where symbols are defined as above and;

Figure 3.1 summarizes the hierarchy of components that make up expected benefits and expected costs for each prospective vaccine. Each element of benefit and of cost rests upon estimates related to the target disease or estimates related to the subject vaccine. For expository convenience, these elements are grouped into three logical categories: (1) the morbidity, mortality, and direct costs associated with the disease and with vaccine side effects (Chapter 4 and appendixes); (2) the anticipated characteristics of the vaccine, including its efficacy and the incidence of adverse side effects, and the likelihood and timing of vaccine development (Chapter 5); and (3) the expected utilization of available vaccine (Chapter 6). Chapter 7 integrates the components of benefit and separately integrates the components of cost, adjusts each for the probability that they will occur and the expected delay until realization, and presents the conclusions of the baseline analysis.

After all assumptions and estimates have been made and all calculations performed, the analysis yields the annualized net expected costs and the annualized net expected health benefits for each candidate vaccine. These could be arrayed in a table like that shown in Table 3.1. The entries in the table are meant to illustrate the interpretation of conceivable results and do not represent actual results.

Table 3.1 summarizes results for ten vaccine candidates, A through J. Each vaccine is associated with a net expected cost and a net expected benefit, both adjusted to their present values to make results with different time horizons comparable to one another, and converted to annualized equivalents. The “expected net” figures take account of all uncertainties that apply to the development, use, and consequences of each vaccine. Built into the interpretation of these results is an assumption that society is risk neutral with respect to alternative vaccine investments. This means, for example, that the benefits from a vaccine investment that has a 50 percent chance of ultimately saving 2,000 lives per year are valued the same as the benefits from an alternative vaccine investment that has a 25 percent chance of ultimately saving 4,000 lives per year, because the expected number of lives saved per year is equal to 1,000 lives in both cases.