The Elusive Promise of Vaccines

Childhood vaccines are the proverbial ounce of prevention. They save innumerable lives, prevent untold suffering, and reduce medical costs by the best of all possible means -- avoiding sickness. Yet, despite recent gains, millions of children in the United States and overseas are not receiving currently available vaccines. And, for want of concerted effort, new vaccines within scientific reach are not being developed.

The lost promise of vaccines is an epic case of market failure. Childhood immunizations are estimated to save about $10 for every $1 expended. But while society gets a high return from vaccines, the returns to vaccine makers and distributors are limited and uncertain.

One basic difficulty is that the economic demand for vaccines bears no relation to the social pay-off. From a commercial standpoint, the total vaccine market here and abroad is small. The world's poor, whose children have the greatest need for vaccines, cannot afford to purchase them at market prices. Even in the United States, vaccinations are rarely covered by health insurance. Ironically, the pharmaceutical industry stands to make far more money from an expensive drug for maintaining a terminally ill patient on the threshold of death in a hospital, where insurance coverage is assured, than from a low-cost vaccine for a child on the threshold of life.

Moreover, whereas drugs are typically taken many times by a single individual, vaccines are often literally one-shot protection. As a result, each drug customer usually returns a profit to the pharmaceutical industry that is hundreds or even thousands of times greater than the profit generated by each vaccine customer. Faced with choices about where to invest their next dollar in biotechnology development, pharmaceutical companies are likely to rank vaccines well behind drugs and diagnostic products simply because vaccines have less commercial potential. Of the $15 billion in annual pharmaceutical sales in the United States, vaccines make up less than 4 percent.

Although vaccine revenues are comparatively small, the risks in producing vaccines and distributing them are high. To take a new vaccine from the laboratory to the market costs anywhere between $10 million and $100 million -- with no assurance that the vaccine will ultimately meet regulatory approval and be recommended for general use. Twenty years ago more than twenty firms sold vaccines in the U.S. Today only three manufacturers continue to do so and most vaccines sold in the U.S. have only one maker.

The United States and other governments, as well as international agencies, have tried to correct these and other problems, primarily by subsidizing basic research, distributing low-cost vaccines to children, and in the U.S. even immunizing the vaccine makers themselves -- against liability. These measures have had some success, particularly in bringing basic vaccines to the Third World, but they have proved inadequate to realize the full promise of immunization. The private firms that dominate U.S. vaccine development and production do not find it profitable to cut unit costs by producing at very high volumes for a global market that consists largely of the world's poor. Even the Canadian, Japanese, and European firms that have sold vaccines in bulk for developing countries have not devoted major resources to creating new vaccines primarily for the Third World.

The vaccine story, in fact, turns on its head the usual tale of private efficiency and public sloth. The recent history of vaccine development shows that where the public sector takes a more direct role, it often promotes more competition and innovation, as well as lower prices, than does private industry. And if delays in vaccine development and deficiencies in distribution are to be overcome, the public and international effort will have to be much stronger than it has been. Fortunately, important initiatives are now under way that could enable the world's children to enjoy the full benefits of modern immunization's stalled potential.

Vaccine Development

The value of vaccines in public health is beyond dispute. Although pure water, safe waste disposal, improved nutrition, and less crowded living space have all contributed to the great health gains of the twentieth century, immunization remains the most cost-effective means for controlling infectious diseases. The measles vaccine, for example, prevented an estimated 52 million cases, 5,210 deaths, and 17,370 cases of mental retardation in the United States in the first twenty years after it was licensed. Among public health measures, only fluoridation of water supplies has a higher ratio of benefits to costs.

Today about ten vaccines are in general use, though some are limited in their effectiveness and cause unwanted side effects. The United States' childhood immunization programs rely on eight of the most effective vaccines -- against diphtheria, pertussis, tetanus, polio, measles, mumps, rubella, and hemophilus influenzae B (known as "HIB," one of the primary causes of childhood meningitis). The United Nations' global childhood immunization program emphasizes the same list, adding BCG against tuberculosis and omitting MB, rubella, and mumps. In addition, there are other vaccines against diseases such as rabies, yellow fever, and Japanese encephalitis that are given only to people at special risk.

