Thursday, June 10, 2010

"Influenza Vaccine Supply Chain with Multiple Agencies"

Influenza is an acute respiratory illness that spreads rapidly in seasonal epidemics. Annually influenza outbreaks result in 250,000 to 500,000 deaths around the globe. The World Health Organization reports that the costs of health care, lost days of work and education, and social disruption are between $1 million and $6 million per 100,000 inhabitants yearly in industrialized countries. Vaccination is seen as a principal means of preventing influenza, slowing the spread of the disease and even containing a global pandemic. Not only effective, vaccination is also cost-effective and one researcher found that immunization in the elderly saved $117/person in medical costs.

Despite their efficiency and cost-effectiveness, global vaccine allocations to various countries have not been socially optimal. Such sub-optimal vaccine allocations can be attributed to misaligned incentives of decision-makers. The main contribution of this paper is to design contractual agreements between governments to align their incentives and achieve the global optimum solution.

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