Why Sole-Supplier Vaccine Markets May Be Here To Stay

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Abstract
Given the structure of costs, demand, and competition, vaccine markets reach long-run equilibrium with one or very few suppliers at any point in time. Sole suppliers are less likely to exit and may have lower total social costs. Vaccine markets are dynamically competitive, with new, superior products displacing older, inferior products. Measures to address short-run supply disruptions include inventories, foreign sourcing, and improved technologies. Increasing the relative prices paid for new vaccines to levels that more closely reflect their social value compared to other new drugs and biologics is essential to achieving appropriate incentives for allocation of pharmaceutical R&D.

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