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Note – this article has been updated and published here.

One of the ongoing memes, tropes and fabrications of the vaccine deniers is somehow, somewhere, in some Big Pharma boardroom, a group of men and women in suits choose the next vaccine in some magical way, and foist it upon the world just to make billions of dollars. And while magically concocting the vaccine brew, these pharmaceutical execs ignore ethics and morals just to make excessive vaccine profits from hapless vaccine-injured victims worldwide.

The Big Pharma vaccine profits conspiracy trope ranges across the junk medicine world. Homeopathy, for example, claims that Big Pharma suppresses the data that shows water cures all diseases. Like Ebola.

A new article published in Health Affairs (pdf) examined the actual costs of vaccine-preventable diseases. The Big Pharma vaccine profits conspiracy is still one of most amusing myths of the antivaccination world, because clearly the best economic choice for Big Pharma would be to provide medications and devices for those who are stricken by these diseases.

Myths about vaccine profits

The vaccine deniers pollute the internet with their screeds about the Big Pharma vaccine profits. One of them said, “measles expert Offit has already made millions of dollars profit from his ties to vaccines and the measles MMR vaccine maker Merck.” Using a childish ad hominem, the article calls him, Dr. Paul “For Profit” Offit. Seriously, that’s how you’re going to “prove” that vaccines are a Big Pharma conspiracy? A 3rd grade playground tease? That’s the best you can do.

You can find whole threads of tedious commentary about Big Pharma vaccine profits on any typical anti-vaccine forum. One of the more illogical claims is that “maybe vax companies see vaccines as more of an investment? Break mostly even on what the vaxes cost to make and sell, but make a bank load of money on treating all the chronic problems they cause!”

Of course, that would be a business strategy that would be laughed out of the secret Big Pharma boardroom, because they know that vaccines don’t cause chronic problems. The vaccines prevent it.

What is infuriating about these antivaccine rants is that not only is their scientific knowledge lacking, so is their business knowledge. Of course, I shouldn’t be surprised given that almost all vaccine deniers exhibit the same characteristic–a few hours googling is equivalent to a Ph.D., or, in this case, and an MBA.

Are vaccines really profitable?

It would be difficult for me to actually claim that vaccines are not highly profitable. They are an important source of both income and profit.

But here are some facts that might temper your expectations that vaccines are that valuable:

But even though vaccine revenues are a tiny percentage of Big Pharma revenues, it is still a huge number, there’s no debating that point. And new companies are entering the vaccine market, because as new vaccines are developed and as more adults get vaccinated, the market growth of vaccines is substantially higher than other pharmaceuticals.

The worldwide revenue growth rate for all pharmaceuticals is around 6-7% per year, but around 10-15% per year for vaccines. Now, this type of growth rate will not last forever, because eventually the market becomes saturated, and much of the growth will be in lesser developed countries, where the market value for vaccines is substantially less than in developed countries.

Let’s look at that US$59.2 billion in worldwide vaccine revenues more carefully. All of the numbers below are in billions of US dollars and were estimated based upon Vaccines: Expert Consult (page 41).

Revenues 59.2 Cost of goods sold (manufacturing, distribution, returns) 18.9 Gross margin (often called gross profit) 40.3 Administration (corporate overhead) 4.1 Sales and marketing 10.1 Net profit 26.1 Research & Development 6.5 Taxes 10.4 Depreciation 2.7 True profits 6.5

So vaccines generate about US$26.1 billion in “net profits,” or about 43.8% of revenue. Most non-vaccine pharmaceuticals would generate about US$27.4 billion in net profit, or 46.3%, from that same level of revenue – therefore, vaccines actually produce around 5% less profits per revenue dollar than do other pharmaceuticals. One of important parameters of a well run business is the amount of net profit generated by every dollar in sales, and vaccines aren’t quite as profitable as other pharmaceuticals.

This lower profit for vaccines is because non-vaccine pharmaceuticals have a lower cost of goods as a result of fewer returns due to spoilage and change in antigens (like from flu season to flu season). Regular pharmaceutical products rarely change from year to year, so something manufactured in 2013 can be sold in 2014 as long as it still has shelf life remaining. Moreover, distribution is a lot more expensive for vaccines, because they need to be shipped more carefully (which is much more expensive) to prevent spoilage.

Analysis of Big Pharma vaccine profits

Still, US$26.1 billion in net profits sounds like a boatload of cash, but let’s see what happens to that boatload.

When all is said and done, that that US$59.2 billion Big Pharma vaccine revenue shrinks to around US$6.5 billion in actual vaccine profits (or US$29.6 billion when stated in the accounting term of EBIDTA, for those finance nerds).

It may actually be quite a bit less, because I’m ignoring things like cost of risk capital (even though Big Pharma is mostly self funded, it’s not always so, and if that capital could make more money invested in gold or something, it’s a lost opportunity). Given this level of profit, and spread over 50 or so vaccines, it’s hard to imagine that Big Pharma executives are sitting in that Boardroom laughing at how they’re printing cash and storing gold bars because of vaccines.

Just for some additional perspective about Big Pharma efforts – Lipitor, probably the #1 drug in revenues ever, sold US$10 billion worldwide in 2011. That’s one drug, with one type of manufacturing facility. In just a few locations. Those Big Pharma execs would rather have Lipitor once or twice over than vaccines.

Are vaccines a good business strategy?

Going back to the laughing, unethical Big Pharma executives sitting in their boardroom, are they really conspiring to push vaccines on us, because it makes so much money? Or, as we saw above, would investing in another kind of medication make more money? Or would they make more money not even selling vaccines?

