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Fall 2003 Vol. 3 No. 3

Table of Contents

Doctor with syringe ©Brand X Pictures A Booster Shot for Vaccine Production and Access

Vaccines once represented a good business opportunity for drug makers. But where 25 companies used to churn out vaccines for the American market, today only five remain. If any one of them cannot produce its usual quantities, the nation faces the prospect of vaccine shortages, such as those that occurred in 2001 and 2002.

Even when supplies are plentiful, fully one-fourth of preschool children do not get all of their recommended shots. Many factors, including lack of health insurance and decisions by insurance providers not to cover immunizations, keep both children and adults from getting all of the vaccinations they need to fend off potentially fatal but very preventable diseases.

The nation needs a new approach to financing and distributing vaccines, one that shifts the federal government's role from simply purchasing large quantities of vaccines to ensuring that everyone gets fully immunized, says a new report from the Institute of Medicine. The report proposes a three-part plan that includes a federal mandate to insurers to cover required immunizations, a subsidy to fund this mandate, and a voucher program to enable those without insurance to receive vaccines, too.

Currently, for children alone, the U.S. government purchases up to 55 percent of vaccines in that market, using its buying clout to negotiate large discounts that save money, but these savings also dampen manufacturers' enthusiasm to pursue vaccine production. The subsidy would create incentives for companies to develop new vaccine products and also induce firms to focus on vaccines that would have the broadest benefits.

The value of the subsidy for each existing and new vaccine would be based on the product's societal benefits, such as its ability to enhance quality of life, increase life spans, reduce future medical costs, and increase individuals' productivity by keeping them healthy. The extent to which the vaccine would protect others besides the recipient from disease will also be an important factor. Vaccine makers could charge more than the subsidy value, or make vaccines that do not meet the requirements for subsidizing -- such as products that protect only the recipient -- if they see a good market opportunity, but insurance plans should not be mandated to cover these products, the report says.

If the federal government implements this plan, it will probably spend more on vaccines. However, these increases would be offset at least in part by savings generated through greater disease prevention and a healthier, more productive work force as well as benefits associated with future innovations in vaccine development.   -- Christine Stencel

Financing Vaccines in the 21st Century: Assuring Access and Availability. Committee on Evaluation of Vaccine Purchase Financing in the United States, Board on Health Care Services, Institute of Medicine (2003, approx. 200 pp.; ISBN 0-309-08979-4; available from the National Academies Press, tel. 1-800-624-6242; $32.00 plus $4.50 shipping for single copies).

The committee was chaired by Frank Sloan, J. Alexander McMahon Professor of Health Policy and Management, and professor of economics, Duke University, Durham, N.C. The study was funded by the Centers for Disease Control and Prevention.

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Copyright 2003 by the National Academy of Sciences