Pandemic Influenza – Just-in-Time vs. Just-in-Case Strategies
How should the government align the incentive of manufacturers with the best interest of the society? Among suggestions of cost sharing, buying a fixed amount, and absorbing leftover doses, which one do you recommend?
The producer of influenza vaccine suffers financial loss at the end because the vaccine has a short time period of useful life if the production exceeds the amount of quantity demanded. The unused vaccine is of no use and has to be disposed by the wholesalers and health care providers. In this scenario, the wholesalers and health care providers bear the loss because they have purchased the vaccines. In addition to this,the manufacturer produces less to cut the loss. However,in that case the less manufactured vaccines would be soon used and there would be a shortfall in the market that causes several problems to the patients that is in severe need of the vaccination. Therefore, the government plays a vital role to ensure the manufacturer loss and being a subsidiary of the manufacturer, the government can help in predicting the required quantity of vaccines.
Role of Government:
The government plays a key role in making the availability of the vaccine and in the same time deals with the financial losses bears by the manufacturer. The government can conduct all the researches that are essential for the influenza and flu virus. They can start their research by collecting data from different labs. They can build their own labs that conclude the nature of flu virus that will effect and harm human in coming season. Moreover, they can judge the number of people who will get affected and how far the virus will move. They can provide the knowledge to the producer regarding the flu virus and the predicted number of people who will get infected by the virus. The government can provide the raw materials that are used to manufacture the vaccine for the virus. The government can supervise the research and development department of the manufacturer for the better results. The government can buy the vaccines and provide it to the people on a subsidized price. This will lead to more availability of the vaccine and the company would bear less loss as well.
Recommendation:
The government pays to the manufacturer to produce in a large quantity than the predicted quantity. However,this causes too much wastage. In addition to this,the vaccines that are not being used are disposed. The government should take charge and make a pact between the vaccine producers that they should cover all the population and in result. If the vaccines are left over, then the government will bear the loss and purchase the left over vaccines from the manufacturer so that the vaccines are produced for everyone.
Why is there a simultaneous shortage and overage? How can we resolve this issue?
Shortage and Overage of product:
In order to generate enough profit and for the company to bear less loss, the manager predicts and plans the production in an amount that is beneficial for the company. However,in the case of flu vaccine, such a plan will eventually break down. A normal flu pandemic is sufficient enough to destroy the whole supply chain system as the demand will grow twice or even thrice as big.
The less manufactured products will soon run out. In addition to this,vaccine manufacturers simply cannot supply the quantity demanded in even six months. At times 80% of the raw materials are supplied from abroad, which takes more time and due to any reason, the borders and routes may be blocked. This could be a painful situation as hundreds of people would die because of no medication and thousands could be hospitalized with severe problems. Hence, it is not permissible to produce under the strategy of just in time supply. A vaccine that is manufactured has a very limited life. The virus is changing yearly and according to the virus, its vaccine is also reformulated every year. The life of a vaccine is around three months;there fore the manufacturer could not produce in a bulk quantity. The market for the vaccine manufacturer is volatile and can be seen that it is increasing every year. The market has a feature of influenza that makes it so unpredictable. The manufacturer never knows that when the market needs high volume of products therefore,it has to be manufactured in advanced, which would make the manufacturer to bear loss by disposing the vaccines at the end of their life....................................
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