AMCs: The Journey from Idea to Action

This is a joint post with Kate McQueston

November 12th is fast approaching and with it comes world pneumonia day. Unfortunately, pneumococcal diseases still pose an enormous global threat–remaining the leading cause of death for children worldwide and taking the lives of 1.4 million children under five years annually. What’s more—a staggering 98% of these children live in developing countries.

This is a joint post with Kate McQueston

November 12th is fast approaching and with it comes world pneumonia day. Unfortunately, pneumococcal diseases still pose an enormous global threat–remaining the leading cause of death for children worldwide and taking the lives of 1.4 million children under five years annually. What’s more—a staggering 98% of these children live in developing countries.

But November 12th doesn’t only bring bad news—it provides an opportunity to reflect on “what works” for new vaccine development and access. At least in some ways, the case of pneumonia has been a success story.

Over six years ago the CGD launched a report outlining how incentive structures could be designed to encourage pharmaceutical and biotechnology manufactures to invest in research and development of vaccines for global diseases. This report, Making Markets for Vaccines: Ideas to Action was based on a concept by Michael Kremer and suggested that commitments to purchase vaccines – if they are developed – might provide needed incentives to accelerate the creation of new vaccines for the developing world.

Luckily for many children around the world, the ideas from these reports aren’t just ideas any longer. I was more than happy last year (read my post here), when this method—termed an Advanced Market Commitment (AMC)—helped make new pneumococcal vaccines available to an initial set of 19 countries. GAVI reports that the roll-out will continue to cover a total of 40 countries by 2015—averting as many as 650,000 deaths within the next four years.

A further benefit of the AMC is that it reduced the lag-time that normally occurs between the introduction of a new vaccine in developed countries and when it reaches low-income countries. This is particularly important for pneumonia, as a child in Nicaragua (the first country to receive the vaccine from the AMC) is more than two-hundred-thousand times (yes two-hundred-thousand) more likely to die from the infection than a child in the United States. The quick roll-out is making substantial impact on saving saves.

There are many other advantages too–for example, the World Bank and GAVI indicate that the AMC:

1) Mitigates market failures: As I have argued before, the reduction of unpredictability and volatility has had a large effect on encouraging private investment. Not only does this provide a guaranteed market for introduced vaccines, but it also allows country governments to plan and budget appropriately for their immunization programs with the knowledge that the vaccines will become available at reasonable price.

2) Encourages competition: AMCs are open to any company or organization—motivating a wide variety of originations to participate in the creation of innovative and cost-effective treatments.

3) Pushes down vaccine prices: By providing a long term contract which pre-establishes market volumes following vaccine development, vaccines can be sold at a price that is affordable even to low-income countries. The pneumonia vaccine, for example, costs developing countries just $3.50 a dose and may be set to fall further.

Making a vaccine available is not enough. The major barrier to roll out is not science or even effectiveness, but whether long-term, large volume funding will be committed such that manufacturers make the investments needed to produce at scale. The success of the AMC argues for further investments in this instrument as new vaccines come online.