Increasing vaccine prices to address shortages?

Low Prices for Vaccines Can Come at a Great Cost

By Austin Frakt
The New York Times, June 27, 2016

A $30,000 price tag for cancer drug therapy that extends life only a few weeks is understandably alarming. But a $2,000 price tag for all childhood vaccines — credited with eradicating smallpox, preventing a million or more cases of other diseases and averting thousands of deaths each year — is a bargain. In fact, the price of childhood vaccines may be too low for our own good because it contributes to shortages.

Vaccine shortages have popped up in the United States many times over the past 50 years. In 2001, eight of 11 recommended childhood vaccines were unavailable or in short supply.

Vaccine prices have gone up over the years, in large part because of newer vaccines that command higher prices. The number of recommended vaccine doses has also increased, which pushes up the overall cost of full vaccination. Still, vaccines are inexpensive relative to their value. A typical dose costs $50 and, apart from an annual flu shot, only a few doses are required over a lifetime. According to the Duke study, vaccines with lower prices were more likely to be in short supply than those with higher prices. There were no shortages of vaccines with a price per dose above $75.

Commercial market vaccine prices are higher than government ones, but not by enough to prevent shortages.

We probably don’t need to raise vaccine prices by a factor of 10 to promote new vaccine investment and stabilize supply. According to one study, a doubling in price would incentivize new vaccine research, development and production.

For drugs as valuable as vaccines, that might be a price worth paying.


NYT Reader Comment:

By Don McCanne
San Juan Capistrano, CA

Are vaccines developed primarily to move wealth from the masses to corporate executives and passive investors? Or are they developed to reduce grief and suffering for all of us?

As a child, I remember putting dimes in the March of Dimes cardboard donor cards, because it was the right thing to do. As a medical student, I remember the iron lungs at San Francisco General Hospital. I remember Jonas Salk saying to Edward R. Morrow about polio vaccine, "There is no patent. Could you patent the sun?" It has been decades since I've seen an iron lung.

Piketty and Saez have shown us what happened: We have moved from the post-war egalitarian society in which our nation thrived by directing production to the common good, and now onto a society that transfers income and wealth to the richest amongst us, even if that means that many will have to do without vaccines because they are not affordable.

Would Jonas Salk rather have been known as a person who became wealthy from a patent on a vaccine, or as a person who helped virtually eliminate polio from the earth? Altruism is still out there. We need to unlock it from from the shackles of the rent seekers.


Dealing with vaccine shortages: current situation and ongoing activities

By Dr. Oleg Benes
World Health Organization, April 12-14, 2016

The way forward...

Paradigm change
  * Global solutions to address global challenges
  * Strategic supply management vs transactions

Risk management ESSENTIALS
  * Identification & assessment & management

Systemic approach
  * Articulated policy & strategies
  * Monitoring & early-warning systems

Commitment & collaboration
  * WHO, Member States, regional institutions, partners & industry


CDC Vaccine Price List



By Don McCanne, M.D.

One of the problems with the U.S. health care system is our heavy reliance on private market dynamics. This has resulted in our exceptionally high prices in health care. The role of our public health system has somewhat moderated price increases for vaccines, but the CDC price list reveals that the costs of vaccine in the private sector are considerably higher than the costs for vaccines provided for our public immunization programs.

Vaccine shortages do occur. Given that we rely on markets, it is understandable why a respected health researcher such as Austin Frakt would reach a conclusion that we need to provide greater financial incentives - higher prices - to motivate vaccine manufacturers to ensure that supplies will not run short.

But how does the rest of the world do it? They cooperate rather than compete. In describing the way forward, the World Health Organization suggests commitment and collaboration. Absent from their list is a suggestion that we should drive prices up until the manufacturers are quite pleased with the cushy margins they would like to have, yet, in the U.S. private sector, we yield to their demands.

My comment in The New York Times is a plea to replace rent seeking in health care with a system based on altruism: We do it because it’s right, and it makes us feel proud (and maybe even begin to  associate greed with shame). Altruism is much more likely to occur when we shift from market driven financing to a government health care financing system (again, compare CDC vaccine prices with market based prices - link above).