What a Bad Flu Season Could Cost the U.S. Economy

This year's unusually potent flu is bad news for most employers but great for drugstores

Flu vaccine

Photographer: Justin Sullivan/Getty Images

This year's flu season looks worse than usual. The Centers for Disease Control (CDC) warned last week that the dominant influenza virus right now, H3N2, typically signals a severe flu season, resulting in more deaths and hospital trips than average. Even worse: About half of the H3N2 viruses detected so far are different strains from the ones included in this year's vaccine, which means flu shots will be less effective.

The resulting misery for millions of Americans is also lousy news for the economy. Flu incurs direct costs, such as the price of medical treatment, and indirect costs, such as lost productivity when workers stay home sick. There's also the cost of lost life: Influenza kills between 3,000 and 49,000 people in the U.S. each year, generally older people, young children, or people with medical conditions such as lung or heart disease that make them vulnerable to complications. The CDC recommends that everyone (except infants less than six months old) get vaccinated, especially those considered high-risk because of other health conditions.

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Tallying the total cost of flu is difficult. In a 2007 article published in the journal Vaccine, CDC researchers put the total economic burden at $87 billion annually, in 2003 dollars, counting a statistical measure that puts a dollar value on lost life. Among the costs: 3.1 million days patients spend in hospitals, 10 times as many doctors visits, and 44 million days of missed work. The estimates come with a high level of uncertainty, though: Researchers calculated the total cost in a range from $47 billion to $150 billion a year. The CDC is updating these numbers, but there's no telling when they'll be ready.

As a percentage of the total U.S. economy, the cost of flu is somewhere between 0.24 percent and 0.80 percent, the researchers estimate. That's less than 1 percent of GDP, but "because influenza epidemics occur annually, this burden amounts to an annual reduction in the rate of economic growth," the paper notes, adding that some of this economic cost is preventable with vaccinations.  

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Creating a flu vaccine is a bit of a guessing game, because the shots take months to manufacture. Each year in February, the World Health Organization (WHO) tries to predict what viruses may be circulating the following winter, a process that can change as bugs mutate. The current variant strains weren't detected until March and weren't found in large numbers before September, CDC Director Tom Frieden told reporters last week. "This is not something that's been around before," he said.

The difficulty matching vaccines to circulating viruses contributes to mixed evidence on how effective flu shots are. At least 40 people would need to get vaccinated to prevent one case of flu-like illness, according to a review of existing studies published in March by the Cochrane Collaboration, which evaluates medical evidence. "Vaccination shows no appreciable effect on working days lost or hospitalization," Cochrane's reviewers wrote.

A nasty flu season means the economy loses, but at least drugstores get a business boost. About 22 percent of adults who get flu shots in the U.S. get them at retail pharmacies, according to CDC data. And at chains such as CVS and Walgreens, a less intense flu season could shave 2 percentage points off prescription revenue in the quarters affected, while a tough one could add 3 or 4 points, says Ross Muken, an analyst at Evercore ISI. "That’s needle-moving," he says. Don't underestimate how much the mix of pathogens matters to retailers. On Wal-Mart's earnings call in May, then-president of Walmart US, Bill Simon, noted that sales of over-the-counter drugs improved "as a soft cough, cold, and flu season transitioned to a robust allergy season."

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