Presentation on theme: "General scientific/technical certainty"— Presentation transcript:
1General scientific/technical certainty Vaccines Pipeline The challengePotential vaccinesHIV/AIDSMalariaTBNext generationHPVPneumococcalAvailable andunderutilizedTyphoidRotavirusGeneral scientific/technical certaintyCholeraMeningococcal AInfluenzaHepBJEYFHibPolioMeaslesTetanusTraditional EPI196019701980199020002010Year/anticipated year of registrationSize of circle indicates number of deaths (400,000 deaths, 2002 data)Left side of circle aligned with expected introduction date
2General scientific/technical certainty Vaccines Pipeline The challenge3 million premature deaths from vaccine preventable diseases7 million premature deaths from diseases for which vaccines are not yet widely availableHIV/AIDSMalariaTBHPVPneumococcalTyphoidRotavirusGeneral scientific/technical certaintyCholeraMeningococcal AInfluenzaHepBJEYFHibPolioMeaslesTetanus196019701980199020002010Year/anticipated year of registrationSize of circle indicates number of deaths (400,000 deaths, 2002 data)Left side of circle aligned with expected introduction date
3Product Development Cycle Developing a new vaccine takes 7-20 years – assuming success at each stage– and costs hundreds of millions dollars. Expectations of future market determines today’s investment decisions and, therefore, tomorrows products.Product Development CycleLow probability of market returnManufacturing capacity scale-upDecision gate: Probability of a market return?A disincentive to investEfficacy trials (phase III)Cumulative investmentBefore investment in mfg capacity:: any investment difficult – since no certainty Sizing capacity : size to cover largest guaranteed market AND minimize risk of unused capacityPrimate/ early clinicalResearch/ pre-clinical?12345678910111213Elapsed time (years)Source: Mercer Management Consulting analysis
4The Vaccine Fund established Slow introduction: Introduction of Hep B and Hib vaccines into developing countries is occurring years after initial availabilityHepB -- all developing countriesThe Vaccine Fund establishedHep B licensed in U.S.HepB -- all developing countries, excl. India, China, IndonesiaMillion dosesHib licensedin U.S.Rate-Speed of IntroductionTwo vaccines against Hep B(cancer) and Hib (respiratory): vaccine not introduced in Dev Count until years after available in industrial countries -- and then only thanks to creation of GAVI/Vaccine Fund able to provide a more credible guarantee of purchaseSo ---- forecasting poor, speed of introduction very unpredictable high risk industry and its impact on Development is SLIDE --- a widening gapHib -- all developing countries198319851987198919911993199519971999200120032005GAVI forecasts*
5Package of solutions Buying and using existing products (GAVI, IFFIm) Improves market for existing productsStrengthens delivery systems to reach childrenIncreases predictability of fundingPrepare for future products (GAVI, PPPs, WHO…)Provide data for timely national decision on demandImprove accuracy of forecastingInvest public resources in early R&DProduct-development PPPs“Enterprise” for scientific collaborationMissing: Assurance that the market for future products will exist
6Private investment to complete the pipeline Funding the pipelineDiscovery & ResearchEarly DevelopmentLate DevelopmentCapacity InvestmentLicensureSupplyVaccine for wealthy countriesVaccines for poor countriesPrivate investment to complete the pipelineHealth R&D for wealthy countries $106 billionHealth R&D for poor countries $8 billion
7Advance Market Commitments (AMC) ProblemSmall, risky and unpredictable markets leads to under-investment in products of importance to the developing worldIndustry’s investments in development/capacity determine what products are available, when and to whomSolutionAssurances of a future market as incentive for more timely investment by industryProvide credible commitments to guarantee future financing for priority vaccines – before funds are needed to purchase dosesOnly use funds – and buy vaccines - if there are results
8Typical vaccine supply and pricing Price- IndustrialPrice – Middle Income$ Price per doseMillions of dosesPrice – Low income151015Years after licensure
10AMCs: A market-based incentive Create a market: for new vaccines needed in poor countries (not a purchase guarantee)Donors commit upfront: Donors fund an AMC of a specified market size and price for a target vaccine with set specifications (effectiveness, public health impact)Candidate vaccines become available: an Independent Assessment Committee determines if a vaccine meets the target specificationsCountry demand: Where recipient countries are interested in introducing a successful candidate vaccine, donors subsidize its purchase and recipient countries provide co-payment.Post-AMC predictable supply and pricing: When AMC funding is depleted, manufacturer continue to provide the vaccine at an established price for a specified period.
