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,...

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Bibliographic Details
Published in:Omega (Oxford) 2011-12, Vol.39 (6), p.589-597
Main Authors: Robbins, Matthew J., Jacobson, Sheldon H.
Format: Article
Language:English
Subjects:
Applied sciences
Biological and medical sciences
Cost models
Economics
Exact sciences and technology
Firm modelling
General aspects
Government purchasing
Health care policy
Manufacturers
Mathematical programming
Medical sciences
Monopsony
Operational
Operational research and scientific management
Operational research. Management science
Operational/OR
Operations research
OR Policy analysis Mathematical programming Cost models
Pediatrics
Policy analysis
Prevention and actions
Public health
Public health. Hygiene
Public health. Hygiene-occupational medicine
Specific populations (family, woman, child, elderly...)
Studies
Vaccines
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Summary: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.
ISSN:0305-0483
1873-5274
DOI:10.1016/j.omega.2010.12.004