Donors will pay drug industry to produce vaccines for developing countries

A set of blueprints that will detail the mechanism, called the Advance Market Commitment (AMC), could be released within days of this article appearing on TropIKA.net. It has taken over three years for some of the world's top economists, UN agencies, medical experts, lawyers, governments, charities and pharmaceutical companies to thrash out the details.

The idea behind the AMC is simple. A group of international donors gives a predetermined amount of money to pharmaceutical companies as an incentive to produce vaccines for developing country-patients quickly, cheaply, in the right volumes and sustainably.

The six most-wanted vaccines for developing countries - and potential target for the AMC - are against rotavirus (which causes diarrhoeal disease), pneumococcal pneumonia (which causes respiratory disease), HPV (causing cervical cancer), malaria, tuberculosis and HIV/AIDS.

Vaccines usually become available in developing countries around 15 years after they have reached markets in high-income countries. That is because pharmaceutical companies usually wait until they've recouped their investments in research, development and manufacturing before providing vaccines in less lucrative markets. The AMC will try to motivate pharmaceutical companies to supply vaccines sooner to developing countries and even design products specifically for those markets.

Critics, however, say the AMC is making vaccines very expensive because too much money is being given to pharmaceutical companies that is not sufficiently accounted for.

Proposed by the US non-profit Center for Global Development (CGDEV), the AMC was first presented by Italy to G8 countries three years ago.

Donor governments, eager to take up the idea, commissioned agencies including vaccine specialists the GAVI Alliance, the World Bank, and UNICEF, to oversee the creation of the AMC (And by 2007 Italy, the UK, Canada, Russia, Norway and the Bill & Melinda Gates Foundation had committed US$1bn).

Legions of experts have spent three years working on the fine print. First they picked one of the six most-wanted vaccines on which to test, or pilot the first AMC. An independent disease expert committee, comprising specialists in epidemiology, economics, vaccine development and law, and chaired by Dr Hetherwick Ntaba, Malawi's minister of health, chose pneumococcal disease.

A scheme to create a pneumococcal vaccine was picked not only because the disease kills approximately 800,000 children a year; a vaccine against this disease is closer to development than any of the others, particularly HIV, so that the AMC concept could be tested quickly.

A pneumococcal vaccine, Wyeth's Prevnar, has been on has been on the market for around for eight years. Although immensely successful, it is not designed to combat the strains of Streptococcus pneumoniae bacteria that cause the disease in many poor countries. And pharmaceutical company GlaxoSmithKline and Wyeth are developing new vaccines that combat far more of the strains found globally in the next few years. These vaccines, and others that might be developed by developing country manufacturers, will be the target of the pilot AMC.

And if this pilot AMC works, another is expected to be created soon after. Both TB and malaria were originally proposed for a second pilot. However, experts say science has moved on considerably since the disease expert group assessed the six diseases and it is unclear which disease may be chosen for the second pilot.

Ruth Levine, one of the authors of the original CGDEV report and instrumental in the process of designing the AMC says: ‘My preference would be that they look for a vaccine stimulating early-stage R&D rather than stimulating manufacture for a vaccine that is almost there.'

More immediately, however, experts have to settle on how much to pay manufacturers, how and when. That is the role of the blueprint - a set of rules on what enticements will motivate pharmaceutical companies to supply and safeguards so that developing countries benefit too.

For instance, a manufacturer will only qualify for funding if they create a vaccine that complies with a detailed product specification developed by the WHO. That so-called target product profile contains the ideal combination of attributes that pneumococcal vaccine should have. It specifies the serotypes that must be included, plus minimum quality, safety and immunogenicity levels.

Rules are incredibly complex and have been evolving constantly. To prevent manufacturers from providing vaccines only when they have unsold leftovers in high-income countries, a group of economists earlier this year recommended a new rule, for instance.

