Coping with drug shortages: A study of government-enterprise option cooperation stockpiling strategies for drugs in shortage considering API surrogate stockpiling subsidies
Yipeng Lan, Chenlu Meng, Lihua Sun, Zhe Huang
TL;DR
This paper explores how governments and pharmaceutical companies can work together to manage drug shortages by using option contracts and API stockpiling subsidies.
Contribution
The study introduces option contracts and API stockpiling subsidies to improve government-enterprise cooperation in drug stockpiling.
Findings
Adding enterprise API stockpiling helps broaden drug reserve methods and improves cooperation effects.
When shortages are likely, API-F integrated enterprises should be preferred to reduce costs and improve responsiveness.
Government subsidies for API storage can incentivize enterprises to stockpile and improve drug supply.
Abstract
Drug shortage is a global problem, and the development of government-enterprise cooperative stockpiles of drugs in shortage, combining physical and production capacity, has become one of the most important means of coping with drug shortages. However, existing studies have tended to overlook the fact that shortages of Active Pharmaceutical Ingredients (APIs) have become an important constraint on production capacity stockpiling and that the lack of incentives and provisions for coordination of benefits have led to a double marginal effect of joint stockpiling by government and enterprises of drugs in shortage. Accordingly, this study introduced the option contract to the drug supply system composed of government and pharmaceutical enterprises and used the subsidy of API storage in lieu as an important initiative to incentivize the reserve of APIs, to construct a model of shortage drug…
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Taxonomy
TopicsPharmaceutical Economics and Policy · Supply Chain and Inventory Management · Sustainable Supply Chain Management