On a purely scientific basis, we should be on the threshold of a new golden age of vaccine development. Since the mid-1970s there has been a revolution in the science of biology. Recent advances in genetic engineering and peptide chemistry have made it possible to design and produce large quantities of pure antigens -- the basic building blocks of vaccines. If scientists can find the antigen of the infecting organism that stimulates immunity, it will probably be possible to produce an effective vaccine. This design approach is replacing the trial and error by which vaccines were developed in the past.

Based on a 1985 review of the prospects for new vaccines for the U.S., the Institute of Medicine projected that if the investment were made, fourteen high-priority vaccines had a better than even chance of making it to market by 1995. These vaccines, the institute said, would have benefits exceeding costs by billions of dollars. Yet, so far, only two -- HIB and hepatitis B -- are available. Of those we are still awaiting, improved pertussis and influenza vaccines and vaccines against cocdciodes immitis, cytome-galovirus, hepatitis A virus, herpes simplex viruses, gonorrhea, paramfluenza viruses, respiratory syncytial virus, chicken pox, rotavirus, and streptococcus group B would make the greatest health and economic contribution in the United States.

A second volume also reviewed vaccine candidates for developing countries, where health benefits would be far greater, and projected nineteen to be feasible in ten years. The list included vaccines against the major respiratory and diarrheal killers of children. Of these vaccines, only three -- rabies, HIB, and hepatitis B -- are on the market, and they are still priced beyond the means of most developing countries.

Delays in realizing the promise of vaccines are an old story, beginning, in fact, with the first and most famous vaccine, against smallpox, discovered in 1798 by an English country doctor, Edward Jenner. For thousands of years smallpox had terrified people with the prospect of severe disfigurement, blindness, and death. Where records were kept in Asia and Europe, smallpox caused on average 10 percent of all deaths each year. It was the chief killer of children under ten in England at the time Jenner observed that milkmaids who contracted cowpox seemed immune from smallpox. Using cowpox pustules, Jenner made a vaccine that effectively prevented smallpox and was much safer than the earlier practice of smallpox inoculation (which involved pricking healthy people with pustules from a smallpox victim, in the hope of provoking a mild case of smallpox itself).

Though some public figures immediately appreciated the significance of Jen-ner's discovery, it took a long time to put smallpox vaccination into general use. In the United States, President Thomas Jefferson, a scientist himself, congratulated Jenner personally in a letter and asked Congress to extend protection against smallpox to all Americans. A decade later, in 1813, Congress did vote to furnish smallpox vaccine to any citizen, but the law was never fully funded. During the 1800s, as vaccination gained acceptance, the disease diminished, but not until the twentieth century did most communities adopt rules for mandatory vaccination. The last smallpox cases in the United States were recorded in 1949.

The final international push came only in recent decades. In 1966 the World Health Organization (WHO) began a campaign to eliminate smallpox from the entire world, and by 1977 the global effort had reached the world's least developed regions and last sources of smallpox infection. It had taken over a century and a half to muster the political will to eradicate smallpox -- and merely a decade to carry it out.

From 1798 until the late 1970s, scientists developed vaccines against another twenty diseases. But all too often, political and economic obstacles have delayed the use of life-saving vaccines. In the United States, not only was funding of public health limited; physicians long resisted any role of public health agencies in providing medical services to individuals, and they sometimes defined vaccination as of one of the services that properly was theirs alone. After the discovery of the polio vaccine in the 1950s, the American Medical Association objected to any direct distribution of the vaccine by federal programs. As a result, thousands of preventable cases of polio occurred, especially among the poor. In general, the basic problem with vaccine policy in the United States has been the failure to follow a systematic public health strategy, integrated by design from research through delivery to the whole population.

Much progress, however, has been achieved in recent decades. Public health efforts, including regulations requiring immunization for admission to primary school, have been effective in ensuring that nearly 98 percent of U.S. children are immunized by the time they are of school age. But, still, less than half of those under two years of age living in some inner cities get the immunizations the experts recommend, and those are the children most at risk.

In the Third World the rates of immunization are, of course, much lower, though recent progress there is encouraging, too. A heroic effort to provide basic immunizations to all of the world's children by 1990 has increased coverage from 5 percent in 1973 to more than 70 percent. Known as the Expanded Program on Immunization, the effort is coordinated by WHO and other United Nations agencies. UNICEF estimates that two million children are being saved each year at current rates of coverage and that three million more could survive annually with greater use of existing vaccines against measles, polio, whooping cough, and tetanus. The global effort might save still more lives if new and better vaccines were developed for the diseases that particularly afflict children in the Third World. International agencies committed to that objective, however, have run up repeatedly against obstacles posed by commercial control of vaccine development and vaccine pricing.

