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Applied Statistics in Business and Economics 5th Edition David Doane
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Series preface
Economic evaluation in healthcare is a thriving international activity that is increasingly used to allocate scarce health resources, and within which applied and methodological research, teaching, and publication are flourishing. Several widely respected texts are already well established in the market, so what is the rationale for not just one more book, but for a series? We believe that the books in the series Handbooks in Health Economic Evaluation share a strong distinguishing feature, which is to cover as much as possible of this broad field with a much stronger practical flavor than existing texts, using plenty of illustrative material and worked examples. We hope that readers will use this series not only for authoritative views on the current practice of economic evaluation and likely future developments, but for practical and detailed guidance on how to undertake an analysis. The books in the series are textbooks, but first and foremost they are handbooks.
Our conviction that there is a place for the series has been nurtured by the continuing success of two short courses we helped develop—Advanced Methods of Cost-Effectiveness Analysis, and Advanced Modelling Methods for Economic Evaluation. Advanced Methods was developed in Oxford in 1999 and has run several times a year ever since, in Oxford, Canberra, and Hong Kong. Advanced Modelling was developed in York and Oxford in 2002 and has also run several times a year ever since, in Oxford, York, Glasgow, and Toronto. Both courses were explicitly designed to provide computer-based teaching that would take participants through the theory but also the methods and practical steps required to undertake a robust economic evaluation or construct a decision-analytic model to current standards. The proof-ofconcept was the strong international demand for the courses—from academic researchers, government agencies, and the pharmaceutical industry—and the very positive feedback on their practical orientation.
So the original concept of the Handbooks series, as well as many of the specific ideas and illustrative material, can be traced to these courses. The Advanced Modelling course is in the phenotype of the first book in the series, Decision Modelling for Health Economic Evaluation, which focuses on the role and methods of decision analysis in economic evaluation. The Advanced Methods course has been an equally important influence on Applied Methods of
Cost-Effectiveness, the third book in the series which sets out the key elements of analyzing costs and outcomes, calculating cost-effectiveness, and reporting results. The concept was then extended to cover several other important topic areas. First, the design, conduct, and analysis of economic evaluations alongside clinical trials have become a specialized area of activity with distinctive methodological and practical issues, and its own debates and controversies. It seemed worthy of a dedicated volume, hence the second book in the series, Economic Evaluation in Clinical Trials. Next, while the use of cost–benefit analysis in healthcare has spawned a substantial literature, this is mostly theoretical, polemical, or focused on specific issues such as willingness to pay. We believe the fourth book in the series, Applied Methods of Cost-Benefit Analysis in Health Care, fills an important gap in the literature by providing a comprehensive guide to the theory but also the practical conduct of cost–benefit analysis, again with copious illustrative material and worked out examples.
Each book in the series is an integrated text prepared by several contributing authors, widely drawn from academic centers in the United Kingdom, the United States, Australia, and elsewhere. Part of our role as editors has been to foster a consistent style, but not to try to impose any particular line: that would have been unwelcome and also unwise amidst the diversity of an evolving field. News and information about the series, as well as supplementary material for each book, can be found at the series website: <http://www.herc.ox.ac. uk/books>.
Alastair Gray Oxford Andrew Briggs Glasgow
Foreword
Vaccination to prevent contagious diseases resulted from a happy accident— the observation by British physician and scientist Edward Jenner that milkmaids were essentially immune from smallpox, and (subsequently) that being infected by the (relatively mild) cowpox disease conferred immunity against smallpox. Our word “vaccination” derives from the Latin word for “cow” (vacca). Smallpox was an incredibly deadly disease, killing 300 million people in the 20th century, and 400 million in the last 100 years before it was eradicated near the end of the 20th century. By inventing vaccines, Jenner is said to have saved more lives than any other person in human history.
