Special Report

Bureaucratic Outbreak

Wonder why flu vaccines are running out? Blame the Centers for Disease Control and the absence of a capitalist dynamic.

By 12.17.03

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NEW YORK -- Just when Americans think they have nothing left to worry about except overeating and obesity, along comes an influenza epidemic that shows just how broken-down our public health systems can be.

Three dozen people have already died in a flu epidemic that promises to be one of the worst in recent memory. In Malad, Idaho, 2,000 people have taken sick and church services and Christmas festivities have closed down. New York hospital emergency rooms are jammed with sick children. About 36,000 Americans die annually of flu complications.

This year's total is likely to be much higher. "These viruses are relatively mild strains," says Jack Calfee, drug policy expert at the American Enterprise Institute. "But if we hit a real killer strain like we encountered in 1918, there wouldn't be much we could do about it."

How did a country that worries itself to death over every little environmental carcinogen and insists that every slice of processed cheese be individually wrapped suddenly fall flat over such a time-tested procedure as flu vaccinations?

The problem lies in the nature of our health concerns. Americans are very good at avoiding "Type 1" accidents, where somebody does something wrong and gets blamed for it. What we tend to ignore are "Type 2" accidents, where somebody is prevented from doing something and other people suffer the consequences.

WHEN "SWINE FLU" HIT IN 1975, President Gerald Ford called for a massive government vaccination program. At the time there were nearly 30 vaccine manufacturers in the United States. Leery of the growing rash of medical malpractice, they declined to participate. Every vaccine will produce an adverse reaction -- even paralysis or death -- in a one or two out of a million or more people. With malpractice awards running higher and higher, the liability exposure was becoming unbearable.

So Congress set up a special fund to protect the manufacturers. As Peter Huber documents in Liability: The Legal Revolution and Its Consequences (1988), Congressional accountants predicted with perfect precision the number of vaccines to be administered, the number of adverse reactions that would occur, and the number of lawsuits that would result. However, they underestimated the damage awards by a factor of ten. Trial lawyers were much more efficient at wringing damages out of juries than anyone had anticipated.

Realizing the problem was endemic, Congress passed the National Childhood Vaccine Injury Act of 1986, which established the National Vaccine Injury Compensation Program (VICP). Like Worker's Compensation or the Federal September 11 Compensation Fund, VICP compensates victims for medical and economic damages according to fixed schedules. What is eliminated is non-economic "pain and suffering" and "punitive damages" that ring up the legal jackpots.

Lawyers are ingenious, however, and soon circumvented the law by going after portions of the product that were "not essential to the vaccine." The most common target has been thimerosal, a mercury-based compound that has been used to preserve vaccines from spoliation since the 1930s. Based on the usual anecdotal evidence, the drumbeat has begun that thimerosal is responsible for a "national epidemic of autism."

"Before the 1990s, 1 in 10,000 children were diagnosed with autism. But in the past decade, as the government has increased the number of mandatory vaccines, some recent studies suggest the rate of autism has risen to 1 in about 250 children," said one typically breathless recent news report. "[Our news organization] has spent the past three months investigating claims that government regulators and some pharmaceutical companies knew of the dangers, but never told the public."

Based on such logic, you could also prove that thimerosal has caused the rise in obesity or the decline in college-board scores. Nonetheless, the government and manufacturers agreed to eliminate thimerosal from children's vaccines in 1999. Pending lawsuits have convinced most drug companies that vaccines are a risky and losing enterprise. Today only two companies remain -- Wyeth and Chiron. Glaxo, the largest vaccine maker in the world, sells flu vaccines everywhere except in the United States. "Bringing our European products to the U.S. would involve extensive clinical trials fore the FDA," says Danielle Halstrom, communications representative for Glaxo. "That would be a significant investment."

In 2002 the field shrunk even further when Wyeth dropped FluShield, its adult product, and Pnu-Immune-23, its vaccine for children. Instead, the company pursued Flu-Mist, a nasal spray that finally won FDA approval last June. (The manufacturer, MedImmune, is a wholly owned subsidiary of Wyeth.) Beyond that there is very little research being done. "When you're vaccinating 70 million people each year, something bad is going to happen somewhere," says Calfee, of AEI.

Even without liability concerns, vaccines are an unrewarding market. As with most preventive measures, people tend to wait until they are threatened with the disease before buying. Last year the two manufacturers made 95 million doses but only sold 83 million during a mild flu season. The surplus 12 million doses had to be destroyed. This year, just to be safe, they cut back to 85 million.

"Making vaccines is a very time-consuming process," says Calfee. "The decisions are made six to eight months in advance. Every February officials from the Centers for Disease Control and the manufacturers get together to evaluate what's coming out of Hong Kong and other parts of the world. Then they take a disabled strain of the virus and grow it in chicken eggs. It's not until June or July that you have a product."

After evaluating this year's evidence, the committee decided to go with protection against the "Panama" strain that was almost identical with last year's. A dark horse, however, was a new strain just emerging out of the Fuji province of China. Under the consensus system, both manufacturers went along with CDC's choice for the Panamanian strain. Now the Fujian strain has proved far more virulent.

OUR FLU PROTECTION CURRENTLY resides in a system that is perilously close to the old Soviet "planning" model. One big government institution -- the CDC -- directs the decisions of two giant manufacturers.

What is missing here is the capitalist dynamic. If there were a dozen manufacturers operating independently, a couple would have undoubtedly taken a chance with the Fujian strain. One might have even bet the farm and produced an oversupply, taking the chance the other manufacturers would be caught short. That gambler would have made a fortune -- and the country would have had enough vaccines.

Instead, we have a lumbering bureaucracy whose main product is platitudes. "We're exploring all options," said Tom Skinner, spokesman for the CDC. "We need more research. It's ridiculous to be relying on chicken eggs. We need new manufacturing methods." Did he have anything specific in mind -- something that's been tried in the laboratories or shown to work elsewhere?

"Not really," he said.

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About the Author
William Tucker is news editor for RealClearEnergy.org.