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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 IntroductionAbstract

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

Pharmaceuticalcompaniesarebusinesses,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.

References

J.E. Salk, " Studies in Human Subjects on Active Immunization against

Poliomyelitis, I: A Preliminary Rreport of Experiments in Progress, " Journal of

the American Medical Association 151, no. 13 (1953): 1081-1098.

Poliomyelitis: Papers and Discussions Presented at the Third International

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J. , Patenting the Sun: Polio and the Salk Vaccine (New York:

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N. son, " Eradication of Poliomyelitis in the United States, " Reviews of

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Children—Recommendations of the Advisory Committee on Immunization Practices, "

Morbidity and Mortality Weekly Report 48, no. RR-2 (1999): 1-23.

T.V. et al., " Intussusception among Infants Given an Oral Rotavirus

Vaccine, " New England Journal of Medicine 344, no. 8 (2001): 564-572.

M. Kulenkampff, J.S. Schwartzman, and J. , " Neurological Complications

of Pertussis Inoculation, " Archives of Diseases of Childhood 49, no. 1 (1974):

46-49.

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Mortality Weekly Report 33, no. 14 (1984): 695-696.

Toner v. Lederle Laboratories, 779F.2d1429(9thCir.1986).

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ed.S.A.Plotkin and W.A.Orenstein (Philadelphia: Saunders, 2004), 1591-1617.

A. Hviid et al., " Association between Thimerosal-Containing Vaccine and

Autism, " Journal of the American Medical Association 290, no. 13 (2003):

1763-1766; T. Verstraeten et al., " Safety of Thimerosal-Containing Vaccines: A

Two-Phased Study of Computerized Health Maintenance Organization Databases, "

Pediatrics 112, no.5(2003): 1039-1048;J.Heron,J.Golding,and the ALSPAC Study

Team, " Thimerosal Exposure in Infants and Developmental Disorders: A Prospective

Cohort Study in the United Kingdom Does Not Support a Causal Association, "

Pediatrics 114, no. 3 (2004): 577-583; and N. s et al., " Thimerosal

Exposure in Infants and Developmental Disorders: A Retrospective Cohort Study in

the United Kingdom Does Not Support a Causal Association, " Pediatrics 114, no. 3

(2004): 584-591.

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Borrelia Burgdorferi Outer-Sur-face Lipoprotein A with Adjuvant: The Lyme

Disease Vaccine Study Group, " New England Journal of Medicine 339, no. 4 (1998):

209-215; and L.H. Sigal et al., " A Vaccine Consisting of Recombinant Borrelia

Burgdorferi Outer-Surface Protein A to Prevent Lyme Disease: A Recombinant

Outer-Surface Protein A Lyme Disease Vaccine Study Consortium, " New England

Journal of Medicine 339, no. 4 (1998): 216-222.

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Vaccine of Group B Streptococcus, " New England Journal of Medicine 319, no. 18

(1988): 1180-1185.

IOM, Financing Vaccines.

, 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.

---------------------------------

M

erinrmos@...

California

__________________________________________________

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Too much liability, not a high enough price. They aren't stupid.

Please, all you attorneys and parents involved in the Eli Lilly and

ohter suits, go get 'em and slam them for absolutely incredible

damages! Send a clear message to the industry to not do this kind of

thing even if the government is encouraging them to!

Andy . . . . . .. .

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