Since then, the science of vaccines has moved through numerous important steps. For over a century, vaccines were made by creating weakened or inactivated pathogens. The famous Salk and Sabin polio vaccines used this same basic approach in the 1950s. Addition of adjuvants strengthened the immune response created by vaccines. New coronavirus disease 2019 (COVID-19) vaccines—developed at an unprecedented speed and with outstanding protection from the disease—instead use “messenger RNA” (mRNA) to teach a body’s cells how to make a protein (or even a piece of one) to create an immune response without actually infecting the subject. This technique offers considerable promise for future vaccines.
A key feature of vaccines is their role in creating “herd immunity.” In simple terms, herd immunity arises when the percent of the population who become immune (either from vaccines or by surviving an infection) exceeds (R0 – 1) / R0, where R0 (called the “reproduction rate”) is the number of persons naturally infected by a newly infected person. Some pathogens have a very low R0 so vaccination is often not necessary to limit outbreaks. Others have very high contagion levels. Measles, for example, has R0 = 12 to 18, so to prevent spreading of measles requires (using the midpoint) that 14/15/=93.3% of the population must either become immunized by vaccination or survive a natural infection to prevent the disease from spreading. COVID-19 has an R0 of about 2.0–3.0 depending on the variant, thus requiring effective vaccination coverage (combined with disease-based immunity) of about two-thirds of any self-contained population. The number needed to be vaccinated interacts with the vaccine efficacy (the rate of protection provided) in obvious ways.
viii Foreword
This raises another key feature of vaccines—they are “public goods” in the sense that all people receiving a vaccination not only protect themselves but also confer a small benefit on the entire remaining population. This benefit is obviously larger as the R0 of the pathogen increases. Standard economic analysis (Phelps, 2017) shows that private incentives to become vaccinated lead to vaccination rates that are too low, so public policy interventions can become necessary to reach optimal levels of vaccination coverage in any given population.1
Multiple issues can reduce vaccine uptake. Things that deter vaccination coverage include painful or health-risking side effects, the necessity of multiple shots to achieve full immunity, and the mode of administration (in descending order of preference, oral, intramuscular injection, and intravenous injection). Apparently simple issues can also confound distribution through the supply chain, including the “cold chain” requirements for storage from manufacturing up to the point of final administration (both temperature and volume of space), and even requisite shelf space for storage of supplies.
In the production process itself, supply chain availability of key components can rate-limit production, as can the simple issue of availability of glass vials of appropriate size and characteristics, and even the availability of needles to give injections. Complete consideration of these issues requires a comprehensive systems analysis review of all facets of vaccine production, distribution, financial, and logistics issues that can deter patients’ access to vaccines, and information campaigns (Madhavan, Phelps, Rouse, & Rappuoli, 2018).
In addition to their primary health effects, vaccines can have profound economic implications that extend far beyond avoided healthcare costs. Worker productivity rises when contagious diseases are suppressed. Particularly in areas where endemic diseases such as malaria exist, school participation and final educational attainment suffer, so vaccines that either prevent the disease or reduce disease severity can lead to long-term economic gains from improved education and higher final attainment levels. These will increase future worker productivity, make for a more informed electorate, and even reduce the rate at which people undertake harmful consumption choices (tobacco, alcohol abuse, lack of exercise, and obesity) (Phelps, 2010).
1 The “cost” of vaccination can be monetary, physical, or psychological, and may be based on misinformation. In rural and lower-income areas, travel costs to receive second and third shots may reduce vaccination rates in a way similar to the effect of monetary fees. Fear of physical pain or other adverse reaction also inhibits vaccination acceptance. Sometimes, misinformation deters vaccination acceptance, such as in individuals who believe the now-refuted concept that vaccine adjuvants lead to autism in children.
The worldwide COVID-19 pandemic highlighted another important economic consequence of vaccine development. The economies of most nations of the world came to a near standstill when the only available public interventions were “shelter in place” and quarantine of those either actually or potentially affected. Only the emerging hope of vaccination success brought these economies back toward full employment, which can only be achieved when worldwide vaccination rates reach necessary levels.