That rule would force any pharmaceutical company that signs up to legally commit to provide a certain proportion of the AMC for ten years, in return for the same proportion of donor funding (They cannot commit to all of the AMC, however). Organisers want pharmaceutical companies to build dedicated manufacturing capacity to provide volumes that meet demand from developing countries.

One rule that has existed from the start, is to front-load the AMC - so that most of the donor money will be available at the beginning of the ten years and not the end. The thinking is that manufacturers can use the donor money for the substantial initial financial outlay needed to build manufacturing plants to serve developing-country customers.

By the time the donor money has been used up, manufacturers are expected to have recouped those upfront costs and the fixed price per dose will therefore have dropped considerably. As a result, pharma will be expected to charge a lower price per dose - called a tail price.

The blueprint will finalise many other rules that have been proposed by economists in recent months. A committee has suggested complex additions, including guaranteed payments by donors in advance of delivery, and even splitting the AMC into tranches.

According to the first ever published figures, released in June 2008, it has been decided that developing countries will pay for half of every dose - or US$3.50 - for 10 years. The donors have agreed to pay the other half - US$3.50 per dose - until their US$1.5 billion is spent. After that manufacturers will continue to receive US$3.50 from the developing country and GAVI. The poorest 70 countries will be eligible for additional GAVI subsidies to help with their portion. The total pot has reduced to US$1.3bn, according to the most recent calculations.

In other words, pharmaceutical companies will receive seven dollars a dose, and when the donor money has gone, half that level.

Critics, such as Professor Donald Light, an expert at the Centre for Bio Ethics at Princeton University, say developing countries cannot afford US$3.50 per dose - unless GAVI subsidies are huge.

In a paper published in the Lancet last year Light said that higher prices meant that substantially fewer children could be inoculated.

Light says that pharmaceutical companies, which are extremely secretive about the cost of manufacture, exaggerate their costs and could actually manufacture much more cheaply. A new meningitis B vaccine is being manufactured for $0.40 a dose, he says.

As a result, much of the AMC and even a proportion of payments provided by developing countries is not actually covering costs but profits, he says.

He told TropIKA.net; ‘This is not an AMC, we have to return the AMC to its original purpose which was to motivate corporate research R&D in neglected diseases.'

The prices have immense implications on future AMCs.

Non-government organisation Médecins Sans Frontières has argued that the total pot of money is an excessive amount to pay to companies that are only increasing their manufacturing capacity. Other AMCs will require more funds to stimulate R&D as well as manufacture.

‘It would set a very worrying precedent for the cost of these [AMCs],' says Tido von Schoen-Angerer, executive director at MSF's Campaign for Access to Essential Medicines.

MSF says that more worryingly, two of the world's largest vaccine manufacturers - GSK and Wyeth - could receive most of the donor money because they are front runners. It says these companies should not accept donations that contribute to their profits, but supply vaccines at cost. Von Schoen-Angerer says they will make healthy profits from a highly successful pneumococcal vaccine industry in rich countries.

For its part, GAVI says an AMC vaccine is still much cheaper than pneumococcal vaccines in rich countries, which are sold for up to $70. (It is also rumoured that pharmaceutical companies think the price is too low. GSK and Wyeth, however, did not reply to requests for comment.)

CGDEV's Levine says funding needs to be high enough to attract companies otherwise they will provide no vaccines at all and children would die. That's why AMC is being used to cover more than costs. ‘The AMC subsidy is to cover the cost of building the plant, ongoing cost of manufacture and some profit so that they can make a business case,' she says. She would not, however, reveal what costs and profit figures were used to calculate the AMC.

Whether manufacturers agree the rules, sign up to the AMC when it is launched in October and manufacture vaccines, and whether developing countries buy and inoculate their populations remains to be seen.

If it is successful, GAVI says 2 billion doses of vaccine will be created over 10 years, immunising 700 million children and saving 900,000 lives by 2015 (although figures are disputed). If it is not successful, the plight of those who might have been saved is unclear.

Source: http://www.tropika.net/svc/news/20080704/Anderson20080704AMC

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