Today's WSJ($) opined:
Americans are angry about the sudden shortage of flu vaccine, and well they should be. But we hope they don't fall for the current story line that this is all the fault of a single company and its British factory. The real problem lies with a political class that has driven all but a handful of companies out of the vaccine business. ... [A]ny company brave, or foolish, enough to make vaccines has had to run an obstacle course of price controls, regulation and tort lawyers. Until Congress and federal officials come to grips with these fundamental problems, life-threatening vaccine shortages will continue to occur.Economist Alex Tabarrok apparently agrees:
President Bush was correct when he said that liability risk is one factor in the recurrent shortage of vaccines. ... Liability is not the only issue, however. Costly FDA regulations and requirements, for example to remove thimerosal from vaccines despite no evidence of safety problems, have pushed firms out of the industry. ...
A further problem is that the federal government is the major purchaser of vaccines, although not the flu vaccine, and it uses its monopsony powers and the law to require companies to sell at low prices. Firms have left the industry because they are squeezed on one end by regulation and on the other by low prices and, for vaccines like the flu vaccine not covered by VICP, potential liability. Note that even if the prices are high enough to earn the company a modest profit the point is that they are not high enough to make it worthwhile to make a surplus of vaccine that can be sold in the event of a contamination problem, as has happened this year. If the firms can't price high during a shortage then there is no incentive to plan for a shortage.
