Tuesday, October 19, 2004

More on the Vaccine Shortage

Weekly Standard examines the effects of liability and a little bit about price controls.

A blogger sums up the reasons he's found in the news media.

  1. For starters, it's a pretty small market. The total vaccine market (for all vaccines, that is) is about $6 billion out of a market of $340 billion for drugs of all kinds.

  2. The flu vaccine business is risky: some years you sell out, but other years you make 50 million doses and only sell 20 million. That makes it fairly unattractive, especially since....

  3. It's a commodity market, so profit margins are thin to begin with.

  4. What's more, the biggest buyer is the government, which buys in bulk at a very low price. So profit margins are even thinner than they might be.

  5. FDA regulations have gotten tighter over the years, and vaccine makers have had an increasingly hard time meeting them because it requires expensive plant upgrades.

  6. But nobody wants to invest a lot of money to upgrade their flu vaccine plants because there's new technology coming down the road in a few years that will render the current manufacturing technique (which uses chicken eggs) obsolete.

  7. Finally, huge awards in liability lawsuits have scared vaccine makers out of the market. About 50-70% of the cost of most vaccines is taken up by the cost of liability insurance.

Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?