The first chapter of this handbook explores these and other related issues relating to vaccine production and use. Chapter 2 goes into detail about methods to evaluate vaccines using appropriate methods of estimating costs, while Chapters 3 and 4 provide important details about proper methods of evaluation using up-to-date methods of cost-effectiveness analysis. An application of these methods to evaluate the cost-effectiveness of the vaccines against COVID-19 is presented in Chapter 4. Chapter 5 covers the global landscape for immunization financing, providing insights about the structure of key global initiatives to expand and sustain immunization programs and on how the different actors within them interact.
Vaccines are some of the greatest miracles of medical science. Those who invent them, finance them, distribute them, promote them, administer them, and, yes, those who receive them are advancing human well-being. This handbook aims at assisting those undertaking economic evaluation of various vaccine programs to sharpen their skills, increase their credibility, and through their work, hopefully, help to focus vaccine development and administration on those diseases where vaccines matter most.
Charles E. Phelps
References
Madhavan, G., Phelps, C. E., Rouse, W. B., & Rappuoli, R. (2018). Vision for a systems architecture to integrate and transform population health. Proceedings of the National Academy of Sciences of the United States of America, 115(50), 12595–12602. doi:10.1073/ pnas.1809919115
Phelps, C. E. (2010). Eight questions you should ask about our health care system (even if the answers make you sick). Stanford, CA: Hoover Institution Press.
Phelps, C. E. (2017). Externalities in health and medical care. In Health economics (6th ed., pp. 387–411). New York, NY: Routledge Press.
1.0
1.1
1.2
1.3
1.4
1.5
J. P. Sevilla, David Bloom, Dan Salmon, and David Bishai
George Pariyo and Onaopemipo Abiodun
2.0
2.1
2.2
2.3
Ijeoma Edoka, Stephen Resch, and Logan Brenzel
2.4 Data analysis 115
Stephen Resch and Logan Brenzel
2.5 Costing new vaccine introduction 124
Susmita Chatterjee, Siriporn Pooripussarakul, and Logan Brenzel
3 Economic evaluation of vaccines and vaccine programs 135 Edited by William V. Padula, Emmanuel F. Drabo, and Ijeoma Edoka
3.0 Section introduction: economic evaluation of vaccines and vaccine programs 137
William V. Padula, Emmanuel F. Drabo, and Ijeoma Edoka
3.1 Overview of decision analysis and cost-effectiveness 140
Emmanuel F. Drabo, Ijeoma Edoka, and William V. Padula
3.2 Defining the scope and study design of cost-effectiveness analysis 156
Joseph F. Levy and Charles E. Phelps
3.3 Parameter estimation 167
Emmanuel F. Drabo and David W. Dowdy
3.4 Measuring and valuing health outcomes 198 Y. Natalia Alfonso, Stéphane Verguet, and Ankur Pandya
3.5 Reporting and interpreting results of economic evaluation 213 Ijeoma Edoka, Carleigh Krubiner, Andrew Mirelman, R. Brett McQueen, Mark Sculpher, Julia F. Slejko, and Tommy Wilkinson
3.6 Budget impact analysis and return on investment 239 Elizabeth Watts
3.7 Introduction to decision tree modeling 246 William V. Padula
4 Advanced methods in economic evaluation 259 Edited by William V. Padula, Emmanuel F. Drabo, and Ijeoma Edoka
4.0 Section introduction: advanced methods in economic evaluation 261
Emmanuel F. Drabo and William V. Padula
4.1 Introduction to Markov modeling 264
Emmanuel F. Drabo and William V. Padula
4.2 Static and dynamic modeling
Ann Levin and Colleen Burgess
279
4.3 Probabilistic sensitivity analysis and value of information analysis 290
Ciaran N. Kohli-Lynch
4.4 Economic evaluation reference case with Markov model 310 William V. Padula, Shreena Malaviya, Natalie M. Reid, Jonothan Tierce, and G. Caleb Alexander
5 Financing and resource tracking of vaccination programs 329 Edited by Logan Brenzel and Shreena Malaviya
5.0 Section introduction: financing and resource tracking of vaccination programs 331
Logan Brenzel and Shreena Malaviya
5.1 Introduction to immunization financing and expenditure 332
Logan Brenzel and Shreena Malaviya
