According to IMS Health, global pharmaceutical sales topped a whopping $1 trillion in 2014, and they're on pace to grow to as much as $1.3 trillion by 2018. These figures shouldn't come as a huge surprise with the costs of cancer treatment and certain infectious diseases, such as hepatitis C, soaring.
But sometimes, the cost to treat (or not treat) a disease is a lot higher than believed if you examine certain intangible factors.
A surprisingly "costly" disease
When we think about costly illnesses, influenza, or the common flu, may not be the first to come to mind. However, intangibly, it can be among the most costly to the average American. Based on a recent study from CVS/Pharmacy, a part of CVS Health (NYSE:CVS), almost two in five Americans in its survey (37%) missed a life event due to influenza.
The online poll of 2,000 people, which was conducted by Harris Poll, showed that 37% of respondents had missed get-togethers with friends, family gatherings, or an important work meeting because of flu-like symptoms. Furthermore, respondents stated they would be most upset if their flu-like symptoms kept them from missing a vacation getaway (63% of respondents affirmed this), family gathering (56%), wedding (54%), graduation (47%), or birthday party (43%).
Yet, when respondents were asked whether or not they get a flu shot annually, or if they planned to get one this year, just 58% affirmed that they do, although slightly more than three-quarters of seniors (76%) were part of the "yes" crowd. These results are actually much higher than the Centers for Disease Control and Prevention has recently noted. Between 2009 and 2013, the CDC notes that child vaccination rates (six months to 17 years) rose substantially to 56.6% from 43.7%. By contrast, adult vaccination rates (age 18 and up) were essentially flat, moving from 40.4% to 41.5%.
CVS/Pharmacy's poll also tried to probe into the minds of these 2,000 individuals to determine what may have driven them to (or not to) get a flu shot. Nearly two in five (38%) suggested that convenience plays a role in deciding whether or not to get a flu shot. Additionally, of the 58% who responded that they get a flu shot annually, or planned to get one this year, 65% affirmed they believed it was the best method to prevent against getting the flu, with 38% overall believing it was the smartest move they could make to protect their family from catching the flu.
As Tom Davis, vice president of Pharmacy Professional Practices at CVS/Pharmacy, notes:
The simple fact is that getting an annual flu shot is the best protection available against catching or spreading the flu.
Some flu facts you should know
Despite the prevalence of the flu, it remains one of the most undertreated diseases or disorders, based on the CDC's statistics.
I suspect the biggest reason for that, other than convenience, is the fact that the influenza vaccine is merely a best guess by researchers and vaccine developers. Vaccine makers can't make nearly enough flu vaccine overnight, so they rely on historical data and other factors from researchers to best forecast what strains of influenza might be most prevalent in the upcoming year. Amazingly, researchers are right a lot of the time, but it isn't a foolproof method. If vaccine makers produce an ineffective vaccine, there's not much that can be done to correct the error.
The other factor working against vaccine makers is that a flu vaccine isn't a cure, nor is it well understood. Personally, I must hear a few dozen people each year discussing how their flu shot got them sick, which is far from the case. Flu shots involve using inactive strains of the flu that teach your immune system what to be on the lookout for. FluMist, which is made by MedImmune, a subsidiary of AstraZeneca (NYSE:AZN), is a Food and Drug Administration-approved nasal spray that does use live attenuated strains, but that's not high enough in dosing to give you the full effects of the flu. In reality, a flu shot or spray will not give you the flu.
But, it also may not stop you from getting the flu. A flu shot isn't a cure-all. Instead, it's a means to teach your immune system what to be on the lookout for, and to hopefully lessen the severity of your symptoms should you contract the flu. Although influenza shots are strongly recommended for children and the elderly, who have weaker immune systems to begin with, it's adults between 18 and 64 who are a major target as well, because if this group is getting a flu shot, there's a good chance their less severe symptoms will keep them out of hospitals and primary care clinics. This leaves doctors available to care for those who really need it, such as children and the elderly.
The push for awareness
So, how do we spread this message? It's partially the responsibility of the CDC, which in August runs its National Immunization Awareness Month campaign. However, the CDC is really relying on word of mouth, businesses, and healthcare providers to be at the front line of their message.
It's possible the Affordable Care Act, perhaps known better as Obamacare, could be a driving force that pushes flu vaccine rates higher. Obamacare is geared, first and foremost, at reducing the rate of uninsured people in this country. With more than 11 million people enrolled through Obamacare exchanges, and the uninsured rate falling to 9.2% in the first quarter per the CDC, it's plausible to presume that more people will be visiting their primary care physician than ever before. One of the basic reasons for that visit could be as simple as getting a flu vaccination.
Vaccine makers also have a new trick up their sleeve. While you can still find trivalent vaccines floating around -- trivalent vaccines focus on two type A influenza strains and one type B strain -- most have shifted their focus to quadrivalent vaccines -- two type A & B influenza strains. Type B influenzas are particularly prevalent toward the later half of the flu season, so these quadrivalent's should help lessen the final push that the flu unleashes each cycle.
Clearly, any uptick in flu vaccination rates could be great news for vaccine makers -- well, most anyway. Poor AstraZeneca with FluMist has never quite taken off, despite its convenience. I suspect its higher price point may be the culprit holding FluMist back from markedly higher sales. Instead, CSL's soon-to-be vaccines, Fluvirin and Flucelvax (CSL is in the process of acquiring these vaccines from Novartis, with the deal expected to close in the second-half of the year), and Sanofi's (NASDAQ:SNY) FluZone are the likely beneficiaries.
The focus on quadrivalents is not only good for consumers because it could presumably offer better Type B strain protection, but vaccine makers can charge a bit more for this next-generation flu shot, so it could lead to a little more in the profit department for these two companies.
Specifically, it could be a boost for Sanofi and FluZone, by far the largest player in this space. FluZone's broad target audience is what sets it apart from its peers, with the product marketed at infants as young as six months. Most peers have an age cut-off for children that's markedly higher. Additionally, FluZone can be administered with a needle that's 90% shorter than normal, thus making an injection as painless as possible for needle-phobic people. Finally, there are also multiple dose options, because one-size-fits-all doesn't always work. Having topped the billion-dollar plateau in sales before, it's possible FluZone could do it with regularity if vaccination rates improve among adults.
It remains to be seen if Obamacare or ongoing vaccine education campaigns will have any effect on vaccine rates, but it's plainly evident from CVS/Pharmacy's report that something should be done; otherwise, the intangible costs of influenza may continue to grow.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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