Free Markets and Flu - A Deadly Combo

[Fake Boris]

Actually by free market doctrine, they'll want to produce extactly the same as demand .

Hmmmm... just like the '73 oil crisis... it seems to me that by free market doctrine they'll just mean circumventing it by producing slightly less and selling disproportionately more...

[Fake Boris]

Originally posted by notyoueither

And I could have sworn that childhood vaccines are covered, but that would depend on which province you are in I suppose.

Maybe this is a language misunderstanding, but it seems to me the flu is not something that'll kill you... I guess the public insurance would only pay for it if the hospitalization costs were rising.

EDIT flu=influenza. Now I understand. Disregard what I've said about the coverage.

[Berzerker]

Three senators

"A few weeks from now, when the country has run out of flu vaccine and people want to know why, we suggest they knock on the doors of Senators Olympia Snowe, Susan Collins and Lincoln Chafee. Perhaps the three Republicans can explain when they intend to honor their promise to hold an open debate about the tort liabilities facing vaccine makers," the Wall Street Journal says.
"The reason for today's shortage — as well as seven previous preventive vaccine shortages since 2000 — is that there are just five vaccine makers. This lack of suppliers is partly thanks to Hillary Clinton, who as first lady turned government into the majority buyer of vaccines and pushed prices so low as to make business unsustainable. (This price control approach, we'd note, is what Democrats would now like to inflict on the Medicare drug program.)
"But just as worrying to manufacturers is an explosion of class action lawsuits. Vaccine makers are supposed to be protected from suits by 1986 legislation, but tort lawyers have found loopholes and filed more than 200 cases. The Republican leadership fixed this by including a liability provision in the Homeland Security legislation of a year ago. That is, until Ms. Snowe, Ms. Collins and Mr. Chafee objected to its 'dark of the night' insertion and forced Senate Majority Leader Bill Frist into repealing it," the newspaper said in an editorial.
"In return for their victory, the senators promised an open debate on broad liability reform within six months. That would have been ... June. But the Senate canceled a markup on a reform bill in April and the senators have gone quiet. Apparently, making sound vaccine policy isn't as politically rewarding as preening before the media by standing up to 'special interests' (vaccine makers). So, what's your solution for the flu-shot shortage, senators?"

http://washtimes.com/national/20031210-120855-1153r.htm

[Berzerker]

Blaming a non-existent free market for the results of government policies again I see.

[Mordoch]

Originally posted by Berzerker
Blaming a non-existent free market for the results of government policies again I see.

I read an article specificly quoting flu maker representatives as saying they had understimated demand this year. I suspect your article has quite a political axe to grind, even if it is somewhat accurate. My point remains fundimentally valid regardless, and the market has actually been cited as one with a positive externality in many economics textbooks. An obvious point is that the five suppliers could easily produce the vaccine if there was economic incentive to do so. While I'll have to investigate the government buying vaccine at an unreasonably low rate, this sounds pretty much bogus, particularly given the demand for the vacccine from a variety of private hospitals, doctors offices, and even businesses. If this was the problem, the businesses would sell just to the private customers.

[Berzerker]

Mordoch, address the article, don't claim it's bogus without something to back it up.

If the following is true:

"The reason for today's shortage — as well as seven previous preventive vaccine shortages since 2000 — is that there are just five vaccine makers. This lack of suppliers is partly thanks to Hillary Clinton, who as first lady turned government into the majority buyer of vaccines and pushed prices so low as to make business unsustainable. (This price control approach, we'd note, is what Democrats would now like to inflict on the Medicare drug program.)

Then there is no free market in vaccines... This is an example of price controls imposed by government... Make it unprofitable to produce vaccines and watch as pharmaceutical companies stop producing vaccines. Result? Not enough vaccine makers and not enough vaccine doses.

[JohnT]

shawn: You had the opportunity to get your girl the flu shot. You passed it up. In this specific case, blame yourself, not the "system." We got Sophie her first flu shot at 6 months, you decided not to. Why is it "the systems" fault that you made the wrong decision?

Mordoch:

I suspect your article has quite a political axe to grind, even if it is somewhat accurate.

