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Vaccines on the horizon and vaccine economics

Stephen C. Schimpff, MD
Meds
July 19, 2011
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What else is on the horizon? There is progress to develop vaccines to control addiction to both nicotine and to opioids. Vaccination may be the best route to get control of the bacteria having a major impact on methicillin resistant Staphylococcus aureus (MRSA) and other highly pathogenic antibiotic resistant bacteria that have become endemic in hospital ICUs.

A vaccine for dengue is likely within the next five years. The World Health Organization (WHO)estimates about 50 to 100 million infections occur annually with 250 to 500 thousand severe cases and about 20,000 deaths –clearly a major health problem in the tropical and subtropical world. And it is close to the United States although we don’t usually think about it here – some 5% of tested people in Key West, Florida were antibody positive in 2009. There is no anti-viral for dengue so a vaccine is critical. A problem is that the virus comes in four serogroups and immunity to one does not confer immunity to the other three. Further, infection with one can lead to immune enhancement, meaning infection with another serotype can lead to much more severe disease. As a result it is essential to have a four serotype vaccine. Among those working on dengue are Sanofi Pasteur with a phase 2 trial in progress, a Glaxo phase 2 trial (in concert with Walter Reed Army Institute of Research which has had a long history of work on dengue vaccines) about to begin and an NIH program to attenuate the four serotypes.

Malaria has been a difficult problem but there is at least one candidate vaccine in phase 3 clinical trials.

Tuberculosis likewise remains a major problem in poorer countries. About 8 million people are infected each year and nearly 20%, especially children, die annually of TB. The BCG vaccine, developed in 1921, is still used around the world but there is a need for a modern vaccine that will be effective against drug resistant strains as well as effective in patients with HIV (on a worldwide  basis, 1/3rd of people infected with HIV have TB.) The not-for-profit Aeras is deep into a possible vaccine. Other vaccines in progress are ones for enteric infections, lassa fever, Ebola virus and Marburg virus.

Norovirus is the common cause of food borne GI upset with vomiting and diarrhea. It is being studied at Cincinnati Children’s Hospital with a new nanoparticle approach. Nanoparticles can be used as carriers of small peptides to serve as antigens. Their researchers have developed a nanoparticle carrier they call a “P particle.” This base scaffold can have any number of antigen peptides attached with norovirus being a model for development. This scaffold should potentially be useful for many different vaccines. Apparently the approach is highly immunogenic, at least in a mouse model. If effective in humans, it should prove to be easy to manufacture and hence low in costs – both important everywhere but especially key to use in developing countries.

In 2004 global vaccine sales amounted to about $8 billion. By next year that number should reach about $40 billion. Credit this to new vaccines, greater distribution, and an increased recognition of vaccines inherent value. The conversion from the old approach of growing up a vaccine in eggs or cells is changing rapidly to a biotechnology approach or to a DNA vaccine approach. These will lead to faster vaccine development and much faster and less expensive manufacturing. Influenza vaccine is a case in point. One of the vaccines uses nasal rather than intramuscular administration. The previous guidelines called for vaccination of the very young, the elderly and those with certain high risk chronic illnesses. But the indications have been widely expanded to vaccinate just about everyone. That of course means better protection for all but a big increase in sales.

Vaccines are generally very cost effective means to prevent infections. But like any pharmaceutical, return on investment for the pharmaceutical firm is a critical element in vaccine development and worldwide use. For example, well over 80% of vaccine doses administered are for basic pediatrics yet this represents only slightly more than 10% of revenues. Adult and travel vaccines are less than ten percent of doses but comprise over 30% of revenue (Batson, etal in New Generation Vaccines, edited by Levine, etal). This represents a “strong value-volume skew” and points out where the profit potential is in most vaccine manufacture and distribution.  Vaccines for the developing world need to be produced in large quantities and very low prices, a scenario that most of the major producers are willing to accept provided their marginal costs are covered. In effect this is tiered pricing with higher prices for developed and lower for developing countries.

For some time there were relatively few manufacturers of vaccines but recently the potential of vaccines for both value and profit have been recognized. The purchase of Wyeth by Pfizer last year was primarily to access Wyeth’s vaccine technology and business acumen. Glaxo has committed to becoming a major vaccine producer as have a number of other large pharmaceutical firms. Clearly they see a profit potential in the coming years from vaccine R&D followed by sales. This new found interest should lead to many useful vaccines in the near future. Major grants from the NIH, the military and other government agencies have spurred further research and methodology for new technologies in manufacture. Major grants from the NIH, the military and other government agencies have spurred further research and methodology for new technologies in manufacture.

The economics of vaccines have changed in recent years. Whereas most pharmaceutical companies dropped out of vaccine research, manufacture and sales in decades past, there has been a major renaissance in recent years. In part this is due to new technologies and science but largely it is due to improved profitability. With the loss of many patents on branded drugs looming, firms are entering the vaccine business where there is minimal generic competition and limited price competition. The “shingles” vaccine is sold for about $200 and the cervical cancer/human papilloma virus vaccine series costs about $375. The research costs were high but the companies are reaping a good return on their investment. Pfizer spent $68 billion to acquire Wyeth principally to obtain it vaccine expertise and stable of vaccine candidates and current products. Glaxo is actively growing its vaccine enterprise from one vaccine to more than a dozen with another dozen in the works. Merck, long a vaccine powerhouse, continues its vaccine development and others like Sanofi Pasteur are entering the fray. But most interesting are the small and startup companies that are actively conducting innovative research. Medimmune was such a company some years ago until it was able to market its RSV vaccine for infant pneumonia and followed it with its intranasal influenza vaccine. That positioned the firm for acquisition by a major pharmaceutical firm.

Finally, for those wishing to explore this subject further, the June, 2011 issue of Health Affairs has a comprehensive series of articles on the potentials, the issues and the challenges facing vaccines in the coming years.

Vaccine development two hundred years ago was the start of a major medical megatrend in prevention. Today vaccines continue to be one of the most effective means to reduce disease burden throughout the world. And in the coming years vaccines will impact not only infections but many other chronic diseases as well – from atherosclerosis, to Alzheimer’s, to diabetes, to cancer.

Stephen C. Schimpff is an internist, professor of medicine and public policy, and former CEO of the University of Maryland Medical Center.  He is the author of The Future of Medicine — Megatrends in Healthcare and blogs at Medical Megatrends and the Future of Medicine.

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