Advance Market Commitments for New Vaccines – Lessons from the Pneumococcal Vaccine

In global public health, we talk about a class of diseases that cause significant morbidity and mortality, but for which treatments are either unavailable, ineffective, or toxic, known as neglected tropical diseases (NTDs). One of the main problems with NTDs is that they predominantly occur in populations who lack the financial means of purchasing new drugs (which are often expensive) to treat them. Thus, there exists little financial incentive for researchers, research funders or a pharmaceutical company to invest in the development of new drugs to treat these conditions, because of the perceived lack of return on their investment.

This has long been a challenge in public health – how do we stimulate the needed research and development to address the world’s most salient public health problems, when the return on investment is likely to be poor?

There is no catch-all solution to this problem, so a number of potential solutions have emerged. The Drugs for Neglected Diseases initiative (DNDi), for example, is a not-for-profit research and development organization that works in collaboration with a long list of partners, from the pharmaceutical industry to universities and university spin-offs. As drugs are developed through the collaboration, different arrangements made by DNDi ensure that the drugs are available and affordable, using different intellectual property arrangements.

This addresses concerns for drugs being developed through the partnership, but doesn’t address the issue of poor access to drugs or vaccines already on the market.

As previously reported, pneumonia is currently the leading cause of death in children under the age of 5, accounting for about 18% of child deaths worldwide, followed by diarrhea and malaria as the second and third leading causes of death. That’s huge, and a lot of pneumonias can be prevented through the use of vaccines. However, getting vaccines to people in poorer countries is a challenge because vaccines do not fit into the contemporary model of most alternative intellectual property arrangements like compulsory licenses or the lure of cheap generic pharmaceuticals.

One problem is that vaccines are difficult to produce. The manufacturing capacity required to produce vaccines – which is quite sophisticated – is greater than what is needed to stamp out medications in tablet form. Vaccines are biologically complex, so producing them isn’t as easy as producing something like paracetamol. For this reason, there are fewer pharmaceutical companies entering into the market, and even fewer capable of producing vaccines on the cheap.

One solution, proposed by the GAVI Alliance, is something called an Advance Market Commitment (AMC), which guarantees a market for vaccine producers and provides incentive for investing in research and development by ensuring a financial return on that investment. This addresses one of the critical shortfalls, above, in the NTDs problem, where financial incentives are weak.

GAVI administers the AMC, which requires manufacturers to commit to providing a share of the targeted 200 million doses of a vaccine. Currently, the AMC states that no dose can cost more than $3.50, and this cost is covered in part by GAVI and in part by the recipient country government (in Malawi, the government is paying $0.20 per dose for the pneumococcal vaccine, which – considering the cost of treating a case of severe pneumonia – is a pretty solid return on investment). By comparison, in rich countries, the cost per dose is between $54-108.

GAVI, through it donor partners (currently: Italy, UK, Canada, Russia, Norway, and the Gates Foundation), agrees to purchase a certain number of the vaccines at a fixed price point, for a certain number of years, thus guaranteeing a market for vaccines once they are developed. The economy of scale allows manufacturers to increase their production and bring costs down, while ensuring that there is a market on the other end to buy them.

Several key questions emerge from this arrangement: is the AMC increasing access to the vaccines in a more timely manner than if the market were left on its own? Is the cost of the program, as a whole, producing the anticipated cost-reductions per vaccine?

First, let’s consider the issue of access. The vaccine currently being used  in Malawi is called Prevnar-13, manufactured by Pfizer. Prevnar-13 (which protects against 13 types of pneumococcal bacteria) was approved by the US Food and Drug and Drug Administration on November 24, 2010. For most new vaccines, the delay between when they are available in rich countries and when they’re available in low-income countries can be 10-15 years, probably because pharmaceutical companies need to recoup their investment in research and development in richer countries before introducing them in countries where the market can only sustain lower costs, and for which the market is not guaranteed. However, in the case of Prevnar-13, it was available in Nicaragua 10 months after it was introduced in the USA, as a result of the GAVI AMC. GAVI’s goal is to reach 40 developing countries with the vaccine by 2015.

