Speaker: Giulia Tani
Title: Insuring Strategic Drug Supply with Public Provision: The Case of Immunoglobulins in France
Abstract: This paper studies the role of public provision as insurance against shortages of essential goods when private suppliers are exposed to systemic risk. During aggregate supply disruptions, these firms may redirect scarce output to higher-paying countries, exposing others to costly shortages. I focus on the market for immunoglobulins, essential medicines whose production depends on a scarce, non-substitutable input and is controlled by a few global firms. In France, these firms compete against a public producer, LFB, which is legally required to prioritize national health needs. Using exhaustive French health claims data from 2019 to 2024, I provide evidence that the public producer acted as a buffer during the 2020–2021 shortage, raising its production as foreign supply fell. I then develop a model of public provision as insurance against systemic supply risk. The model shows why a country may buy from a costly domestic producer in normal times to secure a minimum level of supply during a crisis. I also explore the effects of alternative policies to limit shortages, such as diversifying suppliers or adjusting pricing regulation.
Maggie Hendrix
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