Advance Market Commitments for Vaccines Carlo Monticelli International Financial Relations Ministero dell’Economia e delle Finanze

Advance Market Commitments Vaccines and neglected diseases  More than 7 million people a year die, mostly in poor countries, from infectious diseases like pneumococcus, malaria and HIV/AIDS.  Vaccines: the most effective and efficient solution to address this problem, but unfortunately, they are not available.

Advance Market Commitments Developing a new vaccine takes 7-20 years – assuming success at each stage– and costs hundreds of millions dollars. Expectations of future market determines today’s investment decisions and, therefore, tomorrows products.

Advance Market Commitments Slow introduction: Introduction of Hep B and Hib vaccines into developing countries is occurring years after initial availability

Advance Market Commitments VaccineEst. annual number of deathsAt-risk populations HIV/AIDS3 million High risk groups Continent of Africa Pneumococcus1.6 million Up to 50% of cases in children under 5; highest at risk are elderly and children <2 Tuberculosis1.6 million HIV infected or others with compromised immunity Malaria1.1 to 2.7 million 2 billion people in endemic regions; children under 5 Rotavirus440,000 to 500,000 Children under five; between 6 months and 2 years most vulnerable Human Papillomavirus 250, ,000 Women, primarily in developing countries

Advance Market Commitments

Markets sometimes fail  Global resources invested in finding new vaccines are far below the social optimum  Epidemics control and vaccination are text-book cases of market failure huge externalities opportunities for free-riding difficulties in protecting intellectual property risk and uncertainties

Advance Market Commitments Market failures and AMC  AMC establishes a market where one is currently missing  no winner-take-all  Environmental application  clean technologies

Advance Market Commitments Attracting private investments to fund the vaccine pipeline for vaccines for poor countries is essential. Funding the pipeline Discovery & Research Early Development Late Development Capacity Investment Licensure Vaccine for wealthy countries Private investment to complete the pipeline Health R&D for wealthy countries $106 billion Public funds Private funds Vaccines for poor countries

Advance Market Commitments  AMC are an innovative tool  Market-based  Results-based  Potential to save millions of lives by accelerating the development and supply of vaccines  Widespread support for AMC A new tool in the fight against poverty

Advance Market Commitments How does the market-based incentive AMC work  Create a market (not a purchase guarantee)  Donors commit upfront  An Independent Assessment Committee determines if a vaccine meets the target specifications (effectiveness, public health impact)  Country demand: donors subsidize the purchase of the new vaccine and recipient countries provide co-payment.  Post-AMC predictable supply and pricing

Advance Market Commitments AMC steps Framework Agreement Announced First Vaccine Approved Guarantee Agreement 1 Price guarantee Tail price/supply terms Vaccines delivered Second vaccine purchased Guarantee Agreement 2 Second Vaccine Approved Suppliers provide vaccine to eligible countries at agreed lower price AMC Commitment exhausted Details on AMC: Size, price, target product goal

Advance Market Commitments Why is AMC appealing? With an AMC donors commit to buy vaccines:  if and when they are available (donors’ money disbursed only “against delivery”)  if they are demanded by developing countries (compatible with recipient countries’ systems and priorities)

Advance Market Commitments From academia to political agenda From academia to political agenda  Idea of AMC for vaccines put forward some years ago in the academia  Italian Finance Minister, with the support of Gordon Brown, presented the AMC concept to his G8 colleagues, who expressed interest in the idea  2 December the Report on AMCs prepared by the Working group led by Italy is presented to G8 Ministers who welcome the Report and agree on the idea to launching a pilot project by  Six candidate diseases: HIV-AIDS, Malaria, Rotavirus, Tuberculosis, Pneumococcus and Human Papillomavirus.

Advance Market Commitments  Work for the preparation of the pilot project with the support of an Independent Expert Committee, chaired by Dr Ntaba.  Choice of Pneumococcus (more than 1.6 million deaths a year, nearly 1 million children under 5), for the first AMC.  Recommendation of malaria for the second AMC.  July Proposal to launch the pilot project for a vaccine against pneumococcus by The pilot project

The technical group meetings Advance Market Commitments  Representatives from 15 countries and a range of public health and development institutions Rome meeting  Review of the work undertaken on the legal, technical, institutional and financial aspects of an AMC pilot  Agreement to carry out additional technical work London meeting  The Working Group assessed the concrete proposal for a pneumococcus pilot developed by the World Bank and GAVI

Rome, 9 February 2007 Advance Market Commitments  Launch of the first pilot AMC for pneumococcal vaccines

Advance Market Commitments

Rome, 8 March 2007 Advance Market Commitments  First meeting of the donors group