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The finances of the flu vaccine
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In this Ask the Experts feature, Richard Lander, MD, FAAP, discusses the cost of flu vaccines and public efforts to deliver vaccines to children.
What is the market cost of the flu vaccine and what accounts for the bulk of the cost?
What accounts for the bulk of the cost is a question that relates to the pharmaceutical company that has produced the vaccine. Hundreds of millions of dollars are spent in the research and development of any vaccine, and this cost factor is included in the pricing, as well as the actual cost of materials, labor to assemble the finished product and the cost to deliver the vaccine to the system, be it private or public. Part of the cost is also the marketing of the product.
To determine the cost of the flu vaccine to the physician, there are several factors to consider. First, how was the vaccine purchased? Was it directly from the pharmaceutical company, did the physician spend more money and purchase the vaccine from a medical supply house or was the physician savvy enough to save money by buying through a group purchasing organization?
Next, was the physician smart enough to wait the full 90 days to pay the bill; thereby, still enjoying the pharmaceutical company’s discount but having the use of their money during that time period, and was he/she savvy enough to pay by credit card enabling the physician to delay his/her expenditure of capital for another 30 days?
Has the Vaccines for Children (VFC) program been successful in getting vaccines to kids?
The answer to this question varies from year to year and by location. In the 2009-2010 influenza season, many doctors received VFC vaccines before receiving their private stock. In the 2010-2011 influenza season, pediatricians in certain parts of the United States received their VFC flu vaccines in October, while in other parts of the country, pediatricians received them as early as late August. As of the date of writing this article, there are pediatricians who have not received any VFC flu vaccines.
Some doctors’ offices have received only the intranasal vaccines, which will not service patients with asthma. Unfortunately, there seems to have been more negative feelings regarding this year’s VFC vaccine administration than positive.
An important aspect influencing the delivery of VFC is the payment of the vaccine administration fee. This issue was recently covered in Newsweek magazine, demonstrating the incredibly poor payments that some states offer to physicians to administer vaccines. If doctors are losing money when administering flu vaccines to their VFC patients, they won’t continue to give the vaccine. The states cannot and should not place this financial burden on doctors. It seems obvious that if the United States appropriately paid the administration fee, more pediatricians would be willing to provide that service. The more vaccines that are VFC given, the smaller the number of kids at risk for influenza. This, in turn, means fewer hospitalizations and fewer missed days at work by parents caring for children, a win-win situation for all.
What are the gaps in the system, and how can pediatricians bridge the gap for their patients?
There are several gaps in delivering vaccines to America’s children.
First and foremost, the timing of delivery is, at times, erratic, making it extremely difficult for the physicians to schedule appointments for their patients. This is a great problem in the case of flu vaccine because of the seasonal nature of the illness. Another problem deals with the family who earns too much to qualify for the VFC program but they are either un- or under-insured. It then becomes the physician’s ethical problem to decide whether or not to give vaccines knowing that he/she will not be paid for the vaccine.
Lastly, when physicians are poorly paid by managed care organizations (MCO) for the vaccines, many stop giving vaccines. Currently, 5% of pediatricians and 11% of family physicians are no longer vaccinating. If the goal is to vaccine all the nation’s children, then insurance companies must properly pay the physicians who provide those vaccines. The American Academy of Pediatrics has asked the MCO to base their fees for vaccines using the CDC’s private sector price as a baseline and then to pay a percentage above that. In the AAP’s Business Case for Pricing Vaccines, the academy has suggested 17% to 28% above cost (purchase price) as the breakeven point. Those additional costs include the cost of the refrigerator [that holds the vaccine], the electricity to run the unit, the extra insurance to cover the potential loss of the vaccines in a power blackout (thousands of dollars sitting in the refrigerator), the cost of temperature monitoring systems, loss of vaccine (vaccine drawn up and then the patient/parent refuses it or the accidental spillage of the vaccine) and don’t forget the loss of your money working for you, as you have spent the money on purchasing vaccines and are either awaiting the use of them or payment from the MCO.
Vaccines to me are the greatest medical achievement of the last 5 to 60 years. I do not think that the physicians of this country should bear the financial responsibility of vaccinating the children of this country at a loss.
Dr. Lander in is private practice in Livingston, N.J. He is the New Jersey Chairman of the AAP section on Administration and Practice Management, and is a Clinical Assistant Professor of Pediatrics at the University of Medicine and Dentistry of New Jersey.
Disclosure: Dr. Lander reports the following financial disclosures: co-owner, National Discount Vaccine Alliance; co-owner, Resources in Physician Management Services; speaker, Merck, Sanofi-Pasteur, Novartis, Pfizer.