Germany’s Vaccination Summit is taking place today in Berlin. Among the topics on the agenda is the vaccine shortage, which is currently the subject of much discussion. In an article in today’s edition of German business daily “Handelsblatt”, ZEW President Professor Achim Wambach and head of the “Market Design” Research Department, Professor Vitali Gretschko, argue for greater competition to speed up vaccine production:

Professor Achim Wambach on the vaccination summit in Berlin.
ZEW President Professor Achim Wambach in an exchange on the Vaccination Summit with Professor Vitali Gretschko, Head of the Research Unit "Market Design".

“In November 2020, the EU concluded supply contracts with pharmaceutical companies whose vaccines had a good chance of being licensed. The problem is that once a contract has been signed, a manufacturer can be sure to sell the agreed quantity of vaccine. Consequently, there is only a rather limited incentive to quickly build up large volumes. However, boosting competition can help create incentives for faster production. One way to increase competition could be to set up a new European fund. Payments from this fund would reward those manufacturers whose vaccines are actually administered quickly. For example, it would be conceivable to pay a high bonus for vaccinations that are added to the contractually agreed amount. However, this bonus decreases over time and falls to zero as soon as a certain proportion of the population has been vaccinated. The power of competition could speed up the production of vaccines.”

Date

01.02.2021

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