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A Great Deal for the World's Poorest Children

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If you were the president of a pharmaceutical company, would you devote your funding and research talent to combating baldness in American men or to fighting childhood pneumonia in tropical countries? If you were a Minister of Health in Africa with less than $10 per person to spend on all health care, would you be able to justify $100 per dose for a vaccine, no matter how staggering the disease impact? Consider that American men are likely to spend more money on a baldness treatment than the average African earns in an entire year, and you can imagine the uphill battle of trying to get companies (and their shareholders) to devote significant resources to supplying drugs and vaccines for children in poor countries whose governments could not afford these cutting edge products.

With today's announcement of the first supply agreements under the pneumococcal Advance Market Commitment (AMC) we have evidence that smart use of public money can get big companies to do exactly this. This results-based use of foreign aid leverages market dynamics to address global health priorities. If a viable market for new products were guaranteed, the AMC's pioneers reasoned, drug companies would have a greater incentive to make the hefty investments in development and manufacturing capacity necessary to bring those products to the world's poorest countries who would in turn demand these more affordable vaccines. In other words, the AMC aimed to tilt a company's calculus on investments in ways that favor children in poorer countries over balding men in richer ones.

Born out of the Making Markets for Vaccines report from the Center for Global Development, the AMC was launched through the partnership of the GAVI Alliance and the World Bank in 2007 with a $1.5 billion commitment from Italy, the United Kingdom, Canada, Norway, Russia, and the Bill and Melinda Gates Foundation. Based on an investment case developed by our PneumoADIP team at Johns Hopkins, pneumococcal vaccine was selected by an international expert panel as the initial target for the AMC, due to the vaccine's potential health impact in developing countries and the feasibility of testing the AMC concept in just a few short years.

By 2008, developing countries were lining up to introduce the vaccine for their children and demonstrating their demand for the vaccine if the AMC could supply it, but until today the final piece of the AMC puzzle -- whether it would actually succeed in getting companies to commit large vaccine volumes at drastically reduced prices -- was still unknown.

Today GlaxoSmithKline and Pfizer announced that they will supply up to 60 million doses per year of pneumococcal vaccine under the AMC agreement - that's roughly enough doses to protect all the children born in Africa every year. The GAVI Alliance will purchase each dose for $3.50, and the AMC fund will contribute an additional $3.50 per dose for the first 20% of the doses and pay only $3.50 for the remaining 80%. The countries eligible through GAVI for the AMC vaccines contribute a co-pay of as little as 15 cents per dose.

From today, for the price of a coffee latte at Starbucks, life-saving pneumococcal vaccines are available for children in Africa. When you consider that these same vaccines are sold in rich countries ~ $100 per dose, you can see the significance of this landmark agreement to fight a disease that claims the life of a child every minute.

The GSK and Pfizer vaccines are expected to roll out this year. Emerging market based suppliers, Panacea Biotec Ltd and the Serum Institute of India Ltd have also signed on to the program and last week Merck announced that they are planning to develop a new pneumococcal vaccine that includes 15 serotypes (more than GSK's 10 or Pfizer's 13), further illustrating the AMC's potential to stimulate competition and bring in new supply.

By its nature, the AMC's success required innovative, courageous leaders. Champions for creative solutions to correct old market problems overcame skeptics of change. Imagine trying to convince your government to pledge millions of dollars on the basis of an impossible-sounding analysis that predicts private companies will offer high quality, low-priced vaccines in unheard of volumes and years ahead of historical precedent. Or imagine the task of change agents in the companies themselves who sold their senior leadership on the need to commit hundreds of millions in vaccine research manufacturing capacity ahead of the actual demand from developing countries, rather than repeat the delays of the past.

Today's AMC milestone advances the important work of getting vaccines to the children who need them most, and now people are already talking about which vaccine should be next, or perhaps using it for drugs against neglected diseases, improving energy technologies or finding innovations to provide clean water. What do you think? Which problem should the next AMC tackle?

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