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Vaccine Development Well-intentioned immunization efforts ignore economic realities, observers contend. By all accounts, the 1990s should be a monumental decade for pediatric vaccines. Wielding new molecular tools like genetic engineering, scientists can craft safer and more creative vaccines than ever imagined. Yet poor communication and disparate desires among industry players plague the vaccine pipeline, according to insiders. As a result, they say, vaccine R&D is taking a hit, investors are taking a hike, and everyone is suffering unnecessary headaches. RED FLAG: Christine Grant says price controls make investors wary. "[There is] a huge disconnect between industrial vaccine developers, research scientists, government, and vaccines' end users, like pediatricians," Philip Russell told The Scientist earlier this spring (K.S. Brown, April 1, 1996, page 14). Russell is a Johns Hopkins University vaccinologist and president of the Albert B. Sabin Vaccine Foundation, a New Canaan, Conn.-based nonprofit institution that promotes vaccine production. CLEAR MESSAGE: Philip Russell cites need for discourse on vaccine policy. "These people don't talk to each other well," Russell said. "In some instances, they don't talk to each other at all." One recent result, according to Russell and others: problems with a federal program called Vaccines for Children (VFC), in which the Centers for Disease Control and Prevention (CDC) buys vaccines and distributes them free to needy children. Launched in 1994 to broaden vaccines' health benefits, VFC actually cuts R&D-earmarked revenue and scares away vaccine investors, Russell contends. In addition, he predicts, poor communication may turn a promising line of combination vaccines into a logistical nightmare for producers, purchasers, and pediatricians. From a public-health standpoint, pediatric vaccines are of utmost importance. Immunizations prevent a range of deadly diseases and epidemic outbreaks. As such, childhood vaccines fall under the province of a network of federal agencies, which oversee vaccine production and distribution. The network begins with the National Institutes of Health, which sounds the call for needed vaccines and funds basic biomedical research. Private industry develops and delivers vaccines in accordance with regulations set by the Food and Drug Administration. Then, CDC and various private health care companies buy the products. Last, pediatricians collect vaccines distributed via states or private arrangements and administer the immunizations to children. This pipeline gets particularly complicated for manufacturers juggling trials for a handful of new vaccine products. "In the last five or six years, we've greatly increased the numbers of diseases you can prevent," notes Edward Marcuse, a pediatrics professor at the University of Washington in Seattle and chairman of the National Vaccine Advisory Committee (NVAC), which advises the federal government on vaccines and related issues. Vaccines newly licensed in the 1990s include hepatitis B and varicella (chicken pox), as well as an improved vaccine against Haemophilus influenzae type b (Hib). Current vaccine candidates may treat respiratory syncytial virus, group B streptococcus, and pertussis (whooping cough), among other diseases. With an eye toward developing nations, researchers also hope to produce vaccines against malaria, rotavirus, and other killers. Given this activity, Marcuse notes, "It's not surprising that things have gotten a bit complicated." He and Russell hope to discuss those complications in a November colloquium at Cold Spring Harbor Laboratory on Long Island, N.Y. Sponsored by the Sabin Foundation, the event will explore the development of past vaccines. In doing so, vaccine representatives may learn what worked-and what did not. The colloquium will be the foundation's third annual vaccine-related forum. Russell recalls that after listening to industry representatives at the first two events, he decided there's a critical need for national discourse on vaccine policy and development: "That's one message that came through loud and clear." When asked about conflict with the public sector, most pediatric vaccine manufacturers first point to one thing: the VFC program. Enacted in October 1994, VFC was the Clinton administration's answer to underimmunization of preschool children in the U.S. The dangers of low immunization gained attention during a 1989-91 epidemic of measles, a disease for which a vaccine exists. Until VFC, low-income children received free vaccines via Medicaid and various state programs. The federal government purchased about 55 percent of childhood vaccines to distribute through these outlets. The VFC program is an effort to reach more children. It provides