From Public to Private Control

In much of Europe and in Canada, early vaccines were initially developed and produced in public institutes for use in state-funded programs. In the U.S. and a few other countries some commercial firms entered the business of vaccine development, but most industrial countries until just after World War II conceived of the preparation and distribution of vaccines as a social responsibility, not as commodities with demand, supply, product, and price to be set by the private marketplace.

In the developing world, too, public health institutes assumed responsibility for producing vaccines. Before World War II, some countries in Latin America, such as Brazil, Chile, and Mexico started producing vaccines and distributing them, even without universal medical care systems. (During the global eradication campaign against smallpox, Burma, Indonesia, India, and Kenya produced vaccine for their own use.) These efforts to immunize the population against deadly infectious diseases were often part of comprehensive programs of nation-building, thought comparable to building roads and schools and maintaining national defense.

The military, in fact, has often pioneered the public health approach to immunization. Historically, more soldiers in wartime have died from infection than from weapons. By the late nineteenth century, armies that were better immunized against disease were better protected from defeat -- by microscopic enemies at least. World War II proved to be a historic watershed in showing that military planners could not only make good use of available vaccines; they could also develop new ones. In the United States, the war prompted the federal government to establish and manage an intensive program of scientific research and mass production of vaccines. The U.S. military entered the war using only two or three vaccines but by the war's end had a dozen immunizing agents in regular use. That remarkable achievement demonstrated the value and effectiveness of a government-led, public health approach to developing vaccines.

In the last decade, however, vaccine development and production have been increasingly privatized. A combination of political and economic factors have been at work. Conservative governments in the United States and elsewhere have supported a shift to the private sector of diverse responsibilities, including research and development. And the prospect of revolutionary advances in biology and medicine has enticed investment in a new biotechnology industry. With the advance of genetic engineering, private laboratories -- some relatively small in size -- have taken a leading role in vaccine development, while manufacturing and marketing have become concentrated in large commercial firms. Even in Europe and Canada, most newer vaccine development and production technologies are in the hands of private entrepreneurs, large and small.

Governments here and abroad are still prominently involved in vaccine development, principally at the beginning and end of the process. Private industry tends increasingly to dominate the middle stages. Governments fund much research and subsidize some distribution, but the private sector has the pivotal intermediate role in deciding whether research gets translated into products available for public use.

The process of developing a new vaccine begins with basic research. Before designing a vaccine, scientists need to understand how the disease-causing organism infects and harms people and how the human immune system responds. As vaccine prototypes are developed, they are tested in animals. The next and most costly steps are evaluating the vaccine in humans and developing production techniques to make large batches economically. In the United States, if clinical trials of the vaccine establish both its safety and its efficacy, the Food and Drug Administration (FDA) grants regulatory approval. Next comes mass production, with quality control and monitoring of safety at each step of the way. Last, of course, is distribution of the vaccine through health providers to the public.

As vaccine development passes from basic to applied research, the rules of the game change. In the United States, funds for basic research come primarily through the National Institutes of Health (NIH), the largest biomedical research agency in the world. Most of its budget, now more than $7 billion, is parceled out in grants to academic research institutions to support projects initiated by scientists. At this stage, competitive discipline is intense, because research grants are highly prized and the subject of fierce competition among research laboratories. At the privatized production phase, on the other hand, the industry has only a few firms. One producer may have all proprietary rights, and price competition is limited even when production is licensed to other firms.

The results from NEH-sponsored research provide the main information base for vaccine development and often the fundamental vaccine designs used by commercial firms for new products. Government and academic researchers have had some success in cajoling and persuading industry to invest in the development of vaccines. Public health objectives and advocacy, however, do not drive business decisions, and vaccine development often stalls when commercial firms calculate the relative advantage of investing in vaccines versus other products. Ultimately, industry executives, not public health officials, make the decisions about which products to develop.

Despite its deep interest in new vaccines, the FDA maintains a detached independence. Concentrating on safety and efficacy, regulators eschew active efforts to enhance vaccine development, though this passivity may be changing in the face of the AIDS epidemic.

