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Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (38)	1/10/2005 9:51:58 PM
From: Lazarus_Long	Respond to of 42652

Free The Vaccine Market Ira Carnahan, 12.22.04, 10:40 AM ET WASHINGTON, D.C. - The United States has suffered so many vaccine shortages in recent years that it almost comes as a bigger surprise when there's not a shortage than when there is. In just the past three years, the country has experienced shortages of vaccines for tetanus, diphtheria, whooping cough, measles, mumps, chicken pox and, of course, influenza. To recap: The current flu vaccine shortage began when British health authorities suspended the manufacturing license of a vaccine factory owned by Chiron (nasdaq: CHIR - news - people ), a U.S. biotech firm. That might not have been a great problem, except that Chiron is one of only two major manufacturers of flu vaccine for the U.S. The other major manufacturer, Aventis (nyse: AVE - news - people ), and a much smaller producer, MedImmune (nasdaq: MEDI - news - people )--maker of FluMist--have been able to replace only a fraction of Chiron's lost production. Sharply limited manufacturing capacity is by no means unique to the flu vaccine, point out the American Enterprise Institute's John Calfee and Dr. Scott Gottlieb in a new study. And this is a problem that's been worsening for decades. "From 1967 to 1984," Calfee and Gottlieb write, "the number of U.S. vaccine manufacturers fell from 37 to 15, while the number of licensed vaccines declined from 380 to 88. Twenty years later, we are down to three large manufacturers in the United States and only a few dozen vaccine products." What is going on? Calfee and Gottlieb offer a succinct analysis, identifying misguided federal policy as the heart of the problem. "Most of the vaccine industry long ago ceased to behave as a competitive industry focused on creating better products and being able to earn profits through that innovation," they write. "In many cases, vaccine makers are constrained to producing largely the same vaccines according to government specs, using manufacturing processes that have been held in place for years by regulations, and selling their finished product mostly for a single government price." Does this sound like an industry a sensible company would want to enter when other, more profitable opportunities in freer markets beckon? To make the vaccine business more attractive, Calfee and Gottlieb propose a four-step program for reform. Step one: Reform the new vaccine regulatory process, which now imposes great costs and uncertainty. Step two: Extend federal liability preemption to all vaccine products approved by the U.S. Food and Drug Administration, meaning vaccine makers would have greater protection from lawsuits, compared to makers of other pharmaceuticals. Step three: Rather than have the government buy vaccines outright, as it does now, subsidize low-income people who get vaccinated. Step four: Encourage manufacturers to offer new vaccines that differ from those offered by their competitors. "Public health agencies and regulators have had a bias against differentiation in this market," observe Calfee and Gottlieb, who also is editor of the Forbes/Gottlieb Medical Technology Investor newsletter. "Instead, they need to encourage it. Without the ability to produce better proprietary vaccines with qualities that can appeal to consumers, such as longer protection windows, easier administration, greater efficacy or improved safety, vaccine manufacturers are unable to earn premium pricing that contributes to the profit margins that attract new capital and greater R&D." forbes.com