11Market incentives…An AMC is tailored to the technical challenges and market conditions of each disease to provide an appropriate incentive for greater investmentMarket entry: Open to all players – multinational and emerging, biotechs and vaccine manufacturersCompetition: Designed to sustain 2-3 firms to encourage adequate capacity and price competitionContinued innovation: Designed to last 7-10 years to allow time for 2nd and possibly 3rd generation products
12Continue/accelerate late manufacturing capacity The objective is to motivate increased investment and activity across the R&D pipeline, enabling the availability of better vaccines, sooner.Late-Stage:Continue/accelerate latedevelopmentIncrease plannedmanufacturing capacityIn-Market:Increase capacityEarly-Stage:Advanceproof-of-conceptResurrect latentprojectsResearch:Stimulate newor refocus researchactivityResearchPre-ClinicalPhase IPhase IIPhase IIIBuild capacityApprovalInMarketHIV/AIDSMalariaTBPneumococcalRotavirusHPV
13Legal framework Vaccines delivered Framework Agreement FirstVaccineApprovedGuarantee Agreement 1Price guaranteeManufacturing capacityVaccines deliveredSecond vaccine purchasedGuarantee Agreement 2SecondVaccineApprovedFrameworkAgreement AnnouncedSuppliers provide vaccine to eligible countries at agreed lower priceAMC Commitment exhaustedFramework AgreementDetails on AMC: Size, price, target product goalDonors sign binding financial commitmentsCompanies sign onBifurcated contracts to create enforceable obligation on donorsObviates need for LOC or escrow.No $ paid until qualifying vaccine is tenderedAMC does not compete for current resourcesResponsibilities of companies are nominalGuarantee Agreement is attached—obligation of donors; right of donorsSuperior vaccines do not increase market size→ competition
14AMC complements other strategies Increased investment in R&D (push)Direct investment in vaccine candidatesInvestment in establishing development capacity (clinical trial field sites etc)Investment in public-private partnershipsStrengthened delivery systems to ensure vaccines reach target populationsStrengthened demand forecasting to reduce industry riskStrengthened national planning of health priorities and budgetsCredible assurance of future commitment to purchase priority new vaccines -- AMC
16Next steps Technical dialogue on AMC as requested Further work on ….. Second meeting of Donor Consortium in late-October
17predictable resources GAVI, IFFIm and AMCsAMC$ to subsidize country co-pay for specified vaccineAnnual pledges$IFFIm: frontloaded,predictable resources$GAVISupport for 72 poorest countries (vaccines, funds for systems, TA)…TNZCARKenNigEthLaosCamHaitiTajik
18“Typical” vaccine pricing Gradual MarketpenetrationNew on marketMature productYear from first licensure1-5 yearsCapacity small, few suppliers (usually 1 or 2)Prices premiumLimited to wealthiest6-10 yearsCapacity expanding with experience,2 -3 suppliersPrices tier for industrial and middle incomeIndustrial plus middle income countries10-15+High capacityBetter yields and 3-6 suppliersPrices lower, tiered for industrial, middle income low income countriesGlobalCapacityPricingAvailability
19The case for vaccines Safe, effective, sustainable Low systems costs Highly cost effective$15-30 per DALY$100 yardstick in developing countries$ yardstick in USHuge benefitsLives savedEconomic productivityDemographic transition50% improved standard of living in 20th C the result of improved longevityReferences: See Barder, Kremer, Williams (2006)
20Diverging Causes of Death Communicable disease 56%Injuries 9%Communicable disease 6%Injuries 11%Non communicable disease 33%Non-communicable disease 85%Least DevelopedIndustrialized
21Vaccine Preventable Deaths 5+ million deaths from AIDS, TB, malaria4.5 million deaths per yearvaccines in use todayvaccines on horizonvaccines in the distancemillions of deaths per year
22Advance Market Commitments Response to Vaccine and Biotech Industry’s concerns to initial AMC proposal
23Size of the AMCCGD proposal: $3.0 billion AMC size for all products (average market size for successful pharmaceutical productsIndustry reaction: Market size most critical factor in AMC. Size must be tailored to specific scientific and market conditionsCurrent AMC work: AMC estimates tailored to each product based on risk-adjusted, net-present value return to industry. Model allows scenarios to be run with different assumptions.
