Flu Vaccine Preparedness Press Kit | Drug Safety News

Liability Concerns Are Not Affecting Vaccine Production

Research shows the industry is investing in vaccine production, even without laws to limit victim's rights.

As he did last year with the flu vaccine shortage, President Bush is again trying to blame the civil justice system for potential problems in the delivery of vaccines for the bird flu. But as a number of experts noted during last year's shortage, liability concerns have not affected vaccine production.

In fact, a number of companies have recently increased their investment in vaccine production even without additional liability protections. As the San Francisco Chronicle recently reported, the vaccine sector is "drawing increased interest from big pharmaceutical firms." And Reuters reported that industry experts are projecting that vaccines will show "accelerated growth in coming years":

"Vaccines have traditionally been viewed as a low-growth, low-price business compared with mainstream therapeutic pharmaceuticals. But the arrival of new technologies and a shake-out in the sector, which has seen a number of vaccine makers quit the business, is changing that perspective, and many industry experts now expect vaccines to show accelerated growth in coming years. Britain's GlaxoSmithKline, one of the world's leading suppliers, forecast in June the total vaccine market could quadruple by 2015 to between 17 billion and 24 billion pounds, from 5.2 billion today."

Experts: Liability Concerns Don't Affect Vaccine Production

• Even the pharmaceutical industry downplayed the lawsuit issue for the flu vaccine. "[P]roduct liability lawsuits are one of the many issues, but by no means are they the only challenge and only issue, and not even the biggest issue," said Jeff Trewhitt, a spokesman for the Pharmaceuticals Manufacturing and Research Association. [Raleigh News and Observer, 10/29/04]
  
  
• Dr. Orenstein, who for 12 years headed the vaccine program for the Center for Disease Control, said that liability was never the issue. When asked recently whether or not liability concerns led to the flu vaccine shortage, Dr. Orenstein responded, "I have not seen liability as a major problem with the flu supply to date." [CNN, "Live From…," 10/26/04]
  
  
• The National Vaccine Advisory Committee determined the shortage did not come about because of liability concerns. The National Vaccine Advisory Committee concluded in a January 2003 report "current vaccine shortages do not appear to be liability related." [US Department of Health and Human Services, 1/03]
  
  
• The General Accountability Office reports on the flu vaccine shortage do not even mention liability concerns. The GAO, in reports and testimony, did not once mention liability as a concern or cause of any problems. [See General Accounting Office, "Flu Vaccine: Supply Problems Heighten Need to Ensure Access for High-Risk People," GAO-01-624, 5/15/01; Janet Heinrich, Government Accountability Office (GAO), Testimony Before the U.S. Senate Special Committee on Aging, 9/28/04, www.gao.gov]
  
  
• Anthony Fauci of the National Institutes of Health said that liability is only a "very small part of the problem." "'Bush and Vice President Dick Cheney have tried to frame the issue as part of the administration's overall health care agenda, saying it's the threat of lawsuits that keeps manufacturers from entering and staying in the vaccine business. But that's only a very small part of the problem,' said Anthony Fauci, the infectious disease chief at the National Institutes of Health and a chief [HHS Secretary] Thompson adviser. More significant, he said, are the low-profit margin vaccines provide, unpredictable demand and the complexity of the manufacturing process. 'The fragility of the vaccine enterprise is an issue that has been present for decades,' Fauci said. 'It has been an accident waiting to happen.'" ["Flu Vaccine an Issue in Presidential Race," Laura Meckler, Associated Press, 10/20/04]
  
  
• Dr. James Young, President for Research and Development of MedImmune, said that liability is not the main problem for manufacturers. At a House Government Reform Committee hearing held on October 8, 2004, Dr. Young stated that liability is not the biggest deterrent for manufacturers. He stated that the business of flu vaccine production is too unpredictable and suggested that to increase production of vaccines the government should encourage all Americans to get a flu vaccine every year, thereby increasing the profitability and stability of the vaccine market. [National Public Radio, "Morning Edition," 10/19/04]
  
  
• Prominent physician, and professor of medicine, claims the flu vaccine business is not profitable, so manufacturers have no incentive to produce the vaccine. "Without a patent to insure high prices, the profit margins for 'generic' vaccines is narrow. Plus, proper sterilization methods are quite expensive and cut further into the profit margin. Forget altruism, or concern for patients; drug companies are not eager to make a product they can't make a lot of money on. The only way to insure adequate supplies and reserves is for the government to step in and subsidize the manufacturing of vaccines. Yet last year Congress approved only half the $100 million requested to develop better flu vaccines and improve the distribution system." ["Vaccine Poker," Dr. Marc Siegel, The Nation, 11/1/04]
  