Only after a vaccine has been developed do the Centers for Disease Control (CDC) and Academy of Pediatrics consider whether to recommend it for universal use. At that point the federal government decides if it should purchase the vaccine in bulk to subsidize state programs, hi the absence of a universal health insurance system, the need for vaccine subsidies invariably exceeds the funds appropriated. In the early 1970s, for example, measles immunizations declined and the number of cases rose when a new rubella vaccine was adopted to prevent a predicted epidemic, and insufficient money was available to pay for both. Conflicting Interests

The perspective of the pharmaceutical industry often conflicts with the public health approach that makes most sense as a basis for choosing which new vaccines to develop, which ones to improve, and to whom they should be distributed. The pharmaceutical business and public health represent two radically different institutional cultures. Drug companies primarily sell products to treat disease rather than prevent it; purchases by public health programs represent only a small fraction of their sales. The industry has a strong interest in keeping proprietary control of knowledge about vaccines, whereas the public health profession abhors trade secrets and regards scientific cooperation as imperative. The pharmaceutical industry, like any other, evaluates products according to their potential to turn a profit; public health agencies evaluate vaccines according to their potential to prevent disease.

Pharmaceutical manufacturers typically view new drug development as a kind of lottery. A relatively small fraction of their research initiatives pan out; when one does, the firms expect to cash in big. But cashing in big on a new vaccine isn't easy, particularly if a vaccine is recommended only for a limited group of people at risk of the disease. And the prospect of recapturing development costs, much less making a profit, is dim indeed if a vaccine offers protection against a disease found almost exclusively in poverty-stricken nations with limited health budgets, staggering national debt, and little hard currency. Bangladesh, for example, has an annual health budget equal to about $1 per capita. Unless its health expenditures rise sharply, Bangladesh is not about to become a commercially attractive market for vaccines.

To cash in big on new drugs, pharmaceutical companies today often set extraordinarily high prices. But the conflicting goal of public health is to make vaccines broadly available and to have their prices as low as possible. In these conflicts over pharmaceutical pricing, few episodes have been more troubling than those involving new vaccines. The stories of three new vaccines -- against rabies, hepatitis B, and malaria -- illustrate the seriousness of the conflict between the pharmaceutical and public health outlooks.

Rabies. The rabies vaccine in use today around the world to treat people bitten by rabid animals and to prevent rabies in veterinarians was invented more than a century ago by Louis Pasteur. But the vaccine, which uses virus grown in animal brains, has some serious drawbacks. The long course of injections, besides being horribly painful, carries a risk of adverse reactions caused by the continued presence in the vaccine of foreign brain tissue. In the last decade, a new technology for growing the rabies virus has led to a safer vaccine that excludes all brain tissue, but market incentives have proved insufficient to put the new vaccine into general use.

The new vaccine is being produced commercially by the Institut Merieux in France. Priced to cover development and production expenses, Merieux vaccine is sold for $10 per dose, which is prohibitively expensive for developing countries. Merieux's production capacity, however, could supply the world's entire need for rabies vaccine. At that level, the unit price would fall to about $1.50 per dose, and the whole world could have a safe vaccine for under $11 million per year.

Developing countries, however, have not joined together to buy the French vaccine or been able to get access to safer technology. Many countries maintain domestic production of brain tissue vaccines despite the risks. While the Institut Pasteur was still a public institution, the Rockefeller Foundation tried to acquire from it technology to make the new vaccine and distribute it to the developing world. Merieux, however, assumed control of the Pasteur vaccine production to commercialize it at just that time and declined to make the technology available at an affordable price. Thus, while a safe vaccine is available in industrial countries, inexpensive and less safe vaccines are still used in developing countries.

Hepatitis. Hepatitis B, like AIDS, is a blood-borne and sexually transmitted disease that spread rapidly in recent years. Unlike AIDS, however, there is now a vaccine against hepatitis B. The most extraordinary public health promise of the new hepatitis vaccine lies in the Third World, especially Asia and Africa. There newborns are at risk of acute hepatitis, which can cause a fatal liver cancer in later adult years. The vaccine prevents both. But the price of the vaccine, at least until recently, prevented it from getting to the people who need it most.

A hepatitis B vaccine was first offered by Merck in 1982 for about $100 for a three-dose course. At that price, there were few purchasers, even among the largely middle-class gay men in the United States whose cooperation in clinical trials had permitted evaluation and approval of the vaccine. The use of human plasma in making the vaccine may also have scared away potential purchasers worried that a plasma- derived product might transmit AIDS. Merck then produced a genetically engineered vaccine that did not use human plasma and offered it for the same price. SmithKline Biologicals, a Belgian subsidiary of SmithKline Beecham, marketed its own competing product in the U.S. for a slightly higher price.

