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. In the case of advanced purchase agreements, who bears the cost of a failure?

EBK HEALTH ECONOMICS AND POLICY
7th Edition
ISBN:9781337668279
Author:Henderson
Publisher:Henderson
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
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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.

In the case of advanced purchase agreements, who bears the cost of a failure?

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Purchase agreement of advanced situation would involve risk for the purchasing governments.

Because the payment has to made immediately,and if vaccine doses are not successful,those governments will go into loss.

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