Chapter 25: Threshold Analysis Practice: The Costs of a Possible HIV/AIDS Vaccine
The surest way of ending HIV/AIDS is for a vaccine to exist and be widely distributed. However, as Whiteside (2008) points out, scientific advances have been slow in this area as global spending on an AIDS vaccine is less than 1 percent of research and development spending on health products. One major reason for this lack of resources for research and development for an AIDS vaccine is that there are doubts that uninfected persons in developing countries would be able to afford to pay for it when it does get created. Even if governments want to get involved and subsidize the vaccines that are invented and produced, they also need to know how much private individuals would be willing to pay for them, as the government can then ascertain how much of a subsidy would be required to fill the gap between what people can afford and what the vaccine costs. The WTP for a vaccine can be used in the context of threshold analysis because evaluating a vaccine is a prime example of undertaking a CBA where one is missing a vital piece of information that is, in the current state of knowledge, unknowable. One cannot begin to estimate the cost of something that does not yet exist. However, one can ask what the threshold level for costs must be to ensure that the benefits that can be estimated are not exceeded. This is the question that we will attempt to answer in this chapter for one country at...
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