Exploring pediatric immunization markets using operations research and game theory

Vaccination is one of the most important and successful public health endeavors in human history, profoundly reducing mortalities caused by infectious diseases. In the United States, the comprehensive success of large scale pediatric immunization programs results from the collaboration of an interdependent system of government and industry stakeholders. A stakeholder in this system acts independently in pursuit of its own interests; yet, the actions of one stakeholder may profoundly affect the welfare of another stakeholder. It is imperative that these stakeholders understand the nature of their interdependence and the holistic impact of their behavior on the entire vaccine market. The market for pediatric vaccines is fragile and requires ongoing vigilance to meet public health goals regarding immunization coverage rates. Of particular concern is the economic competition within the vaccine industry, the impact of government regulatory policies on the vaccine industry, and the attendant impact on the vaccine system's ability to ensure the adequate provision of vaccines. This dissertation applies operations research and game theoretic methods to aid public health policy practitioners in making more informed decisions regarding the purchasing and pricing of vaccines in the public sector of the United States pediatric vaccine market. The market is analyzed from three different perspectives. First, an operations research approach is proposed for analyzing a pharmaceutical firm's pricing strategy for a single combination vaccine. A vaccine price is sought that maximizes a firm's expected revenue. Next, a game theoretic approach enables formulation of a static Bertrand pricing model that characterizes oligopolistic interaction between all of the firms in a multiple homogeneous product market. Sufficient conditions for the existence of a price equilibrium are provided. Finally, a monopsonistic buyer's vaccine formulary pricing and purchasing problem is formulated. Using a mixed integer non-linear program (MINLP) model, a pricing and purchasing policy for government health care policy practitioners can be designed that establishes a sustainable and stable capital investment environment in which the reliable provision of the pediatric vaccines so essential to public health can occur.