- The Washington Times - Tuesday, December 16, 2003

Parents are in a panic about getting their kids immunized as a flu epidemic spreads rapidly across America. But if Democrats (and some Republicans) get their way, the vaccine shortages will soon spread to medicines for other diseases.

That’s because Democrats want to apply the policies that produced the shortages — federal bulk purchase and distribution of old vaccines at government-controlled prices, combined with a refusal to pay for new technology in the name of cost containment — to every drug used for every disease, no matter how fatal. Thanks to Democratic proposals to have the federal government buy up drugs like we buy up vaccines, the blizzard of fear that families are experiencing in seeking to protect their children against the flu will extend into a dark winter for Americans suffering from birth defects, cancer, Alzheimer’s, schizophrenia and heart disease.

The current mismatch of immediate demand and available supply can be blamed on the federal Vaccines For Children Program — Hillary Clinton’s dry run for national health care. The vaccine program buys up nearly 70 percent of all childhood vaccines at government-set prices and then distributes them to states according to a federally set formula. The result is no surprise to those of us who lived through the policy-induced gasoline crises of the 1970s. Vaccines have gone to where the outbreaks aren’t, and price controls have discouraged vaccine makers from producing more than what the government orders and blocked the purchase of more than 4 million doses of an easy to administer vaccination through the private sector.

None of this seems to have stopped Democrats and some Republicans from demanding that the government purchase prescription drugs at deep discounts, too. Indeed, they argue that prices can come down without hurting the ability of companies to produce needed medicines now or in the future, since lower prices will make it easier for more people to buy even more medicines, which will make up for smaller profit margins.

But the risks and costs of developing new medicines are hard to predict, and the pace of future innovation depends on how the free market values a product and not what a single government purchaser wants to pay in order to save money. That’s why the federally price-controlled bulk purchase of vaccines has decimated the vaccine industry. Vaccine prices have remained stagnant since 1994, while new regulations and lawsuits have driven up the cost of producing old vaccines and developing new ones.

Thanks to these policies, there are now only four developers of childhood vaccines — down from 20. As a result, there have been periodic shortages of the 11 shots for vaccine-preventable childhood diseases for several years in a row. Technology to produce combination childhood vaccines has been all but shelved.

Democrats like to cloud the issue by claiming price controls are just like those wholesale clubs folks like us use. Rahm Emanuel, a Democrat congressman from Illinois, claims, “We could bring down drug prices if we allowed the secretary of health and human services to negotiate on behalf of 40 million seniors. That is what Sam’s Club does.” Not even close. Sam’s Club gets its buying power from offering consumers a wide array of choices at low prices and adding the newest products quickly and effectively to keep up with several competitors.

Sam’s Club doesn’t have Medicare’s monopoly for buying for 40 million consumers, and it doesn’t have the federal power of telling its vendors: Sell at 50 percent below market price, or I will bar you from selling to any customer in America, or I will prosecute you or seize your patent. And it doesn’t have Medicare or the vaccine program’s power to say: “Since you have no one else to sell it to, I will also determine when I will add new products or whether I will at all depending on my budget.”

Democrats think that biotech and drug companies will have no alternative but to keep pumping out new medicines under such circumstances. They are wrong. The flu vaccine shortage is a result of the kind of policies Democrats want to impose on Medicare. Killing the incentive for producing vaccines and medicines not only kills future research, it kills people, too. And that’s the sort of club no one should be forced to join because of proposals now being considered in Congress.

Robert Goldberg is director of the Manhattan Institute’s Center for Medical Progress.

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