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

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

Omega, 2012, vol. 40, issue 1, 53-64

Abstract: 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 allocation between vaccine producers and different countries under a price discrimination agreement. The objective of the optimization problem is to satisfy countries' antigen demand at the lowest possible price, while providing a reasonable profit for the vaccine producers. The optimization problem results in a mixed-integer non-linear programming model that maximizes the sum of manufacturing profits and the customer surplus, and hence, it maximizes the total social surplus. Moreover, a constructive heuristic is proposed to determine an approximation to the best allocation of combination vaccines and their range of feasible prices. Computational results show that vaccine prices in all market segments become more affordable as the supply of the most complex combination vaccines becomes more available to low-income countries.

Keywords: Operational/OR; Operations; management; Optimization; Bundle; pricing; Vaccines; Health; care; Price; discrimination; MINLP; Heuristics; Vaccine; pricing; Combination; vaccines; Subsidies (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048311000569
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:40:y:2012:i:1:p:53-64

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().