Alternative sources of the hepatitis B vaccine, however, promised to cut the price sharply. When a Korean manufacturer offered a plasma-derived version at about $1 per dose for a clinical trial organized under the aegis of the Pan American Health Organization in the Caribbean, makers of the genetically engineered vaccine succeeded in derailing the test by raising unsubstantiated charges that the Korean vaccine was unsafe. A public interest coalition calling itself the Hepatitis B Task Force made sure, however, that the Korean vaccine was tested elsewhere -- with promising results.

Competing hepatitis B vaccines have now dropped in price from over $34 a dose to about 50 cents. Should it have taken eight years for the price to drop 6,000 percent? It is impossible to say for sure. But now that the price has fallen, there is a serious prospect, though no final agreement, for adding hepatitis B vaccine to the U.N.-sponsored Expanded Program on Immunization's list of universal childhood vaccines. In coming years, hepatitis B vaccine should at last reach the part of the Third World where it can save the most lives.

Malaria. Before AIDS spread through Africa, malaria was rated the worst plague of poor nations. In 1982 purely scientific and public health interest in a vaccine against malaria became intertwined with venture capital, a major university, and Reagan administration politics. The World Health Organization had begun to fund malaria vaccine research after DDT failed to eradicate or control the mosquitoes that carry the disease. The research contracts specified that WHO would retain a royalty-free license to produce any new vaccine against malaria at the lowest cost possible for distribution to developing countries. WHO offered rights to the wealthier markets in the industrialized world as an inducement for commercial participation in the vaccine's development.

The United States Agency for International Development (USAID) joined WHO in supporting malaria vaccine research. When a researcher at New York University (NYU) funded by both WHO and USAID had a promising product after many years of work, NYU's administration sought a commercial developer with the capacity to scale up to industrial production. The university and its partner, the biotechnology firm Genentech, then attempted to abrogate the original contract provision protecting the interest of poorer countries. After initially backing WHO's claim of a royalty-free license, USAID changed positions to support Genentech's demand of exclusive rights worldwide. Genentech later disclaimed interest in a malaria vaccine and, indeed, has avoided vaccines altogether, preferring to concentrate on more profitable products. Before another developer could be found, unrelated scientific problems required a return to the laboratory for additional research.

If these stories disturb you, consider what may be on the horizon with AIDS. There is some progress on an AIDS vaccine, but it may never become affordable where the need is greatest. AZT, the first drug to be approved against AIDS, was originally priced by its maker, Burroughs-Wellcome, at about $10,000 per year for the average user. Even though the recommended dose has been halved and the price reduced two times, the treatment still costs about $3,000 per year. If AZT is replaced by a better drug soon, it will still have generated outstanding profits, particularly because scientists funded by the National Cancer Institute did the basic work on AZT and Burroughs-Wellcome never had to invest much in research.

For Africa, AIDS drugs do not offer a realistic hope. Even at very low prices, drugs required on a daily basis could consume the national income of some African countries where AIDS is now spreading. Vaccines may well be the only, as well as the best, answer. But if recent commercial strategies for pricing are any indication, even a vaccine against AIDS may not be affordable in Africa. Unless commercial self-restraint or international agencies intervene, public health officials may be confronted with pricing policies of the pharmaceutical industry that may seem to many to be equivalent to genocide.

Breaking the Liability Barrier

By the 1980s most of the firms that had been producing vaccines in the United States in the 1960s had abandoned the small vaccine market for more lucrative pursuits. With only a few firms remaining in the vaccine business, the old problem of having a small market share was replaced by a new disincentive to private investment in vaccine development and production -- litigation over alleged vaccine injuries.

The reduced number of suppliers and perceived risk of litigation have greatly limited competition. With most vaccines now being produced by a single supplier, there is obviously little consumer leverage on vaccine prices, which in the United States are typically 70 to 100 times higher than in the developing world. In raising prices steeply, the industry has cited the increased economic risk associated with lawsuits. It has even threatened to stop producing vaccines altogether.

