[lit-ideas] Re: flu vaccine

 
In a message dated 10/29/2004 8:22:12 AM Central Daylight Time,  
aamago@xxxxxxxxxxxxx writes:
http://www.nytimes.com/2004/10/29/business/29inoculate.html


Do  you have the actual article?   


Andy



Hi,
Here it is:
 
 
New York Times
October 29, 2004
Vaccines Are Good Business for Drug  Makers
By  ANDREW POLLACK
s the nation tries to comprehend this year's shortage of flu vaccine,  many 
experts have explained that the vaccines business holds little allure for  drug 
companies, because of low prices, strict regulations and uncertain demand.  
But try telling that to _Nabi_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile
.asp&symb=NABI)  Biopharmaceuticals, a small company in Boca Raton,  Fla., 
which is testing one vaccine to protect patients in hospitals and kidney  
dialysis centers from potentially fatal bacterial infections and another to 
help  
people quit smoking.  
Or tell it to Vical, a San Diego company trying to develop an arsenal of  
bioengineered vaccines for viruses like those that cause Ebola, West Nile and  
SARS.  
Or tell it to _Wyeth_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb
=WYE) , a big drug maker whose vaccine Prevnar, used  against the 
pneumococcal bacteria that can cause pneumonia, meningitis and ear  infections, 
costs 
more than $250 for the four-dose treatment given to infants.  Despite the 
price, 
the government has recommended that all infants get the  vaccine, and insurers 
generally pay for it - as does the federal Vaccines for  Children program for 
low-income families. Prevnar, with sales expected to top $1  billion this 
year, would be the world's first "blockbuster" vaccine.  
Vaccines, it turns out, can make for pretty good business. 
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.  
"I am not one of those who think this is an industry plagued by low prices,  
because it's not true," said Anthony F. Holler, chief executive of _ID 
Biomedical_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=IDBE)
 , a 
Canadian company whose excess  inventory of flu shots might help augment the 
American supply this winter. "I  just think that people are thinking of the 
business 
that occurred 10, 15 years  ago."  
The current shortage has more to do with past government and industry  
decisions, which reduced the nation's suppliers to two: _Chiron_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/
nyt-com/html-companyprofile.asp&symb=CHIR)  and the vaccine unit of 
Sanofi-Aventis. That  occurred in part because the business requires a heavy 
investment, which,  economists say, tends to favor having fewer, big suppliers 
rather 
than many  smaller ones.  
Now, to help prevent shortages, the government is considering steps that  
include expanding the amount of flu vaccine it puts into an emergency stockpile 
 
for childhood vaccines. This was the first year the government decided to add  
flu vaccine to that stockpile. Another possibility is guaranteeing the 
purchase  of a certain number of flu shots each year, possibly beyond what the 
industry is  contemplating manufacturing. That might attract more companies to 
the 
business  or induce existing ones to produce more than needed, providing some 
cushion in  case one supplier runs into problems. 
As those proposals indicate, the vaccine business is as complex as the market 
 dynamics that drive it. That is why the medicines receiving the biggest push 
 from the industry are likely to be ones with a perceived market in the 
United  States, which spends more than half the world's drug dollars.  
With American free-market forces so heavily in play, vaccines for malaria or  
other diseases that mainly afflict developing countries are not likely to be  
pursued except through philanthropic efforts. But with diseases that affect  
Americans, the combination of new technologies, higher prices and new target  
populations - adults, not children, for instance - are opening new vistas for  
the business, even as the older childhood vaccines generally remain 
lower-priced  commodities.  
"It's a tough business for older products," said R. Gordon Douglas, an  
industry consultant who ran the vaccine business for 10 years at _Merck_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.co
m/custom/nyt-com/html-companyprofile.asp&symb=MRK)  & Company. "It's a good 
business for new  products."  
The role played by government can be crucial to determining what vaccines get 
 produced, at what prices and in what quantities. 
For older vaccines used to prevent childhood diseases like mumps, measles and 
 diphtheria, for example, more than half the doses are purchased by the 
federal  Vaccines for Children program. Prices are capped so they rise no 
faster 
than  inflation. At $10 to $30 a dose, such vaccines are not a growth market, 
which  helps explain why there is only a single supplier for five of the eight  
recommended childhood vaccines and why periodic shortages still occur.  
Like many of the older childhood immunizations, flu vaccines are considered  
commodities. But because most are sold through the private sector, there are 
no  caps on prices.  
In the late 1990's four companies supplied flu vaccines but two - Wyeth and  
_King Pharmaceuticals_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb
=KG)  - dropped out, citing low profits  and heavy expenditures to meet 
increasingly stringent regulatory requirements to  prevent contamination.  
In the same period, however, demand for flu shots was on the rise as  
government health officials expanded the categories of people recommended to  
receive 
the vaccine. As a result of that demand and the reduction in the number  of 
suppliers, flu vaccine prices have quadrupled since the late 1990's, to  around 
$8 a dose wholesale.  
That trend appeared to be attracting more companies to the field even before  
the recent shortage. Chiron, for instance, acquired a British flu vaccine  
company last year largely to enter the American market; it was problems at the  
British plant, not a lack of profit motive, that created Chiron's shortage.  
And ID Biomedical of Canada had been planning to enter the American market in 
 a few years, though the shortage might now speed its entry. Others, like 
_Baxter International_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=BA
X) , have been weighing entering the  market within a few years.  
Various economic arguments can be made for why the government should play a  
role in promoting the use of vaccines. One is that they are among the most  
cost-effective modes of medicine. Preventing a disease - often, the inoculation 
 
