[Ip-health] Harvey Bale and Christopher Earl's July 3 FT op-ed on G8 Advance Market Commitment discussions

[James Love]

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 (IFPMA).  This was their Feb 3 op-ed in the FT on the G8
discussions on the Advanced Market Commitment (AMC) for vaccines.  Jamie


http://www.bvgh.org/news/articles/FTOpEdJuly06.asp

July 3, 06 Op-ed in The Financial Times
A market remedy that can bring vaccines to the poor

By Christopher Earl and Harvey Bale
Published: July 3 2006

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
(=A39 to =A319) 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

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James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

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