percent of their total R&D expenditures to applied vaccine-related R&D, often building upon basic discoveries made through federally funded research (see Table 4-10). Over the last 10 years, biotechnology firms have emerged as a new force in the area of applied vaccine research and early-stage product development. However, as noted in Chapter 3, neither biotechnology firms nor the federal agencies involved in vaccine research currently have the capability of manufacturing vaccines on a large scale. This is also true for Massachusetts and Michigan, the only two states currently producing vaccines. Consequently, large-scale manufacturing capacity rests entirely with the large commercial manufacturers.

Generally, a commercial manufacturer begins the process of vaccine development when scientific research has yielded promising results and when ''proof of principle" (the point in R&D when the feasibility of a particular product or process is determined) has been established. The decision to invest in this process takes into account two critical factors: the technical feasibility and complexity of developing the vaccine and market considerations. These market considerations include the likelihood of and anticipated rate of return on investment, the availability of patent protection (and freedom from third-party patent rights), and the potential costs of liability exposure.

Corporate R&D investment in human vaccines is often viewed less favorably than investment in drug-related R&D (DeBrock, 1983; Freeman and Robbins, 1991; Institute of Medicine, 1985; Pettinga, 1983). Unlike drugs, which may be used many times by the same patient over the course of several years, vaccines are designed to give long-lasting immunity after one or at most a few administrations. Although the benefit of vaccination to the individual is clear, there is a larger benefit of vaccination that accrues to society at large if a significant proportion of the population is immunized and herd immunity is achieved (see Chapter 2).

Compared with drugs, vaccines are disproportionately complex, both in terms of the technologies used to produce them and the skills needed to manage those technologies (Institute of Medicine, 1992). The analogy has been made that pharmaceutical manufacturing is similar to chemistry, whereas vaccine production is more like agriculture: drugs can be synthesized and put in tablet form within days to weeks; however, it can take a year or more, with complicated intervening steps, between the first culture of a vaccine product and its eventual use in a child.

Vaccine manufacturing also requires substantially greater investment in sophisticated and elaborate production facilities than is typically true for pharmaceutical production (Institute of Medicine, 1992). Vaccine manufacturing facilities must be upgraded on a regular basis, and the technicians and researchers who operate them must be particularly well trained and motivated to ensure that the production of vaccines meets or exceeds good

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