The United States is not prepared for the possibility of an avian flu pandemic. We could have been, we should have been, but we're not.

Disease experts now fear that the deadly H5N1 bird flu strain could mutate and become contagious through human-to-human contact. If that happens, the most effective tool against it would be a vaccine. Sadly, the U.S. government, over several decades, has crippled the nation's once-thriving vaccine industry.

In 1957, 26 companies supplied the market for standard children's vaccines. Now only four companies do. Three decades ago, at least 10 U.S. firms manufactured vaccines to treat seasonal flu. By the late 1990s only five remained. And in 2004, the entire U.S. flu-vaccine market depended on just two companies.

The only avian flu vaccine likely to be available soon is made by the French company Sanofi-Aventis, one of the two firms we rely on for seasonal flu vaccines. Its H5N1 vaccine is undergoing preliminary U.S. government testing and showing early signs of success. But it's not clear how soon it could be available.

To develop vaccines against the next pandemic -- whether it ends up being SARS, the West Nile virus or an avian flu -- is well within the reach of science. So why don't U.S. drug companies, which dominate the global medicine market, make vaccines?

For one thing, vaccines are subject to excessively strict screening by the Food and Drug Administration. So, for example, FluMist, a flu vaccine delivered via nasal spray, has been approved for use only for people between ages 5 and 49. Our youngest and oldest, though, run the greatest risk of catching the flu. So while FluMist maker MedImmune Inc. could produce 20 million doses a year, only about 2 million would get by the regulators -- even as the market demanded many more.

Second, vaccines are very expensive to produce. Using one older method of making flu vaccine, it costs about $300 million to build a factory and takes almost five years to get it completed and inspected.

Third, out-of-control lawsuits have scared companies away from developing and producing vaccines. For example, a researcher claimed in the 1970s that the whooping-cough vaccine caused brain damage. More than 800 lawsuits were subsequently filed in the U.S. against vaccine makers. Scientists later proved that there was no link. But by that time the manufacturers were already out of business.

If companies stood a chance of recouping their investments, these high costs of doing business might be manageable. Government price controls, though, make getting a return next to impossible.

The Vaccines for Children Program was the final nail in the coffin of the American vaccine industry. Established by the Clinton administration in 1994, it created a single-buyer system for children's vaccines. The government now buys almost two-thirds of all childhood vaccines -- at a mandated discount of 50 percent. No wonder most makers have left the country or gone out of business.

As if choking off the American vaccine industry weren't bad enough, now some members of Congress are trying to deal the same fate to prescription drugs.

Currently, a clause in the Medicare Modernization Act preserves the right of drug makers to negotiate freely with the dozens of companies offering drug coverage to seniors.

Opponents of this "nonintervention" clause would have the government step in and coerce below-market prices for all 40 million Medicare-eligible Americans. If that happens, the whole American pharmaceutical industry could go the way of vaccines.

It doesn't have to be this way. Rather than repeat our vaccine mistakes in the drug industry at large, let's reverse them. If we remove the red tape and the price controls, we can have a vaccine industry that's ready for the next pandemic.