The economics of vaccines

The 14th International AIDS Conference in Barcelona lasted for five days, and on its jam-packed agenda there was one plenary session about HIV vaccines. Most news coverage focused on the wildfire spread of the pandemic in Asia and Africa, the political challenges of a global war on AIDS, and the high cost of treatments. Little was reported about the need for greater international efforts to design, develop, and test vaccines for HIV/AIDS. Although the U.S. National Institutes of Health now spends 15% of its total AIDS budget on vaccine related research, the development of this and other crucial vaccines is low on the agenda of most multinational drug companies. Dr. Rino Rappuoli, vice president for vaccine research at Chiron SpA, a European subsidiary of U.S.-based Chiron Corporation, gave a keynote speech in June at a scientific symposium on vaccines held by the Giovanni Armenise-Harvard Foundation, which supports multidisciplinary, basic science research at Harvard Medical School and several leading Italian institutions. Journalist Patricia Thomas was on hand this year to summarize the scientific proceedings, and she was struck by Rappuoli’s speech, which summarized some of the economic barriers to developing vaccines. Thomas is author of  Big Shot: Passion, Politics, and the Struggle for an AIDS Vaccine, an award-winning nonfiction narrative published in September 2001. She is presently the Visiting Scholar at the Knight Center for Science and Medical Journalism at Boston University. Here, Thomas adds her own perspective on how the economics of vaccine development undermines public health.

Patricia Thomas

In explaining why incentives for vaccine research and development must be changed, Dr. Rino Rappuoli cited the unparalleled public health impact of vaccines: mass vaccination has reduced the incidence of nine devastating diseases by more than 97 per cent worldwide, and has eradicated two of them (see chart below). Historically, vaccines are the only weapons that have ever defeated epidemic diseases. Smallpox was eliminated by immunization, and the eradication of polio is just around the corner. But as Rappuoli pointed out, although vaccines are the most cost effective medical intervention ever known, development of new vaccines is often undermined by economics.

Many of his points were ones I had made repeatedly last Fall, when Big Shot was published and I gave a series of lectures on AIDS vaccines at universities and research institutions around the United States. Four years of researching my book left me appalled at how politics, power, and money have slowed the quest for safe, effective vaccines to prevent HIV/AIDS – which is a major scientific challenge under the best of circumstances. It was not easy to design drugs to treat HIV infection, either, yet pharmaceutical and biotech companies have come up with an ever-growing list of therapeutic agents over the past decade. Why so much progress on one front but not the other?

Mass vaccination has reduced by more than 97 per cent the incidence of nine devastating diseases and has eliminated two of them.

For starters, private companies find vaccines less financially rewarding than drugs. In 2001, the global marketplace for therapeutic drugs exceeded $300 billion, whereas worldwide vaccine sales were only about $5 billion. A single, heavily promoted drug used to treat a common malady of affluent consumers, such as high cholesterol or ulcers, can easily chalk up annual sales of $1 billion. Even less common diseases, such as HIV/AIDS, can be highly profitable in the right setting: a one year supply of an AIDS “cocktail” can sell for more than $10,000 per patient in the United States or Western Europe. (In much of the developing world, such treatments remain out of reach even at reduced prices negotiated since 2000.) It is not hard to understand why major pharmaceutical companies, capable of developing drugs and preventive vaccines, generally invest in drugs that patients must take every day rather than shots given only occasionally. Drug company executives have investors to answer to, after all.

Of all the vaccines that companies might choose to work on, the least attractive are those aimed at conquering diseases that hit hardest in countries with limited public health budgets and low per-capita incomes. Taken together, AIDS, tuberculosis and malaria kill 5.2 million people each year – most of them living in less-wealthy nations. Those three major killers aside, an additional 3 million people die annually from diseases that could be prevented by immunization, if only existing vaccines were universally available. One in four children around the globe still doesn’t get basic pediatric immunizations, and although most of these kids live in developing nations, American children are also at risk. This year there have been shortages of many vaccines that are ordinarily required for school enrollment, including those to prevent diphtheria, tetanus and pertussis (DTaP), measles, mumps and rubella (MMR), chickenpox, and pneumococcus.

One reason for these shortages is that only four major pharmaceutical companies still manufacture standard childhood vaccines, compared with more than a dozen 20 years ago. Low expectations about profits and market size, concerns about a patchwork quilt of regulations, worries about liability and a tense atmosphere created by antivaccine activists—are all factors that have driven companies out of the vaccine business.

Fortunately, there are still scientists who want to defeat humankind’s most lethal enemies by inventing vaccines against HIV, TB, and malaria. Several major pharmaceutical companies, including Merck and Wyeth, are working on some of these vaccines. But many of the most innovative ideas – including some of those being developed by Big Pharma – were born in academic laboratories, in small biotechs founded on a single novel idea, or in medium-sized companies like Chiron.

Although ideas about how to make such vaccines are relatively cheap, hundreds of millions of dollars are needed to propel them through the development pipeline and into the clinic. Better mechanisms are needed for funding development of new vaccines, for insuring there will be money on hand to purchase newly approved products, and for making sure that existing vaccines reach the parts of the world hit hardest by infectious disease.

Vaccines are not a magic bullet, of course, and must be integrated into a broad approach to public health. Major investments by wealthy countries, as well as increased efforts by poor nations, will be needed to strengthen woefully inadequate clinical infrastructures. The benefits could be enormous. If global health spending increased by $66 billion per year over current levels, estimated economic gains of $360 billion per year would be realized within 15 years, according to the Commission on Macroeconomics and Health, an expert panel convened by the World Health Organization. These gains would be realized as people in poor countries live longer, enjoy better health, and increase the productivity of their societies.

Industrialized nations can take the first steps by increasing support for the Global Fund to Fight AIDS, Tuberculosis, and Malaria (which underwrites prevention and treatment efforts), and for the Global Alliance for Vaccines and Immunizations (which buys pediatric vaccines and distributes them in 60 of the world’s poorest countries). Private foundations and individuals can help by backing organizations such as the International AIDS Vaccine Initiative. Developing countries will be able to assume more responsibility for the health of their citizens if rich countries provide debt relief. The U.S. Congress also can help by continuing to increase spending on basic vaccine-related research and on public health, and by passing legislation that provides tax incentives to private companies working on vaccines against AIDS, TB, and malaria. Collaborations between public institutions and private companies have worked in the past, and they can do it again.