and Pereira, however, finds this not to be the case.  They find that the likelihood a supplier exits from a particular vaccine market is not effected by whether the CDC is a purchaser of the vaccine, the amount of vaccine the CDC purchases, or the CDC price at the time the firm exits.

The authors propose that the large economies of scale in vaccine production are the cause of the lack of competition in the vaccine market.

“The vaccine industry is characterized by large fixed costs of initial vaccine development as well as substantial ‘semifixed’ costs of producing an individual batch (a process that may take 6 to 18 months) but low marginal costs of producing an additional dose, up to the batch limit, and low storability. If there are multiple competing suppliers with large sunk costs and low marginal costs, competition may drive the price low enough that it is relatively unattractive for multiple firms to remain in the market and for new firms to enter.”

Further, the demand for vaccines is price sensitive.  Insurers (public and private) typically pay physicians and hospitals a fixed payment per vaccine administered.  Increases in vaccine costs come directly from the provider’s bottom line.

Some observers may point to the 2004-2005 influenza vaccine shortage and claim that government regulation had to cause this shortage.  The authors note that although several suppliers did exit the market before the shortage years, “…this cannot be blamed on government purchase and price controls, as less than 20 percent of the flu vaccine is publicly purchased.”

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Why did the people of Nigeria reject the polio vaccine?

January 12, 2010 in Health Care in Developing Nations, Vaccinations | 1 comment

From a letter in Health Affairs:

In 1996 Pfizer came to Kano to administer a test of the drug Trovan for a meningitis outbreak. One hundred children were given Trovan, and another hundred were given chloramphenicol, a drug approved by the World Health Organization (WHO).  Of the 200 children, eleven died due to Trovan and low dosages of chloramphenicol, and many others suffered injuries (paralysis, deafness, blindness, brain damage, liver damage, and joint disease) from Trovan. The U.S. Food
and Drug Administration (FDA) approved Trovan for adults in 1997 but severely restricted its use in 1999. Europe banned it outright.

In 2000 a Nigerian report exposed the negative outcomes from this drug trial; in Kano there were street demonstrations and demands for reform. Thirty families sued Pfizer in 2001, and in 2007 the Nigerian and Kano State governments also sued for damages. In February 2009 there was an out-of-court settlement
for a reported $45 million.

This incidentwas on everyone’s mind when WHO personnel showed up in Kano with an American-made vaccine for polio eradication…There was a political dimension to this problem, but people were wary of any medicine from the United States.  When Muslim religious leaders stated that the vaccine would sterilize young girls—a terrible outcome like that of Trovan—the program was “boycotted.”

  • Alan Frishman, Hobart and Wm. Smith Colleges, Geneva, New York

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Brain Tumor vaccine

June 1, 2008 in Vaccinations | Permalink

Have scientists found a vaccine for brain tumors? Scientists have found that the cytomegalovirus is present in the 90% of glioblastoma brain tumors.  The Economist reports on two doctors who are attempting to create a vaccine for the cytomegalovirus which (hopefully) can greatly reduce the incidence of brain tumors around the world.

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