David L. Webster is president and founder of The Webster Consulting Group Inc. The firm provides pricing consultation to the pharmaceutical, biotechnology, and medical industries.

Author: MHarry       Number:   of 96
Subject: Flu Vaccine Pricing Problems Date: 12/11/2000 1:35 PM
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All,
Found this on Yahoo. Not really sure how this will play for AVIR. Any comments?

mm

Monday December 11, 7:01 am Eastern Time
Press Release
SOURCE: The Webster Consulting Group
Flu Vaccine Shortage Is Due to Low Price Not Manufacturing Problems; No Financial Incentive for Manufacturers
ALLENTOWN, Pa., Dec. 11 /PRNewswire/ -- Contrary to numerous reports, the shortage of flu vaccine is not due to manufacturing problems and plant shutdowns according to a recent study by The Webster Consulting Group.

``The real culprit is the vaccine's low price,' states the study's author, David L. Webster, Ph.D. ``It's a matter of economics.'

``The whole process of producing, selling and distributing the flu vaccine is more complicated than people realize,' said Webster. ``It not only involves manufacturers and distributors, but the World Health Organization (WHO). The composition of the vaccine changes each year, so manufacturers must wait for the WHO's recommendation on the formula to complete production. Most contracts for sale of the vaccine are made early in the spring, long before the WHO makes its final recommendation.'

At prices ranging from $2.00 to $3.00 per dose, quantities of vaccine that are returned or not sold at the end of the season can turn a manufacturer's annual profit into a loss. As a result, each manufacturer produces only what they know they can sell.

By the time manufacturers learn that actual production is different from original projections, as they did this summer, it is difficult to make up the shortage. There are also few financial incentives to do so. Diverting resources away from vaccines with guaranteed sales of $7.00 to $60.00 per dose is not popular among demanding shareholders.

``This year's shortage once again draws attention to the issue of pharmaceutical pricing and how it can severely impact public health,' said Webster. ``The shortage creates an opportunity for pharmaceutical companies, policymakers, and public health officials to develop a strategy to better meet the needs of consumers.'

``Ironically, it is senior citizens who will suffer the most from low pricing,' said Webster.

David L. Webster is president and founder of The Webster Consulting Group. The firm provides pricing consultation to the pharmaceutical, biotechnology, and medical industries. Webster formerly was director of pricing for Aventis Pasteur, the vaccine division of Aventis, one of the world's largest drug manufacturers. He received his Ph.D. in economics from the University of Chicago. For a complete study go to www.websterandcompany.com or contact Dr. Webster at 610-820-6436.

SOURCE: The Webster Consulting Group