free vaccines to those who are eligible for Medicaid as well as to those who are uninsured or underinsured (those whose insurance does not cover vaccination), and to American Indians. The program sets up an infrastructure that allows the government to purchase up to 80 percent of childhood vaccines and distribute them to states. Capped at certain prices, the vaccines are cheap for CDC to buy. While the immunization initiative is noble, it totally neglects the economics of industry, Russell comments: "[VFC] was an attempt to fix one part of the vaccine system [immunization rates] that failed to predict its impact on research and investment." For a manufacturer, vaccines do not come cheap. A vaccine may take more than 10 years and $100 million to develop, Russell points out. Cheap government purchase of that vaccine means less profit, which translates into less funding for vaccine R&D. PREDICTION: Thomas Vernon says some novel vaccines may not be developed. As a result, some innovative yet high-cost vaccines may not get developed, predicts Thomas Vernon, executive director for medical and public health affairs at Merck Vaccine Division in West Point, Pa. Merck manufactures vaccines against chicken pox, hepatitis, Hib, measles, mumps and rubella, and pneumococcal disease. On May 10, CDC announced a contract to purchase Merck's chicken pox vaccine for distribution to VFC and other public health programs. "A vaccine has to be an attractive investment," Vernon says. "The ultimate downfall is to have a single purchaser." Add an annual federal budget review-in which the government can change its mind about which vaccines to buy-and things grow even more volatile, he maintains. A 1995 document entitled "Report on the United States Vaccine Industry," commissioned by the U.S. Department of Health and Human Services, evaluated vaccine industry economics. The report was produced by Mercer Management Consulting of Washington, D.C. In one case study, the report compared earnings from private and public purchase of two vaccines-one against measles, mumps, rubella, and one against polio (MMR/OPV). In analyzing profit, Mercer examined these vaccines together. Because of its monopoly, the government's purchasers are able to negotiate for vaccines at a discount. According to the Mercer report, private companies typically buy the MMR/OPV vaccines at an average of $14 per dose, giving a company about $8 in revenue after certain costs. By comparison, government-purchased MMR/OPV averages $6, giving the manufacturer roughly $3 toward R&D, interest, taxes, and earnings. The difference: about $5 per vaccine dose. In summary, the report stated: "Private sector sales make a significantly larger contribution to vaccine industry R&D . . . ultimately generating the cashflow to fund dividend payments to investors and capital expenditures to support the growth of the business." 'UNFORTUNATELY': Ronald Saldarini says federal involvement reduces revenue. "[VFC] is simply taking away revenue sources that fuel private-sector research," declares Ronald Saldarini, president of Wyeth-Lederle Vaccines and Pediatrics, a business unit of Wyeth-Ayerst Laboratories in Philadelphia. "That's extremely unfortunate, because it comes at a time when biotechnology has got us conceiving vaccines that we couldn't even dream of before." In addition to company representatives, the VFC program affects another decision-maker: investors, says Christine Grant, head of public policy at Connaught Laboratories Inc., in Swiftwater, Pa. Connaught manufactures vaccines against diphtheria, Hib, influenza, pertussis, rabies, and tetanus, among others. "There is a crash in investor interest when federal price controls and centralized distribution enter the picture," Grant contends. "There's an investor sentiment that it's problematic to stay with vaccines when other [products] don't have price controls." In other words, according to Grant, investors seek sure-fire products with guaranteed profit. They shy away from companies that deal with government purchasers that can set prices and call the shots. Investor wariness hits biotech companies hardest. While drug firms like Merck and Connaught can sustain investor interest during tumultuous times, fragile biotech startups can't. So they turn away from pediatric vaccines, notes Gregory Brown, a financial analyst with Vector Securities International Inc. in Deerfield, Ill. "The economics of [pediatric] vaccines are not attractive," Brown says. "It just doesn't work for most biotech companies to undertake the brutal, high-risk, and, ultimately, price-constrained road to develop these vaccines." James Young, senior vice president of research and development at MedImmune Inc., a privately held biotech company in Gaithersburg, Md., agrees: "You're looking at an easier development