Thursday, October 21, 2004

John Kerry has been blaming President Bush for the flu shortage, claiming that the president could have solved the problem — a result of having only two flu manufacturers — three years ago. Typical of Mr. Kerry, he blames Mr. Bush for every problem and promises his own plan to solve it. But Mr. Kerry supported programs that created the crisis as he defines it. And his promise to impose price controls, bulk purchase and importation of medicines are exactly the policies that have pushed the vaccine industry to the brink of extinction.

Ironically, Mr. Kerry had his own plan to promote AIDS and malaria vaccine development: the Vaccines for the New Millennium Act, that he co-sponsored with Sen. Bill Frist and others. According to a press release at the time: The Kerry plan “provides tax incentives for vaccine R&D, [and] creates market mechanisms for the purchase and distribution of vaccines in developing countries.”

Mr. Kerry seems to believe that new vaccines need real markets and market prices in the Third World, but not in America. He supported the Clinton Vaccines for Children (VFC) Program in 1994. VFC was designed to buy up all vaccines for kids in America but was scaled back to purchase 65 percent of all childhood shots at government-set prices. Prices were fixed for nearly a decade. Government purchases of flu shots at low prices expanded as well. Meanwhile, the cost of producing existing vaccines and investing in next-generation shots began to climb.

The creation of a huge government purchase at below-market prices has led to many vaccine companies leaving the business and the shortages we now face. Two years ago, the Institute of Medicine sent Congress a report asserting that the vaccine industry needed higher prices and protection from frivolous lawsuits in order to get more companies to make vaccines. The president has lifted price caps in the VFC program and has fought to reduce the number of questionable cases against vaccine companies, particularly those based on junk science. Both Sen. John Edwards and Mr. Kerry opposed any liability protection for vaccine firms.

The Kerry “plan” to solve the vaccine shortage is hypocritical and reflects a misunderstanding of drug and biologic development in general. Much of his plan simply reworks proposals already set forth by Mr. Bush, such as having the government buy unused vaccines, much like the way it buys up unsold wheat or corn. He refuses to go beyond the already frayed Federal Vaccine Injury Compensation program. The program was supposed to encourage lawyers to get a no-fault payment from the fund instead of suing. But the opportunity for large legal settlements has proved too seductive and most people bypass the program and go straight to court. Messrs. Kerry and Edwards do nothing to solve that problem.

Mr. Kerry says his “administration will work the biotechnology industry, including generic companies, to increase the number of manufacturers.” There are no generic vaccine companies, since brand-name companies already make shots for less than cost. And his response to the real problem, low vaccine prices, is to merely promise “responsible incentives to enter the marketplace” instead of proposing that the government get out of the vaccine purchase business and shift payment to the private sector. Indeed, Chiron renovated a plant in England rather than build a new one in America because it was cheaper and required less legal hassle. Nothing beats a higher price to encourage a business to risk capital.

Yet Mr. Kerry would expand on the failures of the VFC program by allowing Medicare to buy drugs in bulk for all seniors at below market prices. He would allow all governments, insurance companies and chain stores to import drugs from countries that artificially force down the prices charged by American biotech and drug firms. And he supports forcing these companies to sell to France, Canada and elsewhere so they can be reshipped to the United States.

Mr. Kerry would impose the same policies that have driven vaccine companies to the edge of extinction on drug companies as a whole. Vaccine companies have shifted production overseas to save money and avoid endless regulation. No one should be shocked if pharmaceutical firms cut research and relocate jobs and manufacturing of medicines to cheaper places ,too. Should our nation be reduced to scrounging for shots and drugs because of government policies that Mr. Kerry and Hillary Clinton created? If Mr. Kerry’s reckless rhetoric on drug prices becomes policy, fewer vaccines or new medicines will be made in America.

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

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