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Setting prices for new vaccines (in advance)
1Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave., Boston, MA 02115, USA. mcguire@hcp.med.harvard.edu
International Journal of Health Care Finance and Economics
|November 25, 2003
Summary
Developing new vaccines is crucial but lacks incentives. This study suggests setting advance procurement prices based on anticipated benefits to encourage vaccine development, finding efficient prices are higher than current ones.
Area of Science:
- Health Economics
- Vaccinology
- Pharmaceutical Policy
Background:
- New vaccines offer significant societal benefits but face weak financial incentives for development.
- Current market dynamics may not adequately reward the social value of novel vaccines.
Purpose of the Study:
- To propose a novel pricing strategy for new vaccines to strengthen development incentives.
- To determine efficient vaccine prices based on cost-effectiveness and anticipated benefits.
Main Methods:
- Economic modeling to determine optimal vaccine procurement prices.
- Cost-effectiveness analysis to estimate the value of new vaccine development.
- Analysis of the relationship between supply price, demand, and investment levels.
Main Results:
- Recommends setting a vaccine procurement price before development, linked to anticipated societal benefits.
- Proposes a supply price distinct from consumer prices to avoid dampening demand.
- Calculations show efficient vaccine prices should be substantially higher than current market prices.
Conclusions:
- Advance procurement pricing based on cost-effectiveness can align incentives with social value.
- A higher, pre-determined supply price can ensure efficient investment in vaccine innovation.
- This policy could improve the development pipeline for socially valuable vaccines.