Why Pharmaceutical Companies Abandon Vaccines

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Why Are Pharmaceutical Companies Gradually Abandoning Vaccines?

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Why Are Pharmaceutical Companies Gradually Abandoning Vaccines?

A. Offit

Health Aff. 2005; 24 (3): 622-630. ©2005 Project HOPE

Abstract and Introduction

Abstract

During the past fifty years, the number of pharmaceutical companies

making vaccines has decreased dramatically, and those that still make

vaccines have reduced resources to make new ones. Pharmaceutical

companies are gradually abandoning vaccines because the research,

development, testing, and manufacture of vaccines are expensive and

because the market to sell vaccines is much smaller than the market

for other drug products. Congressional action could assure both a

steady supply of existing vaccines and the promise of vaccines for

the future.

Introduction

Pharmaceutical companies are businesses, not public health agencies;

they are not obligated to make vaccines. Events during the past fifty

years have made the manufacture of vaccines more expensive and their

sale less profitable. What follows here are case studies of two

important vaccines, one for polio and the other for influenza, and

the factors that either encouraged or discouraged their production.

Polio Vaccine, 1955

In mid-1953, the National Foundation for Infantile Paralysis (the

March of Dimes) was ready to test Jonas Salk's polio vaccine. Made by

treating live polio virus with formaldehyde, the Salk vaccine was

initially tested in 161childreninand around Pittsburgh.[1] When it

was time to determine whether Salk's vaccine worked in a field trial

involving hundreds of thousands of children, Basil O'Connor, the

foundation's director, turned to the two largest vaccine makers in

the United States: Eli Lilly of Indianapolis and Parke of

Detroit.[2] O'Connor realized that only pharmaceutical companies had

the expertise, facilities, experience, and skill required to make

that much vaccine. After the field trial proved successful-and the

polio vaccine was ready to be sold to the public-three more

pharmaceutical companies entered the field: Pitman- of

Zionville, Indiana; Wyeth Laboratories of Marietta, Pennsylvania; and

Cutter Laboratories of Berkeley, California.[3] Between 1955 and

1962, physicians and public health agencies administered 400 million

doses of polio vaccine across the United States, and the incidence of

polio decreased by 90 percent.[4]

Influenza Vaccine, 2003-2005

The commitment by five pharmaceutical companies to make polio

vaccines in 1955 stands in sharp contrast to companies' lack of

commitment to making influenza vaccines today. For 2003-04, drug

companies made eighty-three million doses of influenza vaccine for

the United States: forty-eight million doses were made by Aventis in

Swiftwater, Pennsylvania, and thirty-five million doses, by Chiron in

Liverpool, England.[5] Because the influenza epidemic of 2003-04

started early and because cases were particularly severe, the media

broadcast stories daily of those who were hospitalized for and died

of the disease. Demand for the flu vaccine quickly exceeded supply,

and many people who wanted and needed the vaccine could not get it.

The flu vaccine shortage was repeated a year later. For 2004-05,

Aventis made fifty-five million doses and Chiron made forty-eight

million. But because of a manufacturing error, British regulatory

authorities prohibited the sale of Chiron's vaccine. As a

consequence, about thirty million fewer doses of influenza vaccine

were available for 2004-05 than the year before. The U.S. Centers for

Disease Control and Prevention (CDC), the U.S. Food and Drug

Administration (FDA), and drug companies were all blamed for their

inefficiencies, and during the presidential debate on 13 October 2004

between W. Bush and Kerry, each candidate accused the

other of failing to provide the nation with needed influenza vaccine.

The flu vaccine shortages of 2003-2005 are just one example of what

has been a steady, unrelenting series of vaccine shortages.[6]

Since1998,nine of twelve vaccines routinely recommended for young

children have been in short supply: specifically, vaccines to prevent

measles, mumps, rubella (German measles), varicella (chickenpox),

tetanus, diphtheria, whooping cough (pertussis), influenza, and

pneumococcal disease. All of these shortages have caused children to

miss vaccines that they needed, and some children never caught up

when the shortages were over.

Factors That Discourage Vaccine Making

Recent vaccine shortages are not coincidental, nor do they represent

short-lived, easily fixable problems in the vaccine industry. Rather,

several market forces explain why pharmaceutical companies are

gradually abandoning vaccines.

