« Prescott on Tax Rates | Main | On Markets for Body Organs» Don Boudreaux
October 22, 2004
Taking the Profit Out of Medicine
Russell Roberts
In an earlier post, I suggested that to understand the true source of the vaccine shortage, it would help to know how much of the flu vaccine is bought by the government and what is holding price down. I spoke with people at the Center for Disease Control. In a typical year, the CDC buys 7% of all purchases, the states buy 8% and the Department of Defense and the Veteran's Administration also buy some. Haven't nailed those numbers down yet, but in 2002, Medicare paid for 22 million doses. This year, if we hadn't lost the Chiron supplies, that would have been about 20% of the total. So as a crude estimate of government purchases, either direct or indirect through Medicare, 40-50% is a good starting place. (I think the full effect is larger but I'll save that for another time.) My guess is that the large role of government in purchasing vaccine restrains the price that manufacturers can charge, making it difficult to overcome the regulatory and litigation risks. Essentially we've taken the profitability out of this industry.
The news today is that MedImmune, the makers of FluMist will be supplying an additional 1 million doses.
The U.S. government has secured 1 million additional doses of the nasal-spray version of flu vaccine, bringing the total number of vaccine doses to 61 million, Health and Human Services Secretary Tommy Thompson said Thursday.
Phew. I thought we were going to be stuck with only 60 million doses, Good to know it's going to be sixty one million. Too bad the FDA only approved FluMist for people ages 5-49, the low-risk population. Still it could help:
The government hopes the increased FluMist supply will act as "further incentive for people to forgo a flu shot intended for people in high-priority groups," the health secretary added.
Too bad there's not much of an incentive. We're still relying on begging and pleading to get younger people to step aside rather than relying on price.
But the real story here is who is responsible for this modest expansion in supply. The government. The Department of Health and Human Services. With people lining up to get flu shots, waiting in line for hours, you'd think some private source would find it profitable to order some additional supply. Evidently not. Only the government finds it worthwhile. Which suggests that because of various regulations and social norms, we've taken the profit out of not just producing the vaccine but supplying it as well.
Posted by Russell Roberts in Health, Prices | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d834518ccc69e200d834271ade53ef
Listed below are links to weblogs that reference Taking the Profit Out of Medicine:
» MP3 File Search from The Mp3Database
Download mp3 audio music and song lyrics. Mp3 search engine to music links for free download ... Quick Database Search search in 250209 mp3 entries ...
[Read More]
Tracked on Mar 26, 2006 4:41:47 AM
» Auto Search: 1938 chevrolet fenders from Online Auto Guise
Search and Compare Certified Pre-Owned Cars. Car Shopping Tools and Advice · 2006 Auto Shows · New York Auto Show Check out 2007 models and cool concepts ... [Read More]
Tracked on Apr 27, 2006 2:11:03 PM
» Finance Search Online: online quotes liability insurance from Business Finance Online
Business Finance Online Product/Service Directory. Search for business finance related products and services by browsing the directory of business finance ... [Read More]
Tracked on Apr 28, 2006 6:04:06 AM
» Library of Congress WWW/Z39.50 Gateway from Harvard Seismology: Centroid Moment Tensor Catalog
Contents: Search Library of Congress Catalog | Search Other Catalogs | About the Z39.50 ... Library of Congress Online Catalog. Simple Search (any keyword) ... [Read More]
Tracked on Apr 29, 2006 9:35:20 PM
» MP3 Downloads, Find your favorite mp3 from Mp3 Search
Enter Artist or Song or Album name to search:. Download MP3 Music for $0.10 per song. MP3 Archive:. # - A - B - C - D - E - F - G - H - I - J - K - L - M ... [Read More]
Tracked on Apr 30, 2006 5:38:18 AM
» JetBlue, Verizon qualify for wireless auction from LiveTV LCC to
of Verizon Airfone Inc. and JetBlue's LiveTV LCC to participate in the auction, almost a month after their initial applications [Read More]
Tracked on May 2, 2006 2:11:52 AM
» Jewelry Shop from Jewelry making, Tips from The Jeweler's bench - Jewelry making
The Gem and Jewelry World's foremost Resource on The Internet. ... The Jeweler's Selected Bibliography. Add Ganoksin Power Search to your website ...
[Read More]
Tracked on May 20, 2006 12:41:41 AM
» Firefox-Based Netscape Prototype Released from opened. The Options
close tab actions (e.g. close all to the left, close blank). To the right of the tab bar is a button which opens a tab selection menu, a [Read More]
Tracked on May 25, 2006 8:41:46 AM
» Tornadostream, LLC Releases myBlogTunes Beta Version from allows bloggers
blog or web site via the myBlogTunes player. (PRWEB May 15, 2006)
[Read More]
Tracked on May 29, 2006 2:24:17 PM
» Internal Audit: Resources for Internal Auditors from Audit Company
Internal Audit - is the Web portal and online community for the internal audit profession provides free audit work programs, ICQ's, checklists, ...
[Read More]
Tracked on Jun 6, 2006 11:51:37 PM
» Indian Muslims welcome dialogue between the USA and Iran from ant Dialogue
ant Dialogue to be Unconditional and Under the IAEA... [Read More]
Tracked on Jun 15, 2006 11:27:16 AM
» 83 Premiership Transfer Rumours Added from City
Barnes..MF..from..Derby..to..Manchester
Wright-Phillips..MF..from..Chelsea..to..Portsmouth
Mensah..DF..from..Rennes..to..Reading
Onyewu..DF..from..Standard [Read More]
Tracked on Jul 24, 2006 8:07:40 PM
» ESRI Careers, Job Spotlight: ESRI Instructors from for teaching
utilize their passion for teaching and knowledge of GIS to help our customers stay on the leading edge of ESRI technology. [Read More]
Tracked on Aug 9, 2006 11:34:14 AM