Let’s take an example of just one infectious disease, measles. According to the CDC, one hospitalization for a serious measles complication costs more than US$142 thousand. Typical cost breakdown of hospital billing indicates that pharmaceuticals and other consumables (syringes, IV’s, saline, etc.) are around 35-40% of the total cost to the patient (see Note 1).

So, just one serious case of measles, Big Pharma could get up to US$56,000 per patient. How much is one dose of MMR vaccine to prevent measles? Just over $20. They would need to sell 2800 vaccine doses just to match the revenue from one serious ICU case of measles.

Let’s assume that Big Pharma ended production of all vaccines today, because the evil Big Pharma execs wanted rapidly increase their profits. According to the CDC (pdf), there are about 4 million births in the USA every year. Starting today, those 4 million children annually will not be vaccinated because Big Pharma, being ultimately evil and immoral, stop researching and manufacturing vaccines. Of course, the vaccine deniers will be dancing in the streets. But it’s not just 4 million new children. Being conservative, let’s say another 3 million children won’t receive booster shots, because, once again, Big Pharma quit selling vaccines.

And we need to look at the inpatient and outpatient costs for some diseases that are exclusive to adults, like flu, HPV, and hepatitis A

Let’s look at the hospitalization rate for those 7 million children, along with susceptible adults, for every single vaccine preventable disease:

Of course, this is an imaginary scenario where everyone stops vaccinating because Evil Big Pharma stops manufacturing vaccines on one day, because they could make more profits (see Notes 2 & 3).

Outbreaks, epidemics and pandemics would soon occur within the first 1-2 years after we end vaccination. Based on information developed by the CDC and others, the total worldwide medical economic burden if we suddenly ended vaccines would nearly US$59 billion (and this ignores flu pandemics that might suddenly ravish the pediatric population).

If we stick with the estimate that about 40% of the cost of hospitalizations will fall to Big Pharma, then they would make about $20 billion a year, worldwide, from not vaccinating. But remember, most vaccines are given, at most, 2-3 times, so, long-term, the revenues derived from vaccines is rather flat, unless new diseases are prevented. But, the revenues from the diseases themselves repeat every single year, and possibly multiple times per child.

And most of the products used to treat these diseases don’t require the research and capital investment that vaccines require. In other words, the income derived from vaccine preventable diseases would be more profitable than vaccines.

If we really believe that Big Pharma executives are greedy sociopaths looking for more money, then we have to carry that descriptive to it’s logical end. They would be ending vaccines tomorrow. Maybe today, if it’s not too late.

But there’s more

Actually there are other issues that become problematic if we suddenly had this size of an epidemic. For example, the number of ICU beds per capita has dropped by 75% since the 1960’s partially as a result of the reduction in numbers of children with infectious diseases.

If we suddenly stopped vaccinating because Big Pharma wanted to make billions more profits, our hospitals would be overwhelmed. And guess who’s making money then. Big Mortuary. Because children will die in much higher rates than in the 1950’s because we couldn’t handle it.

And I’m ignoring all of the other burdens to modern countries if this happened. Parents who are unable to work, so productivity losses. There are ong term healthcare costs for children who are seriously injured by these diseases. Emotional stress. Overwhelmed hospitals that can’t treat other chronic conditions. Even countries that have superior healthcare systems would collapse under the strain.

So, all of you people at Age of lying about Autism, how much money are YOU receiving from Big Pharma to create the illusion that vaccines are dangerous. Because, now that I have uncovered the real goal of Big Pharma–get rid of vaccines.

Yes, you vaccine deniers are the real shills for Big Pharma. How unethical can you be, sacrificing the lives and health of children for a few dollars from Big Pharma?

And I haven’t gotten to Big Iron Lung who has waited 60 years for the chance to get back into the game. I bet they’ve been investing in shills to push lies about polio vaccines.

I’m not naive. I know that pharmaceutical companies manufacture vaccines because they are able to make a decent profit, the goal of any corporation. But the profits are used not to buy gold bars to give as gifts to executives (or to pay me), but most of it is plowed into future generations of better drugs and devices.

They are not trying to harm humanity, because if they were ruthlessly profit motivated, like the narrative pushed by the science denying antivaccination crowd, Big Pharma would close down vaccine research and manufacturing, and wait a year for huge epidemics.

Is Big Pharma perfect? Hell no, and I’ve said it before.

But vaccines save lives. And Big Pharma makes sure that happens, despite the trope regarding vaccine profits. And that make that happen, despite the better profit scenario of not making one single vaccine.

Notes

Determining cost breakdowns of hospital bills is a complex, bewildering, and frustrating process. I used the conservative estimates of Ozawa et al., who developed inpatient and outpatient along with medication costs for each vaccine preventable disease. The data for this chart was adapted from a CDC study of the Vaccines for Children Program, which I have discussed previously. It only includes data for vaccines on the current schedule for babies and infants, and does not include other vaccines such as for HPV and meningitis. The estimates use the CDC estimate of 4 million live births per year in the USA. The data does not include other costs, like lost income for caretakers, pre-hospitalization costs (which is listed in the CDC study), or death. Big Mortuary would surely profit from the 40,000 deaths a year that would suddenly be added to the cost of eliminating vaccines. Flu data was adapted from here and here.

Key citations:

Editor’s note: The original version article was published in November 2015. This new version is based on new market research data. It has also been updated to improve readability and to add some new research into the burden of vaccine preventable diseases. The calculations for those costs have also been revised.

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The Original Skeptical Raptor Lifetime lover of science, especially biomedical research. Spent years in academics, business development, research, and traveling the world shilling for Big Pharma. I love sports, mostly college basketball and football, hockey, and baseball. I enjoy great food and intelligent conversation. And a delicious morning coffee!

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