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A market remedy that can bring vaccines to the poor By Christopher Earl and Harvey Bale Every year 3m people die from diseases that could be prevented by using vaccines. Immunising people against these diseases, such as measles and hepatitis B, is therefore a great investment for developing countries and the donors who support them, and one of the most cost-effective health measures a government can take. But innovative vaccines to prevent major diseases - such as malaria and pneumococcal disease - are developed mainly by private industry. When it comes to creating new vaccines primarily for poorer populations, limited markets in the poorest developing countries have slowed the substantial investment required. Now momentum is building behind a plan that could change the equation by creating vaccine markets for the developing world that are sufficiently robust to inspire industry to develop the vaccines needed. The finance ministers of the Group of Seven in April called for the launch before the end of this year of a pilot Advance Market Commitment. This is a novel mechanism they believe can, by substituting for the inadequate effective demand in poor countries, unleash the resources of pharmaceutical and biotechnology companies against neglected diseases. Under an AMC, sponsoring governments and foundations would guarantee purchase of a specified number of treatments for a disease, at a pre-set price, for which all companies supplying an effective vaccine would be eligible. The rationale is straightforward: industry responds to real market opportunities and there is an un-met public health need here. Having first asked for an evaluation of the AMC concept only a year ago from Italy, the G7 finance ministers are currently assessing a list of six candidates for the proposed leading project. This involves three vaccines in the later stages of development - against rotavirus, pneumococcal disease and human papilloma virus - and three early-stage vaccines for malaria, HIV/Aids and tuberculosis. The World Bank and the Global Alliance for Vaccines and Immunization have fine-tuned the details of the proposal. Gordon Brown, the chancellor, has already declared the British government ready to commit. Many companies in the biopharmaceutical sector have expressed excitement about the concept's potential. This, combined with a desire that the terms of any AMCs accurately reflect market realities, should lead industry to seek a role in programme design. From the industry's perspective, the numbers tell the story. Annual sales of vaccines represent less than 2 per cent of the worldwide pharmaceutical market. With average per capita spending of $17 to $36 (£9 to £19) on health - and in some cases much less - the world's low-income countries lack market pull. Donors could address this imbalance under an AMC by mounting a fund large enough to purchase millions of doses of a single vaccine - one that might reach into the billions of dollars. Once the fund was exhausted, the company or companies supplying the vaccine would have to lower its price to ensure the market's sustainability, but a reasonable return on investment would already have been achieved. While creating a market through an AMC would require an up-front pledge from sponsors, they would pay only in the case of success, as would the poorest countries whose contribution would be a low co-payment on each dose. If no effective vaccine were developed, neither sponsors nor countries would be out a penny. It would be the companies that assumed the risk, investing their resources in pursuit of market rewards. Because it can take 10 to 15 years to bring an early-stage vaccine to market, donors will have to offer a legally binding commitment and one whose longevity market entrants can count on. Getting the market size right will be critical as well: the larger the commitment, the more players are likely to engage. The key for donors will be striking a balance between maximising the social value of their investment and ensuring broad participation in the programme. Such a balance can be reached, but all involved must recognise that the creation of new markets through AMCs will require extensive effort and trust-building among donor governments, the global health community and industry. The AMC cannot be expected to dissolve all the barriers that limit investment in global health product development. Still, industry considers it the most promising market mechanism for health to come along in some time. We urge the G8 to use the summit to launch this important initiative. Dr Christopher Earl is president and CEO of BIO Ventures for Global Health. Dr Harvey E. Bale, Jr is director-general of the International Federation of Pharmaceutical Manufacturers and Associations Reprinted with permission from The Financial Times Limited 2006 |