Vaccines Prove Effective and Cost-Effective

Vaccine R&D has grown exponentially in recent years, spurred by ethical and medical needs to combat lethal infectious outbreaks and increased funding from public and private agencies and organizations. The Ebola outbreak in 2015 and the current stampede to develop a new vaccine to combat the Zika virus illustrate global recognition of the important role of vaccines in promoting public health. Consequently, both small biotech firms and more leading pharmaceutical companies have expanded vaccine research and production in the past decade, as returns on investment have become more attractive.

Development assistance and international vaccine funding boosted aid for vaccine development from $822 million in 2000 to $3.6 billion in 2014, a sign of the success so far of the  “Decade of Vaccines” (2011–2020) initiative launched by the Bill & Melinda Gates Foundation and the global health community five years ago. One result is that more vaccine candidates have moved through clinical testing since 1990, and product approvals have increased, according to an analysis by Thomas Hwang of Bain Capital and Aaron Kesselheim of Harvard Medical School/Brigham and Women’s Hospital, published in the February 2016 special issue on vaccines in the journal Health Affairs.

Economists further document in Health Affairs that expanded childhood immunization in developing countries is a good investment, providing a return of 16 to 44 times the costs of implementing vaccination programs in 94 low-income countries. Similarly, analysts find that providing the HPV vaccine to young women in high-income countries yields economic benefits for nations, as well as healthy returns to manufacturers. GAVI, the Vaccine Alliance, and other international health organizations presented data supporting the value in national governments assuming responsibility for the financing and operation of immunization programs, following initial support from outside organizations in building national programs.

In the United States, the Vaccines for Children (VFC) program has been a boon to lower income minority groups, according a report on that program’s impact. But another study found that even though the measles outbreak in Disneyland in 2014–2015 increased public awareness of the importance of immunization, it did not alter opinions significantly of those who oppose vaccination mandates for school-age children. Yet, strong state vaccine mandates can work, according to an article describing the history and impact of childhood vaccination requirements in Mississippi and West Virginia, the only two states to allow only medical (and not religious or personal) exemptions to vaccination prior to a recent move in California. It may be politically difficult to revoke non-medical exemptions, advised Abigail Lowin of Columbia Law School, but policy makers could make such exemptions harder to attain.

Of particular interest to manufacturers is an analysis of the relationship between vaccine prices and production, investment, and shortages according to a study by David Ridley and colleagues at the Duke University Fuqua School of Business. The study finds that vaccine shortages have declined since a notable spike in 2007, which occurred largely due to problems in quality production that led to plant closings and companies exiting the vaccine business. When shortages do occur, it’s difficult to find alternate sources, as vaccine production differs from conventional drugs, Ridley noted: facilities usually produce only one vaccine to reduce the risk of contamination, and there’s little competition from generics or opportunities to outsource production.

Such shortages particularly affected low-priced vaccines, including older products that had been restricted in raising prices, the analysis shows. Shortages have declined as newer vaccines have entered the market, including new combination products that have replaced older therapies. While government health programs and other payers want to avoid over-paying for vaccines, Ridley noted that higher priced products encourage R&D in new vaccines and in high-quality and high-capacity manufacturing facilities. While there’s “not a perfect correlation” between high prices and fewer short supply situations, Ridley pointed out that there have been no shortages of vaccines that cost more than $75 per dose on average, and few problems with those priced above $50 per dose. Supply-side incentives are important in encouraging investment to ensure product quality and reliability and to maintain healthy, competitive vaccine markets.