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Making Markets for Vaccines a Practical Plan

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Making Markets for Vaccines a Practical Plan Making Markets for Vaccines A practical plan Consultation Draft Report of the Working Group Making Markets for Vaccines – Consultation Draft Working Group Members Alice Albright, The Vaccine Fund (Co-Chair) Jon Andrus, Pan-American Health Organization Abhijit Banerjee, Massachusetts Institute of Technology Amie Batson, The World Bank Ernie Berndt, Massachusetts Institute of Technology Lael Brainard, The Brookings Institution David Cutler, Harvard University Shanta Devarajan, The World Bank David Gold, Global Health Strategies Peter Hutt, Covington & Burling Michael Kremer, Harvard University (Co-Chair) Randall Kroszner, University of Chicago Ruth Levine, Center for Global Development (Co-Chair) Donald Light, University of Medicine and Dentistry of New Jersey Tom McGuire, Harvard University Medical School Tomas Philipson, U.S. Food and Drug Administration Leighton Read, Alloy Ventures Tom Scholar, International Monetary Fund Raj Shah, Bill & Melinda Gates Foundation David Stephens, Emory University Wendy Taylor, BIO Ventures for Global Health Adrian Towse, Office of Health Economics Sean Tunis, U.S. Department of Health and Human Services Sharon White, UK Department for International Development Victor Zonana, Global Health Strategies Members of the Working Group were invited to join in a personal capacity. This report does not necessarily represent the views of the organizations to which they are affiliated. 2 Contents Table of contents TABLE OF CONTENTS.................................................................................................................... 3 SUMMARY.................................................................................................................................... 5 Summary of Working Group conclusions ............................................................................. 10 ACKNOWLEDGEMENTS............................................................................................................... 11 The Working Group thanks the following individuals .......................................................... 12 CHAPTER 1: ABOUT VACCINES................................................................................................... 13 1.1 Vaccines and Global Health ........................................................................................... 13 1.2 The development of vaccines .......................................................................................... 16 1.3 The market for vaccines in developing countries ........................................................... 18 CHAPTER 2: PROMOTING VACCINE DEVELOPMENT..................................................................... 25 2.1 The difference between push and pull............................................................................. 25 2.2 Push programs................................................................................................................ 25 2.3 Pull programs ................................................................................................................. 27 2.4 Types of incentives .......................................................................................................... 31 2.5 Push and pull can complement each other ..................................................................... 33 CHAPTER 3: AN OUTLINE PROPOSAL .......................................................................................... 35 3.1 Rationale......................................................................................................................... 35 3.2 Outline of an AdvancedMarkets commitment................................................................. 35 3.3 The expected benefits of an AdvancedMarkets commitment........................................... 37 3.4 AdvancedMarkets for late-stage and early-stage products ............................................ 40 3.5 Is it practical?................................................................................................................. 42 CHAPTER 4: PRACTICAL ISSUES ................................................................................................. 43 4.1 Legal issues: the contract structure................................................................................ 43 4.2 Eligibility requirements .................................................................................................. 47 4.3 Co-payment and the absence of quantity guarantee....................................................... 49 4.4 The Guaranteed Price..................................................................................................... 50 4.5 Two-stage pricing ...........................................................................................................51 4.6 Second entrants and later products ................................................................................ 52 4.7 Improving the terms over time ........................................................................................ 53 CHAPTER 5: COST EFFECTIVENESS AND PRICE............................................................................ 55 5.1 Determining the guaranteed price.................................................................................. 55 5.2 How much is the AdvancedMarkets commitment worth?............................................... 60 5.3 The case for a bigger commitment.................................................................................. 61 3 Making Markets for Vaccines – Consultation Draft 5.4 Alternative calculations .................................................................................................. 61 CHAPTER 6: INDUSTRY PERSPECTIVES ....................................................................................... 63 6.1 Summary of consultations with industry......................................................................... 63 CHAPTER 7: SPONSOR PERSPECTIVES ......................................................................................... 67 7.1 Possible Government sponsors....................................................................................... 67 7.2 The World Bank ..............................................................................................................73 7.3 Foundations .................................................................................................................... 74 7.4 GAVI and Vaccine Fund ................................................................................................. 75 7.5 The International Financing Facility.............................................................................. 76 CHAPTER 8: REGULATORY AND PROCUREMENT CONSIDERATIONS............................................. 81 8.1 Existing regulatory and procurement systems................................................................ 81 8.2 The need for long term contracting ................................................................................ 81 8.3 Regulatory and procurement implications of AdvancedMarkets.................................... 82 CHAPTER 9: ADVANCEDMARKETS EXAMPLES FOR TWO PRODUCTS........................................... 85 9.1 AdvancedMarkets for an early stage product: Malaria ................................................. 85 9.2 AdvancedMarkets for Rotavirus and Pneumococcus ..................................................... 88 CHAPTER 10. NEXT STEPS .......................................................................................................... 93 CONCLUSION.............................................................................................................................. 97 REFERENCES .............................................................................................................................. 99 APPENDIX A: RECENT EXPERIENCES WITH VACCINE INTRODUCTION ...................................... 105 A.1 The Hepatitis B (HepB) Experience ............................................................................. 105 A.2 The Haemophilus influenzae type b (Hib) experience.................................................. 107 APPENDIX B: DRAFT TERM SHEET FOR FRAMEWORK AGREEMENT. ........................................ 109 Schedule A to Term Sheet for Framework Agreement (Malaria)....................................... 123 Schedule B to Draft Term Sheet for Framework Agreement (Malaria) ............................. 125 APPENDIX C: DRAFT TERM SHEET FOR GUARANTY & SUPPLY AGREEMENT........................... 127 Schedule A to Draft Term Sheet for Guaranty and Supply Agreement............................... 135 Schedule B to Draft Term Sheet for Guaranty and Supply Agreement............................... 136 Schedule C to Draft Term Sheet for Guaranty and Supply Agreement .............................. 138 4 Summary Summary Vaccines are a very effective way to tackle poverty Immunization is one of the safest and most cost-effective ways to reduce disease and prevent death. It is safe and cheap, and requires relatively little contact between the health system and the patient. As well as preventing death and illness, immunization also contributes to greater attendance in school, increased productivity, enhanced lifetime earnings and economic growth. Immunization has been one of the great successes in global health. In 1974, about five percent of the world’s children had access to vaccines. As a spin-off from the successful effort to eradicate smallpox, a global effort
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