Small Market for Vaccines Compared With Drugs

Vaccines are used at most several times in a lifetime; drugs are

often used every day. Therefore, the market for drugs is much greater

than the market for vaccines. For example, the conjugate pneumococcal

vaccine for children (Prevnar), the highest-revenue-generating

vaccine, has annual gross U.S. sales of about $1 billion. But markets

for cholesterol-lowering agents; hair-loss products; potency drugs;

and drugs for heart disease, obesity, or neurological problems are

often $7 billion per drug or more. (Annual revenues for Lipitor, a

cholesterol-lowering agent, are greater than revenues for the entire

worldwide vaccine industry.)[[7]

Because of the large private market for drugs, many companies compete

to make similar products; however, no other company has made a

pneumococcal vaccine for children. Of the twelve vaccines routinely

recommended for infants and young children, seven are made by one

company, and only one is made by more than two companies.

Effect of Mergers

During the past fifty years, companies devoted solely or primarily to

manufacturing vaccines (such as Lederle and Praxis) have been

acquired by other pharmaceutical companies; the number of companies

making vaccines has decreased from twenty-six in 1967 to seventeen in

1980 and to five in 2004 (GlaxoKline, Sanofi-Aventis, Merck,

Wyeth, and Chiron).[8] Previously, among companies that made vaccines

only, resources for development of one vaccine would compete with

resources for the development of another. Now, because of mergers,

vaccines compete for resources with drugs and most often lose.

To determine where they should invest research and development (R & D)

dollars, pharmaceutical companies evaluate a product's potential to

contribute to their bottom line. Among the four large companies still

making vaccines (Chiron accounts for less than 1 percent of the

worldwide vaccine industry), none has revenue from vaccines that

exceeds 10 percent of total revenue.[9] All four companies could stop

making vaccines tomorrow without much impact on their bottom lines.

In 2002, Wyeth stopped making its combination diphtheria-tetanus-

acellular pertussis (DTaP) and influenza vaccines. The decision had

little impact on shareholders but a major impact on stakeholders; it

precipitated vaccine shortages and vaccine rationing for both DTaP

and influenza vaccines.[10]

Dramatic Reduction in the Private Vaccine Market

In 1955, after the field trial of Jonas Salk's polio vaccine found it

to be safe and effective, a large private market was available to

sell the polio vaccine. Today the largest single U.S. purchaser of

vaccines is the federal government through the Vaccines for Children

(VFC) program. This program-launched in 1994 to provide vaccines to

all uninsured and some underinsured children in the United States-

purchases 55-60 percent of all vaccines.[11] As a large single

purchaser, the federal government creates a functional cap on vaccine

prices and, more importantly, has contributed to shrinking the

private market-a market consisting almost entirely of insurance

companies.

Low or Inconsistent Insurance Reimbursements

In 1995 the FDA licensed a vaccine to prevent chickenpox (varicella).

The varicella vaccine was the first vaccine to be licensed and

recommended in a private market dominated by insurance companies.

Many insurance companies initially refused to reimburse doctors for

the vaccine, and some reimbursed doctors below the cost of the

vaccine. As a consequence, doctors bought large quantities of

varicella vaccine out of their own pockets without a clear

understanding of whether and at what level they would be reimbursed.

Predictably, within one year of licensure, only about 10 percent of

children recommended by the CDC to receive varicella vaccine got it.

Lack of Infrastructure Support

In 1955 doctors bought the polio vaccine for $1.50 per dose and sold

it to their patients for $5. In the late 1970s doctors bought the

combination measles-mumps-rubella vaccines for $25 per dose and sold

them for $75. Because people paid for vaccines out of their own

pockets, doctors could depend on reimbursements that offset the

enormous infrastructure required to purchase, store, administer, and

record vaccines.

Reimbursements for the polio vaccine fifty years ago are at variance

with reimbursements for the influenza vaccine today. In 2004 the CDC

changed its recommendation for the influenza vaccine; it recommended

that all children ages 6-23 months, and all family members living in

the home of children less than two years of age, receive a flu

vaccine.[12] The CDC's recommendation was difficult to implement.