5.2 Financing of immunization programs 340
Logan Brenzel
5.3 Donor architecture for immunization financing
Grace Chee, George Pariyo, and Shreena Malaviya
351
Appendix 1. Exercise: a case study on estimating the total and unit routine immunization costs from the facility to the national level 365
Ijeoma Edoka
Appendix 2. Exercise: estimating new vaccine introduction costs
Susmita Chatterjee
371
Appendix 3. Immunization activities and line item costs 375
Logan Brenzel
Appendix 4. Markov decision processes 379
Emmanuel F. Drabo and William V. Padula
Appendix 5. Derivation of the annual expected costs associated with the Infected state 381
Emmanuel F. Drabo and William V. Padula
Appendix 6. Making models probabilistic and estimating the value of information 383
Ciaran N. Kohli-Lynch
Appendix 7. Decision model 395 Index 397
Introduction to the handbook
David Bishai
Complexity surrounding the development, production, distribution, storage, injection, and surveillance of vaccines has fascinated economists for good reason. Much can go wrong. Much can go right. Triumph can save millions of lives and billions of dollars. But failures can multiply out of control and cost jobs, reputations, and set back progress for decades.
Economists are also drawn to the study of vaccines because they are exquisite economic products. They are supremely valuable to societies yet often scarce and neglected except in a crisis. Because they prevent something from happening, their invisibility creates a constant need to create and spread information about their value. The invisibility demands transparent and meticulous models of the value of vaccines so that the right choices can be made by myriad stakeholders.
Vaccine stakeholders include literally every human being. From the day of birth until the end of life, there is always a choice to be made about whether to receive a vaccine and how valuable it will be. From newborns getting BCG shots in the nursery to hospice patients deciding on a COVID-19 vaccine, these products are inescapable. Most choices about vaccines occur in an information-scarce environment. Price signals that could guide an efficient choice are seldom functional because public subsidies abound. Information about the benefits and risks of a shot change over time as epidemics wax and wane and safety data emerge. The stakeholders responsible for financing the subsidies or setting prices are forced to make vital decisions that proxy what fully informed people would pay, but there are never any fully informed people anywhere. The authors and editors of this handbook were drawn to vaccine economics because of both its importance and the appeal of connecting models of economic value to life-saving decisions.
Many of the chapters in this handbook had their genesis in classroom sessions with policymakers and practitioners who needed to apply economic tools to their work in immunization programs and health systems. In 2017,
with a grant from the Bill & Melinda Gates Foundation, a consortium known as Teaching Vaccine Economics Everywhere (TVEE) started with faculty from Johns Hopkins University, Aga Khan University, Indian Institute of Hospital Management Research University, Makerere University, and Witwatersrand University. (The University of Ouagadougou and Mahidol University joined in 2019.) The goal of TVEE was to prepare and deliver a curriculum in vaccine economics that stretched from introductory material to advanced methods with an audience ranging from policymakers and practitioners to economics graduate students. After several workshops to develop outlines of the necessary fundamentals in the field, the curriculum was organized around modules on economic principles, costing, economic evaluation, financing, and resource tracking. Courses were co-taught live in university settings and online with slides and videos available in French and English. Many of the participants in these courses were practitioners so there was a focus on immediately applying principles to problems. The exercises accompanying this handbook have undergone extensive classroombased refinement.
