Report on the United States Vaccine Industry

Price Comparisons by Country

Exhibit 7 illustrates the price differences for a sample of public and private markets for DTP
and OPV. Both of these vaccines are older commodity products. In an efficient market, one
would expect far smaller differences in prices across countries. Clearly, these are not efficient
markets.
Exhibit 7
1993 Worldwide Vaccine Prices
- $ per dose -
Competitive U.S. Market Monopoly U.S. Market
-DTP- -OPV$10 $10
$9 [ Public Price $9 Public Price
$8 a Private Price $8 * Private Price
$7 $7
$6 $6
$5 $5
$4 $4
$3 $3
$2 $2
$1 $1s
Italy UK US France Germany US UK Italy US France US
The DTP market in the U.S. is quite competitive. Excluding two state suppliers, there are 3
licensed suppliers of DTP that serve the country's public and private markets. Consequently,
the public market price in the U.S. is very similar to the public market prices in Italy and the
United Kingdom. The small U.S. premium is largely driven by higher production costs from
the smaller U.S. vaccine plants. In the private market, U.S. prices are at a larger premium, but
a significant portion of this is due to the higher costs of production, sales, marketing and
distribution.
OPV is a different story. The U.S. public price for OPV is considerably higher than in Italy or
the United Kingdom, and the U.S. private market is at an enormous premium. The primary
reason a European supplier sells OPV to UNICEF at 7 cents a dose and does not sell to CDC at
$1.87 or the U.S. private market at $10.14 is that they are not licensed to do so. Despite the
fact that millions of children receive OPV by these suppliers, European suppliers have been
denied approval of their license applications in the U.S. OPV is a monopoly in the U.S. and its
prices reflect a lack of competition.
Arguably, there is value in the higher prices being paid in the U.S. market - U.S. suppliers,
biotech firms, NIH and academic research centers have led the world in the development of
new vaccines. If U.S. prices were the same as European prices, it is doubtful that new products
would have been funded as generously. The millions of dollars spent on research have
provided a rich pipeline of new vaccines that have directly benefited American children and
have been exported or licensed overseas to benefit children around the world. Although not by
design, the U.S. market has in fact subsidized the development of vaccines for the entire world.

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