Doctors had to create an infrastructure within their practices that

included hiring receptionists to schedule appointments and hiring

nurses to administer a yearly, seasonal vaccine. But reimbursements

by insurance companies for vaccines, including " administration fees, "

were about 5-10 percent above the cost of the vaccine, compared with

a 300 percent markup for vaccines when the private market consisted

of direct out-of-pocket payments. By refusing to pay for the

infrastructure required to administer vaccines, the federal

government and insurancecompanies areaskingdoctors to payfor

theinfrastructurethemselves. As a consequence, doctors often view new

vaccines, or expanded recommendations for existing vaccines, as yet

another burden to be borne by their practices.

Public Buy-In Versus Public Buy-Out

On 31 May 1954 a Gallup poll showed that more Americans knew about

the field trial of Jonas Salk's polio vaccine than knew the full name

of the U.S. president, Dwight Eisenhower.[13] This was because

more Americans participated in the funding, development, and testing

of the polio vaccine than in the nomination and election of the

president. The March of Dimes increased awareness of polio and

anticipation of a polio vaccine through celebrity

spokespersons; " poster " children; and short, poignant films shown in

movie theaters across the country. As a consequence, before the

vaccine's licensure, Americans understood the horrors of polio and

were anxious to prevent the disease.

The March of Dimes was successful because polio was a dramatic

disease. But many diseases potentially preventable by vaccines today

are also dramatic. For example, respiratory syncytial virus (RSV)

causes pneumonia, croup, and lower respiratory tract infections; as

many as 90,000 children are hospitalized for and 5,000 killed every

year by RSV. Group A streptococcus causes rheumatic fever

andsevereskininfections; cytomegalovirus causes mental retardation,

impaired vision, hearing loss, and cerebral palsy; adenovirus and

parainfluenza virus cause severe pneumonia; and enteroviruses,

herpesviruses, and arboviruses (like West Nile virus) cause

meningitis. All of these infections routinely cause children and

adults in the United States and throughout the world to be

hospitalized and to die. Although the technology is available to

prevent much of this suffering, most people are unaware of the names

of these specific diseases or of the possibility for their prevention.

The public buy-in to the introduction of a polio vaccine in 1955 has,

fifty years later, been replaced by a public buy-out of vaccines.

Groups opposing vaccines have proliferated, and many people see

information campaigns about new vaccines as just more hype to

increase pharmaceutical companies' revenues.

Regulatory Issues: Moving From Relative to Absolute Safety

The cost to develop and make many vaccines is greater than that to

make most drugs, because products given to healthy people are often

held to higher standards of safety than those given to people who are

sick. In 1998 the FDA licensed a vaccine to prevent rotavirus, a

common cause of fever, vomiting, and diarrhea in young children.[14]

After the vaccine had been on the market for one year-and was given

to about one million children-the CDC detected a rare adverse event:

About one of every 10,000 children who received the vaccine developed

intussusception, a blockage of the intestine.[15] As a consequence,

the rotavirus vaccine was withdrawn.

Before it was licensed, the rotavirus vaccine had been given to about

11,000 children in placebo-controlled prospective studies. Because

intussusception was very rare, studies performed prior to licensure

were not big enough to determine that rotavirus vaccine caused the

condition. Following the withdrawal of the rotavirus vaccine in 1999,

children have continued to be hospitalized for and killed by

rotavirus. Although many more children would have been helped by a

rotavirus vaccine than hurt by it, the current culture does not allow

for any serious side effects from a vaccine. As a consequence,

pharmaceutical companies are now asked to disprove even very rare

adverse effects prior to licensure. Two companies, Merck and

GlaxoKline, are now testing rotavirus vaccines in pre-licensure

trials that include more than 140,000 children. The cost of these two

large trials is about $400 million. The added financial burden of now

disproving rare adverse events before licensure is another

disincentive to making vaccines.

