I am usually not a big fan of “tort reform” — while I can certainly read about bizarro cases where jury awards seem outrageous, too many tort reform efforts smack of CYA by businesses against their own neglect or malfeasance.
Still, as this article has it, if we want to pin some blame on the current shortage of flu vaccine, rather than pointing at George Bush, we might want to point at John Edwards — or at least his colleagues.
Two weeks ago, British regulators suspended the license of Chiron Corp., the world’s second-leading flu vaccine supplier, for three months. Officials cited manufacturing problems at the factory in Liverpool, England, where Chiron makes its leading product, Fluvirin. Chiron was scheduled to supply 46 million of the 100 million doses to be administered in the United States this year. The other 54 million will come from Aventis Pasteur, a French company with headquarters in Strasbourg.
So why is it that 100 percent of our flu vaccines are now made by two companies in Europe? The answer is simple. Trial lawyers drove the American manufacturers out of the business.
I also mistrust analyses that start with, “the answer is simple,” but …
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.
I’d be curious for Margie’s perspective on this one …
Well it is the Standard – a right wing mag – owned by News Corp…’nuf said.
Unlike the rest of the civilized world (the government buys all of the flu vaccinations in large enough lots to cover all of the people that will be needing it) there is very little profit in making flu vaccines in the US, which is why the two companies in the US outsourced the manufacturing of them. Also, since no company wants to have a lot of very expensive vaccine (a one time use item, made for that year alone) sitting around and tossed if not sold, very limited amounts of it is made for the US (limited supply driving up demand yadda, yadda, yadda..).
Limited risk to profit ratio.
If you want a flu shot, go to Canada (James got one when he was there last week for $40can).
Also, tort reform has never lowered the price of anything, only increased profits for the entities protected by the tort reform. The current insurance crisis has nothing to do with malpractice suits, and everything to do with insurance companies not making enough profit in the stock-market and now they are trying to cover their losses on your dime.
There are some Palast and Grieder books you should be reading.
Boulder Dude: saying the article is wrong or biased just because they are a “right-wing mag” or that they are wrong because they are owned by the notorious News Corp is to commit the fallacy of guilt by association. So no, it’s not ’nuff said.
You went on to give reasonable arguments supporting your position, so even you didn’t think that it was ’nuff said.
Just on general principles, without any specific knowledge of this industry, I suspect that part of the reason vaccine manufacturing isn’t profitable is that the legal and liability costs were fairly high. So I’m inclined to split the difference between the view that it’s all the trial lawyer’s fault and the view that it’s all the government’s fault. I think there’s probably plenty of blame to go around here since the political-economic system is very complicated, and it’s unlikely that there’s a simple cause for anything.
Well, to namedrop a publisher from the “other side,” the NY Times, here’s their reporting on it:
Over the weekend, Mr. Kerry began ridiculing Mr. Bush about the vaccine shortage, and his campaign began a television spot calling the problem “a George Bush mess.” Yesterday, Mr. Kerry offered his plan, including a government promise to buy excess serum from manufacturers and create a stockpile.
Except it doesn’t sound like there is any “excess serum,” and given the changing nature of flu strains between years (as BD points out), a stockpile makes no sense. (And, were Bush to propose such a plan, he would no doubt be attacked for providing a windfall for big drug companies …)
Mr. Kerry is correct about warnings of a shortage over the last year. But like Mr. Bush, he never raised the issue until it erupted.
Mr. Bush said in the debate last week that the ultimate cause of the shortage was manufacturers’ fears of lawsuits. Experts said that was not a main reason to halt production, because a law already offers government protection against such liability.
If the Standard article is right, the liability protection in the 1986 National Childhood Vaccine Injury Act allows plaintiffs to opt out of the government mediation board. (There may be other litigation restrictions in that or other laws — I’m not sure.)
Mr. Kerry’s camp spread the word yesterday that the National Vaccine Advisory Committee of the Health and Human Services Department had reported the litigation threat was not a cause of the shortage.
That report was dated January 2003. It said, “Current vaccine shortages do not appear to be liability related.” Two sentences before that, it said, “Today, litigation again threatens stability of the vaccine program in the form of class-action lawsuits.”
So, like David, I’m willing to split the difference. It’s actually, at the moment, more of a question of how to get out of a situation where there are only two overseas sources of flu vaccines, which seems dangerous for a variety of reasons (one of them having been demonstrated this year).
Low profit margins = low manufacturer interest makes a lot of sense to me. Lawsuits have some effect but it sounds a lot like the pharmaceutical companies trying to spin things to seem more public spirited. Which they aren’t — and they’re not supposed to be. Their legal responsibility, in a publicly traded company, is to maximize profits for their shareholders and to not break any laws along the way, period. Any PR along the way is solely to bolster job one. In a privately held company you might have the odd public benefactor who was worried about his legacy or going to hell, but not with companies that are run by hired guns (ceo’s) and committees (boards). So why would they possibly waste big bucks on the slim returns of vaccines when they can better utilize their capacity on medicines that get used every day?
The socialist solution is for governments to guarantee sales and for the taxpayers to eat the cost of the wasted units.
The Invisible Hand will jack up the price until it is profitable — very profitable until those high profits lure more manufacturers in.
Neocons like the Prez can’t stomach the first and hate the political fallout of the second. They’ll do nothing and push for tort reform.
Randy said
Their legal responsibility, in a publicly traded company, is to maximize profits for their shareholders and to not break any laws along the way, period.
