Since last June, Elisabeth Rosenthal at The New York Times has been putting together a deeply reported investigative series on healthcare costs in the U.S. called “Paying Till It Hurts.” The primary theme of the series is to identify the key factors behind the inordinately greater costs of medicine and procedures in the U.S. relative to other countries, particularly those with better health outcomes than here.
Beyond being a well-regarded journalist, often focusing on infectious diseases, Rosenthal was a practicing emergency physician until 1998 at what is now New York Presbyterian Hospital. She earned her M.D. at Harvard University and was board-certified in internal medicine.
Part 8 of the series appeared this morning on the frontpage of the Times, entitled, “The Price of Prevention: Vaccine Costs Are Soaring.” Rosenthal opens with the story of a San Antonio pediatrician whose modest stockpile of vaccines–$70,000 worth–required that she remortgage her home to ensure access for her patients.
Although specific profit numbers are nearly impossible to obtain, Rosenthal remarks that vaccines have become profit centers for pharmaceutical and biomanufacturing companies after years of having been loss leaders. She cites CDC data that the out-of-pocket costs for fully immunizing a privately-insured child up to age 18 went from $100 in 1986 to $2,192, although it’s not clear how much of this reflects the increase in the number of immunizations over that time period.
Rosenthal singles out Pfizer’s Prevnar 13, a vaccine that immunizes against 13 strains of bacteria that cause pneumococcal pneumonia, brought the company $4 billion in revenue last year at about $136 per shot.
Of course, public health initiatives cost money. Unfortunately for those dedicated professionals in the field, when public health initiatives work, we don’t necessarily see the benefits of disease being prevented. But here’s one recent dataset from the Vaccines For Children program that was initiated by Congressional appropriations in 1994. The VFC program was intended to overcome financial and logistical barriers to childhood vaccinations by low-income families, ultimately achieving 90% immunization. The latest numbers from the CDC in a April 25, 2014 paper inMorbidity and Mortality Weekly Report detail the human and financial impact of the VFC on the national vaccination initiative:
Among 78.6 million children born during 1994–2013, routine childhood immunization was estimated to prevent 322 million illnesses (averaging 4.1 illnesses per child) and 21 million hospitalizations (0.27 per child) over the course of their lifetimes and avert 732,000 premature deaths from vaccine-preventable illnesses.
Preventing 732,000 deaths is the equivalent of saving the lives of every man, woman, and child in the cities of Boston and West Palm Beach, Florida, combined.
But, again, vaccines cost money. So how are we doing?:
Vaccination will potentially avert $402 billion in direct costs and $1.5 trillion in societal costs because of illnesses prevented in these birth cohorts. After accounting for $107 billion and $121 billion in direct and societal costs of routine childhood immunization, respectively, the net present values (net savings) of routine childhood immunization from the payers’ and societal perspectives were $295 billion and $1.38 trillion, respectively.”
Why have costs increased?
Rosenthal points to several factors accounting for increased vaccine costs, such as increased complexity in the vaccine production methodology. Depending on the company, new biological systems have to be validated with the FDA, such as moving from a traditional egg-based influenza vaccine to a more rapid and responsive method using cultured mammalian cells.
I’d also expand on Rosenthal’s interview with a Pfizer spokeswoman on the tremendous investments of dollars and time in establishing and validating a new biomanufacturing facility. Merck, for example, invested over $1 billion over the last nine years to expand its vaccine production capabilities, much of which went to a brand-new facility here in Durham, North Carolina, one of the three cities that comprise the Research Triangle area.
At each stage of building, the facilities are generally required to operate for two years or more without actually making a single vaccine. As part of FDA validation, the plant has to run a dummy solution through the entire production line to reproducibly demonstrate sterility of the process, lack of foreign particulate matter, proper freeze-drying of vaccines for reconstitution, etc.
As regards product pricing, one can view drug companies in a positive or negative light–what is fair in a marketplace that provides a temporary monopoly in return for a company assuming the risk that their product might never be approved for sale?
(And before making our conclusion, we should all check our retirement mutual funds to see how dependent our future is on the financial success of drug discovery and development.)
Rosenthal cites one source on the adoption of the more limited Prevnar 7 by the country of Singapore: its cost increased by 50% after the government made its commitment.
So, vaccine developers truly need to be sensitive and responsive to the criticism of opportunistic vaccine pricing. This April at the Association of Health Care Journalists annual meeting in Denver, I watched as keynote speaker and academic vaccine developer, Paul Offit, M.D., dismissively answered a question from Rosenthal about corralling vaccine costs by spouting the dated chestnut that vaccines don’t bring profits, calling them “the ‘stepsisters’ of the pharmaceutical industry.”
An unforeseen cost of the antivaccination philosophy
But in the middle of Rosenthal’s piece, I found a tidbit that I had not fully appreciated previously:
There are, of course, some good reasons vaccines like Prevnar are more expensive than previous offerings. Vaccine trials, which once included thousands of volunteers, must now include tens, if not hundreds of thousands of people, as fears about side effects like autism have grown, even though many studies have concluded that such worries are unfounded.
So while vaccine costs may have gone up 21-fold since 1986, the costs of doing clinical trials have gone up by tens to hundreds of times, primarily as a regulatory overreaction response to concerns of various vaccine refusal communities about potential adverse effects that have either proven extremely rare are not at all causally related to vaccination. Few fully appreciate that incrementally refining the probability of a side effect from 0% to 0.0001% (1 in 100,000) increases development costs by factors of 10 or 100.
So are the sample sizes used in vaccine clinical trials truly justified in the face of increased financial burden on the American healthcare system?
Rosenthal’s exhaustive but eminently readable piecepoints to another culprit, not so much in terms of increased costs but in countering vaccine availability: insurance companies. Many doctors in her report cite dramatically decreased reimbursement rates for immunizations they might give in their practice. Some physicians must even operate at a loss to ensure that their longstanding patients receive vaccines.
There’s certainly enough blame to go around. But who will be responsible for solutions?