Analytics for vaccine economics and pricing: insights and observations

Abstract

Pediatric immunization programs in the USA are a successful and cost–effective public health endeavor, profoundly reducing mortalities caused by infectious diseases. Two important issues relate to the success of the immunization programs, the selection of cost–effective vaccines and the appropriate pricing of vaccines. The recommended childhood immunization schedule, published annually by the CDC, continues to expand with respect to the number of injections required and the number of vaccines available for selection. The advent of new vaccines to meet the growing requirements of the schedule results: in a large, combinatorial number of possible vaccine formularies. The expansion of the schedule and the increase in the number of available vaccines constitutes a challenge for state health departments, large city immunization programs, private practices and other vaccine purchasers, as a cost–effective vaccine formulary must be selected from an increasingly large set of possible vaccine combinations to satisfy the schedule. The pediatric vaccine industry consists of a relatively small number of pharmaceutical firms engaged in the research, development, manufacture and distribution of pediatric vaccines. The number of vaccine manufacturers has dramatically decreased in the past few decades for a myriad of reasons, most notably due to low profitability. The contraction of the industry negatively impacts the reliable provision of pediatric vaccines. The determination of appropriate vaccine prices is an important issue and influences a vaccine manufacturer’s decision to remain in the market. Operations research is a discipline that applies advanced analytical methods to improve decision making; analytics is the application of operations research to a particular problem using pertinent data to provide a practical result. Analytics provides a mechanism to resolve the challenges facing stakeholders in the vaccine development and delivery system, in particular, the selection of cost–effective vaccines and the appropriate pricing of vaccines. A review of applicable analytics papers is provided.

Keywords:

• analytics
• operations research
• pediatric vaccines
• public health
• vaccine pricing

Acknowledgements

The authors would like to thank LE Rodewald, Director, Immunization Services Division, National Center for Immunization and Respiratory Diseases, CDC (GA, USA), and JA Jokela, Head, Department of Internal Medicine, University of Illinois at Urbana-Champaign (IL, USA), for their longstanding encouragement and feedback on this line of research. The authors also thank the Commissioning Editor and two anonymous referees for their insightful comments and suggestions, resulting in an improved manuscript.

Disclaimer

The views expressed in this article are those of the authors and do not reflect the official policy or position of the US Air Force, Department of Defense, National Science Foundation, or the US Government.

Financial & competing interests disclosure

This research has been supported in part by the National Science Foundation (CMMI-1161458). The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

No writing assistance was utilized in the production of this manuscript.

Key issues

• Large-scale immunization programs in the USA are a successful and cost–effective public health endeavor, profoundly reducing mortalities caused by infectious diseases.

• The pediatric vaccine industry consists of a relatively small number of pharmaceutical firms (i.e., companies, manufacturers) engaged in the research, development, manufacture and distribution of pediatric vaccines.

• The number of firms that produce vaccines for the US market has steadily decreased since the 1960s; in 1967, 37 vaccine manufacturers operated in the USA, whereas only five vaccine manufacturers operate as of 2014.

• The determination of appropriately priced vaccines is an important issue and influences a vaccine manufacturer’s decision to remain in the market.

• The recommended childhood immunization schedule, published annually by the CDC, continues to expand with respect to the number of injections required and the number of vaccines available for selection.

• In the 1980s, the schedule required children to receive a total of five shots by the time they were 2 years old and not more than one shot at a single clinic visit; as of 2014, the schedule requires children to receive a total of 24 shots by the time they are 2 years old and up to six shots in a single visit.

• The challenge for state health departments, large city immunization programs, private practices and other vaccine purchasers is to select a cost–effective vaccine formulary from this set of vaccines so as to cost–effectively satisfy recommended childhood immunization schedule.

• Operations research is a discipline that applies advanced analytical methods to improve decision-making; analytics is the application of operations research to a particular problem using pertinent data to provide a practical result.

• Analytics provides a mechanism to resolve the challenges facing stakeholders in the vaccine development and delivery system.

Notes