Government support for the development of Covid-19 vaccines took two different forms. Some firms accepted grants (a.k.a, direct monetary support) for vaccine development and testing. As a condition of the grant, the government has options to purchase a first and specific number of vaccine doses. Other firms chose not to accept grants. Instead they negotiated advanced-purchase agreement to support pre-approval manufacturing of vaccines. The purchase agreement stipulates that payment will be made upon delivery of the pre-specified number of doses.1. Is the successful development and delivery of a vaccine for Covid-19 virus risky or an uncertainty?2. In the case of direct support agreements, who bears the cost of failure?3. In the case of advanced purchase agreements, who bears the cost of a failure?4. Pfizer was the first firm to have its vaccine authorized for use in the U.S. It did not accept a grant to support development and testing, but the Pfizer did negotiate an advance-purchase agreement for $1.95 billion to support the manufacturing of 100 million doses. Looking back, what hidden information is revealed by Pfizer's deal?

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EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 1QAP

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Government support for the development of Covid-19 vaccines took two different forms. Some firms accepted grants (a.k.a, direct monetary support) for vaccine development and testing. As a condition of the grant, the government has options to purchase a first and specific number of vaccine doses. Other firms chose not to accept grants. Instead they negotiated advanced-purchase agreement to support pre-approval manufacturing of vaccines. The purchase agreement stipulates that payment will be made upon delivery of the pre-specified number of doses.

1. Is the successful development and delivery of a vaccine for Covid-19 virus risky or an uncertainty?
2. In the case of direct support agreements, who bears the cost of failure?
3. In the case of advanced purchase agreements, who bears the cost of a failure?
4. Pfizer was the first firm to have its vaccine authorized for use in the U.S. It did not accept a grant to support development and testing, but the Pfizer did negotiate an advance-purchase agreement for $1.95 billion to support the manufacturing of 100 million doses. Looking back, what hidden information is revealed by Pfizer's deal?

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