Need something more to worry about?

Foreign Affairs has a special section in their July/August 2005 issue devoted to “coping with the next pandemic.” After reading Laurie Garrett’s excellent introduction to the section (subscription only) about the emergence of the H5N1 avian influenza, I feel both better informed and freaked out. Garrett also identifies the economic reasons why there isn’t a booming market for flu vaccines:

The total number of companies willing to produce influenza vaccines has plummeted in recent years, from more than two dozen in 1980 to just a handful in 2004. There are many reasons for the decline in vaccine producers. A spate of corporate mergers in the 1990s, for example, reduced the number of major international pharmaceutical companies. The financial risk of investing in vaccines is also a key factor. In 2003, the entire market for all vaccines — from polio to measles to hepatitis to influenza — amounted to just $5.4 billion. Although that sum may seem considerable, it is less than two percent of the global pharmaceutical market of $337.3 billion. Unlike chemical compounds, vaccines and most other biological products are difficult to make and can easily become contaminated. There is also a large and litigious antivaccine constituency — some people believe that vaccines cause harmful side effects such as Alzheimer’s disease and autism — adding considerable liability costs to manufacturers’ bottom lines. The production of influenza vaccines holds particular drawbacks for companies. Flu vaccines must be made rapidly, increasing the risk of contamination or other errors. Because of the seasonal nature of the flu, a new batch of influenza vaccines must be produced each year. Should sales in a given year prove disappointing, flu vaccines cannot be stockpiled for sale in a subsequent season because by then the viruses will have evolved. In addition, the manufacturing process of flu vaccines is uniquely complex: pharmaceutical companies must grow viral samples on live chicken eggs, which must be reared under rigorous hygienic conditions. Research is under way on reverse genetics and cellular-level production techniques that might prove cheaper, faster, and less contamination-prone than using eggs, but for the foreseeable future manufacturers are stuck with the current laborious method. After cultivation, samples of the viruses must be harvested, the H and N characteristics must be shown to produce antibodies in test animals and human volunteers, and tests must prove that the vaccine is not contaminated. Only then can mass production commence. The H5N1 strain of avian flu poses an additional problem: the virus is 100 percent lethal to chickens — and that includes chicken eggs. It took researchers five years of hard work to devise a way to grow the 1997 version of the H5N1 virus on eggs without killing them; although there have been technological improvements since then, there is no guarantee that an emerging pandemic strain could be cultivated fast enough.

Garrett also makes a very solid case for why, even in an open global economy, the U.S. government should ensure there is a domestic industry for these vaccines:

Were the United States to falter, it would probably not be able to rely on Canadian or European generosity, as it did just last year. When the United Kingdom suspended the license for the Chiron Corporation’s U.K. production facility for flu vaccine due to contamination problems, Canada and Germany bailed the United States out, supplying additional doses until the French company Sanofi Pasteur could manufacture more. Even with this assistance, however, the United States’ vaccine needs were not fully met until February 2005 — the tail end of the flu season…. In the event of a deadly influenza pandemic, it is doubtful that any of the world’s wealthy nations would be able to meet the needs of their own citizenry — much less those of other countries…. There would thus be a global scramble for vaccine. Some governments might well block foreign access to supplies produced on their soil and bar vaccine export. Since little vaccine is actually made in the United States, this could prove a problem for Americans in particular.

Click here to read a brief Q&A with Garrett on the problem. And click here to read Michael Osteholm’s assessment of the damage that a new pandemic would wreak on the global economy.

The arrival of a pandemic influenza would trigger a reaction that would change the world overnight. A vaccine would not be available for a number of months after the pandemic started, and there are very limited stockpiles of antiviral drugs. Plus, only a few privileged areas of the world have access to vaccine-production facilities. Foreign trade and travel would be reduced or even ended in an attempt to stop the virus from entering new countries — even though such efforts would probably fail given the infectiousness of influenza and the volume of illegal crossings that occur at most borders. It is likely that transportation would also be significantly curtailed domestically, as smaller communities sought to keep the disease contained. The world relies on the speedy distribution of products such as food and replacement parts for equipment. Global, regional, and national economies would come to an abrupt halt — something that has never happened due to HIV, malaria, or TB despite their dramatic impact on the developing world…. SARS provided a taste of the impact a killer influenza pandemic would have on the global economy. Jong-Wha Lee, of Korea University, and Warwick McKibbin, of the Australian National University, estimated the economic impact of the six-month SARS epidemic on the Asia-Pacific region at about $40 billion. In Canada, 438 people were infected and 43 died after an infected person traveled from Hong Kong to Toronto, and the Canadian Tourism Commission estimated that the epidemic cost the nation’s economy $419 million. The Ontario health minister estimated that SARS cost the province’s health-care system about $763 million, money that was spent, in part, on special SARS clinics and supplies to protect health-care workers. The SARS outbreak also had a substantial impact on the global airline industry. After the disease hit in 2003, flights in the Asia-Pacific area decreased by 45 percent from the year before. During the outbreak, the number of flights between Hong Kong and the United States fell 69 percent. And this impact would pale in comparison to that of a 12- to 36-month worldwide influenza pandemic.

Kudos to Jim Hoge and Gideon Rose at Foreign Affairs for putting together this special section and scaring the bejeezus out of me.