Free Minds & Free Markets

Health Care: Shots in the Dark

The saga of the Vaccines for Children program

It was a rally set against the background of the New York City skyline.The Statue of Liberty towered behind President Clinton as he pounded the podium with such force that the presidential seal fell off. It was August 1, and the White House was trying to save a very unpopular health plan. We must pass his plan "this year," Clinton repeated incessantly. "Don't let the fearmongers, don't let the dividers, don't let the people who disseminate false information frighten the United States Congress into walking away from the opportunity of a lifetime.

Why is "this year" the "opportunity of a lifetime"? Maybe because by next year, people will have had an opportunity to witness the first phase of ClintonCare in action. The Vaccines for Children program is scheduled to start October 1, and an administration eager to take credit for at least one successful piece of legislation before the fall elections has been strangely silent about this one.

Such silence stands in marked contrast to the confidence with which Clinton launched his first health-care policy initiative in February 1993, accusing the pharmaceutical industry of "pursuing profits at the expense of our children." Sen. Edward Kennedy (D-Mass.) added his voice: "The laissez-faire attitude of the past administration meant that business too often was not asked to participate in meeting urgent national needs."

The new administration alleged that the divergence between the public good and the private interests of vaccine makers meant that only about half of the nation's preschoolers were properly vaccinated. In 1982, the average cost for a complete set of childhood vaccines was $23.29. In 1992, it was $243.90—a seemingly obvious example of profiteering. Thus, Clinton argued, the industry needed government intervention.

Hillary set up a working group to explore the possibility of price controls if vaccine costs exceeded "voluntary" guidelines. Bill pushed for "universal purchase"—he wanted the federal government to buy and distribute all childhood vaccines produced in the United States. In August 1993, Congress passed a compromise. The Vaccines for Children program would purchase one third of the national supply at a forced discount of half price. The government then would distribute the vaccines free to private physicians who could administer them to Medicaid recipients, the uninsured, the underinsured, and Native Americans.

Sounds simple. But from the original rhetoric to the approaching reality of implementation, the facts have been getting in the way. First, people began to notice that every reliable source showed a much higher vaccination rate than Clinton alleged. His low figures come from 1991, and are disputed by a more recent 1993 Centers for Disease Control and Prevention survey, which puts the rate between 80 percent and 90 percent.

When the VFC program was unveiled, administration officials had easy access to 1992 CDC figures showing an 80 percent immunization rate—and it was well known among experts that 96 percent of 5-year-olds are properly vaccinated, because they are required to be to enter kindergarten. The administration has denied trying to deceive the public.

Second, if the vaccine business is so lucrative, reaping high profits "at the expense of our children," why has the number of producers fallen from 12 to five in the last 10 years? Because the nationwide litigation explosion has hit the pharmaceutical industry hard. Fear of liability is the reason Merck is the only company that will make the unpatented MMR (measles, mumps, rubella) vaccine in the United States. And $8.00 of an $11.50 dose of DPT (diphtheria, pertussis, tetanus) vaccine reflects the cost of liability insurance.

In addition, new federal excise taxes total about $25 for the full set of childhood vaccines, more than the set itself cost in 1982. The cost of developing and marketing new drugs also has risen from an average of $80 million in 1982 to more than $200 million in 1992, much of which is the cost of winning FDA approval.

But the main cause of the higher vaccine cost is a better and more comprehensive product. Since 1982, new vaccines for hepatitis B and bacterial meningitis have been developed and added to the recommended schedule. Hence, cost comparisons between 1982 and 1992 are meaningless.

Nor is the cost of a full set of childhood vaccines a one-time barrier to vaccination, as the administration presented it. That $243.90 is the total cost for a set of shots administered over the course of 16 years, not up front. The shots cost an average of $15.24 per year.

And all of the groups covered by the VFC program already are eligible for free vaccinations at public clinics. Clinton never mentioned that program.

Finally, 12 states already have programs similar to the new Clinton buy-up initiative and their vaccination rates aren't significantly higher than the rest of the country. The inescapable conclusion: "Vaccine cost is not an important barrier," in the words of the General Accounting Office report on the VFC program issued in July.

The "plan" itself was as hollow as the anti-capitalist rhetoric behind it. The Department of Health and Human Services was given wide discretion under the authorization bill, which had been formulated without considering who would run the program. First HHS tried the Defense Department, a logical choice since advocates of big government like to justify their programs by creating the impression they are part of a war. But the Pentagon declined, as did the Department of Veterans Affairs.

So the job eventually fell to the much-maligned General Services Administration, usually known for distributing items such as toilet paper and paper clips to federal office workers. By using the GSA as a middleman, which would mean routing vaccine bound for places like California through New Jersey, the government said it could save $30 million.

But even the GAO couldn't justify that claim. Doctors now order vaccine directly from the manufacturers. In fact, both the Defense and Veterans Affairs departments recently canceled their own plans for distributing vaccines to the children of military families because they found the pharmaceutical industry already did it more cheaply than they could. HHS Secretary Donna Shalala declined congressional offers to provide extra money for the VFC program—but only if she preserved the drug industry's role as distributor of the vaccines.

The GSA, which has no experience with handling biological materials, soon drew harsh congressional criticism for its decision to store a large portion of the national supply of the temperature-sensitive vaccines at its Burlington, New Jersey, warehouse, next to rooms where the agency stores paint, turpentine, and other highly flammable materials. Sen. Dale Bumpers (D-Ark.) said that it would be "foolish in the extreme to proceed on schedule," and that because of the GSA, the program would be "an unmitigated disaster."

The critics won. In late August, the administration abandoned plans to use the GSA and the Burlington warehouse. Sources speculate that the job of storing and shipping the vaccines will be given to state agencies where they exist and remain with the manufacturers otherwise.

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