This handbook goes beyond the original classroom material by including material from leaders in the field to fill in essential areas and connect readers to emerging consensus in the areas of vaccine costing, evaluation, and guidance. The economics lessons learned during the COVID-19 pandemic are still emerging, but the authors have incorporated them whenever possible.
If nothing else, the ongoing struggle to solve the economic problems surrounding the deployment of COVID-19 vaccines will stimulate many more readers and practitioners to consider the economics of vaccines. This is a beautiful field and promises life-changing rewards.
Acknowledgments
Bishai, Brenzel, and Padula wish to thank the countless individuals who have studied vaccine economics through the Teaching Vaccine Economics Everywhere (TVEE) program. Faculty and workshop participants in Burkina Faso, India, Pakistan, South Africa, Thailand, and Uganda spent weeks discussing the elements of vaccine economics that were central to both research and policymaking. Their support of TVEE, and feedback, instilled a sense of confidence that the content in this handbook could deliver change in vaccine capacity building throughout countries and communities worldwide.
We would like to acknowledge the supporting roles of Shreena Malaviya, Gatien de Broucker, and Mandy Chen, whose efforts to manage elements of the manuscript development from start to finish were critical in its success.
The editors and authors also wish to thank their families, whose daily support of efforts to develop this manuscript during the midst of the COVID-19 pandemic was instrumental to completing this work.
Financial support was provided through a grant to the Johns Hopkins University (INV-009627). This funding source has made this handbook openly accessible to individuals seeking to learn more about excellence in vaccine economics.
List of abbreviations
AMC Advance Market Commitment
BCR benefit–cost ratio
BIA budget impact analysis
BMGF Bill & Melinda Gates Foundation
CBA cost–benefit analysis
CCA cost–consequence analysis
CEA cost-effectiveness analysis
CET cost-effectiveness threshold
CFA cost-finding analysis
CHEERS Consolidated Health Economic Evaluation Reporting Standards
CI confidence interval
CIA cost-identification analysis
CMA cost-minimization analysis
cMYP Comprehensive Multi-Year Plan
COI cost of illness
COVAX COVID-19 Vaccines Global Access
COVID-19 coronavirus disease 2019
CUA cost–utility analysis
DALY disability-adjusted life year
DCVM Developing Country Vaccine Manufacturer
DOF Department of Finance
DOH Department of Health
ED-5Q EuroQol five-dimensions
EPI Expanded Program on Immunization
EVPI expected value of perfect information
EVPPI expected value of perfect parameter information
EVSI expected value of sample information
FDI Federation Dentaire Internationale
GDP gross domestic product
GNI gross national income
HALY health-adjusted life year
hib Haemophilus influenzae type b
HPV human papillomavirus
HRQoL health-related quality of life
HSIS health system and immunization strengthening
ICER incremental cost-effectiveness ratio
IFFIm International Finance Facility for Immunization
JCVI Joint Committee on Vaccination and Immunisation
xx List of abbreviations
JRF Joint Reporting Form
LMICs low- and middle-income countries
MDP Markov decision process
MI4A Market Information for Access to Vaccines
MNC multinational corporation
mRNA messenger RNA
MVP Meningitis Vaccine Project
NHA National Health Accounts
NHB net health benefit
NHI national health insurance
NHIS National Health Insurance Scheme
NIP national immunization program
NITAG National Immunisation Technical Advisory Group
NMB net monetary benefit
NUVI new and underutilized vaccine introduction
OOP out of pocket
PAHO Pan American Health Organization
PCV pneumococcal conjugate vaccine
PFM public financial management
PFP private for-profit
PNFP private not-for-profit
PPS post-polio syndrome
PSA probabilistic sensitivity analysis
QALY quality-adjusted life year
QHES Quality of Health Economic Studies
R&D research and development
RCT randomized controlled trial
ROI return on investment
SE standard error
SEIR Susceptible–Exposed–Infected–Recovered
SG standard gamble
SIA supplementary immunization activity
SIR Susceptible–Infected–Recovered
SIRV Susceptible–Infected–Recovered–Vaccinated
TTO time trade-off
UK United Kingdom
UNICEF SD UNICEF Supply Division
US United States
VAS visual analog scale
VFC Vaccines for Children
VPD vaccine-preventable disease
WHO World Health Organization
Contributors
Editors
David Bishai, MD, MPH, PhD, is Adjunct Professor of Population, Family and Reproductive Health in the Bloomberg School of Public Health at Johns Hopkins University in Baltimore, Maryland, USA.
