Atlantic Institute for Market Studies
News Release
December 15, 2004
For Immediate Release


(Halifax, NS)Professor Brian Ferguson, AIMS Fellow in health care economics and Julia Witt, AIMS Fellow in pharmaceutical policy have released their commentary on the US flu vaccine crisis, This Won’t Hurt a Bit: Why the vaccine crisis shows we shouldn’t believe what health “planners” tell us about how to reform drug policy, the latest paper from the AIMS series on Canadian pharmaceutical policy.

According to Ferguson and Witt, the US flu shot crisis didn’t occur because of too little government involvement in the industry, but rather too much. Contrary to some recently published media reports, over-zealous governments have made the production of flu vaccines in that country very unattractive and helped to make less therapeutically valuable drugs the focus of industry attention.

European countries like Ireland and Great Britain fared much better than the United States during the latest shortage because of greater flexibility shown by their governments.  Fairer pricing policies in the UK have made access to a larger number of vaccine producers possible.  Currently the United States purchases 95% of its flu shots from only two manufacturers.

“Like it or not — and a lot of people do not — government intervention in health care markets does more harm than good,” Ferguson and Witt conclude.  “The failures of vaccine supply the United States has experienced regularly over the past several years illustrate, not market failure, but government failure.”

While pharmaceutical companies do produce the ‘lifestyle’ drugs that have been the object of so much criticism, they do so in part because government intervention has undermined the profitability of vaccine production.  While some reformers in Canada look at the efforts of American governments as successful in keeping prices down, they fail to understand the long term consequences of these decisions — such as the shortage of flu vaccines now plaguing the United States.

“What we are looking to accomplish in this series is to provide policy makers and Canadians with the straight facts on the pharmaceutical industry and present alternatives for the future.  This latest paper outlines failed practices in the United States which led to the latest flu shot crisis and should serve as a warning for Canada,” said AIMS President Brian Lee Crowley.

Somewhat ominously, federal and provincial ministers of health agreed, at their most recent meeting, to develop ways to use their combined purchasing clout to drive drug prices down.  Ferguson and Witt suggest the ministers should take a close look at how precisely that sort of policy has worked out in the US market for vaccines.

“Canadians need to stand up and take notice of what has happened in the United States, and not make the same mistakes by following short-sighted policies.  Canada is at risk of following the rabbit tracks of our neighbors to the south,” added Crowley.

For more information:

Dr. Brian Lee Crowley