Product Liability

Vaccines were the first group of medical products that were nearly

eliminated by lawsuits. In 1974 a British researcher published a

paper claiming that the pertussis vaccine caused permanent brain

damage in twenty-two children.[16] Stories that pertussis vaccine

harmed children soon appeared in the United States, and personal-

injury lawyers sued vaccine makers. American lawyers claimed that the

pertussis vaccine caused epilepsy, mental retardation, learning

disorders, unexplained coma, Reye's syndrome (the sudden onset of

coma later found to be associated with aspirin), and sudden infant

death syndrome (SIDS, unexplained death in the first year of life

later found to be associated with sleep position). By 1987, 800

lawsuits totaling more than $21 million were filed, and new claims

were filed every week. To meet the demand for increased liability

insurance, and to pay for legal fees and settlements, the cost of the

pertussis vaccine increased from $0.17 per dose to $11.00 per dose.

[17]

By the late 1980s and early 1990s many investigators had examined the

question raised by the British researcher and found that the

pertussis vaccine did not cause permanent brain damage.[18] The

researcher's hypothesis was wrong, but the damage was done. The

number of companies making pertussis vaccine for U.S. children

decreased from four (Wyeth, Connaught, Sclavo, and Lederle) to one

(Lederle).[19] In the mid-1980s a lawsuit against Lederle claiming

that pertussis vaccine caused paralysis in a young boy ended with an

award of $1.13 million.[20] This award was equivalent to more than

half of the entire pertussis vaccine market. Although there was no

scientific evidence to support the claim, pharmaceutical companies

looked at this situation and decided to leave the vaccine business.

[21]

Threatened by a return to the prevaccine era-when hundreds of

thousands of children were routinely hospitalized for, permanently

harmed by, or killed by vaccine-preventable diseases-the U.S.

government stepped forward. In 1986 Congress passed the National

Childhood Vaccine Injury Act (NCVIA), which included the National

Vaccine Injury Compensation Program (NVICP), designed to protect

companies from lawsuits not supported by scientific evidence. The

program was funded by a federal excise tax on every dose of vaccine.

In many ways, the NVICP was a model system to prevent abuses by

personal-injury lawyers. Scientists, epidemiologists, virologists,

microbiologists, clinicians, and statisticians reviewed scientific

studies and recommended to the courts which problems were caused by

vaccines and which coincidentally followed vaccines. If a child

suffered a reaction caused by a vaccine, the program was designed to

compensate the family for medical expenses and damages quickly,

generously, and fairly. Because of the NVICP, manufacturers remained

in the vaccine business and the number of lawsuits against vaccine

makers declined substantially.

Unfortunately, three important weaknesses in the NVICP discourage

vaccine makers. First, if dissatisfied with the outcome, people can

always opt out of the NVICP and take their case to a jury. Parents

claiming that their children were harmed by thimerosal (an

ethylmercury-containing preservative in some vaccines) have sued

vaccine makers; about 300 separate lawsuits are now pending in U.S.

courts. Although four large epidemiologic studies found that children

receiving thimerosal-containing vaccines were not at increased risk

for the neurological problems claimed, plaintiffs' lawyers are

pressuring pharmaceutical companies for a large settlement.[22]

Second, the NVICP does not cover all vaccines-only those routinely

recommended for all children. For example, the Lyme vaccine, licensed

by the FDA in 1998, was not covered by the program. After licensure,

many people claimed that the Lyme vaccine caused chronic arthritis as

well as muscle pain, headaches, forgetfulness, memory loss,

paralysis, and fatigue. Although two large epidemiologic studies

found no evidence that the vaccine caused chronic disease, Glaxo-

Kline was spending millions of dollars defending its product.[23]

Further, the media raised fears that the Lyme vaccine caused

permanent harm. Predictably, sales decreased, and the vaccine was

taken off the market in 2002. Now, people at risk for Lyme infection

can only hope that they are not among those permanently harmed by the

disease.

Third, the NVICP does not include the unborn child when the mother is

immunized. For example, very young infants are occasionally infected

by a bacterium called group B streptococcus (GBS). GBS infects the

bloodstream, the brain, and the spinal cord. Every year, about 2,000

U.S. babies are infected with GBS and 100 die; more newborns die from

GBS than any other infectious disease. Unfortunately, most vaccines

in the United States and the world are not given until one or two

months of age-too late to prevent GBS infections. Therefore, the most

effective strategy to prevent GBS would be to immunize pregnant

women. Researchers have already shown that a GBS vaccine given to

pregnant women would work to protect newborns.[24] However, because

of concerns about litigation following immunization of pregnant

women, no pharmaceutical company is willing to make a GBS vaccine or

any vaccine that would include maternal immunization.