Logan Brenzel, PhD, is Senior Program Officer at the Bill & Melinda Gates Foundation in the District of Columbia, USA.
William V. Padula, PhD, is Assistant Professor of Pharmaceutical & Health Economics in the School of Pharmacy at the University of Southern California, Los Angeles, and Fellow in the Leonard D. Schaeffer Center for Health Policy & Economics in Los Angeles, California, USA.
Contributors
Onaopemipo Abiodun
PhD Candidate
International Health
Johns Hopkins Bloomberg School of Public Health
Baltimore, MD, USA
G. Caleb Alexander
Professor of Epidemiology and Medicine
Johns Hopkins Bloomberg School of Public Health
Baltimore, MD, USA
Y. Natalia Alfonso
Health Economist, PhD Candidate
International Health
Johns Hopkins Bloomberg School of Public Health
Baltimore, MD, USA
xxii Contributors
David Bishai
Adjunct Professor
Population Family and Reproductive Health
Johns Hopkins Bloomberg School of Public Health Baltimore, MD, USA
David Bloom
Professor
Global Health & Population
Harvard T.H. Chan School of Public Health Boston, MA, USA
Logan Brenzel
Senior Program Officer
Bill & Melinda Gates Foundation Seattle, WA, USA
Gatien de Broucker
Senior Health Economist
International Vaccine Access Center, Department of International Health
Johns Hopkins Bloomberg School of Public Health Baltimore, MD, USA
Colleen Burgess
Principal Consultant
Ramboll Health Sciences Phoenix, AZ, USA
Susmita Chatterjee
Senior Health Economist
George Institute for Global Health
New Delhi, India
Grace Chee
Project Director
MOMENTUM Routine Immunization Transformation and Equity
JSI Research & Training Institute, Inc.
Arlington, VA, USA
Clarke B. Cole
Manager
Non-Communicable Diseases
Clinton Health Access Initiative
Accra, GH
David W. Dowdy
Associate Professor
Department of Epidemiology
Johns Hopkins Bloomberg School of Public Health Baltimore, MD, USA
Emmanuel F. Drabo
Assistant Professor
Health Policy and Management
Johns Hopkins University Baltimore, MD, USA
Ijeoma Edoka
Health Economics and Epidemiology Research Office
Department of Internal Medicine, School of Clinical Medicine, Faculty of Health Sciences
University of the Witwatersrand Johannesburg, South Africa
School of Public Health, Faculty of Health Sciences
University of the Witwatersrand Johannesburg, South Africa
Beth Evans
Program Manager Global Vaccines Team
Clinton Health Access Initiative Boston, MA, USA
Ciaran N. Kohli-Lynch
Research Fellow
Center for Health Services & Outcomes Research Northwestern University Chicago, IL, USA
Carleigh Krubiner
Bioethics Lead Research Environment Wellcome Trust London, GB
Ann Levin President Levin & Morgan LLC Bethesda, MD, USA
Joseph F. Levy
Assistant Professor
Department of Health Policy and Management
Johns Hopkins Bloomberg School of Public Health Baltimore, MD, USA
Shreena Malaviya
Senior Health Economist
Purple Squirrel Economics Toronto, ON, CA
xxiv Contributors
Chrispus Mayora
Lecturer
Health Policy Planning and Management
Makerere University School of Public Health
Kampala, UG
R. Brett McQueen
Assistant Professor
Skaggs School of Pharmacy and Pharmaceutical Sciences
University of Colorado Anschutz Medical Campus
Aurora, CO, USA
Andrew Mirelman
Technical Officer
Health Systems Governance and Financing
World Health Organization Geneva, CH
William V. Padula
Assistant Professor
Department of Pharmaceutical & Health Economics
University of Southern California
Los Angeles, CA, USA
Ankur Pandya
Associate Professor of Health Decision Science
Health Policy and Management
Harvard T.H. Chan School of Public Health
Boston, MA, USA
George Pariyo
Chief of Operations
Senior Management Team
