Tuesday, October 19, 2004

From The Marriott Chronicles

Want Flu Vaccine? Repeal Vaccines For Children Program
by Michael Marriott

WASHINGTON, Aug. 15 -- Over strenuous objections by some drug companies, the Federal Government is establishing a program guaranteeing free vaccine for millions of children who are poor or uninsured.

The above paragraph appeared in the New York Times in August 1993. President Clinton had just signed legislation creating what came to be known as Vaccines For Children (VFC) Program. The article went on to explain that the federal government now had the power to purchase vaccines from pharmaceutical companies at “discount” prices and distribute them to doctors. Clinton’s aim in this, the first legislative proposal of his new administration, was to “… assure that all children in the United States are protected against vaccine-preventable infectious diseases by their second birthday.”

The Times article noted that drug company spokesmen lambasted the new legislation, quoting David R. Bethune of American Cyanamid that it would “destroy the vaccine industry in this country.” Of particular concern to the industry was the provision to allow the government to buy vaccines at a bulk discount, thereby controlling vaccine costs. In effect vaccine producers faced a price cap.

It hardly took an economic genius to predict the outcome of the legislation. Whenever the demand for a commodity rises while simultaneously the commodity is sold below market price, a shortage of that commodity is bound to occur. And in the ten years since the VFC Program took effect that is precisely what has happened. The vaccine market cannot reach supply and demand equilibrium since it is artificially constrained by the federal government from doing so.

As Mr. Bethune predicted, vaccine manufacturers know a losing proposition when they see one and have jumped ship, leaving vaccine production to fewer firms.

Today in the U.S., five companies make vaccines as opposed to twenty five companies 30 years ago. In particular, flu vaccine has been in short supply since at least 2000 as vaccine producers are unwilling to make a product whose price is controlled and where the risk of litigation is high. The Kansas City Star noted during the flu vaccine shortage of 2003 that the “… decision to force vaccine makers to discount their price resulted in 'declining financial incentives to develop and produce vaccines.'”

Another year of the VFC Program has only aggravated matters.

This year its affects on Americans would be laughable if not so deadly serious. Quoting the Star regarding the current flu vaccine shortage: “Scene by disheartening scene, the spectacle of a severe shortage of flu vaccine is unfolding around the country. Last week elderly and chronically ill people waited in line for hours to get flu shots. Some were turned away. One died after hitting her head when she passed out or fell while waiting.”

Government response to the mess it has created ranges from the heavy handed to the ham-fisted. One governmental reaction to the shortage is reported by the Star: “States threatened to fine or jail doctors and nurses who gave shots to anyone not in the high-risk groups.” In a less bellicose manner, a township in New Jersey totaling 70,000 people is holding a flu vaccine lottery this year to “parcel out” its paltry 300 available doses.

The net result of Clinton altruism is less flu vaccine, fewer vaccinations, much fewer vaccine producers, less research, more head injury deaths and possible jail time for doctors and nurses. Still, economic knuckleheads abound. Again from the Star: “Congress, the Justice Department, and the Securities and Exchange Commission began investigations into how the nation has been left, on the brink of flu season, with half the flu vaccine it needs.” I can save them all time: the cause of the flu vaccine shortage is government interference in the vaccine marketplace. Congress must repeal the loathsome Clinton Vaccine for Children Program posthaste.

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