[Ip-health] Wall Street Journal: Global Vaccine Initiative Hits Snag

[Thiru Balasubramaniam]

Global Vaccine Initiative Hits Snag

U.S.-French Discord Hinders
Plan to Give Drug Makers
Incentive to Focus on Poor Countries
By *MICHAEL M. PHILLIPS*
July 7, 2006; Page A5

WASHINGTON -- A spat between the U.S. and France is blocking progress on
a novel, business-friendly plan to persuade drug companies to develop
vaccines for deadly diseases in the developing world.

Despite lobbying by the U.S., Italy and the United Kingdom, chances have
faded that President Bush and other leaders of the Group of Eight major
powers will endorse the proposal when they meet next weekend in St.
Petersburg, Russia, for their annual summit.

The proposal "is now in substantial danger of flopping even though there
is an extraordinary level of support among some key stakeholders," said
one senior official with direct knowledge of the G-8 vaccine discussions.

A summit-planning meeting last month ended with senior French and U.S.
officials in a heated exchange over the plan, in which the G-8 would
guarantee a market for pharmaceuticals companies that develop successful
vaccines. France refused to endorse the vaccine plan unless the U.S.
backed a French proposal for a new international airline-ticket tax to
pay for aid to poor countries, and the Bush administration refused to do
so, according to the senior official.

Further complicating matters, Germany and Japan are reluctant to
contribute much money for the vaccine plan, called an advance market
commitment.

The situation marks a sharp reversal for the initiative. The proposal
appeared to be on the fast track in February when G-8 finance ministers,
including then-Treasury Secretary John Snow, endorsed the idea. At that
time, the ministers expected to agree by April on a pilot project to
tackle at least one deadly infectious disease.

That meeting led to creation of a panel of experts, who recommended that
the first advance market commitment be used to promote development of a
vaccine for pneumococcal disease. According to the World Health
Organization, the bacterial infection killed 1.6 million people in 2002,
716,000 of them under the age of 5. The panel suggested that the
approach could help generate a vaccine for malaria, which kills one
million people a year, but predicted that it would take longer than a
pneumococcus vaccine.

G-8 officials say that drug companies, although initially skeptical,
have rallied behind the idea. "They're ready to give this a go," said
the official familiar with the G-8 discussions.

The plan aims to address a problem in global drug markets: The countries
that most need new treatments for diseases such as AIDS and tuberculosis
are those that can least afford to pay for them. An Italian Finance
Ministry paper concluded last year that poor financial prospects have
made drug companies reluctant to develop vaccines aimed at diseases
found mostly in developing nations.

Under the advance market commitment plan, the G-8 would guarantee a
subsidy -- valued at $800 million to $6 billion depending on the disease
-- for any company or companies that produce vaccines that meet
agreed-upon safety-and-efficacy standards. Once the donors spend that
initial subsidy, the pharmaceuticals companies would discount the
vaccine sharply for developing-world customers.

"All of the technical work that can be done on an abstract level has
been done," said Orin Levine, an epidemiologist who works on
pneumococcus vaccines at Johns Hopkins University in Baltimore. "It's
time to just commit, to take that step and move into the first stage,
which is negotiating the first-ever advance market commitment for a
vaccine."

*Wyeth*, the Madison, N.J., pharmaceuticals company, makes a
pneumococcus vaccine, but it doesn't prevent infection by bacterial
strains common to the developing world, according to the Treasury
Department, which has been helping push the vaccine initiative. The
company "has always been supportive of the G-8's efforts around advanced
market commitments for vaccine development," Wyeth spokesman Christopher
Garland said in a written comment.

Hopes that the G-8 leaders would push the plan in St. Petersburg have
gone astray at the negotiating table. The proposal is one of three major
drug-finance plans floating around the G-8. While the plans could
complement each other, they compete for the limited financial resources
-- and political bragging rights.

U.K. Chancellor of the Exchequer Gordon Brown has championed what he
calls the International Finance Facility, in which the G-8 would issue
bonds to raise money to purchase drugs for poor nations. France, Italy
and several other nations have signed on, and the first series of bonds
is expected to raise $4 billion in the next few months, according to a
French government official. The Bush administration has said the British
plan doesn't fit with the U.S. system of yearly budget appropriations.

France has lobbied hard for an airline-ticket tax to fund drug
purchases. A week ago, Paris took the lead by imposing a tax of =801, or
about $1.25, on domestically purchased tickets for economy-class flights
within Europe, as well as a =8010 levy on business- and first-class
tickets. For flights outside Europe, the tax rises as high as =8040. The
revenue will go for drugs to treat AIDS and other illnesses in poor
countries, according to a French official, who says 13 other countries
have agreed to the tax plan.

At the summit-preparatory meeting last month, France argued that the G-8
should endorse its approach, provoking opposition from the U.S. and
reluctance from Japan on antitax grounds. The U.K. gave only tempered
support for its European Union partner. A U.K. Treasury spokesman said
London would only go so far as to divert some of its current ticket-tax
revenue to the French effort; it won't impose a new tax.

Failing to win support for the ticket tax, the French negotiator blocked
the advance-market-vaccine proposal from the G-8 leaders' statement
being drafted for the coming summit, according to the senior official.

The French government official played down the disagreement. "We're not
expecting to see the U.S. joining the air-ticket tax group on a short
horizon -- maybe at a later stage," the official said. The ticket-tax
plan does "not require you to have everybody around the same table."

At the same time, Japan and Germany shied away from the vaccine plan
because of concern about the cost. "A number of other governments in the
G-8 don't want to pony up more money for something right now," said a
senior U.S. Treasury official.

Some G-8 officials expressed hope that wealthy nations would find a way
to launch an advance market commitment pilot by year's end. Other
supporters of the plan are worried it is being slowly derailed.

"I just think it's a tremendous opportunity, and it would be an absolute
shame to let the window pass without an announcement in St. Petersburg,"
said Mr. Levine.