Finally, in addition to weaknesses in the federal compensation

program, pharmaceutical companies have abandoned lower-revenue

products such as vaccines because liability insurance has

dramatically increased the cost of making all medical products.

Factors That Would Encourage Vaccine Making

The CDC and the IOM have recognized the importance of finding ways to

finance vaccines for the twenty-first century.[25] We discuss several

possible solutions below.

Increase Payments for Vaccines

Pharmaceutical companies could be encouraged to make vaccines if the

federal government provided more assurances that the VFC entitlement

program was robust, allowed for a mechanism to increase the fixed

price of certain vaccines, offered tax breaks to companies that chose

to make vaccines, and supported more testing centers (such as the

Vaccine Evaluation and Testing Units [VETUs]) for commercial vaccines

prior to licensure. Further, the burden of assuming the cost of

creating and maintaining an infrastructure for vaccines by health

care professionals could be supported by adequate administration fees

through both the VFC program and private insurers.

Decrease Costs of Making Vaccines

The cost of making vaccines for pharmaceutical companies could be

reduced by strengthening weaknesses in the NVICP-specifically,

disallowing opt-out of the program when scientific studies do not

support a claim; covering all vaccines; covering the unborn child

when a vaccine is given to a pregnant woman; and indemnifying

academic medical centers (AMCs) that test vaccines prior to licensure.

The cost of making vaccines could also be reduced by encouraging

public-private partnerships for vaccine R & D. The first and best

example of a public-private partnership was that between the National

Foundation for Infantile Paralysis and polio vaccine manufacturers in

the 1950s. Between 1938 and 1962 the foundation raised $630 million;

$70 million was spent on research. The amount of money spent by the

March of Dimes to understand one disease-ten times more than spent on

polio research by the National Institutes of Health during the same

period-was unprecedented.[26] By paying for research that determined

how to make a polio vaccine and by paying for a large clinical trial

that showed that the vaccine worked and was safe, the foundation took

the risk out of vaccine R & D. Further evidence for this model for

vaccine development is found today in the relationship between the

Gates Foundation and pharmaceutical companies for the development of

AIDS and malaria vaccines.

Vaccines are difficult and expensive to make and, because they are

used once or at most several times during one's life, have revenues

that are dramatically less than products that are used every day. As

a consequence, many pharmaceutical companies have abandoned vaccines

in favor of drugs. However, the technology is in hand to prevent many

infections that routinely hospitalize and kill people in the United

States and the world. By increasing funding for vaccines through the

VFC program; by offering tax breaks to companies that develop less

profitable but life-saving products; by supporting clinical testing

centers for commercial vaccines; by strengthening protection against

litigation unsupported by scientific evidence; and by ensuring that

health care professionals are reimbursed for the infrastructure

required to administer vaccines, Congress has the power to protect a

product that is vital to our nation's health.

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, Patenting the Sun, 229.

Acknowledgements

The author thanks Edgar Marcuse for his contributions to this paper.

Offit ( offit@... ) is chief of the Division of

Infectious Diseases and director of the Vaccine Education Center at

the Children's Hospital of Philadelphia. He is also a professor of

pediatrics at the University of Pennsylvania School of Medicine in

Philadelphia.

________________________________________________________________________

________________________________________________________________________

R. Schissel, LCSW

President (AHA/AS/PDD)

Advocates for Individuals with HighFunctioning Autism, Asperger's Syndrome

and other Pervasive Developmental Disorders

phone/fax

PO Box 475, Roslyn Heights, NY 11577

PatS@...

Please visit (www.aha-as-pdd.org) for the listings of our support group

dates, locations, and times. The groups meet monthly and are open to all at

no charge. We have groups for parents of school age children, parents of

older teens and adults, and for individuals on the spectrum.

Helpful Websites:

Part 200 Regulations:

Part 200.13(specific to Autism):

http://www.vesid.nysed.gov/specialed/publications/lawsandregs/part200.htm#200.13

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