Article Analysis: Application of Supply and
Demand Concepts to Current H1N1 Vaccine Shortages
According to a recent article, the United States faces problems of H1N1 vaccine shortages as the swine flue epidemic spirals out of control. Even though the supply is increasing steadily, so is the demand for it. “The first estimates called for 40 million doses by the end of October and 190 million doses by year's end” (ACJ). Although production has been delayed several times the gap between supply and demand is closing according to Dr. Thomas R. Frieden, director of the U.S. Centers for Disease Control and Prevention. The above described problem embodies several microeconomic topics. More specifically, the current vaccine shortages raise issues in the areas of supply decisions, public versus private goods and government intervention.
Although by manufacturing supply decisions one usually means output optimization, the reason for production delays in case of drugs and vaccines shall not be narrowed down to pure economic considerations exclusively. As Dr. Anne Schuchat, CDC's director of the National Center for Immunization and Respiratory Diseases said “manufacturers are making unprecedented amounts of vaccine, but difficulties growing the vaccine, as well as time-consuming potency and purity testing, are contributing to the delay” (Falco). Even though delaying production enables manufacturers to avoid excessive production by waiting till demand gets substantial, the holdup of production in this case is related to social responsibility rather than aiming to break even.
The current shortage also gives rise to debates about the adequacy of the US Health Care System and raises questions whether or not vaccines should be traded as public goods. The majority of the US population prefers financing medical care through private insurance funds; however, during hardships such as the current swine flue epidemic, declaring vaccines as public...