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Supply, Demand And Price

Essay by   •  October 26, 2010  •  889 Words (4 Pages)  •  1,393 Views

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Introduction

Prior to 2004, vaccinations to prevent the most common human diseases were readily available. In the 1950's, there were 26 pharmaceutical companies that made vaccines in the United States; however, by 2004 only four such companies remained. For instance, while the demand for the flu vaccine has risen sharply, the supply of the vaccine has declined; consequently, the price of the vaccine has increased. The problem has now reached widespread proportions. "Over the past three decades the vaccine infrastructure in the United States has steadily crumbled" (Serafini, 2006).

Supply

Since the 1950's, the supply of flu and childhood disease vaccines has continued to decrease due to financial reasons. Vaccine production hasn't traditionally been a lucrative business, and everything comes down to money (Serafini, 2006). It is not profitable enough for pharmaceutical companies to build expensive plants to supply the one or two doses needed for most vaccines when they can make more money manufacturing a drug that people will take daily for chronic conditions. Along with the decrease in the production of vaccinations by pharmaceutical companies, another major concern that is adding to the problem is lawsuits. "The vaccine industry today is worth $6.7 billion, approximately, and lawsuits out there are adding up. Damages being sought exceed $30 billion, total" (Serafini, 2006). The federal regulations for the manufacture of

vaccinations were getting tougher, making it even more expensive for vaccine makers to stay in business. So, as cost continued to increase for producers of vaccines, these companies decreased their supply and, in turn, raised their prices. Yet, the demand for vaccines continues to increase year after year.

Demand

Vaccines are needed in greater quantities than the pharmaceutical companies are manufacturing today. "Between 1998 and 2004, nine of the 12 vaccines routinely given to children were in short supply at one time or another" (Serafini, 2006). Only enough vaccines were produced for about 15 to 20 million of America's 300 million people during the 2003-2004 flu season. The 2000-2001 flu season was the last flu season in the United States that had more than one domestic flu supplier. Not long after that flu season, the demand began outstripping the supply (Serafini, 2006).

Prior to 2000, there was a demand for a vaccine to treat pneumococcus, which was a death sentence for a child infected with the bacteria. In 2000, Wyeth Pharmaceutical marketed a vaccine that guarded against pneumococcus in young children. In 2004, there was a short supply of the vaccine, and a very young child died because he only received two of the four recommended doses of the vaccination. The demand was larger than the supply, which caused prices to continue to climb.

Price

Vaccinations that were introduced years ago were priced at $10 to $20 per dose. Newer vaccinations are now priced in the range of $50 to $70 per dose. As the vaccine producers decrease, the price as well as the demand for the vaccines continues to increase. Because of the decrease in the number of pharmaceutical companies who manufacture vaccinations, Congress responded with the 1986 National Vaccine Injury Compensation Plan. Under this plan, if a panel of experts determined that a child had

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