A Game Theoretic Approach to Pediatric Vaccine Pricing

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The research objective of this award is to introduce and explore game theoretic models that capture how pediatric vaccine prices are negotiated in the United States. Non-cooperative game theory and discrete optimization methodologies will be studied to gain insights into pediatric vaccine pricing that meets the needs of all stakeholders, and hence, facilitate a reliable stream of pediatric vaccines. The advantage offered by such models is that pediatric vaccine prices can be set collectively based on the entire set of vaccines required to satisfy the childhood immunization schedule, rather than one vaccine at a time, as is the case today. The results of this research will provide novel insights gleaned from Bertrand oligopoly pricing models, including the existence and computation of Nash equilibrium for weighted set cover games, and the introduction and analysis of repeated weight set cover games. This research will also provide conditions under which tacit collusion and the grim trigger strategy may lead to unexpected equilibrium vaccine prices. If successful, this research will introduce models and methodologies for setting and evaluating pediatric vaccine prices, with the potential to lead to a more secure and reliable pediatric vaccine supply. Such results will provide value in assessing the current state of pediatric vaccine pricing and in evaluating future pricing for new vaccines as they enter the market. This in turn may lead to improved national immunization coverage rates based on a more reliable set of vaccine sources and their impact on both economic and public health performance measures. Moreover, through a variety of student involvement activities and public health outreach, this research effort will enhance the educational environment supported by NSF and fostered at the University of Illinois.