FDA REGULATIONS ARE A MAJOR CAUSE OF THE FLU VACCINE SHORTAGE

Even a Leftist commentator can see that. Excerpt from Kevin Drum:

The FDA has a famously tight regulatory regime, made even tighter in the late 90s, and as a result the United States has only two approved manufacturers of flu vaccine while Britain has half a dozen. (Although, ironically, it's worth noting that a breakdown of the regulatory regime seems to be a more likely explanation for Chiron's immediate problem.) The bottom line is that there are other flu vaccine manufacturers besides Chiron and Aventis, but they don't sell into the U.S. market because the cost of complying with FDA regulations is higher than the narrow profits they could expect to make from selling flu vaccine.

And Drum's follow-up post is good too. I reproduce it in full below -- and the comments on the post really drive home how indefensible the FDA is in the matter

FLU VACCINE UPDATE....Two companies say they may jump into the U.S. flu vaccine market next year:

GlaxoSmithKline, the largest vaccine maker in the world, and ID Biomedical, a small Canadian company, have announced plans to sell flu shots in the U.S. ID Biomedical could enter the market as soon as next year.

....The competitive interest in making flu vaccines could dispel the notion that there is no money to be made in the business. In fact, over the last five to six years, the wholesale price of a flu shot has jumped to more than $8 from less than $2, far outpacing increases in production costs. What's more, the market is growing...."It is a very attractive business," said Anthony Holler, ID Biomedical's chief executive.

....U.S. public health officials have said they are unsure the FDA could move swiftly enough to approve the shots. The FDA will clear a drug only if the manufacturer can demonstrate that the product is safe and effective, a process that typically takes years.

So: demand is high and growing; prices have quadrupled recently, which means government price caps aren't an issue; and it's an "attractive business," which mean liability lawsuits must not be scaring anyone too badly.

However, FDA approval could be a problem. This leads me to think that my tentative conclusion yesterday was probably correct: out of all the reasons on offer to explain why the United States relies on only two main suppliers for its flu vaccine supply (small market, low price, risky business, lawsuit worries), it's probably FDA regulatory hurdles that explain the most.

Are those hurdles reasonable? I don't know. But it does seem as if they're the most likely reason that the United States, with a huge market, has only two approved suppliers, while Britain, with a market 10% the size, has half a dozen.

Needless to say, there is no shortage of flu vaccine in Australia either. I recollect that there was a shortage of some vaccine in Australia a while back but we just bought in a whole lot of extra shots from Britain to fix the problem in comparatively short order. Australians did not think that their regulators were the sole source of wisdom in the matter




AND IT IS NOT ONLY THE FDA THAT IS THE PROBLEM

It's government meddling generally according to Rich Lowry:

Americans have been shocked to learn a flu-vaccine shortage will keep many of them from getting their flu shots this year. They shouldn't be. What they are experiencing is the effect of the most basic law of economics. Guess what? When it ceases to be profitable to make a vaccine (or a prescription drug, or anything else), companies stop making it.

Litigation, regulation and government pricing have hammered vaccine makers during the past two decades, chasing them out of business. Democrats "have a plan" -- as John Kerry would put it -- in response to the flu-vaccine debacle, which is to bring the same model of failure to the prescription-drug market and make it just as unprofitable. Then there will no longer be any of those "greedy" pharmaceutical companies. Problem solved!

In the 1980s, many vaccine makers were driven out of business by litigation costs. Congress eventually passed legislation protecting vaccine makers from out-of-control lawsuits. But the damage had been done. Once a company gets out of the business, it is difficult to get back in because it loses its manufacturing capacity and its expertise.

Another blow came from Hillary Clinton. She championed getting the government into the pediatric vaccine business in a big way in the 1990s. It now buys 60 percent of pediatric vaccines, dictating cut-rate prices that have dried up vaccine-manufacturing capacity. More regulation inevitably accompanied the government purchases. "It's a snowball effect of more and more regulation over the past decade, driving more and more vaccine makers out of business," says Grace-Marie Turner, president of the free-market-oriented Galen Institute.

On top of these regulations, the flu-vaccine business has its unique hurdles. As Scott Gottlieb of the American Enterprise Institute points out, the vaccine for each flu season needs to be set a year in advance because the vaccine is developed in chicken eggs in a cumbersome, dated and very expensive process. Just as with pediatric vaccines, there's a lot of government purchasing, which keeps prices low.

Companies have to sell tens of millions of doses to make a profit. Since the entire U.S. market at its maximum is about 150 million doses, it means there is room for only two or three suppliers, and therefore no margin for error. Worse, vaccine makers have to take back any unused vaccines (usage can vary widely year to year), eating the production costs and exposing themselves to millions of dollars in annual losses. The setup is based on the idea that manufacturers are doing a public service by providing the flu vaccine, considerations of profit be damned. "It's a market that hasn't been allowed to make a profit and not allowed to innovate," says Gottlieb. Without innovation, vaccine makers can't engage in premium pricing based on changes that make their product better than the competition. Everyone is stuck with the same old method.

Flu-vaccine makers could move to a more efficient process involving monkey or human cell lines instead of chicken eggs, but the Food and Drug Administration -- which imposed new regulations in 1999 that drove several flu-vaccine makers out of the business --has been nervous about approving the new techniques. Rather than more government intervention, what vaccine manufacturers need is the government's permission to innovate so they can move beyond the inefficiencies of the current system.

The vaccine market is a harbinger of what could happen to the prescription-drug industry if Democrats get their way. They are agitating for the government to be able to negotiate -- read: mandate -- low drug prices as part of the new Medicare prescription-drug benefit. And the push for re-importation of drugs from Canada is really a way of importing Canada's price controls into this country.

But when the government vanquishes profits, it vanquishes the incentive to create new drugs, vaccines and technologies in the first place. This year's flu season might be a brutal, unfortunate reminder of that fact.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation.

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