Vaccines in Developing Countries: Why the High Prices?

Kate Elder and Jennifer Cohn from Médecins Sans Frontières question why new vaccines are so expensive. 

Global health leaders will gather in Abu Dhabi on April 24-25 for a Vaccine Summit to discuss recent accomplishments and seek ways to expand the impact of childhood vaccination under the Decade of Vaccines (DoV), an initiative for collective action announced by Bill Gates at the 2010 World Economic Forum.  Promoting greater affordability and accessibility—key tenets for increasing immunization coverage—should be at the top of the agenda.

The past few years have brought many positive developments, with childhood vaccination now saving an estimated 2-3 million lives each year. But huge gaps remain. In 2011, over 22 million children—20% of the global birth cohort—did not receive the full WHO-recommended package of basic vaccines. Teams from Doctors Without Borders/Médecins Sans Frontières (MSF) see the consequences of these gaps every day in the children we treat—among refugee populations, people caught in conflict, or in more routine settings of maternal and child health clinics.

Leaders in Abu Dhabi will call for funding the DoV at approximately US$57 billion over the next ten years, almost half of it for purchasing the vaccines.

While vaccines are often called a ‘best buy’ in public health, the overall cost of the vaccines package has skyrocketed in the past decade,  from $1.37 in 2001 (to vaccinate against six diseases) to $38 in 2011 (for 11 diseases)—a 2700%  increase. The two newest vaccines, pneumococcal conjugate vaccine (PCV) and rotavirus vaccine (against diarrhea), account for over 70% of the current package’s cost. While US$7 per dose of PCV (or US$21 for the recommended 3-dose course) may not sound high, it’s a big jump from US$0.25 for a dose of measles vaccine. Such a trend is unsustainable, and risks leaving more children behind as immunization programs struggle under the weight of these increased costs.

So why are new vaccines so much more expensive? Well, we just don’t know. Under the current business model, prices for vaccines and medicines are based on recouping both R&D and manufacturing costs. Some new vaccines are more complicated to produce than older ones, which contributes to their higher cost. But vaccine manufacturers do not make their R&D and manufacturing costs public, a practice that makes the vaccine industry one of the most opaque areas of the health sector. And without this critical information, there is no objective basis for purchasers to negotiate a fair and appropriate price.

Efforts to increase transparency on vaccine prices, even for products procured by public funds, have been an uphill climb. A first notable success: In 2011, UNICEF Supply Division published 10-year data on prices paid for vaccines (minus data from companies that refused permission to include their prices), revealing large discrepancies among manufacturers.

We do know, however, that blockbusters such as Prevnar 13 (a PCV), have been huge industry successes. Prevnar 13—the world’s best-selling vaccine—had sales of $3.72 billion in 2012; analysts forecast that its revenue will reach $6.75 billion by 2018.

Andrew Witty, CEO of GlaxoSmithKline (GSK), recently said that the often-cited $1 billion cost to develop a new medicine was one of the great myths of the industry. Recognizing that vaccines have already brought significant profits from wealthy markets, manufacturers can advance this discussion by providing the information needed to assess whether the public sector is getting a good deal for the world’s poorest children.

One much-discussed effort to reduce costs and spur adaptation of new vaccines for developing countries is the PVC Advance Market Commitment (AMC) designed by the GAVI Alliance, a public-private global health partnership. GAVI launched the AMC initiative in 2009 to incentivize R&D aimed at the needs of poor countries and to accelerate introduction of PCV into these settings, by creating a subsidized market for PCV producers. So far this pilot program has helped to accelerate the introduction of PCV into developing countries and to distribute 82 million doses, but has fallen short of creating PCV formulations adapted to resource-poor settings or of fundamentally influencing the PCV vaccine market. A recent independent analysis concluded that the subsidy was probably higher than necessary to entice large pharmaceutical companies to negotiate, resulting in significant profit margins for these manufacturers while not sufficiently leveraging price reductions. The evaluators also noted that assessing the AMC in terms of PCV price negotiations was difficult due to the lack of information from Pfizer and GSK on capital investments and manufacturing costs.

Yet even this AMC price is only available to GAVI directly. Although MSF vaccinates over 10 million children yearly—including some from highly vulnerable populations other vaccination programs do not reach—we cannot purchase PCV at the GAVI price, despite almost five years of back-and-forth discussions with vaccine manufacturers; the same holds true for other medical actors in these settings. Most recently, our ambitions to vaccinate refugees in South Sudan were frustrated by lengthy negotiations with Pfizer and GSK to purchase PCV vaccine at an affordable price. Now we are trying to purchase PCV for the Central African Republic, a country with one of the world’s lowest basic immunization coverage rates and where the Ministry of Health has asked MSF to vaccinate children missed by the country’s struggling health system. Although companies have offered donations for some of these specific scenarios, this is not a sustainable solution.

One step towards alleviating this problem would be for GAVI Alliance to extend its negotiated prices to medical humanitarian organizations working in the countries it supports. As the largest purchaser of new vaccines for developing countries, GAVI could leverage its market share to include other organizations purchasing and delivering vaccines in these challenging settings.

The current toolbox of vaccines offers the promise of dramatic reductions in illness and death for the world’s children, but this promise will never be realized without significant changes to the way vaccines are priced for low and middle income countries. It is past time to end the prohibitive prices, closed-door negotiations and deals that exclude actors who vaccinate some of the world’s most at-risk children , and instead, to put the needs of children first.

Kate Elder is the Vaccines Policy Advisor for MSF’s Access Campaign, which pushes for access to, and the development of, life-saving and life-prolonging medicines, diagnostic tests and vaccines for patients in MSF programs and beyond. Jennifer Cohn, an infectious diseases physician, is the Access Campaign’s Medical Director.

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