Pediatric vaccine procurement policy: The monopsonist's problem
Vaccination against infectious disease is an extremely important public health endeavor. Yet, in the past 40 years, the manufacture of pediatric vaccines has become less profitable due to rising costs and limited demand, inducing many pharmaceutical companies to leave the market. To ensure the safe, secure, and reliable provision of vaccines, the economic interests of the vaccine industry must be considered by public health policy makers. The monopsonistic market power of the federal government uniquely positions it to significantly influence the pediatric vaccine market by negotiating contractual agreements that increase the vaccine manufacturers' financial incentives to remain in the market. The Monopsonist Vaccine Formulary Pricing and Purchasing Problem (MVF3P) is introduced, which seeks pediatric vaccine prices and purchase quantities that ensure a birth cohort is fully immunized according to the recommended childhood immunization schedule at an overall minimum system cost while also ensuring that vaccine manufacturers each attain a reservation profit level. The practical value of MVF3P is demonstrated by analyzing and assessing pricing and purchasing policies that the Centers for Disease Control could adopt in attempting to actively manage the long-term provision of pediatric vaccines.
Volume (Year): 39 (2011)
Issue (Month): 6 (December)
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References listed on IDEAS
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- Edward Sewell & Sheldon Jacobson, 2003. "Using an Integer Programming Model to Determine the Price of Combination Vaccines for Childhood Immunization," Annals of Operations Research, Springer, vol. 119(1), pages 261-284, March.
- Yu, Haisheng & Zeng, Amy Z. & Zhao, Lindu, 2009. "Single or dual sourcing: decision-making in the presence of supply chain disruption risks," Omega, Elsevier, vol. 37(4), pages 788-800, August.
- Matthew Robbins & Sheldon Jacobson & Edward Sewell, 2010. "Pricing strategies for combination pediatric vaccines and their impact on revenue: Pediarix® or Pentacel®?," Health Care Management Science, Springer, vol. 13(1), pages 54-64, March.
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