Many vaccines in short supply

For makers of all types of vaccines, the Institute of Medicine's report traced the decline in manufacturers' interest to the fact that the U.S. government — predominantly through the Vaccines for Children program run by the CDC — buys slightly more than 50 percent of the vaccines in the United States and keeps prices low.

Under the Vaccines for Children program, the CDC negotiates a discounted price with the manufacturer. It then allocates to each state a credit balance, which states can use to buy vaccines from the manufacturer at the discounted price. The program offers free vaccines to uninsured children under 18 years of age or to those who are eligible for the federal-state Medicaid program or care from federally qualified health centers.

The report concluded that the price squeeze, coupled with a heavy regulatory burden, has discouraged investment and driven drug companies out of the vaccine business. The U.S. vaccine market is only a couple of billion dollars a year in sales, and many pharmaceutical companies can make more money on other products than on hard-to-make and -market vaccines.

Manufacturing vaccines involves the complex transformation of live organisms into pure, active, safe and stable vaccines. Many vaccines must remain in a narrow temperature range during storage and delivery, called the "cold chain." Moreover, each batch must be tested and approved before being released.

Legal liability also is a problem. Manufacturers are supposed to be insulated from lawsuits on pediatric vaccines but plaintiffs' lawyers have found ways around that.

In addition, the vaccine industry also has a wobbly distribution network, where at any given time there can be surplus in one region and shortages in another.

Besides the problems of the vaccine market overall, the flu vaccine has its own peculiarities that could bedevil efforts to alleviate shortages. The government isn't a big buyer of adult flu vaccine.