Tiered pricing of vaccines: a win-win-win situation, not a subsidy

Abstract

It is a widespread misconception that tiered pricing of vaccines entails the producers or consumers in the high-price markets subsidising the consumers in the low-price markets. Such a view is inconsistent with realities, as well as with economic theory. In the vaccine sector, the cost and demand structures ensure that all three parties involved benefit. The developing countries' low-price market consumers get access to a product that would have been unattainable if the vaccines were offered at a uniform price. The producers benefit from increased revenues and profits, and the developed countries' high-price market consumers benefit from slightly lower prices than would be the case in the absence of the low-price market. This article rebuts the notion that tiered pricing of vaccines is a subsidy, and discusses past experiences, present challenges, and future opportunities for tiered pricing of vaccines in relation to developing countries' immunisation programmes.