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Vaccines and credibility

Good to see the wise fellows at EconLog and Vaccines for Development drawing inspiration from, well, me. Here's what worries all of us: that truly valuable medical advances, especially those with emergency uses, will not be appealing investments for private sector firms because they are afraid that governments will refuse to respect the patent (it looks like 'price gouging'). Viagra, on the other hand, is perfectly profitable because no government ever ordered compulsory licencing on the grounds of a national emergency.

Vaccines for Development have been righly pushing the idea of an advanced purchase commitment, where governments (or donors) promise in advance to pay a certain amount for a certain drug. Such promises seem to be more credible than promises to respect patents. For developing countries, an important additional benefit is that the donor making the commitment can also add extra purchasing power to that of governments in poor countries.


Submitted by Jessica on
Thanks for the endorsement! However, I just wanted to clarify a few points. The preferred terminology is actually "Advance Market Commitments" (AMCs), which more accurately reflects the nuances of the policy. Namely, under an AMC, donors would not commit to buy a set number of vaccine doses. Rather, they would guarantee to heavily subsidize vaccines purchased by developing countries up to a predetermined quantity. This arrangement has several advantages over a purchase commitment by incorporating the level of consumer demand, encouraging second entrants, and allowing competition. It is also worth noting that the G8 has announced their intention to move forward with this idea by developing a pilot AMC.

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