Couldn't get a flu shot this year?
When the flu hits and you're confined to bed, bath and not very far beyond, remember that you're suffering from the free-market flu.
The reason there's not enough flu vaccine to go around this year is that Americans have decided, consciously or not, that they don't want the government to get too deeply involved in health care.
Protecting the nation from the annual, inevitable bout with influenza has been left entirely to the private sector, even though every year the flu kills many more Americans than have died in the Iraq war -- 36,000 of us annually, according to the federal Centers for Disease Control and Prevention.
The government's primary role merely is to assemble the nation's most knowledgeable scientists every year to tell the drug companies what kind of flu vaccine to make based on the various strains making their way around the globe.
What happens after that is left up to the market. And these days the market does not provide much incentive for anybody to make flu vaccine and try to sell it.
Merck & Co. abandoned the business almost 20 years ago. Wyeth pulled out last year after throwing away about one-third of the flu vaccine it made for the 2002-03 season because it didn't sell.
That leaves just three companies in the business -- Aventis Pasteur Inc., Chiron Corp. (the company whose entire output for the United States had to be destroyed because of contamination) and MedImmune Inc. of Gaithersburg, the region's biggest biotech company.
Huge amounts of flu vaccine are trashed every year -- about one out of every dozen doses, said Greg Poland of the Mayo Clinic in Rochester, Minn., an infectious-disease expert who serves on the government panel that decides what kind of vaccine is needed each year.
Is there any other business that wastes so much? Airlines, certainly. All those unsold empty seats are why four airlines are in Chapter 11 bankruptcy protection. Dumping more than 8 percent of your output every year is not a good business plan.
The percentage of waste was even higher at MedImmune Inc., which last year introduced a nasal-spray flu vaccine called FluMist. MedImmune had to throw away more FluMist than it sold because it made the mistake of pricing the product wholesale at $46 a dose when flu shots were going for $10 to $15.
This year MedImmune is pricing FluMist at $16 a snort wholesale on a non-returnable basis and $23.50 for sale on the usual understanding that what you don't sell, you can send back.
That is old fashioned free-market economics at work, a demonstration of the concept of elasticity -- the higher the price of something, the less people ordinarily buy. Cut the price, sell more.
It's one of the few examples of economics working the way it's supposed to in the flu vaccine business.
"The market has failed," said Andrew Pavia, chief of pediatric infectious diseases at the University of Utah, who chairs the flu task force of the Infectious Diseases Society of America, based in Alexandria.
"We can lightly manipulate markets and produce market-driven solutions," Pavia said. "But I don't think the market by itself will answer the problem."
That the market has failed "seems to be the consensus" among flu experts, Pavia said.
Why doesn't the market work?
One reason is product liability, drug companies said, which keeps them out of the flu vaccine business. That is not a big issue, however, Pavia said, because lawsuits over flu vaccine have not been successful.
Another is the high cost of regulation and the high cost of building vaccine production facilities.
Drug companies don't want to take on those costs because of the third problem with the flu vaccine business: it's a low-profit business and the demand for flu shots is "exceedingly fickle," said Poland, the Mayo clinic expert.
Sales of flu shots fluctuate from year to year based on people's perception of how bad a year's flu is going to be. Last year there were early reports of flu deaths and severe symptoms, so demand was strong and drug companies threw away only 4 million of the 87 million doses of conventional vaccine they made. This year the shortage seems to be fueling demand, prompting people who might not ordinarily get flu shots to try to get them, making the shortage worse.
Regulatory costs, the two flu experts suggest, may be holding back development of better technologies for manufacturing flu vaccines that could have helped with this year's shortage.
Flu vaccine is manufactured with a time-consuming, half-century-old technology that grows the flu germs in fertilized eggs. By the time regulators discovered contamination at Chiron's plant in England, it was too late to crank up production elsewhere.
A MedImmune spokeswoman said the company starts its flu vaccine in California, ships it to England, where it is grown in eggs, then brings the material from the eggs back to a plant near Philadelphia to be turned into FluMist.
Other kinds of vaccines can be grown in tanks, which is much quicker. But if a drug company wanted to switch to that kind of technology for flu vaccine, Pavia said, federal regulations would treat the new version as if it were an entirely new drug, which would have to go through the lengthy Food and Drug Administration approval process before it could be sold. When profit margins are low and the market is fickle, there is no marketplace incentive for a company to develop a more efficient production method.
That issue might be tackled with tax incentives, says the Infectious Diseases Society, which began worrying about the vaccine market long before this year's shortage. There are already research and development tax credits, but Pavia suggests tax incentives that would be given to companies only when they bring a badly needed new product to market.
The Infectious Diseases Society also is lobbying to include vaccines in the Project Bioshield legislation passed this year to fight bioterrorism. The measure, which became law in July, provides incentives for developing drugs to treat or prevent ailments that could be spread by terrorists.
Another idea floating around Washington is to simply get rid of the free market for flu vaccine and do what Canada and many countries in Europe do -- have the government buy all the vaccine the nation needs. That is so contrary to the American approach to health care that the suggestion is pretty much dead on arrival.
Poland, of the Mayo Clinic, suggests a more limited role for government, which already buys about 20 percent of the flu vaccine for the military and federal health programs. (While the prevailing view is that Americans don't want the government dictating drug prices, the government does dictate what it pays for flu vaccine, demanding a price drugmakers say is unprofitable.)
Under the plan Poland recommends, the government would set a target for how much flu vaccine is needed and would pay market prices for the roughly 20 percent that it buys. Most vaccine -- say 70 percent of the market -- would be handled just the way it is now: the drug companies would sell it on their own. To guarantee an adequate supply, though, the government would promise to buy up to 10 percent of the output if it could not be sold and to pay a bonus price for it.
Poland argued -- persuasively to me -- that the government ought to treat vaccines as a national essential. We need jet planes to protect the nation's security, so we buy them. We need vaccines to protect the nation's health, so we buy them.
This approach isn't all that different from federal farm programs, which are intended to guarantee the nation an adequate food supply at reasonable prices while protecting the incomes of producers. If the government can buy milk or corn to stabilize the market, why not flu vaccine? If we can use tax dollars to subsidize growers of tobacco, which destroys people's health, why not use them to subsidize growers of flu vaccine to protect our health?