Why don't we have a vaccine for the avian flu? Why will it take so long to produce enough tamiflu to mitigate the symptoms of a potential flu pandemic? Is it that the drug companies are failing us? The Wall Street Journal explains:
Our political leaders keep telling us to fear the avian flu, and in one sense they're right: We should all be scared to death about how much damage our political leaders will do responding to the avian flu.
Consider Secretary-General Kofi Annan, who declared this month that he hoped concern for "intellectual property" wouldn't "get into the way" of procuring widespread vaccines for a potential avian-flu outbreak. In other words, companies that make vaccines should abandon their patents at Mr. Annan's whim. This kind of hostility to property rights is precisely the reason we now have a shortage of vaccines and drugs to combat this potential pandemic.
Whatever the risk, some good will come out of this public alarm if we use it as an opportunity to understand why the U.S. is now so poorly armed to cope with a deadly flu outbreak. The reason is that our political class has spent the past 30 years driving the vaccine industry out of business with its own virus of over-regulation, price controls, litigation and intellectual-property abuse.
The U.S. today has only three large vaccine makers--down from 37 in the 1960s. This is the reason that, as recently as 2001, there was a shortage of eight of 11 critical childhood vaccines. It is also the reason the U.S. fell drastically short of flu vaccine a year ago, after a shut-down of one of two major flu-vaccine makers. And it is the reason only one company, Switzerland's Roche, is being counted on for a drug that would potentially protect against bird flu.
Despite these warning signals, Washington has done almost nothing. One problem is the Food and Drug Administration, which puts safety above developing rapid cures. Flu-vaccine makers face particular difficulties because they must effectively gain approval for a new product (for each new flu strain) every year. The vaccine is still grown in chicken eggs--a process that takes up to eight months. The industry has revolutionary new technologies--reverse genetics and mammalian cell culture--that would dramatically reduce the time and cost of development. Europe is moving toward products using these new techniques, but the FDA refuses to adapt and allow more rapid approval.
The feds have also done their best to remove any financial incentive--i.e., profit--for developing new vaccines. The Vaccines For Children program, a pet project of Hillary Clinton back in her First Lady days, has been especially destructive. The program now buys more than 50% of all private vaccines, and it uses this monopsony clout to drive prices down to commodity levels.
When one pharmaceutical company offered to sell a new pneumococcal vaccine to the government for $58 a dose, the Centers for Disease Control demanded a $10-a-dose discount. Politicians want companies to take all the risk of developing new vaccines, but they don't want the companies to make any money from taking those risks. Then the politicians profess surprise and dismay that there's a vaccine shortage.
Vaccine makers are also a favorite target of tort lawyers, who've spent 20 years trying to get around the 1986 Vaccine Injury Compensation Program (VICP)--which was specifically designed to protect vaccine makers from liability abuse. Senate Majority Leader Bill Frist has been trying to update the VICP for several years, and Republicans did pass a liability provision as a rider to a homeland security bill in 2002. But three GOP Senators--Susan Collins, Olympia Snowe and Lincoln Chafee--created a media ruckus and demanded that it be killed. The Senators promised more debate on the subject, yet once the headlines vanished so did their interest.
The larger point is that if politicians want private industry to develop new cures and vaccines, they can't steal their patents or confiscate their hope of making money. Private companies developed the AIDS drugs that have extended millions of lives, but countries like Brazil want to force those companies to give the drugs away at cost.
The solutions to getting more vaccines aren't complicated: Push the FDA for faster approvals, shield companies from tort robbery and get the government out of the business of buying routine vaccines. Politicians can't be held responsible for knowing when the next animal virus will strike the human race. But they will be responsible if their hostility to business leaves us unable to cope with its consequences.
Bureaucrats and politicians excel at two things: Wasting money on worthless projects and over-regulating businesses upon which our welfare depends. Other than these, the federal government, at least in its civilian sector, tends to be pretty incompetent.
