Costs turn vaccines into luxury products

By Elisabeth Rosenthal / New York Times News Service

Published Jul 3, 2014 at 12:01AM

SAN ANTONIO — There is little that Dr. Lindsay Irvin has not done for the children’s vaccines in her office refrigerator: She remortgaged her home to afford their rising prices. She packed them in ice chests and moved them when her office flooded this year. She pays a company to monitor the fridge in case the temperature rises.

“The security company can call me any time of the day or night so I can go save my vaccines,” said Irvin, a pediatrician. Those in the refrigerator recently cost $70,000, she said — “more than I paid for four years of medical school.”

Vaccination prices have gone from single digits to sometimes triple digits in the last two decades, creating dilemmas for doctors and their patients as well as straining public health budgets. Some doctors have stopped offering immunizations because they say they cannot afford to buy these potentially lifesaving preventive treatments that insurers often reimburse poorly, sometimes even at a loss.

Childhood immunizations are so vital to public health that the Affordable Care Act mandates their coverage at no out-of-pocket cost and they are generally required for school entry.

Once a loss leader for manufacturers, because they are often more expensive to produce than conventional drugs, vaccines now can be very profitable.

Old vaccines have been reformulated with higher costs. New ones have entered the market at once-unthinkable prices. Together, since 1986, they have pushed up the average cost to fully vaccinate a child with private insurance to the age of 18 to $2,192 from $100, according to data from the Centers for Disease Control and Prevention. Even with deep discounts, the costs for the federal government, which buys half of all vaccines for the nation’s children, have increased 15-fold during that period. The most expensive shot for young children in Irvin’s refrigerator is Prevnar 13, which prevents diseases caused by pneumococcal bacteria, from ear infections to pneumonia.

Behind the price

Like many vaccines, Prevnar requires multiple jabs. Each shot is priced at $136, and every child in the United States is required to get four doses before entering school. Pfizer, the sole manufacturer, had revenues of nearly $4 billion from its Prevnar vaccine line last year, about double what it made from high-profile drugs like Lipitor and Viagra, which now face generic competitors.

Michael Haydock, an analyst at the London-based consulting firm Datamonitor Healthcare, said no vaccine had ever been such a big seller. “It’s expensive in part because it’s a very effective vaccine,” he said. “And also because they’re exploiting their monopoly.”

That does not sit well with many doctors. Even though the vaccine has not changed, the price of the current version, Prevnar 13 (it protects against 13 strains), has gone up an average of 6 percent each year since it was approved by the Food and Drug Administration in 2010.

“You have to make back your investment and pay your shareholders, but at what point do you say, ‘Look, you’ve had your steak, gravy and potatoes and this is enough?’” said Dr. Steven Black, a vaccine expert at Cincinnati Children’s Hospital who served on the government committee that recommended all children get Prevnar 7, an earlier version of the vaccine.

To deal with the rising prices, some doctors, who say they lose money on every vaccination, reserve their shots for long-standing patients. A survey of family-practice doctors, who along with pediatricians are among the lowest-earning physicians, found that about one-third were considering giving up immunizations because of the expense. Another survey found that 40 percent do not offer at least some required childhood immunizations.

‘Where should I go?’

That is why Breanna Farris, a San Antonio mother, had to call 10 pediatricians in April before she found Irvin to vaccinate her son, Traven, who is entering kindergarten this fall. The family’s usual doctors do not offer vaccinations, and referred Farris to local pharmacies (which do not vaccinate children) or the city health clinic (which would not take Traven’s insurance).

“I was like, ‘Where should I go?’” Farris said. “They say vaccines are covered, but that isn’t really true if doctors aren’t giving them.”

There are, of course, some good reasons vaccines like Prevnar are more expensive than previous offerings. Vaccine trials, which once included thousands of volunteers, must now include tens, if not hundreds of thousands of people, as fears about side effects like autism have grown, even though many studies have concluded that such worries are unfounded. Some of the newer vaccines are complicated to manufacture.

Prevnar, for example, involves attaching a piece of a dangerous bacterium’s outer layer to a protein that renders it better able to provoke a protective immune reaction in babies. And because it covers 13 strains of the disease, it is in some ways 13 vaccines in one.

Pfizer maintains that Prevnar’s prices are justified because of its investment in “one of the most complex biologic products ever developed and manufactured,” said Sally Beatty, a company spokeswoman. She noted that it takes five years and costs $600 million to build a vaccine manufacturing site, and that one batch of Prevnar 13 takes two years to create, with more than 500 quality control tests. Development of the first Prevnar vaccine took 14 years, Beatty said, from the initiation of research to licensing. (That work occurred before Pfizer acquired the Prevnar brand in 2009 when it bought Wyeth Laboratories, which had in turn acquired it from smaller companies.)

“It’s a risky business developing vaccines, so you can explain — if not necessarily justify — the higher costs of vaccination,” said Dr. Alan Hinman, a former head of the immunization division of the CDC and now a senior scientist at the Task Force for Global Health in Georgia. “A more difficult question is, after the research and development costs are recouped, why don’t prices come down?”

Most developed countries demand better cost-effectiveness numbers before approval of vaccines and can use that to negotiate for discounts, said Anthony Newall, a health economist at the University of New South Wales in Australia.

The Swiss Agency for Therapeutic Products pays $101, a price that has not changed over time. In Britain, the small private health care market sells prefilled syringes of Prevnar 13 for an average of $82 at pharmacies; the National Health Service pays even less, experts say. Prefilled syringes cost an average of $136 in the United States, and even the CDC — which buys vaccines for the Medicaid program at a discount — pays $112.84.

Information shortage

Because some companies, like Pfizer, require that each physician sign a legal agreement not to disclose the price he or she paid, there is little informed shopping. “I was kind of aghast, I didn’t think this it could be legal, but it is,” said Dr. Gary Freed, a pediatrician at the University of Michigan School of Public Health who has studied vaccine purchases. “And it’s certainly a very inefficient market since it means physicians don’t have information to bargain.”

The result is much like that in other aspects of American medicine: Huge price variations for the same item or service. Large group practices that have purchasing clout with drug-makers and insurers may make a profit from providing vaccines, while solo practices, like Irvin’s, can incur losses. Some doctors pay three times as much as others in the same city, Freed’s studies have found. One large practice was yielding $39 per dose of Prevnar, while 11 percent of practices were losing money on it.

The family practice doctor downstairs in Irvin’s office building has stopped immunizing children. A local obstetrician recently told her in tears that she cannot afford to give pregnant patients a shot recommended to boost the mother’s immunity to whooping cough, protection that is transferred to her unborn baby for the first months of after birth.

Nationally less than 10 percent of pregnant women are getting this recommended shot. Though there are many reasons women go unvaccinated, studies show that patients are far less likely to get a vaccine if their doctors do not offer it. And the consequences can be grave: Last year, two babies, each a month old, died of whooping cough here in San Antonio. Their mothers had not been vaccinated during pregnancy.