Researchers at Washington University in St. Louis have proposed a new contract scheme to fix influenza vaccine shortages in the United States.
“In the past, we have seen major flu vaccine shortages during the vaccination season, even though the total supply for the flu vaccines was abundant,” Fuqiang Zhang, PhD, professor of operations and manufacturing management at the university’s Olin Business School, told Infectious Disease News. “The major reason for this is because of late delivery.”
Every January, vaccine manufacturers make a vaccine to match the strains they believe the U.S. government will target for the upcoming influenza season in October or November, according the CDC. By March, the FDA recommends the targeted strains. As a result, if the manufacturer guessed incorrectly, vaccine production must be restarted. Consequently, manufacturers do not produce large amounts of vaccine before the FDA’s recommendation. Aware that manufacturers face this risk, retailers avoid requesting large orders to avoid being left with unused doses. This often leads to influenza vaccine shortages. In 2014, for example, a shortage occurred during a period of peak demand.
Zhang collaborated with two other researchers to suggest a solution to this problem.
“By looking into the supply chain between vaccine manufacturers and the retailers (such as physicians’ offices and pharmacies), we identified an incentive problem that may give rise to delayed delivery,” he said. “We propose a solution to realign the incentives of the supply chain members; it can help improve the supply chain efficiency and alleviate the shortage problem during the vaccination season.”
According to Zhang, a buyback and late rebate contract, which combines 100% buybacks and rebates on late shipments to incentivize retailers to make larger orders, would lead to greater production by the manufacturers. This would lead to a steady, reliable flow of influenza vaccine.
“We looked at incentive issues for the different parties, and then tried to provide a holistic solution to the problem,” Zhang said in a press release. - by Will Offit
Disclosure: Zhang reports no relevant financial disclosures.