Wyeth quits flu manufacturing?
Oct. 24, 2004, 12:57AM
Shortage illustrates precarious balance of flu vaccine system
Suppliers fled the unpredictable market, saying it's too difficult to profit
By TONY FREEMANTLE
Copyright 2004 Houston Chronicle
After about 20 years in the difficult business of producing flu vaccines, the decision by Wyeth Pharmaceuticals to stop doing so boiled down to quite simple math. For the 2002 flu season, the company made and delivered 21 million doses to the U.S. market. But it was a mild season, and relatively few people wanted shots. Wyeth ended up throwing away 7 million doses, losing $30 million in the process.
That capped a string of five years in which the pharmaceutical giant lost $50 million on flu vaccines. The decision to bail out of the business altogether came quickly and easily. Wyeth's departure from the market in April was another blow to an already fragile flu vaccine supply system in the United States. It left only two companies with the task of making the 100 million or so doses needed to fight an illness that on average kills 36,000 people each year in this country and sends 200,000 more to the hospital.
The supply system was further shaken earlier this month when British regulators abruptly suspended the license of one of the surviving manufacturers, San Francisco's Chiron Corp., because of contamination
at its plant in Liverpool, England.
In one fell swoop, the supply of vaccines for this year's flu season was cut in half, leaving public health officials scrambling to redistribute the medications to those most at risk and raising the troubling question of why the richest nation on Earth is not able to guarantee an adequate supply of such a vital commodity.
Wyeth's unhappy experience in the flu vaccine market may provide at least some of the answers. Financially, it simply wasn't worth it. "Wyeth found itself in a situation where we were producing a vaccine that in the end we were unable to sell," said Peter Paradiso, Wyeth's vice president for scientific affairs. "The difficulties with vaccines in general are they are biological products. There's not a lot of margin, there's a lot of regulation, and there are issues of litigation."
The number of U.S. companies making vaccines against a wide range of diseases, including influenza, has been steadily declining for at least three decades, and shortages of one type or another are becoming increasingly common. In the 1970s, at least 25 companies were in the vaccine business; today only six companies supply the country, and one company is the sole provider of 21 different vaccines, according to the National Network for Immunization Information.
Part of the reason, again, is simple economics. Developing a single vaccine for the market can cost a company as much as $350 million before a single dose is sold. Globally, the vaccine market is worth about $6 billion, while the market value of a single prescription drug, like Lipitor, can be $10 billion, said Gary Poland, director of the vaccine research group at the Mayo Clinic in Rochester, Minn., and an adviser to the Centers for Disease Control and Prevention in Atlanta.
'No way' to profit
"The profit margin is just so slim," Poland said. "There is no way they (manufacturers) can sell enough to make a return on their investment." Because of the mutability of the virus that causes it, vaccines for the flu stand apart from other vaccines in that they have to be manufactured from scratch each season based on the best guess of public health officials as to what strain may be lurking around. Surpluses of the flu vaccine cannot be stockpiled, as with other vaccines, meaning that the unused doses each season are returned to the manufacturers and destroyed.
In addition, using technology that is at least 50 years old, it takes up to eight months to produce each season's vaccine, rendering suppliers unable to respond to fluctuations in demand or to unforeseen disruptions in supply.
U.S. public health officials estimated about 100 million doses would be needed for this year's flu season. Chiron was to supply 46 million to 48 million doses, and the French pharmaceutical company Aventis Pasteur was to produce 54 million.
But fluctuations in demand are almost as much of a problem and are one of the main reasons why in some years there are surpluses and in others shortages. The CDC recommends vaccination for the at-risk population only, which includes, among others, very young children and people older than 65. Experts estimate that on average only about 50 percent of the over-65 population takes heed.
They also believe that flu vaccines are "undervalued" by the general population, which is not included in the CDC's recommendation. "The problem is we don't value the vaccine enough," said Paul Offit, an immunology expert at Children's Hospital in Philadelphia who is writing a book about the vaccine industry. "It's somewhat of a Beanie Baby phenomenon. People get excited about the flu vaccine when they don't think there is going to be enough of it. If there was a universal flu vaccine recommendation, and we had sufficient infrastructure to deliver it, I think more companies would make it." Universal recommendation might go some way toward increasing and stabilizing the market, experts agreed. But it won't solve the problem entirely.
One solution, though not a short-term one, could be the development of new technologies to manufacture the vaccines, which would increase flexibility and cut the time it now takes to make them. Researchers are looking at two possible approaches: growing the vaccines in mammalian cells instead of eggs and genetically engineering flu strains.
"Government is at least starting to encourage new technology," said Paul Glezen, a professor of molecular virology and microbiology at Baylor College of Medicine and an epidemiologist at the college's Influenza Research Center. "That would provide a lot more flexibility. But we are not anywhere near tooling up for production."
In the interim, Glezen said, the Food and Drug Administration should streamline the process of licensing more production facilities to make the flu vaccination business more attractive to drug companies.
Apart from having to toss out millions of dollars worth of unused vaccine doses, Wyeth's decision to bail out of the market was in part prompted by the fact that to update its 120-year-old plant in Marietta, Pa., and comply with FDA regulations would have cost in the order of $300 million.
Before 1986, one of the main reasons manufacturers left the market was the question of liability. But Congress then created the National Vaccine Injury Compensation Program, a no-fault system that compensates people for injuries or other conditions caused by vaccines the government recommends.
The current shortages of flu and other vaccines are not liability related, in the opinion of the National Vaccine Advisory Committee. There is, however, now some movement in the Bush administration to
strengthen the compensation program.
Health and Human Services Secretary Tommy Thompson has also floated the idea of a "guaranteed market" for flu vaccines so manufacturers do not have to throw out unused doses at their own expense. Whether this would be enough to get companies like Wyeth back into the flu vaccine business in the future is far from certain, but for the present the company has no interest.
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