The Effects of Bundled Discounts on Entry in the Market for Pediatric Vaccines

The market for pediatric vaccines is unusual in that more than half are publicly provided through the federal Vaccines for Children (VFC) program. The CDC negotiates with vaccine manufacturers for the purchase of all pediatric vaccines supplied under the program, and given the size of its purchases buys at significant discounts off of list prices on a per-dose basis. In contrast, bundled discounts are in widespread use by multi-vaccine manufacturers for pediatric vaccines sold for private use. In this paper, we consider the competitive implications of the use of these bundled discounts, and whether the practice is at odds with the public health goals of ensuring a stable vaccine supply and encouraging the development of new and improved pediatric vaccines