  
• Harvard University professors: Litigation is not a substantial burden on vaccine manufacturers; Found only 10 cases over last 20 years. In a recent edition of the Journal of American Medical Association, two professors from the Harvard School of Public Health wrote that litigation is not a substantial burden on vaccine manufacturers. In fact, they found only 10 reported cases involving vaccines over the past 20 years: "We independently searched reported jury verdicts and judicial decisions for cases involving flu vaccine and found only 10 reported cases in the last 20 years… Overall, there is little evidence of significant litigation involving the flu vaccine. Although the available data sources are not comprehensive and the possibility of additional unreported lawsuits cannot be excluded, by all appearances the situation is not one in which a rational observer would conclude that litigation is a substantial burden on manufacturers." ["Legal Concerns and the Influenza Vaccine Shortage," Michelle M. Mello, JD, PhD, MPhil, Troyen A. Brennan, MD, JD, MPH, The Journal of the American Medical Association, 10/12/04]

Industry Investing in Vaccine Production, Even Without Additional Liability Protections

Merck Investing in Vaccine Production:

• Merck Annual Report: "We are Rapidly Building Our Capacity to Successfully Compete in…New Vaccine Markets." "The foundation of Merck's strength, and the engine of its growth, has always been the novel medicines we discover and develop to meet the healthcare needs of patients, physicians and payers. Merck's franchises continue to drive growth, supported by new products, indications, formulations and clinical trials. At the same time, we are rapidly building our capacity to successfully compete in new therapeutic areas such as diabetes, insomnia and cancer and new vaccine markets. That capacity has been further enhanced by the redeployment of the talented Merck sales representatives who had previously supported Vioxx." [Merck & Co. Annual Report, 2004, p.12 (pdf p.14)]
  
  
• Merck Began Construction of Vaccine Manufacturing Facility Last Year. According to the company's 2004 annual report, Merck began construction of a new vaccine manufacturing facility in Durham, NC in October 2004. [Merck & Co. Annual Report, 2004, p.14 (pdf p. 16)]
  
  
• Merck Suggested that Vaccine Development was Part of the Company's Values. In the company's 2004 annual report, Merck suggested that vaccine development is part of the company's "values." In a section of the report discussing the company's commitment to "broadening access to medicines and information", the company began the section with the following title: "Living our values; Getting our medicines and vaccines to people in need." [Merck & Co. Annual Report, 2004, p.16 (pdf p. 18)]

Wyeth Investing in Vaccine Production:

• Wyeth Annual Report: Vaccines are a "Principle Product" for Company's Pharmaceutical Division. In its 2004 annual report, Wyeth stated that vaccines are among the "principle products" for the company's pharmaceutical division, which provides 80 percent of all the company's worldwide net revenue in 2003 and 2004. [Wyeth Annual Report, 2004, p.66 (pdf p.68)]
  
  
• Wyeth Annual Report: Company Will Continue to Develop and Produce New Vaccines. "Fueling an R&D Engine for Growth. We believe that pharmaceuticals are very effective and affordable tools for addressing serious illnesses. In the interest of public health, our Company continually seeks to discover and develop new, high-value therapies using three major discovery platforms: small molecules, biopharmaceuticals and vaccines." [Wyeth Annual Report, 2004, p.5 (pdf.p 7), http://library.corporate-ir.net/library/78/781/78193/items/141903/AR04.pdf] "The Company intends to leverage its breadth of knowledge and resources across three scientific development platforms (traditional pharmaceuticals, biologicals and vaccines) to produce first-in-class and best-in-class therapies for significant unmet medical needs around the world." [Wyeth Annual Report, 2004, p.67 (pdf p.69)]
  
  
• Wyeth Recently Opened $2 Billion Facility that Will Include Production of Vaccines. "US drug [maker] Wyeth this month formally opened its Grange Castle, near Dublin in Ireland, biotechnology production facility which, with 1.2 million square feet of campus, it says, is one of the 'largest integrated biotech manufacturing facilities in the world and is expected to produce some of the company's most innovative products.' Wyeth invested nearly $ 2.0 billion in the unit. Among biotechnology products to be made at Grange Castle is the firm's rheumatoid arthritis drug Enbrel (etanercept), for which Wyeth has marketing rights outside the USA. Prevenar (7-valent pneumococcal vaccine for children) is also expected to be produced there, as is the newly US Food and Drug Administration-approved intravenous antibiotic Tygacil (tygacycline)." [Pharma Marketletter, 9/19/05]
  