This would seem to suggest that the AMC is, in fact, working as it was intended and increasing access to cheaper versions of the vaccine.

Some criticisms have emerged regarding the financing of this model, as highlighted in an editorial in Nature Medicine in 2011. The crux of the argument, basically, is that: (1) the cost per child saved under the GAVI AMC is $4,722, and immunization packages for other diseases (like polio, measles, and yellow fever) can save more children for less; and (2) The GAVI model serves the interests of the pharmaceutical companies.

These seem to be flawed arguments. The AMC model is designed with the intention of stimulating vaccine development and distribution that may otherwise be neglected, while reducing costs for new vaccines that are still under patent in rich countries (and therefore, more expensive). Arguably, this needs to be a part of a more global focus on increasing access to vaccines in general (like polio, measles, and yellow fever), however the focus of the AMC is on expediting the availability of the pneumococcal vaccine in countries like Malawi (which already has exceptionally high vaccine coverage rates for other vaccines), for whom $54 a dose is simply out of reach. If nothing else, there is an ethical imperative to provide an available vaccine to populations who are disproportionately affected by a condition prevented by a vaccine. Pitting one disease against another seems a poor argument to make.

Pharmaceutical companies clearly have an interest in generating profit from the technologies they produce. However, as has been shown repeatedly, the pharmaceutical industry rarely profits from the introduction of new drugs in developing countries, precisely because they can’t afford to purchase them at the same price point as rich countries can. Thus, pursuing patent protection and distribution in many poor countries is rarely in the pharmaceutical company’s interest, and these countries rarely factor into how they make money. Thus, these new products are rarely accessible to developing countries, and unless we start finding ways around this, it seems unlikely that this will change.

Compulsory licensing isn’t going to achieve this, for the reason that producing the vaccines is costly and it’s unlikely that a generic manufacture is willing to invest in the technology to do so.The start-up costs of having a generic company produce a vaccine are likely going to offset the cost reductions, and issuing a compulsory license (thus allowing the country to essentially ignore the patent) is a politically-charged intervention.

The AMC puts the global public health community (particularly those from the access to essential medicines community) closer to the pharmaceutical industry than perhaps we would like to be; However, it’s important to consider this in the broader context of results. Results that suggest that the pneumococcal vaccine became available quicker than most other vaccines in developing countries, and that the cost per dose remains steeply discounted from the cost per dose in rich countries.

Fundamentally, this is the hand we have been dealt. The pneumococcal vaccine has been brought to market by major pharmaceutical companies (Pfizer and Wyeth), who are the current patent holders. Producing it under a compulsory license is probably impractical and the costs of production may not result in cost-savings and certainly won’t result in saving time from when the vaccines are brought to market in the US or Canada and when they’re available in developing countries. Had the vaccine been produced through a pooled, non-profit intellectual property arrangement, we might be in a different situation; but we’re not.

For now, the AMC administered by GAVI has succeeded in bringing the pneumococcal vaccine to populations who likely wouldn’t have access to it today without the arrangement. Is it perfect? Nope. But, it is a different approach to access to new technologies that seems to be working. In global public health, it’s important that we focus on interventions that are successful (even if marginally so), and continue to refine them even further until they’re flawless and address global health problems head-on. Celebrate our successes and then make them better.

Check out:

International Vaccine Access Center Twitter: @IVACTweets and @NoMorePneumo


Gabriel P, Goulding R, Morgan-Jonker C, Turvey S, & Nickerson J (2010). Fostering Canadian drug research and development for neglected tropical diseases. Open medicine, 4 (2) PMID: 21709722
Scudellari, M. (2011). Are advance market commitments for drugs a real advance? Nature Medicine, 17 (2), 139-139 DOI: 10.1038/nm0211-139

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