[Ip-health] Questioning the 1.5 billion dollar vaccine deal

[Adrienne.MacDONALD@geneva.msf.org]

Development Today=0D
OPINION/ DT 6/ April 25, 2008=0D
www.development-today.com=0D
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Opinion Article by Tido von Schoen-Angerer,=0D
Executive Director of the Campaign for Access to Essential Medicines,=0D
M=C3=A9decins Sans Fronti=C3=A8res=0D
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Questioning the 1.5 billion dollar vaccine deal=0D
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M=C3=A9decins Sans Fronti=C3=A8res does not deny the rationale of the Advan=
ce Market=0D
Commitment: a new vaccine against pneumococcal disease is desperately=0D
needed. Over a million people, mostly children, die each year of pneumonia,=
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bloodstream infections and meningitis caused by pneumococcal bacteria. But=
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why is it so expensive?=0D
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Any initiative that aims to get these important vaccines deployed in poor=
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countries, as soon as they come to the market in wealthier ones, is=0D
therefore laudable. Reassuringly, the GAVI Alliance has a track record in=
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increas-ing the take-up of underused vaccines. GAVI=E2=80=99s pilot Advance=
d Market=0D
Commitment for pneumo-vaccines is therefore an important proposal. But it=
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also is just that: a pilot, an experiment that tests the benefits of using=
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this type of financing tool. And although the AMC donors are set to meet in=
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May to finalise the deal, many questions remain unanswered.=0D
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The big questions obviously surround the USD 1.5 billion price tag. To=0D
date, there is insufficient explanation of why such a large carrot is=0D
needed.=0D
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Firstly, the AMC money for the most part does not have to recoup industry=
=E2=80=99s=0D
R&D costs. True, as yet unidentified emerging suppliers whose candidate=0D
vaccines are still far away from licensure may need their R&D costs covered=
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- the AMC could act as an R&D incentive for them. But that is not the case=
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for the two vaccines that will capture most of the scheme=E2=80=99s rewards=
. The=0D
vaccines nearing development by GSK and Wyeth are primarily to be marketed=
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in rich countries, and the firms will be rewarded from sales there.=0D
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Next, developing countries will be asked to pay USD 1-2 per dose (with=0D
initial GAVI susbidy for poorest countries), which is roughly equivalent to=
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GAVI=E2=80=99s estimate for the cost of production. The USD 1.5 billion wil=
l then=0D
not pay for the cost of goods. It will only act as an incentive - except=0D
for emerging suppliers, where it will stimulate R&D - to increase=0D
production capacity and dedicate sufficient production of vaccines to poor=
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countries. Is USD 1.5 billion too big a carrot for such a remit?=0D
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Contrast the pilot AMC with the results of another new vaccine initiative,=
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and the differences are telling. The conjugate meningitis A vaccine is=0D
being developed through grants for USD 70 million and will be marketed at=
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US 40 cents per dose. Unlike the AMC pilot, the money spent includes the=0D
financing of R&D, and the vaccine has no market in rich countries. Although=
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the complexity and market size of the two vaccines obviously vary, the cost=
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differences are of such an order that they deserve to be explored.=0D
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More worrying, GAVI=E2=80=99s Expert Group has warned that the large AMC ca=
rrot=0D
might still not be attractive enough to the firms that are already expected=
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to gain a windfall from the scheme. Indeed GSK, whose product will be=0D
launched first, will initially be in a monopoly position, which it can use=
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to maximize the profit reaped from the AMC. But it would seem that the AMC=
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designers=E2=80=99 major focus is to make the carrot bigger still, so that =
selling=0D
in poor countries will be as profitable as selling in rich countries.=0D
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That the AMC should provide a fair and positive return on investment should=
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be enough to reward firms participating in the pilot. If they do not take=
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part, it would show that the high price of health products in rich=0D
countries acts as an indirect but powerful barrier to access to health=0D
products in poorer countries, where the rewards cannot hope to compete.=0D
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Thus, the pilot AMC raises a funda-mental question: do companies such as=0D
GSK, which will sell their pneumo-vaccines highly profitably in Western=0D
markets, have a moral obligation to make the same vaccines available in=0D
poor countries, in sufficient quantities and at affordable prices?=0D
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After the initial design of the Pneumo AMC was released in 2007, MSF=0D
commented to the GAVI Expert Group that USD 600 million of industry profit=
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would be generated simply due to the design of the AMC. The updated design=
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seems to address many of the initial inadequacies. Crucially though, the=0D
economic simulations on which GAVI=E2=80=99s Expert Group bases its recomme=
ndations=0D
have not been made public. Until they do, the real mechanism of the AMC=0D
remains opaque. GAVI has pledged to make data available but says this will=
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take several weeks. With the signing of the AMC agreement only weeks away,=
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this leaves a short time for public scrutiny and debate.=0D
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This AMC project is an experiment. It may well be that the AMC is deemed an=
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unsuccessful or inappropriate alternative financing model in the future.=0D
What is certain though is that without more transparency AMCs will never be=
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recognised as a funding mechanism accepted by all stakeholders.=0D
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Governments may find it easier to commit to AMCs than to confront the=0D
complex issue of intellectual property and R&D. But they should recognize=
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that AMCs are only a minor adapta-tion of the present system, and that the=
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ambition to develop policies for essential health R&D should go well beyond=
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AMCs. Other alternative financing mechanisms may be better suited to solve=
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certain problems.=0D
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Donors should therefore engage in discussions, including the forthcoming=0D
WHO Intergovernmental Working Group on Public Health, Innovation and=0D
Intellectual Property (IGWG) that pursue other models, such as prize funds=
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or an R&D treaty. The IGWG is mandated to promote alternative financing=0D
mechanisms that address the link between the cost of R&D and the price of=
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products. In 2007 the World Health Assembly called on the WHO Director=0D
General to encourage the development of such mechanisms. The AMC, which=0D
fails to address that link, cannot be the only proposal on the table.=0D
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Adrienne MacDonald=0D
Communications Officer=0D
M=C3=A9decins Sans Fronti=C3=A8res=0D
Campaign for Access to Essential Medicines=0D
Rue de Lausanne 78=0D
1211 Geneva, Switzerland=0D
+ 41.22.849.8909=0D
+ 41.79.293.0270 (m.)=0D
www.accessmed-msf.org=0D
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