  
• Wyeth CEO: "Wyeth has helped rejuvenize overall interest in the vaccine field." "Prevnar is another absolutely remarkable story. It's the first ever $1 billion a year vaccine in terms of sales, and has really set a new paradigm for what a vaccine can be. And I think to a certain extent Wyeth has helped rejuvenize overall interest in the vaccine field by handling Prevnar not as another kind of commodity vaccine, but really as the very high-tech biotech product that it is. In the way we invested in it, the way we developed it, the we we've positioned it, and the kind of value we can capture I think Prevnar represents a new way of thinking about vaccines. It's its fifth anniversary in the United States, and again has a very now well-established track record in terms of efficacy and safety, and is really making a significant contribution to overall public health in the United States and also around the world." [Robert Essner speaking at the UBS Global Life Sciences Conference, FD (Fair Disclosure) Wire, 9/26/05]

Glaxo Smith Kline Investing in Vaccine Production:

• GlaxoSmithKline (GSK) Investing Heavily in the Vaccine Market. "The world's second-largest drugmaker by sales, GlaxoSmithKline, has taken a further leap into the vaccines sector with the signing of a definitive agreement to acquire Canada-based ID Biomedical, an integrated biotechnology firm dedicated to the manufacture and development of innovative vaccines, including for influenza. The move comes hot on the heels of GSK's purchase of US drug major Wyeth's Marietta, Pennsylvania, vaccines research and production facility (Marketletter September 12) and not long after its announcement that it is to buy another US vaccines maker, Corixa, in a $ 300.0 million deal (Marketletter May 9). The UK group's existing vaccines business brings in annual revenues of around L570.0 million ($ 1.05 billion), and the company recently said that it plans to launch five major new vaccines from its own research over the next five years with a combined market potential of up to $ 18.3 billion a year." [Pharma Marketletter, 9/19/05]
  
  
• GSK Has More than 1,000 Scientists Working on Vaccine Development. According to the company's 2004 annual report, GlaxoSmithKline (GSK) has more than 1,000 scientists devoted to vaccine development: "Over 1,000 scientists are employed who are devoted to discovering new vaccines and developing more cost-effective and convenient combination vaccines to prevent infections that cause serious medical problems worldwide." [GlaxoSmithKline Annual Report, 2004, p.13 (pdf p.15)]
  
  
• GSK Annual Report: "The Vaccine Business had a Strong Year" in 2004. "The vaccines business had a strong year, with sales up 11 per cent to £1.2 billion. Several key products are driving growth - Pediarix/Infanrix up 12 per cent to £357 million, Priorix up 14 per cent to £95 million and Fluarix up 38 percent to £79 million." [GlaxoSmithKline Annual Report, 2004, p.62 (pdf p.64)]
  
  
• GSK Forecasts a Quadrupling of Vaccine Market Over Next Ten Years. "Vaccines have traditionally been viewed as a low-growth, low-price business compared with mainstream therapeutic pharmaceuticals. But the arrival of new technologies and a shake-out in the sector, which has seen a number of vaccine makers quit the business, is changing that perspective, and many industry experts now expect vaccines to show accelerated growth in coming years. Britain's GlaxoSmithKline, one of the world's leading suppliers, forecast in June the total vaccine market could quadruple by 2015 to between 17 billion and 24 billion pounds, from 5.2 billion today." [Reuters, 10/31/05]

Novartis Investing in Vaccine Production:

• Novartis Made Bid to Acquire Vaccine Manufacturer; Bid is an Indication that Vaccine Sector is "Drawing Increased Interest from Big Pharmaceutical Firms." "Chiron Corp.'s largest shareholder, Novartis AG, is offering $4.5 billion to acquire full control of the troubled Emeryville biotechnology firm, which triggered a public health crisis last year when its entire U.S. flu shot inventory was lost to bacterial contamination. Novartis, a major international drug firm based in Basel, Switzerland, that now owns a 42.2 percent stake in Chiron, said Thursday that it will pay $40 per share for the 112 million shares held by other investors. … The acquisition would give Novartis entry into the vaccines business, a sector that is drawing increased interest from big pharmaceutical firms. Chiron received the merger offer Wednesday night, after Novartis' inspection of its books. Novartis, with a market capitalization of $114 billion compared with Chiron's $8 billion, sells pharmaceuticals ranging from cancer to cardiovascular treatments, over-the-counter consumer health products, and generic drugs through its Sandoz division." [The San Francisco Chronicle, 9/2/05]
  
  "The drug maker Novartis said on Monday that it would buy the remaining stake in the U.S vaccine maker Chiron that it does not already own for $5.1 billion, as governments raise spending on treatments for diseases like avian influenza. The Swiss company, which already owns 42 percent of Chiron, raised its cash bid for the remainder to $45 a share, or about $600 million more than a bid made Sept. 1 that was rejected as inadequate. It was 3.7 percent above Chiron's closing stock price on Friday." [Reuters, 10/31/05]
  

November 3, 2005