Bulletin of the World Health Organization

Controversial funding mechanism to fight pneumonia

New financing methods show promise in fight against pneumonia, the biggest killer of children. Theresa Braine reports from Mexico.

More than two million children aged less than five years die of pneumonia every year worldwide. Most of these deaths occur in the poorest nations where treatment is not always readily available and where vaccines are hard to come by. Now there is a big global push to prevent the infections that cause pneumonia using unique financing mechanisms to develop and purchase new vaccines.

Vaccines exist against some strains of pneumococcus bacteria, which can cause childhood pneumonia as well as meningitis and otitis media. But these vaccines are often too pricey for developing countries or they do not protect against the strain prevalent in a given country.

Public health experts and government officials have developed an innovative financing approach, called Advanced Market Commitment (AMC). Under this scheme, donor nations finance the purchase of new pneumococcal vaccines at a pre-agreed price if demanded by countries in need and if the vaccines meet certain product characteristics. The aim is to drive investment into late-stage vaccine development and building manufacturing capacity. Companies that benefit from AMC financing are obliged to supply the vaccine for a prolonged period of time at a reduced price, to assure long-term sustainability of the scheme.

AMC also has its critics, who believe the scheme to be cumbersome, inefficient and not flexible enough to incorporate innovations, and that better vaccines may come down the pipeline during the 7 to 10 years that AMC will be subsidizing prices. At stake is the health of millions of children worldwide and the attainment of the fourth of the eight UN Millennium Development Goals (MDGs), to reduce by two-thirds the mortality rate among children less than five years of age.

Just a few years ago childhood pneumonia was barely on the public health radar, says Hans Kvist, a spokesperson for the GAVI Alliance, which is heading the AMC pneumococcal vaccine initiative. But over the past few years, health officials have begun to recognize the toll that pneumonia takes and look for ways to finance large-scale vaccinations. In Mexico, for example, pneumonia is the second-leading cause of hospitalization, says Dr Silvia Lule, who heads the paediatric services unit at the National Institute of Respiratory Illnesses (Instituto Nacional de Enfermedades Respiratorias, or INER).

Elsewhere, the figures are starker because Mexico is one of the few developing nations to have implemented wide-scale vaccination in high-risk populations. Any child with a respiratory condition or HIV is automatically vaccinated against pneumococcal disease, says Lule.

Countries with fewer resources than Mexico may be able to rely on AMC. In 2007, several countries agreed to provide US$ 1.5 billion to finance the AMC pneumococcal programme. The AMC for pneumococcal vaccine is scheduled to be launched later this year as a pilot project with the hope that, after it is successful, the same model can be applied to malaria, tuberculosis and perhaps even clean water projects.

The idea behind AMC is to create a level playing field for poorer nations that need vaccines and to compensate for the fact that the developing-world market for such vaccines is often small and risky from the manufacturer’s perspective. If poor countries can’t afford to pay prices high enough to cover the manufacturers’ investment costs, and thus cannot guarantee a demand for the product, the company will lose money. Under these circumstances, AMC steps in and subsidizes prices to make it viable for pharmaceutical companies to develop and produce the vaccines, while guaranteeing a price that developing countries can afford to pay, thus ensuring a continuous demand for the vaccine.

The money for a pneumococcal vaccine has been secured, with pledges from Canada, Italy, Norway, the Russian Federation and the United Kingdom, as well as the Bill & Melinda Gates Foundation, says Kvist of the GAVI Alliance, a public–private sector consortium, which promotes and funds vaccines for developing countries. In February 2007, the GAVI Alliance – formerly known as the Global Alliance for Vaccines and Immunization – promised US$ 1.5 billion towards the AMC effort. In Latin America, for example, Nicaragua will be the first of 30 countries to benefit from support for pneumococcal vaccines, says Kvist, while Guyana and Yemen have been shortlisted to receive AMC support. “This US$ 1.5 billion would be absolutely crucial in achieving the MDGs,” says Kvist.

The AMC for pneumococcal vaccine is being run as a pilot programme that, if successful, could be used to support other initiatives in the future, such as development of vaccines for malaria, tuberculosis and other ailments, says Kvist.

The GAVI Alliance estimates that the AMC pneumococcal vaccine programme will save five million lives overall by 2030, including between 500 000 and 700 000 of those lives during the 10 years the AMC is scheduled to run. A 2006 document, prepared by the GAVI Alliance and the World Bank to explain the AMC mechanism, estimates that each dose will cost US$ 5–7, with developing countries contributing a co-payment of about US$ 1 per dose, although Kvist says price negotiations continue. The first AMC payments would begin in 2010 and last for nine to 10 years.

However, the AMC plan has been criticized, most notably by Andrew WK Farlow, Donald W Light, Richard T Mahoney and Roy Widdus, in their Center for Global Development (CGD) 2005 report to the WHO Commission on Intellectual Property Rights, Innovation and Public Health. The authors expressed several concerns, including the fear that the long-term nature of the financing method could exclude companies that want to join the scheme later, even those with better vaccines. AMC is currently considering some measures to extend the benefit of AMC to late-coming companies. The report also considers the possibility that the AMC’s promise of a contract to the first company that comes up with a vaccine that meets the minimum specifications could lower quality and efficacy.

It’s telling that the four authors of the report were part of the initial advisory committee that came up with the AMC idea. “After a careful review of the CGD report and of its earlier drafts – indeed, all of us advised on it – we conclude that the CDG model for these vaccines is unworkable, inefficient and inequitable towards the wide range of potential developers and suppliers of such vaccines,” they wrote in their 2005 report.

Whether AMC is the solution or not, the fact remains that vaccines are pricey, and mechanisms do not exist to force companies to drop their prices or to make a vaccine or drug for which there is a public health need. Global health organizations and experts are turning more and more to public–private partnerships to try to reduce the time lag between the moment a vaccine is introduced in the developed world to the day it reaches the developing world. ■

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