24Continuing Demand Uncertain CGD proposal: The proposal assumed that the AMC guarantee addresses financing risk and demand riskIndustry reaction: There is a continued high level of risk associated with timely knowledge about developing country demand for vaccines even with AMC support.Current AMC work: Agree, ongoing discussion to explore parallel activities to improve accuracy of forecasts e.g.support PPPs and other partners in ensuring gov’ts have necessary data to make decisionsStrengthen forecastingExplore gov’ts signing intent to introduce or not to introduce an AMC vaccineExplore possibilities of capital investment or small guarantees through other entities
25Post-AMC pricing and volume commitments CGD proposal: Once AMC depleted, companies benefiting from the AMC would be required to drop prices substantially (marginal costs discussed) and commit to supply to meet all demand from eligible developing countriesIndustry reaction: Commiting to a long-term (post-AMC), low prices before there is knowledge about the costs of production or investment might mean companies forced to sell at a loss. No company will commit to this.Current AMC work: Agree, ongoing discussion to explore options.Favored idea is that each firm sets post-AMC price at time that they submit product for review to the IAC. Post-AMC price then used to establish co-pay so incentive for industry to keep low.
26Superiority vs Comparability for Second Entrants CGD proposal: The second entrant to the AMC would be required to prove their product was superior to the first entrantIndustry reaction: Extremely complex to implementCurrent AMC work: Agree, this is now deleted from the AMC. Any products that meet the IAC product standards are eligible for AMC funding. Multiple entrants will be encouraged (through decisions on size and duration of AMC) to assure capacity and promote competition.
27Structure and Function of the IAC CGD proposal: An independent expert body needed to set the product Goals to trigger an AMC and determine if a given product achieves the goal. Also need entity to lower requirements in necessitated.Industry reaction: Unease over adding another layer of bureacracy on-top of national licensing requirements and WHO pre-qualificationCurrent AMC work: Understand concern but IAC plays unique role. Attempt to minimize requirements and avoid any duplicationEndorse licensing decision of credible NRASet public health performance goal for target countriesEarly communication of minimum data to show performanceWorking with WHO to harmonize with pre-qualification process
28Credibility of donor agreements CGD proposal: Guarantee agreement with each qualifying firm is signed by all donor governments with donors making binding commitments.Industry reaction: Transaction costs and risk of donor reneging too high with multiple signatories or multiple contracts.Current AMC work: Agree, donors also wish to avoid complexity of multiple signatories and multiple contracts. On-going discussion to explore options but probable that a single agent for the donors will hold binding commitments and sign contracts on strength of commitments.
29Product Specifications CGD proposal: IAC should define the product goals that will trigger AMC funding.Industry reaction: Value in having clear product goal but the actual product specifications will strongly affect the attractiveness of the AMC.Current AMC work: Understood. Work on-going to determine AMC composition to ensure critical skills and knowledge on public health goals, state of science and commercial implications product goals. Uncertain how to engage firms without losing independence and credibility of decision.
30Milestone payments or push funding CGD proposal: AMCs are a market based mechanism that ensures funding at a reasonable price when the desired product is demanded by a given government.Industry reaction: The market return is far in the future for early stage and still has large demand risks. Milestone payments at key points (e.g. proof of concept, finish 2b clinical trial, finish phase 3 trials, make capital investment in capacity)Current AMC work: Understand but not feasible within the AMC given G8 focus on market mechanism. Flat payments to industry too risky and politically untenable. Will explore potential of other partners to make investment with link back to AMC.
31AMCs: A market-based incentive AMCs are designed to provide an adequate return on manufacturer investment in target vaccines.AMC process:Donors commit to fund AMC for target vaccine.Target vaccine specifications (effectiveness, public health impact), tailored AMC market size and AMC price are established.An Independent Assessment Committee determines if a vaccine meets the target specifications.When a vaccine meets the specifications and countries are interested in introducing the vaccine, donors pay subsidy and recipient countries provide co-payment.When AMC funding is depleted, manufacturer is obligated to continue to provide the vaccine at an established price for a specified period.AMC complements direct R&D funding as well as efforts to strengthen current immunization programs and systems.