As opposed to the original article, from the World Socialist Web Site?

If the government is the primary buyer and distributor of flu vaccines... they ordered 83,000,000 for a country with a population approaching 300,000,000. Y'all do the math.

Edit: However, I don't think that's the case. I think appx. 10-15% of flu vaccines are purchased by the various governments, with the remainder going to whomever orders them in the private sector.

[JohnT]

The number of Flu vaccines made is dependent upon last years demand, hence the 83,000,000 made this year matches the number of flu shots given last year. Unless y'all can make a convincing argument that the "non-free market" can accurately predict disease patterns, I'm not too sure how the "free market" can do any better. And if y'all can make such amazingly accurate predictions, then why are you wasting such valuable talents here on Apolyton? Go, save the world!

[JohnT]

Not reading more than a few articles, this proposal by Charles Schumer makes more than a bit of sense:

New York Senator Charles Schumer has introduced a package of proposals that would go a long way toward a workable solution to the recurring problem of supply, distribution and affordability of flu vaccines. Some of his proposals include:


Building a national reserve of influenza vaccines in which the federal government would purchase enough doses to treat the number of Americans that the Centers for Disease Control determine are at risk for this disease each year. Such guaranteed government purchases would be in excess of the normal private-sector demand.

Funding research into methods for producing influenza vaccine faster and at a lower cost. Today, it takes about four months to make a batch of flu vaccine.

[Ned]

This is a classic example of what happens to any product subject to price controls.

Any remember the long lines at gas stations when we had price controls?

The solution to this problem is to end price controls, just as it was the solution to the gas shortage issue.

[JohnT]

Originally posted by Oncle Boris


Hmmmm... just like the '73 oil crisis... it seems to me that by free market doctrine they'll just mean circumventing it by producing slightly less and selling disproportionately more...

Spoken like a person who doesn't know what he's talking about. How is a governmental cartel raising oil prices by over 400% in a 12 month period (from $2.18/barrel in Dec. 1972 to $11.65 in December 1973), the 1973 Arab-Israeli war, and the ensuing 4-month embargo on ME oil shipments to the US by the OPEC countries (from November 1973-February 1974) the fault of the "free market"?

[Ned]

JohnT, remember that Schumer is an extremist liberal.

The solution to a goverment created problem is not more government.

Remember in all systems three dependent factors are always present: price, time and quality. In the case of the vaccine, it is the timeliness of the supply that is flexible given regulation of pricing and quality.

I am more than dumbfounded that no one in this thread except Berz had a clue as to why there is a shortfall of flu vaccine.

[JohnT]

Problem is, Berz might not have a clue either. Most sources I referenced state that from 10-15% of flu vaccines are purchased by the various US governments. Also note that his argument begins with the highly speculative "If", and that the article quoted qualifies its charges with "partly". So "if" the charges are "partly" true, you can blame Hilary... but only partly.

[JohnT]

Originally posted by Ned
I am more than dumbfounded that no one in this thread except Berz had a clue as to why there is a shortfall of flu vaccine.

Again, vaccine manufacturers base their production schedules on what happened last year. Last year only 83,000,000 flu vaccines were demanded by US citizens, therefore only 83,000,000 were made this year.

However, I am unsure as to why research of processes to speed up production is de facto worse if the government does it than if private industry does it.

[Ned]

Originally posted by JohnT


Again, vaccine manufacturers base their production schedules on what happened last year. Last year only 83,000,000 flu vaccines were demanded by US citizens, therefore only 83,000,000 were made this year.

However, I am unsure as to why research of processes to speed up production is de facto worse if the government does it than if private industry does it.

JohnT, I am sure the shortages are caused by price controls or market restraints of some kind. I would assume that most suppliers of vaccine would add about 20% to estimated demand just to make sure given the lead times in producing the vaccine and to avoid spot shortages. However, the narrow profit margins caused by the market structure forces companies to try to hit the exact number, but never go over it. Now, that is very strange behavior for any supplier who is trying to keep his customer happy.

The question has to be asked - why do we have a shortage of just this one drug in the United States?

We only have to look as far as the Clinton administration to find the answer, do we not?