[Ip-health] WSJ:Global Vaccine Initiative Hits Snag

[Amy Nunn]

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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 vaccine=
s for deadly diseases in the developing world.

Despite lobbying by the U.S., Italy and the United Kingdom, chances have fa=
ded that President Bush and other leaders of the Group of Eight major power=
s 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 s=
enior official with direct knowledge of the G-8 vaccine discussions.

A summit-planning meeting last month ended with senior French and U.S. offi=
cials in a heated exchange over the plan, in which the G-8 would guarantee =
a market for pharmaceuticals companies that develop successful vaccines. Fr=
ance refused to endorse the vaccine plan unless the U.S. backed a French pr=
oposal for a new international airline-ticket tax to pay for aid to poor co=
untries, and the Bush administration refused to do so, according to the sen=
ior 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 appea=
red to be on the fast track in February when G-8 finance ministers, includi=
ng 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 th=
e first advance market commitment be used to promote development of a vacci=
ne for pneumococcal disease. According to the World Health Organization, th=
e bacterial infection killed 1.6 million people in 2002, 716,000 of them un=
der 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 predicte=
d that it would take longer than a pneumococcus vaccine.

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

The plan aims to address a problem in global drug markets: The countries th=
at 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 pa=
per concluded last year that poor financial prospects have made drug compan=
ies reluctant to develop vaccines aimed at diseases found mostly in develop=
ing 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 an=
y company or companies that produce vaccines that meet agreed-upon safety-a=
nd-efficacy standards. Once the donors spend that initial subsidy, the phar=
maceuticals companies would discount the vaccine sharply for developing-wor=
ld customers.

"All of the technical work that can be done on an abstract level has been d=
one," said Orin Levine, an epidemiologist who works on pneumococcus vaccine=
s at Johns Hopkins University in Baltimore. "It's time to just commit, to t=
ake that step and move into the first stage, which is negotiating the first=
-ever advance market commitment for a vaccine."

Wyeth <http://online.wsj.com/quotes/main.html?type=3Ddjn&symbol=3Dwye> , th=
e 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 t=
he 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-fi=
nance plans floating around the G-8. While the plans could complement each =
other, they compete for the limited financial resources -- and political br=
agging 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 r=
aise money to purchase drugs for poor nations. France, Italy and several ot=
her nations have signed on, and the first series of bonds is expected to ra=
ise $4 billion in the next few months, according to a French government off=
icial. The Bush administration has said the British plan doesn't fit with t=
he 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 =E2=82=AC1, or about $1=
.25, on domestically purchased tickets for economy-class flights within Eur=
ope, as well as a =E2=82=AC10 levy on business- and first-class tickets. Fo=
r flights outside Europe, the tax rises as high as =E2=82=AC40. The revenue=
 will go for drugs to treat AIDS and other illnesses in poor countries, acc=
ording 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 sh=
ould endorse its approach, provoking opposition from the U.S. and reluctanc=
e from Japan on antitax grounds. The U.K. gave only tempered support for it=
s 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 th=
e advance-market-vaccine proposal from the G-8 leaders' statement being dra=
fted for the coming summit, according to the senior official.

The French government official played down the disagreement. "We're not exp=
ecting 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 "no=
t require you to have everybody around the same table."

At the same time, Japan and Germany shied away from the vaccine plan becaus=
e 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. T=
reasury 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 o=
f the plan are worried it is being slowly derailed.

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







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