Advance market commitments vs. diseases

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G8 nations met over the weekend to discuss their plan to stimulate vaccine development for poor countries that cannot afford them.

Under an advance market commitment plan, the G-8 nations would promise to subsidize the purchase of new vaccines -- for between $800 million and $6 billion -- if pharmaceuticals companies develop ones that meet standards of efficacy and safety. Once the G-8 spends the pledged amount, the drug companies would sell the vaccine at a set discount in the developing world.

The idea is to ensure that companies get a substantial, upfront, government-backed financial incentive to develop the drugs, even if they ultimately have to sell them at a low price. "By restoring appropriate incentives," advance market commitments "can stimulate private research and investment, accelerate the discovery of new vaccines, save lives and contribute to economic development in a cost-effective way."

…The plan aims to address a paradox in the pharmaceutical world: The countries that most need certain drugs are the ones that can least afford them. The result is that drug companies often focus research in areas that are more profitable while poor nations are ravaged by infectious diseases that otherwise might be successfully fought.

Update: Phil points us to some objections about the plan.

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