Serum Africa Medical Research Institute (SAMRI) Kampala, UG
Charles E. Phelps
Professor and Provost Emeritus
University Professor and Provost Emeritus
Economics and Public Health Sciences
University of Rochester Rochester, NY, USA
Siriporn Pooripussarakul
Independent Researcher
Bangkok, Thailand
Natalie M. Reid
Director
Monument Analytics Baltimore, MD, USA
Stephen Resch Lecturer
Department of Health Policy and Management
Harvard T.H. Chan School of Public Health Boston, MA, USA
Dan Salmon Professor
Department of International Health
Johns Hopkins Bloomberg School of Public Health Baltimore, MD, USA
Soleine Scotney Country Director
Clinton Health Access Initiative (CHAI) Cambodia
Phnom Penh, KH
Mark Sculpher
Professor and Director Centre for Health Economics
University of York York, GB
J. P. Sevilla
Research Associate
Global Health and Population
Harvard T.H. Chan School of Public Health Boston, MA, USA
Julia F. Slejko
Associate Professor
Department of Pharmaceutical Health Services Research
University of Maryland School of Pharmacy Baltimore, MD, USA
Jonothan Tierce Principal
Monument Analytics, Inc. Baltimore, MD, USA
Stéphane Verguet
Associate Professor of Global Health
Global Health and Population
Harvard T.H. Chan School of Public Health Boston, MA, USA
Contributors xxv
xxvi Contributors
Elizabeth Watts
Doctoral Researcher
Health Policy & Management
University of Minnesota Minneapolis, MN, USA
Tommy Wilkinson Senior Researcher
Health Economics Unit, School of Public Health
University of Cape Town Cape Town, ZA
1
PRINCIPLES OF VACCINE ECONOMICS
Edited by David Bishai and Chrispus Mayora
1.0 Section introduction: principles of vaccine economics
David Bishai and Chrispus Mayora
Fundamentals matter. Vaccines are some of the most complex molecules ever invented and the social systems that deploy, monitor, and finance them are equally complex. Much of the peculiarities of vaccine economics arises from the peculiarities of vaccines. The most eccentric thing about vaccines is that many of them can benefit the person who gets the shot as well as the people around them. Furthermore, not everyone will obtain the same amount of benefit because of varying risk levels in the population. Coronavirus disease 2019 (COVID-19) vaccines illustrate these points well. The massive public investments to subsidize supply of and stimulate demand for COVID-19 vaccines were predicated on a sure forecast that without public investment the free market was doomed to fail. In many countries, even with the public sector investments, a COVID-19 vaccine at a price of $0 was not attractive to many who were at lower risk and did not appreciate the benefits their shot would offer their community.
There are also many technical peculiarities of vaccines such as their production and delivery that have economic policy implications, which will be the focus of Chapter 1.1. The need to closely monitor storage, delivery practices, and wastage as well as the methods of reaching children either through routine pediatric visits or supplemental immunization activities and campaigns are key special features of vaccines with implications for costs and financing.
The fundamental elements of economics such as price, demand, and supply take on a new meaning in the world of vaccines, which are often “free” to most consumers. Chapter 1.2 adapts these fundamental tools of economics to highly subsidized goods like vaccines. By increasing supply and demand while keeping prices low, these tools will be fundamental in understanding policies to achieve better coverage. With the extensive role of public sector
