Want to squeeze U.S. pharmaceutical companies? Be careful what you ask for

If you miss getting a flu shot this season and you want to fix blame when you're on your sickbed, take a look in the mirror. If the face you see belongs to someone who buys into the bashing of U.S. drug companies, you're a part of the problem.

The looming shortage of flu vaccine comes down to the fact that very few American drug companies are left in the business of making vaccines. Why? The capital costs are enormous, the regulatory climate is burdensome, production estimates are guesswork and the company is typically stuck with million of unused doses of vaccine. All that, and the companies must listen to politicians whine about how drug prices—without ever stopping to think what a major epidemic costs the economy in terms of lost production.

Given the unattractive nature of the job, it's not surprising that only two manufacturers—Chiron and Aventis—were willing to supply all 100 million or so vaccine doses needed by the United States this flu season. Now, there is only one.

Health officials warned of shortages last week after British authorities suspended the manufacturing license of Chiron due to concerns about sterility at its vaccine plant in Liverpool. In one day, the nation's supply of flu vaccine was chopped in half.

It's not a case of putting all of the flu vaccine eggs in one basket. Most eggs were scrambled out of the market. The basic problem is that “we've lost most of our domestic manufacturers” of flu vaccine, Richard Webby at St. Jude Children's Research Hospital in Memphis told the Associated Press. “When you're relying on two manufacturers ... and one goes down, you're up the creek.”

Chiron bought the Liverpool plant in 2003 from Powderject, a British firm that also owned a facility in Madison (since shut down). Chiron executives believed they could quickly ramp up production of flu vaccine in Liverpool, and expected vaccine sales would account for about three-quarters of the company's profits this year. That bet backfired when British regulators shut down production, without explaining if the problem was isolated to a few batches or all vaccine produced at the plant.

The experience shows why drug companies shy away from flu vaccines—and why people who criticize U.S. drug companies need to take into account the risks most of those companies take to provide cutting-edge therapies of all types. If you're looking for the next breakthrough drug, don't look north to Canada. Rigid price controls killed innovation there years ago.

What can be done to draw more companies back into the flu vaccine business? Demand must grow beyond the usual high-risk vaccine recipients to include healthy adults, who could be lost to the workforce in an epidemic. The government could commit to buying a certain number of doses at a given price each year, easing much of the uncertainty. A public program could provide flu shots for uninsured people. The cost of complying with regulations could be better controlled, and new vaccines could be brought to the market faster. The federal government will offer financial incentives of $50 million for this fiscal year and $100 million for the following year to encourage drug companies to speed up development.

Finally, candidates for public office—Wisconsin's two U.S. Senate candidates included—can stop trying to outdo one another over who can whack American drug companies the hardest. In a nation that has lost some exporting industries over time, one would think political candidates would try to protect pharmaceuticals, one of the more productive exporting industries. Instead, they're convincing voters that U.S. drug companies are the bad guys.

Before you climb onboard the anti-drug company bandwagon, ask yourself this question: When was the last time you took a breakthrough drug actually researched, tested and manufactured in Canada or anywhere outside the United States? The answer should tell you why anti-drug company hype is dangerous to your health, and the health of your family.


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Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.