Vaccine Supply and Innovation (1985) / Chapter Skim
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4 Economic Aspects of Vaccine Innovation and Manufacturing
4 Economic Aspects of Vaccine Innovation and Manufacturing
Pages 45-64
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From page 45... ...
In his testimony before a congressional hearing in 1982, Jack Bowman, then president of Lederle Laboratories, estimated that the total cost of developing a vaccine for HemoPhilus influenzas tone b (a cause of meningitis) would be in excess of S50 million.
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From page 46... ...
projects for vaccines are similar to those associated with the development of other new pharmaceutical products, but the total revenue stream is substantially lower for vaccines. Occasionally, the annual earnings of one successful drug may be greater than several years of revenue for the entire vaccine industry.5 Two current trends in the vaccine industry are noteworthy.
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From page 47... ...
Merck Sharp & Dohme Lederle Laboratories Connaught Laboratories Ltd. Lederle Laboratories Institut Merieux Wyeth Laboratories, Inc.
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From page 48... ...
The remainder of this chapter provides a general overview of the economic structure of the vaccine industry, possible causes of unsatisfactory market incentives, and relevant descriptive statistics.
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From page 50... ...
SOURCE: Committee interpretation of data supplied by Division of Product Certification, Food and Drug Administration, 1985; Pharmaceutical Manufacturers Association, 1984. POTENTIAL CAUSES OF INDUSTRY DECLINE Several factors may be responsible for the symptoms of decline observed in the vaccine industry.
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From page 51... ...
may be reducing these problems. The third development that could affect investments in vaccine innovation was passage in 1984 of the Drug Price Competition and Patent Restoration Act (P.L.
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The magnitude of the disincentive posed by regulatory clearance costs depends at least in part on the anticipated product revenues. Safety and efficacy regulations force innovators to incur the heaviest expenses early in the development process.
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DESCRIPTIVE STATI STICS Data in this section offer some insights into the status of the vaccine industry at the beginning of 1984. The precise situation at the time of publication (mid-1985)
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From page 54... ...
Lederle Laboratories Merck Sharp & Dohme Parke, Davis and Company Wyeth Laboratories Foreign Institutions 10 1 12 18 1 IS Connaught Laboratories Ltd. 3 Glaxo Laboratories Ltd.
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From page 55... ...
These data underestimate the size of the market because they do not include federal, state, or direct private physician purchases of vaccines.l° Despite this shortcoming, they sales by product. Marketing Services *
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From page 56... ...
The concentration ratio is defined as the ratio of sales of the top four firms to total market sales in a specified market. The four-firm concentration ratios for various subgroups of the vaccine industry were calculated on the basis of data supplied by IMS for domestic vaccine sales.
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From page 57... ...
These data show that the rate of price increases in the market for vaccines has, in general, outstripped the rise in prices for the economy as a whole, including the price indexes for medical care and drugs. It is significant to note that most of the price increase in the vaccine industry has occurred since 1978; indeed, many vaccines showed price decreases during the 1970s, as indicated in Table 4.10.
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59 on ~5 to to 11 x a: H tO ,.
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From page 61... ...
Congressional hearings were held in 1982 to examine the pricing of vaccines, but no single factor emerged as solely responsible for price increases.12 Research and Development Table 4.2 suggests that during the 1970s and early 1980s, commercial biologics R&D became a less attractive investment than R&D involving other pharmaceuticals. Whether the availability of new development and production technologies for vaccines (Chapter 2)
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From page 62... ...
Wyeth 05-23-77 Improved production 08-11-82 process Institut Merieux 08-31-79 Same as above 06-09-80
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From page 63... ...
Smith, Kline & French (rabbit kidney cells) Rubella virus vaccine, live Merck Sharp & Dohme (human diploid cells)
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From page 64... ...
Cold Spring Harbor, N.Y.: Cold Spring Harbor Laboratory.
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