These problems were brought home dramatically in 1975, when federal health officials became convinced that a strain of influenza detected at Fort Dix, New Jersey, seemed likely to cause a severe epidemic of "swine flu." Many people think of the "flu" as no more than a discomfort. But between 1918 and 1920 a catastrophic influenza epidemic cost 20 million lives worldwide. Calculating that a multimillion dollar effort was justified by even a 10 percent chance of another epidemic on that scale, public health officials persuaded Congress and the President to launch a major immunization campaign, including a special appropriation to assure purchase of enough doses for the whole population. Laboratory researchers were racing though the development phases for a new vaccine, using techniques perfected in the 1960s, when work suddenly came to a halt. The new vaccine's prospective manufacturers could not get liability insurance.

After two months of tension and delay, Congress agreed to indemnify the manufacturers to make certain that the vaccine would be distributed in time for the flu season. As it turned out, a grave swine flu epidemic never materialized, but the episode showed that, without protection against risk, the pharmaceutical and insurance industries were willing to hold up production of a vaccine even in what appeared to be a public health emergency.

The vaccine liability issue surfaced again in 1982, when an alert TV reporter documented the increasing number of lawsuits arising from deaths and injuries claimed to be associated with "whole cell" pertussis vaccine. One manufacturer's batch failed, another manufacturer could not get insurance, and a third abandoned the vaccine business altogether. A vaccine that had been routinely given to every American child was soon in short supply and the remaining producers imposed steep price hikes.

When Congress investigated parental claims and the courts required vaccine makers to produce internal corporate documents in litigation, a more complex story emerged. The makers of the whole cell pertussis vaccines had known about adverse reactions for many years. Yet they had decided not to invest in improvements, since the FDA had declared the old vaccine safe and effective; a new vaccine also appeared to be more expensive to produce and less profitable. The firms may well have received legal advice that investing in a safer vaccine might constitute an admission of defects in the older product and would thus bolster plaintiffs' claims in court.

The pertussis liability crisis was accompanied by an escalation in prices, a general erosion of public confidence in the safety of immunization, insecurity about the adequacy of vaccine supplies, and increased risk of disease during periods of shortage. Accordingly, Congress enacted a National Childhood Vaccine Injury Compensation Program to compensate injured children from a federal fund created by a tax on vaccines. Though this measure eased the immediate problem, the pertussis scandal took a toll on public support of immunization. Finally, after years of contention, improved pertussis vaccines are coming forward. But, as always, the expense of clinical trials and new production processes will affect the price, and the safer vaccine may not be as widely distributed as it should be.

The issue of vaccine liability is clearly a genuine problem for society, not merely a problem for the industry to work out. When public health officials decide to recommend or require immunization, they are basing their judgment on data used to assess risk to large populations as accurately as scientific methods allow. If a vaccine can spare large numbers of people the risk of death, disability, or disfigurement, the officials calculate that its benefits outweigh the risk of adverse effects to a few people.

But the few who suffer injury are not likely to look at the problem the same way, nor perhaps should they. After all, it would be one thing if they suffered a side effect from medical treatment when already sick with a disease. But it is another thing, from their point of view, to suffer an injury from a vaccination while they are healthy. At that point, the disease being prevented seems remote, and they are being asked to extend their arm, not just for their own personal good, but for the expected benefit to the community as a whole from controlling infectious disease.

In that sense, vaccine injuries are legitimately understood as a social cost, and their full burden ought not to fall on the few who are accidentally hit by them. Vaccine safety, interestingly, has not emerged as a major concern in societies that have comprehensive forms of health and social insurance, perhaps in part because individuals who suffer injuries do not have to meet the ensuing costs of health care on their own. Universal health and disability insurance might, therefore, ameliorate the liability problem. But with or without universal health and disability insurance, we will have to find some way to ensure that the risk of litigation does not deter the development of needed vaccines. Even if preempting the tort system proves useful, the 1986 compensation program applies only to existing mandated childhood vaccines. Obviously, it does not reduce the barriers to the development of new or improved vaccines.

Toward a Better System

If we were designing a vaccine development and distribution system from scratch, building on the experience of the last century, it would look something like this: Basic research would continue to be underwritten by public support. Both the U.S. government and international agencies would foster competition, as NIH and WHO have done. The middle phase of the system -- the development, testing, and production of new vaccines -- would still involve private manufacturers, but governments and U.N. agencies would play a more active role in planning which vaccines are developed and setting the ground rules of their production and distribution. Firms would develop and produce vaccines under contract on a cost-plus basis. Public enterprises might enter into vaccine production as a form of "yardstick competition." Final distribution would be designed to assure every person .at risk would be immunized against all preventable diseases. In the industrial societies, including the United States, national health programs would assure distribution. In the Third World, United Nations agencies would continue to subsidize vaccine purchases and assist member nations with delivery. In this model, disease prevention rather than profits would be the guiding interest in the key choices about immunization.

