Spotlight April 2016
April 12, 2016
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Preventing Vaccine Shortages
Few people worry about vaccine supply until a shortage occurs. New research from Duke University’s Fuqua School of Business focuses on market tensions that can keep vaccine manufacturers out of the business and price points needed to entice them in.
“The government doesn’t want to overpay,” says professor David Ridley, “but there’s a tension between responsible use of government funds and giving manufacturers sufficient incentives to get into vaccine manufacturing — and stay in.” Together with colleagues Xiaoshu Bei and Eli Liebman, he found that over the past decade, every 10% increase in vaccine prices corresponded with a 1% lower shortage probability
“Many people forego vaccines and jeopardize herd immunity,” Ridley explains, “putting at risk the health of people with compromised immune systems. That’s the demand side. But what about supply? How do we encourage suppliers to be in the business?”
Some children visit a doctor only once per year, so if a vaccine is unavailable at that time, they won’t receive it until the following year’s check-up. So the risk of preventable infection spreading grows. In 2004, the Institute of Medicine warned of a fragile vaccine supply, reporting that shortages affected eight of 11 childhood vaccines. That prompted 35 states to suspend school immunization requirements.
Studying the 2004–2013 supplies and prices of 22 vaccines, Ridley and his colleagues found 24 instances of shortage. Those resulted not from increased demand, but from a dwindling of supply. They peaked with seven shortages in 2007. The average shortage lasted 510 days. But the researchers found that the situation has improved since then. Since 2004, no shortages occurred for vaccines priced over US$75/dose. But improving supply is not as simple as the government paying $75 for any vaccine. Some doses are far cheaper.
“It’s not a magical number,” Ridley said, “but it’s a useful framework.” Today’s price affects tomorrow’s supply. Manufacturers make investment decisions based on current prices. The US Food and Drug Administration (FDA) requires them to comply with current good manufacturing practices (CGMPs). If that requires updating a facility, then a company might simply exit the market, Ridley said, especially if profitability is low already. “You’ll be reluctant to invest in expensive new technology,” he said, “if you think you’re not going to make any money.”
Then other manufacturers might not enter to take their place. ”It’s expensive to get into manufacturing,” Ridley explained, “so if someone exits, it’s hard for someone else to step in and take their place. If you’re not making money anyway, you’re not going to have excess capacity sitting around.”
The government has been willing to pay higher prices for new products (e.g., pneumococcal conjugate vaccine). But older vaccines fetch lower prices, and manufacturers are often unwilling to invest in manufacturing capacity or improvements as a result. “The public has a sense that higher prices encourage investment in research,” Ridley said. “But what’s overlooked is that higher prices also encourage manufacturers to invest in capacity and quality. Without those investments, shortages become more likely.”
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Breast Cancer: A Promising Pipeline
Business intelligence provider GBI Research reports that exceptional levels of activity and innovation characterize the breast-cancer treatment pipeline, with a staggering 1,050 drugs in active development across all stages and 347 first-in-class programs. In Frontier Pharma: Breast Cancer — First-in-Class Innovation Clustered Around Growth Factor Signalling Processes, the company says this situation could significantly alter clinical and commercial landscapes of the disease market over the next decade. Factors driving innovation include a very large and growing patient pool, a well-established market with multiple unmet needs, and a robust understanding of the disease pathophysiology facilitating development of novel drugs to fill those needs.
GBI analyst Dominic Trewartha explains: “Breast cancer has the largest product pipeline in the pharmaceutical industry, and its significant patient population and successful commercialization of drugs such as Herceptin have attracted a great deal of R&D investment. The sheer number of first-in-class products in development reflects a deepening scientific understanding of the underlying pathophysiology of breast cancer and a growing list of molecules that have been implicated in the initiation and progression of the disease.”
Developing products for novel molecular targets can be risky when their role in disease pathophysiology is poorly characterized. But Trewartha says the breast cancer pipeline has the potential to yield therapies that outperform existing products and mechanisms of action. The cure rate for early stage breast cancer is currently high, and the safety and tolerability profiles of existing monoclonal antibody (MAb) products are strong. But more advanced forms of the disease — especially metastatic cancers — are not so treatable.