lasts a lifetime - can be far less expensive than treating it once it 
develops  and spreads. Economists have estimated that every dollar spent on 
some of 
the  inexpensive childhood vaccines has yielded benefits as high as $27. But 
left to  their own devices, individuals may not highly value vaccines because 
of 
the  uncertainty that they themselves will ever get the disease.  
Whatever the government's role, there are business obstacles for vaccines,  
including a much smaller market than with drugs. Total sales of all vaccines  
worldwide are around $8 billion, less than sales of _Pfizer's_ 
(http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/cust
om/nyt-com/html-companyprofile.asp&symb=PFE)  Lipitor cholesterol-lowering 
pill alone.  
And because vaccines are given to healthy people, safety and liability  
concerns can be greater than with drugs, which are given to sick people, who 
are  
willing to bear some risk of side effects to get better. Liability concerns  
drove many companies out of the vaccine business before Congress enacted a law  
in 1986 providing some protection to makers of childhood vaccines. Companies 
say  they are still vulnerable on adult vaccines and are still being sued for 
the use  of thimerosal, a mercury-containing preservative that has been largely 
removed  from pediatric vaccines.  
Potential liability is also on the mind of Merck, which hopes to get approval 
 for a vaccine aimed at rotavirus, a cause of life-threatening diarrhea. The  
company is testing it on 70,000 children - an enormous number for a clinical  
trial - because the company wants to rule out a rare side effect that caused 
a  rotavirus vaccine by Wyeth to be pulled from the market in 1999.  
Merck, which recently withdrew its painkiller Vioxx from the market and has  
had several drugs fail in clinical trials, is counting three vaccines among 
the  most important products it expects to bring to market in the next few 
years.  Besides the rotavirus vaccine, there is one for human papilloma virus, 
which is  believed to cause cervical cancer. The third is for shingles, a 
disease 
of  adults caused by the chickenpox virus.  
As Merck's efforts indicate, many of the newer vaccines aim at adult  
diseases. "In the next 15 to 20 years we're going to move from pediatric  
vaccines to 
adolescent vaccines and adult vaccines," said Vijay B. Samant, chief  
executive of Vical.  
If, as some economists argue, vaccines are underused relative to their value  
to public health, then the government could have several roles.  
Urging vaccination, as is done for childhood diseases, assures manufacturers  
of a market. And the government can buy vaccines for a stockpile, as it is 
now  doing for vaccines for anthrax and smallpox.  
But industry officials, like Wayne Pisano of Aventis Pasteur, the vaccine  
unit of Sanofi-Aventis, say the most important factor for a healthy vaccine  
business is higher prices. "You can't have high investment, high regulatory  
requirements and low prices," Mr. Pisano said. 



------------------------------------------------------------------
To change your Lit-Ideas settings (subscribe/unsub, vacation on/off,
digest on/off), visit www.andreas.com/faq-lit-ideas.html

Other related posts: