Sunday, October 23

Health Care Economics: How much damage can political leaders do?

The Washington Post is reporting on a Hong Kong newspaper report Saturday that China says it will close its borders if it finds a single case of human-to-human transmission of bird flu there. And so it goes--our politicians making things worst! The fact is there is a crisis in the United States in regards to the lack of vaccine makers, but its not the pharmaceutical companies' fault.
HONG KONG (Reuters) - China will close its borders if it finds a single case of human-to-human transmission of bird flu there, a Hong Kong newspaper reported on Saturday, while a defiant Taiwan said it would copy a patented antiviral drug.

Saving lives would be Beijing's top priority in efforts to contain a possible outbreak of bird flu, even if it meant slowing the economy, Huang Jiefu, a vice minister of health, was quoted as saying by the South China Morning Post.

The World Bank said while prevention measures would cost a lot, the economic damage from a pandemic would be far worse.
According to a WSJ Review & Outlook article, Political Virus, there are only three in this country. The government is regulating our health care to death! Now there is a real cause to be alarmed--the over-regulation of our pharmaceutical industry. If Taiwan does what it is threatening, they are only going to make matters worst--create an artificial shortage caused by central government management.

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.