path and larger profit margin to be made on adult vaccines." DISINCENTIVE: Dino Dina notes the vaccines cost as much as other drugs to develop. Dino Dina, president of Chiron Biocine, a vaccine division within biotech giant Chiron Corp. of Emeryville, Calif., emphasizes that investors-like others-are getting an unfortunate message: Vaccines are entitlements that should automatically be provided free or at a low price. "Again, that contradicts the fact that vaccines cost as much as any other drug to develop," Dina states. "That's a major disincentive for investors, and it needs to change if pediatric vaccine research is going to prosper." Aside from money matters, poor communication in the vaccine industry adds to confusion over new products, Russell says. For example, a gulf between pediatricians and vaccine manufacturers could complicate delivery of new combination vaccines. These vaccines mix and match standard and improved varieties, offering pediatricians simpler, more complete immunizations. A host of combination vaccines could hit the U.S. market within the next five years. One problem, Russell maintains, is that some of these vaccines will be incompatible with others. Physicians and manufacturers must get together to work out easy vaccine schedules and answer compatibility questions. Right now, he contends, the two professions occupy different worlds. "On the one hand, we've got the user [pediatrician] community saying, 'Give us simple [vaccine schedule] systems, with few decisions and minimal problems in delivery,'" Russell says. "On the other hand, the industry is adding to the complexity by developing all these varied new products. We call it combination chaos." Dina notes another issue: patents. Because vaccines are patented, companies will have to cooperate in blending and selling individually patented products as a combined unit. "This needs to be addressed," Dina says. "There is no magic solution, and it's going to require compromise." PARTNERSHIP: David Klein cites collaboration of NIAID and industry. PROGRESS: Edward Marcuse notes an explosion in the number of licensed vaccines. Manufacturers must also compromise in getting vaccines to the developing world, a less lucrative market. A report by the Institute of Medicine, The Children's Vaccine Initiative: Continuing Activities (National Academy Press, 1995), reiterated that public and private vaccine representatives must cooperate more if combination vaccines and other badly needed products are to reach Third World countries. As Russell puts it, "We have got to get a dialogue going." Researchers have proposed several ways to do that. Barry Bloom, a tuberculosis expert at Albert Einstein College of Medicine in Bronx, N.Y., has proposed a National Vaccine Authority, an independent body of experts and citizens to lead and support vaccine development. But Grant and other manufacturing representatives say such a body would inevitably discard innovative ideas that seem far-fetched. Russell reports that the vaccine community is also lukewarm about a concept he proposed: a consortium between private companies and government funding agencies. Under this arrangement, the group would set a vaccine goal, encouraging manufacturers and government researchers to work on individual pieces of the puzzle. While neither of these ideas soon stand to become reality, Russell says he does see progress in bridging vaccine communication gaps. As an example, he points to a recent series of clinical trials in Europe and Italy for an improved pertussis vaccine. During the trials, the National Institute of Allergy and Infectious Diseases (NIAID) tested four potential pertussis vaccines. What's special is that NIAID set up cooperative research and development agreements (CRADAs) with Chiron Biocine and SmithKline Beecham PLC in Philadelphia, which produced some of the final vaccine candidates. While collecting and calculating trial data, the agency and companies worked together every step of the way. "The collaboration was remarkable," remarks David Klein, a program officer at NIAID who helped coordinate the trials. "As partners, people with SmithKline Beecham and I would sit down and discuss everything dealing with the protocol and science." The result, Klein says, was an efficient series of trials. The vaccines are now under consideration at FDA. This spirit of collaboration is essential to making the pediatric vaccine industry a success, says Marcuse: "The science and technology behind vaccines are absolutely exploding." Now, he notes, it's a matter of bringing industry together to get those vaccines to children. Kathryn S. Brown is a freelance science writer based in Columbia, Mo.

Regulations And Poor Communication Slow Pediatric Vaccine Development

May 26, 1996

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