Government intervention wooed Big Pharma back to loser vaccines that would have otherwise only thrived in totalitarian countries where the health of the government trumps that of the citizen.
By Patricia Adams and Lawrence Solomon for The Epoch Times
Vaccines are hopeless losers, Big Pharma concluded decades ago. In 1985, vaccines represented a mere one quarter of 1 percent of worldwide pharmaceutical sales, making them an all-but-irrelevant segment of the otherwise booming $100-billion-a-year pharmaceutical industry. Vaccines were not only a distraction, keeping Big Pharma from concentrating on developing blockbuster drugs to address major diseases; vaccines were also hurting their bottom line. “All vaccines were losing money,” recalled former CEO Claude Vezeau of IAF BioChem International, Canada’s largest vaccine maker in the 1990s.
To rationalize the pharmaceutical industry, Big Pharma had been ditching vaccine manufacturing. Between 1968 and 1977, more than half of America’s vaccine producers shut their doors. By 1980, just 10 remained, and even those 10 had streamlined their operations by shedding some vaccines in their product lines. By the 1990s, 10 of the 15 childhood vaccines had sole manufacturers, allowing them to raise prices severalfold.
The ability to charge monopoly prices did little to warm Big Pharma to vaccines. The market for particular vaccines tended to be small, with little repeat business. Moreover, much of the public didn’t see value in many vaccines, regardless of price. “People are willing to pay more for a bottle of headache tablets than they are for a vaccine that will protect them for many years,” lamented Alan Davies, the head of money-losing Connaught Antitoxin Laboratory.
Worse, vaccine failures were leading to hundreds of lawsuits over claims of injuries and death, giving Big Pharma a black eye with the public and an immense financial headache. In the case of the vaccine for DTP (diphtheria, tetanus, and pertussis), the number of lawsuits was growing exponentially in the 1980s. Lederle, the only U.S. manufacturer that hadn’t exited the DTP vaccine business, was saddled with a liability estimated to be 200 times greater than its annual sales. Anti-vax sentiment dominated Big Pharma.
Not so with the U.S. government health establishment, which saw vaccines as silver bullets that would one day be able to lower health care costs by eradicating disease.
To achieve what it saw as vaccines’ potential, the federal government decided to overcome Big Pharma’s aversion by protecting manufacturers from liability, on the rationale that vaccine companies shouldn’t be held accountable for unavoidable casualties. According to legislation passed in 1986 (pdf), “No vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine after Oct. 1, 1988, if the injury or death resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.”
But protection from liability wasn’t enough, because much of the public had for decades been skeptical about the value of vaccines, limiting pharma’s prospects for profitability. Economic models that assessed the cost-benefit of vaccines also showed mixed results. Such pessimism stemmed from a “systematic undervaluation of preventive treatment,” explained a landmark 1985 Institute of Medicine and National Research Council report that recommended urgent federal government intervention to reverse the decline of the vaccine industry. It attributed the undervaluation of vaccines to media coverage that highlighted adverse reactions, ignorance among patients and their physicians, and the failure to recognize that, although an individual may correctly assess that he or his children would not benefit from being vaccinated, the “vaccination of an individual conveys a benefit to other members of society by protecting them against disease. Thus, total benefits from immunization programs may be greater than the sum of benefits to each recipient.”
To overrule the public’s reluctance to take vaccines in profitable numbers, the government progressively augmented the number of mandated vaccines, giving manufacturers an ever-larger guaranteed market. As another sweetener, governments became the largest purchasers of vaccines, sparing the manufacturers’ marketing costs.
Big Pharma now had a can’t-lose business proposition: government-guaranteed payments for millions of captive customers who had little choice but to inoculate their children and no ability to hold companies accountable if their products caused harm. This government intervention in what had been a relatively free pharmaceutical market radically changed Big Pharma’s attitude, eliminating the industry’s perception of vaccines as risky, money-losing sidelines. Vaccines soon became a burgeoning growth area in Big Pharma’s portfolio.
Without the past support of Western governments, the free market would have largely done away with vaccines because too few wanted them, most especially Big Pharma. Vaccines would only have thrived in totalitarian countries such as those of the then-Soviet Union and communist China, where the health of the government trumps that of the citizen.
Without the continuing support of Western governments, today’s vaccine industry would again turn anti-vax, as it had in its pre-1985, free-market days. Big Pharma’s resolve to withdraw from the industry would only be steeled by the track record of COVID-19 vaccines, where studies almost daily report high levels of injuries and deaths attributed to the vaccines. Those costs, which are mostly borne by the vaccinated, would have bankrupted Big Pharma but for their exemption from liability. Unlike governments, which are notoriously poor at picking winners, Big Pharma can spot losers when it sees them, and knows how to protect itself from governments that don’t.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
Patricia Adams is an economist and the President of the Energy Probe Research Foundation and Probe International, an independent think tank in Canada and around the world. She is the publisher of internet news services Three Gorges Probe and Odious Debts Online and the author or editor of numerous books. Her books and articles have been translated into Chinese, Spanish, Bengali, Japanese, and Bahasa Indonesia.
Lawrence Solomon is an Epoch Times columnist, author of 7 books, and executive director of the Toronto-based Consumer Policy Institute.