Making combination vaccines more accessible to low-income countries: The antigen bundle pricing problem☆

Publication year: 2012
Source: Omega, Volume 40, Issue 1, January 2012, Pages 53-64

Ruben A., Proano , Sheldon H., Jacobson , Wenbo, Zhang

Combination vaccines have become the preferred choice for immunizing children in high- and middle-income countries. However, these new vaccines are prohibitively expensive for low-income countries, causing them to rely on older, less-expensive vaccines. This product divergence decreases economies of scale for the purchase of vaccines and eliminates the financial incentive for manufacturers to maintain production of less-expensive vaccines or even to develop new vaccines for diseases affecting developing countries. This paper treats combination vaccines as bundles of antigens that can be priced as a single item. Such bundles are used to formulate an optimization problem that determines the combination vaccine…

 Highlights: ► Affordable combination vaccines in low-income markets can be profitable. ►Affordable combination vaccines in low-income markets can reduce prices in high-income markets. ► A monopsonistic entity can find out vaccine procurement plans that maximize total social surplus. ► Vaccine procurement plans that maximize total social surplus minimize costs for the buyers. ► Vaccine procurement plans that maximize total social surplus guarantee a margin to the producers.