I’m not a lawyer, so I’m not sure if the legal responsibilities of a corporation are this narrowly-drawn. However, as someone who studies business ethics in a limited way, I can say that the corresponding theory about corporations’ moral responsibilities has a number of competitors that seem to me to be better justified.
The theory that companies are morally responsible for maximizing profits within the law and nothing more is the classical model of corporate social responsibility (J. Desjardins, An Introduction to Business Ethics, McGraw-Hill, New York, 2003, p. 45). The stakeholder theory of corporate social responsibility seems to me to be a better approximation to what is morally required of a company. Desjardins reviews the arguments, and I won’t go into them here.
My point is that even if Randy is right that the legal responsibilities of a corporation are very limited, that doesn’t show that they don’t also have further moral responsibilities that they should fulfill.
“Should.”
There is no profit in ethics other then what you can put on 30 second ad spot.
I wonder if the “want” factor in the marketing and pricing of vaccines in general doesn’t hurt drug companies bottom line. Flu shots are preventative medicine; they don’t cure a problem and therefore from a marketing standpoint, you can’t make people choose your vaccine over anyone elses.
Also, taking a flu vaccine doesn’t make one feel better except in a virtious way. When allergy sufferers, arthritis patieints and folks with sexual problems take a pill, they get at least temporary relief from their problems (or else they try another drug). That gives marketing a place in the cycle of drug development, manufacture and sale that it doesn’t now have (and most liekly will never have) in the flu vaccine cycle. And from everything I have heard, these vaccines are costly to research and produce, even if we had enough for everyone that wants one.
Snopes raises some interesting points here:
* It dings the tort issue on this (as well as shooting down a silly story that this really is, literally, all John Edwards’ fault).
* It notes that flu vaccine production is an expensive and trouble process, with extremely low margins (actually, it’s worse than that, since sometimes there’s substantial profit, and other times there’s substantial loss, meaning it’s worse than low profit, it’s *uncertain* profit).
* New flu vaccine tech coming Real Soon Now makes investment in current processes even more unlikely.
It does expand on that litigation report, and actually quotes a large portion of the report (though it only bolds one of the two comments; I’ve bolded a bit more):
The Vaccine Injury Compensation Program (VICP) enacted in the late 1980s has been of immense value in stabilizing the vaccine market. Prior to its enactment, litigation led to national shortages, withdrawal of manufacturers from the marketplace, and instability of supply of essential childhood vaccines. The VICP was designed to compensate individuals who suffered a serious adverse event as a result of administration of a covered vaccine in a manner that was rapid, simple, generous and appropriate. The VICP has assisted in stimulating the availability of new vaccines since its inception in 1988. Despite the success of the program, criticism of the VICP could lead to significant legislative changes, including a more relaxed burden of proof standard for determining eligibility for compensation. Today, litigation again threatens stability of the vaccine program in the form of class action law suits, exemplified by those that have been filed involving vaccines that contain thimerosal. The VICP is currently understaffed to meet the new increased numbers of claims. While current vaccine shortages do not appear to be liability related, the VICP should be maintained and strengthened as supported by scientific evidence, including continuing expansion of VICP to include additional vaccines as they are recommended for routine administration to children. The VICP coverage of vaccines should recognize that “vaccine” includes the active ingredient as well as preservatives, additives and other excipients. Strengthening the VICP would benefit manufacturers, providers and consumers and further safeguard the nation’s vaccine supply.
So, according to the folks who run the VICP program, litigation did have an effect previously, but is not the current problem, but could quickly become a new problem (since, for example, the thimerosal issue may not be covered by it, since it isn’t the vaccine that’s deemed dangerous but the mercury-based medium it’s delivered in).
And, looking at the VICP, it’s clear that plaintiffs can pretty straightforwardly opt out of it, and pursue law suits as they see fit (if they think they can do better than full medical compensation and $250K pain and suffering). I’m not aware, on the other hand, of any info on how many people actually do so.
I wonder if vaccines aren’t even MORE marketable than other drugs. If you get the flu shot and then you don’t get the flu, you attribute it to the vaccine. If you get the flu shot and then you get the flu, you assume it would have been worse without the shot. Either way, you’re happy with the result. It’s true that as things stand, there’s no difference between one company’s flu shot and another, but don’t people still do brand marketing in commodity markets? And I’m sure that companies could develop brand differences if the opportunity arose. I can imagine a company saying “We’ve correctly predicted the flu variety for the last seven years. Why would you get your flu shot from those other companies who don’t predict it as reliably as we do?”
The NY Times has an interesting article on the profitability of vaccines.
The article makes two interesting claims about flu vaccines:
Even flu vaccines, despite challenges that include the need to reformulate the medicine each season, are potentially more lucrative than they used to be, with wholesale prices up fourfold since the late 90’s,
and
In the late 1990’s four companies supplied flu vaccines but two – Wyeth and King Pharmaceuticals – dropped out, citing low profits and heavy expenditures to meet increasingly stringent regulatory requirements to prevent contamination.
The article seems to me to confirm my suspicion that the vaccine shortage is produced by a combination of regulatory and market forces rather than by either one alone.
That’s odd. The both of the two quotations in my post above looked right in the preview window, but the first lost its formatting when actually posted. Looking at the page source, it looks like the double-quotes in the p-tags got screwed up somehow. But it’s unclear to me why the second one worked but the first one didn’t.
You used the “P” tag in the first, the “p” tag in the second. The latter is allowed through the HTML santization that’s done (when the post is actually saved, vs. in the preview), the former is not.
Fixed it.