Michelle M. Mello and Troyen A. Brennan of the Department of Health Policy and Management, Harvard Schoolof Public Health write in the Journal of the American Medical Association today about the impact of legal concerns on vaccine manufacturers.
Overall, there is little evidence of significant litigation involving the flu vaccine. Although the available data sourcesare not comprehensive and the possibility of additional unreported lawsuits cannot be excluded, by all appearances the situation is not one in which a rational observer would conclude that litigation is a substantial burden on manufacturers. Of course, the fascinating aspect of legal dynamics is thatthe participants rarely act in a completely rational fashion. Manufacturers may misestimate risks and act accordingly. They may also anticipate that their future risk may be higher than their past record suggests—for example, that new facts such as a sharp increase in GBS incidence or product contamination problems may spur new claims. Importantly, insurers and reinsurers may make similar (mis)judgments, creating a situation in which manufacturers find it difficult to obtain affordable coverage. Manufacturers complained of this problem during the childhood vaccine crisis of the early 1980s.
The paper offers a summary of the extensive literature on the reasons that manufacturers have withdrawn from the development and manufacture of vaccines:
Nonlegal Factors Contributing to Manufacturer Decisions to Not Produce Vaccines: Literature Review Summary
CostsFood and Drug Administration (FDA) regulatory compliance costs- Required upgrades to production facilities- Requirement that vaccines produced for clinical trials be made in the same facilities that will manufacture them after FDA approval (requires early construction of vaccinespecific factories)- Production slowdowns and shutdowns due to quality problems identified on FDA inspections- Mandates to remove thimerosal from vaccine preparations- Requirements that each batch of vaccine be tested and licensed- Mandates for costly clinical trials to disprove rare adverse effects as a condition of FDA approval - FDA communication problemsResearch and development costs- Complex research and development process- Vaccine must be reengineered each yearProduction costs- High fixed, sunk costs- Biologics more difficult to produce with consistent quality than drugs; higher production loss rate- Flu vaccine: costly and cumbersome egg-based production methodMarket FeaturesMarket size- Small market ($6 billion per year compared with $340 billion for drugs)- Limited potential for market expansion (many vaccines administered only 1-4 times in a lifetime)- Limited time on the market; new formulations constantly replacing old onesInstability of demand- Fluctuating demand due to annual changes in the epidemiology of the influenza virus- Substantial unsold stock due to forecasting errorsLow price- Statutory price caps- Government as dominant purchaser forces discounts
It concludes:
The reasonable conclusion to draw from these reviews is that vaccine production decisions flow from a holistic judgment about the likely economic benefit from making vaccines vs other products. Manufacturers balance a variety of risks and costs against expected returns; liability exposure is only one of the weights on the scale. There are ample reasons to suspect that flu vaccine is not an attractive product to drug manufacturers quite apart from liability concerns.
