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Covid-19 vaccine supply chains and the Defense Production Act

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  • Chad P Bown

Abstract

In response to the Covid-19 pandemic, the US government used novel policies to accelerate research, development, and production of a diversified portfolio of new vaccines. This article begins by describing the Defense Production Act (DPA) of 1950 and the initial ‘priority-rated’ contracts agreed to under Operation Warp Speed in 2020 to expedite manufacturing and achieve scale, which succeeded in producing hundreds of millions of doses of Covid-19 vaccines by early 2021. However, a puzzle soon emerged, as the scale of US vaccine production was shortly thereafter overtaken by plants in the European Union and India. The paper investigates the trade-offs US policy-makers faced in early 2021—once much of the initial uncertainty about the safety and effectiveness of many Covid-19 vaccines had been resolved—about whether to recalibrate contracts to expand production capacity to help meet global, instead of US, vaccine demand. It also examines the emergence of input shortages and assesses whether both the price constraints implicit in the 2020 DPA contracts and business decisions made to quicken the process of bringing new vaccine plants online globally inadvertently exacerbated them. It also explores the potential need for complementary, input capacity-enhancing policies in the face of highly fragmented, cross-border Covid-19 vaccine supply chains.

Suggested Citation

  • Chad P Bown, 2022. "Covid-19 vaccine supply chains and the Defense Production Act," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(4), pages 771-796.
  • Handle: RePEc:oup:oxford:v:38:y:2022:i:4:p:771-796.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grac026
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    Cited by:

    1. Cao, Wanpeng & Du, Debin & Xia, Qifan, 2023. "Unbalanced global vaccine product trade pattern: A network perspective," Social Science & Medicine, Elsevier, vol. 325(C).
    2. Susan Athey & Juan Camilo Castillo & Esha Chaudhuri & Michael Kremer & Alexandre Simoes Gomes & Christopher M Snyder, 2022. "Expanding capacity for vaccines against Covid-19 and future pandemics: a review of economic issues," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(4), pages 742-770.
    3. Scott Duke Kominers & Alex Tabarrok, 2022. "Vaccines and the Covid-19 pandemic: lessons from failure and success," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 38(4), pages 719-741.

    More about this item

    Keywords

    Covid-19 vaccines; advance market commitments; manufacturing; input shortages; Defense Production Act; priority-rated contracts;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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