Flu Vaccine Rationing
With the flu season coming around, people will be lined up to get their shot. Wait, they are saying not everyone should rush to get the shot due to a shortage. They want the healthy people to wait and let those at risk get the shot first. If people hear that there is a short in the flu vaccine they will go even quicker to get their shot. If they want people of higher risk to get the shot first, they should not get everyone worried about a shortage. What do you think will happen? Do you think everyone that is at high risk will get the vaccine?
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The recent hullabaloo surrounding a potential shortage of flu vaccine presents a good opportunity to apply the economics of shortages. A shortage is defined as when the quantity demanded exceeds the quantity supplied at a given price. With word that the Chiron Corporation, a major manufacturer of flu vaccine, will be prevented from distributing its vaccine due to safety concerns over its production processes, the supply of vaccine to the United States will be reduced. If the market for vaccines behaves like other markets, we would normally expect the price of vaccines to rise. The price of a flu shot in Washington County has been $10 for the last couple of years. Thus, I would expect the price of the vaccine to rise this year. However, according to a story in the Marietta Times (October 6, 2004, B1), the Washington County Health Department will continue to offer flu vaccine shots at $10 a shot (indeed, the Health Department states that no one will be turned away for their inability to pay). Thus, a true shortage could result because price does not rise to adjust to the lower supply. Note, if the price of flu shots rose as predicted, then there wouldn’t be a shortage since quantity demand would fall to meet the lower quantity supplied.
If a true shortage exists, then some sort of non-price rationing would have to be use to allocate the scarce vaccine. We already hear about calls from health officials that the vaccine should only be allocated to those who are in “high-risk” groups: the very young and the very old, for instance. Hmmm…I wonder if a black market in flu vaccines will ever develop? [Pssst…Hey, you wanna buy some Meigs County flu vaccine?]
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