Innovative financing mechanisms for vaccines are crucial for developing countries.
. From research and development phases to scaled-up manufacturing and distribution, industry investment has fallen short – mainly due to a lack of predictable resources in developing countries that would ensure a return on investment. This often results in delayed introduction of critical vaccines in poorer countries, also often at prohibitive prices.
An innovative solution
An advance market commitment (AMC) is an innovative financing tool that addresses this market failure by de-risking the investment in global manufacturing of vaccines. To incentivize investment in developing country markets, assurances of vaccine uptake are provided to manufacturers in advance. Countries benefit both from having vaccines available at a much faster rate and from more predictable vaccine pricing.
The pilot AMC for pneumococcal vaccines
Advance market commitment for pneumococcal vaccines was established in 2009 by a group of donors together with Gavi, UNICEF and the World Bank. The pneumococcal AMC received $1.5 billion in long-term commitments from donors to incentivize the market to manufacture and supply vaccines for biological strains of pneumococcus in poorer countries. The World Bank provided the financial backstop for the long-term donor commitments. The AMC has helped vaccinate millions of children against pneumococcal disease, the world’s biggest childhood killer. The initiative was piloted for 10 years and is coming to the end of its term of investment later this year.
How has the AMC helped?
The AMC has prompted an unprecedented supply of pneumococcal vaccines which, in the past, would have taken 10 years or more to reach children in the world’s poorest countries. Experience with this AMC also shows that long-term donor commitments can induce manufacturers to sign long-term, binding commitments to supply a fixed amount of vaccines per year at a predetermined price. This is unprecedented, as historically vaccine manufacturers have only entered into good faith agreements of three years with no binding obligation to supply.
An AMC for COVID-19?
The pneumococcal AMC continues to produce clear and measurable results. Although the vaccine was already in fairly advanced stages of development, a similar incentive structure could be used for vaccines that are in earlier stages too – such as a COVID-19 vaccine.
The race for a COVID-19 vaccine is already underway, but there are a number of challenges for the global community well before the finish line. How do we ensure enough investment in manufacturing capacity at the scale and speed needed to supply the billions of doses needed globally?Experience with other pandemics also indicate a risk that advanced orders from wealthier countries could squeeze out poorer countries, jeopardizing fair global allocation.
These imminent challenges require an urgent, concerted, and coordinated global response.: a rules-based COVID-19 advance market commitment that is flexible enough to address vaccine market failures for developing countries.