One Flu Over The Cukoo’s Nest

Michael Giberson

The headline for Jerry Knight’s column today in the business section of the Washington Post reads “Got the Flu? Blame the Free Market.” Writers are not always responsible for their headlines, but the headline clearly reflects what Knight writes. If you get sick this winter, he writes, call it the “free market flu.”

Calling it a “free market flu” is just plain cukoo.

Knight blames the problem on the “free market,” and then proceeds to detail various federal government supports, limits, and controls over the vaccine market. Here are some samples from the article:

Protecting the nation from the annual, inevitable bout with influenza has been left entirely to the private sector, even though every year the flu kills many more Americans than have died in the Iraq war — 36,000 of us annually, according to the federal Centers for Disease Control and Prevention.

Other kinds of vaccines can be grown in tanks, which is much quicker. But if a drug company wanted to switch to that kind of technology for flu vaccine, Pavia said, federal regulations would treat the new version as if it were an entirely new drug, which would have to go through the lengthy Food and Drug Administration approval process before it could be sold.

That issue might be tackled with tax incentives, says the Infectious Diseases Society, which began worrying about the vaccine market long before this year’s shortage. There are already research and development tax credits, but Pavia suggests tax incentives that would be given to companies only when they bring a badly needed new product to market.

[The federal government] buys about 20 percent of the flu vaccine for the military and federal health programs. (While the prevailing view is that Americans don’t want the government dictating drug prices, the government does dictate what it pays for flu vaccine, demanding a price drugmakers say is unprofitable.)

So apparently, leaving flu vaccination “entirely to the private sector” includes restrictions on research and development, tax incentives for research and development of certain drugs and vaccines, and government purchase of 20 percent of the market at prices chosen by the government.

Knight also quotes a specialist in infectious diseases as saying that the consensus among flu experts seems to be the market has failed.

It was not explained how flu experts arrived at this conclusion. However, I wouldn’t naturally turn to medical researchers, no matter how expert they are concerning infectious diseases, for assessments of market failure. It does appear that there will be a shortage of vaccine this year, but not every shortage is a market failure.

UPDATE: The interested reader can find much more commentary on flu vaccine issues at Marginal Revolution (Search link), including Tyler Cowen’s ahead-of-its-time posting from December 11, 2003, “How to conserve flu vaccine.”


4 thoughts on “One Flu Over The Cukoo’s Nest

  1. Sort of like blaming the electricity problems in California on a free-market failure, without understanding the broader regulatory context and rules.

  2. Why is it that, when “managed markets” fail, the failure is always attributed to the markets and never to the managers? One obvious set of requirements for a successful “managed market” is that the managers have the intelligence and experience to understand the market and the skill and authority to manage it. Oops!

    In the case of flu vaccine, the US “managers” did not have the authority (thankfully) to force US companies to remain in the vaccine market despite its limited profitability and high liklihood of crippling lawsuits; and, the British “managers” and the British manufacturer “dropped the ball” jointly and severally.

    I suspect that a “free” market would have produced adequate quantities of vaccine, arguably at somewhat higher prices. However, the principal criterion was obviously low price; the result was poor quality control, which resulted in contamination and a shortage. Decisions have consequences, intended and unintended. However, not all unintended consequences are unanticipated!

    I guess we could just order the vaccines we need from Canadian pharmacies and save even more money. Why hasn’t someone suggested that approach?

  3. Not to mention that the whole flu vaccine thing is contrived anyway! This whole shortage has been blown out of proportion by misinformed media and bandwagon-jumping politicians.

    Read the ingredients … among other things, aluminum and mercury are put in every flu shot … do you really want that in your body? Have your doctor explain to you why you should inject these toxins and how they can help your immune system.

    The bottom line is to lead a healthy lifestyle year round. Diet, exercise and sleep are the real answer. Get healthy and strengthen your immune system and you will be better off than with any vaccine you can get.

    As Dr. Mercola states “if we even come close to following an optimal diet, exercise and rest, we will have a high likelihood of immunity from illness.” Like in most things, our society is looking for a shortcut. A way to eat junk food and veg out in front of the tv without getting sick.

    “People are dying from the flu not because they didnít get their annual flu shot, but because they are already sick and have compromised immune systems. Therefore, the ultimate treatment for the flu is straightforward: proactive prevention.” — Dr. Mercola

    Check out http://www.mercola.com for lots more insight on this.

  4. I cringe anytime people capitalize on fear to deface. This reminds me of when I heard Edwards was blaming the Bush Administration for the paucity of shot supply. Bush won, so let’s blame the market now. Yes the market has its flaws, and in a perfect economy supply equals demand, but that’s just it: it’s a model. The real market will constantly fluctuate and might never reach this true equilibrium.

    We should actually blame road blocks to a free market on the lack of flu shots. It was health controls and over regulation that caused the shutdown of British vaccine plants.

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