When we begin with the world as we find it, success hinges on a major challenge -- getting private participation in a program that must be managed by public health officials. Even the U.S. Army has had trouble getting private contractors to bid on vaccine projects. The multinational pharmaceutical firms rigidly guard their prerogative to operate on a for-profit basis without disclosing costs or rates of return. And no alternative industrial capacity has emerged where entrepreneurs other than the traditional pharmaceutical firms might work effectively on a cost-plus basis.

The legislation enacted in 1986 setting up a limited vaccine injury compensation fund also established a National Vaccine Program to harness governmental, industrial, academic, and professional talent. A provision in the law requires the federal government to draft a yearly National Vaccine Plan to assure "optimal prevention of human infectious disease." It remains to be seen if this planning process will harmonize the distinct interests of public health and private industry, or just heighten the sense of contradiction. At a minimum it should force the government to review its own inconsistent policies and adopt a clarified -- and perhaps more ambitious -- public health agenda.

Beyond the industrial world vaccines play a larger role. In developing nations, immunization is more than a protector of health. When children are immunized, they are more likely to survive into adulthood. When they do survive, the birth rate drops, and economic development speeds up. Like infant mortality rates, immunization rates have become a measure of how well a country is protecting its people and safeguarding its future.

Since developing countries have more severe and far-ranging infectious disease problems than do their wealthier neighbors, they may need to develop institutions of their own to address their needs. Challenging the assumption that good vaccines based on world-class science can be developed only in industrial countries, the Pan American Health Organization is considering creation of a regional system to develop vaccines appropriate to the needs of Latin America. Few if any Latin American countries have the resources to maintain a modern vaccine development capability of high quality without international collaboration. The hope is that a regional, collaborative effort can obtain the scientific, economic, and political support necessary for success. Latin America already boasts the highest immunization rates of the developing world, and it has a history of vaccine research and production predating the emergence of antibiotic drugs. So it is a logical place to begin. If the experiment works, it may provide a model for other regions.

Tailoring vaccines to meet the needs of developing countries has never been industry's forte. Yet the world's most ambitious vaccine development initiative is trying to get industry to help solve the problems that complicate immunization in developing countries. Many vaccines need refrigeration from the factory until injection. Some do not work in infants before their immune systems mature, leaving them unprotected for the first year of life. Others require boosters. And painful injections themselves discourage parents from bringing their children back.

Scientists are confident that vaccines can be improved to overcome these problems. Some are participating, therefore, in a global Children's Vaccine Initiative to speed progress toward the ideal vaccine: a single-dose, oral vaccine, given soon after birth, that produces lifelong immunity, does not require refrigeration, and protects against a dozen or more diseases. The project received support from the September 1990 World Summit on Children at the United Nations, where President Bush was one of those to endorse the idea. In fact, experts say the same approach of combining protection against more diseases in a simplified immunization schedule would help them reach the underimmunized infants in the U.S. as well as Ethiopia.

UNICEF urges the United Nations and national leaders to aspire to ambitious goals: global eradication of polio by the year 2000; elimination of neonatal tetanus by 1995; marked reduction in measles deaths; and reduction of the annual toll of two million child deaths from preventable diseases to 150,000 by the year 2000.

While proponents of market systems are glowing with their apparent success, the record suggests skepticism about market solutions to immunization. The new set of initiatives share a recognition that public institutions must assume a central role in managing decisions about vaccine research, development, production, and distribution. Of course, even highly cost-effective initiatives will require new investment. But even if the international Children's Vaccine Initiative were to cost $1 billion over the next five years, the expenditure would not be a large burden on a global basis. In fact, world leaders would have a hard task finding another project as wholesome or as cheap as improving universal childhood immunization.

Proponents of expanding the benefits of immunization with new and improved vaccines are beginning to conspire in earnest. Progress can be maximized by attempting to close the gap between industry's historical insistence on independence and profitability and the reluctance among holders of the public purse to assert a strong government role in this commercial aspect of public health. If public managers can offer well-structured plans incorporating industry and market forces where they actually work, the public and private sectors may together be able to achieve a historic advance in the health of the world's children.