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The Art of Making Vaccines More Affordable

By: Seth Berkley, MD

Vaccines are one of the most innovative tools in public health.

And finding innovative ways to deliver vaccines to children in developing countries is at the heart of our work at the GAVI Alliance, which brings together governments, UNICEF, WHO, the World Bank, vaccine manufacturers, civil society, the Bill & Melinda Gates Foundation and private corporations working toward a common goal: saving lives and improving health by expanding access to immunization in developing countries.

Between 1980 and 2009, the world’s population more than doubled. Yet during that time, the number of diphtheria cases dropped by 99 percent, polio cases by 97 percent and measles and pertussis cases both by 95 percent. By increasing support for vaccines and immunization, we can carry such progress forward, not just to 2015 – the deadline for meeting the UN’s Millennium Development Goals (MDGs) – but beyond.

Imagine that in a world of 7 billion people and counting, by 2020 polio and measles could be eradicated, new vaccines for malaria and AIDS could be available and immunization coverage could be 90 percent.

How do we get there?

GAVI long has relied on innovative finance tools to find new and better ways to raise and apply resources, and broaden the base of participants in development to include meaningful public-private partnerships.

At its core, innovative finance is designed to provide more money for health and more health for the money. And GAVI has created three products designed to do this, garnering significant interest from not only governments, but also private sector actors – particularly important during a time of fiscal austerity.

GAVI Matching Fund. The first of these products is brand new and has created much excitement in the private sector as it is designed to raise $260 million for immunization by the end of 2015.

Under the program, the UK Department for International Development (DFID) and the Bill & Melinda Gates Foundation have pledged about $130 million combined (£50 million and $50 million, respectively) to match contributions from corporations, foundations and other organizations, as well as from their customers, employees and business partners.

The Matching Fund demonstrates the power of collaboration to raise awareness and empower private individuals and companies to have an impact on global health programs.

Since its launch this summer, the GAVI Matching Fund already has attracted four private institutions to make significant pledges to GAVI’s immunization programs. They are the Anglo American, ARK Foundation, J.P. Morgan and the “la Caixa” Foundation (the philanthropic arm of the large Spanish bank). In all, they have pledged more than $14 million toward immunization programs, which means that this innovative matching mechanism already has led to $28 million in funding for GAVI.

A $3 million donation, for example – matched by GAVI’s donors – could buy enough vaccine to immunize 511,000 children against pneumococcal disease in 2012, or 980,000 children against rotavirus.

Clearly, such private sector involvement can make a significant contribution to global health, and not just through donations. Corporations also can share their business competencies to help solve development issues and bring their advocacy skills to bear. Former MTV Networks CEO Bill Roedy has become an envoy for GAVI, helping to promote the Matching Fund.

International Finance Facility for Immunisation (IFFIm). GAVI’s other two innovative finance products are well-established, starting with IFFIm, which uses long-term payment pledges from nine donor governments to create and sell “vaccine bonds” in the capital markets. A tenth donor, Brazil, also has announced it will join.

Launched in 2006, IFFIm was the first aid-financing entity in history to attract legally binding commitments of up to 20 years. These commitments are the financial basis for bond offerings in the capital markets to provide funding for immunization programs and increase the predictability that developing countries need to make long-term health care-related budget and planning decisions.

Vaccine bonds have proven remarkably popular with institutional and individual investors who are looking for a market-based return and a socially responsible investment opportunity. As recently as September 2011, an offering in Japan raised $169 million for GAVI programs. The World Bank is IFFIm’s treasury manager.

IFFIm has transformed GAVI, helping to double its financial support for countries from 2006-10. The value of this support is magnified and extends beyond immunization by bringing people into larger health systems and exposing them to other essential services.

A recent independent evaluation of IFFIm concluded that it had changed the landscape of development finance and had done so efficiently, meeting the objectives of its donor sponsors. The report further noted that IFFIm saved a projected $20.9 billion, helping to free up funds for other initiatives.

Advance Market Commitment (AMC). GAVI’s third innovative finance tool is the Advance Market Commitment. The AMC funds vaccines to prevent pneumococcal disease, the leading killer of children younger than five and the cause of pneumonia, meningitis and sepsis.

AMC connects donors, the World Bank, UNICEF, WHO and the vaccine industry to provide pneumococcal vaccines at significantly reduced prices. Companies sign a legally binding commitment to provide the vaccines at a price that’s affordable and sustainable by developing countries in the long term. This agreement also encourages dedicated manufacturing capacity and continued collaboration.

By shaping markets, GAVI helps drive down vaccine prices over time. For example, the price of pentavalent vaccine has dropped by almost 50 percent from two years ago, and the price of a vaccine against rotavirus, a major cause of diarrheal disease, is down by 67 percent. Potential new entrants into the market for rotavirus vaccine and pneumococcal vaccine could yield price reductions of approximately 40 percent in each case. Over the long term, market shaping fosters incremental innovation for affordable new and follow-on products and spurs improvements in vaccine technology.

Market shaping plays another important role as well.

There is no reason that new, effective vaccines should not be introduced simultaneously in developed and developing countries. Normally it would take 10 to 15 years for pneumococcal vaccines to reach low-income countries after being introduced in wealthier ones. Because of the AMC, 16 developing countries have introduced the pneumococcal vaccine already. In 2011, 3.6 million children will be immunized against pneumococcal disease.

And GAVI recently approved the introduction of pneumococcal vaccines by 18 more countries over the next two years. In all, GAVI and its partners plan to help nearly 60 countries introduce the vaccines by 2015, immunizing more than 90 million children.

GAVI is not alone in using innovative finance as a way to fund global health programs. Of note, the Leading Group on Innovative Financing for Development, which consists of 63 member countries, international organizations (including GAVI), foundations and NGOs, has become an important platform for discussion, sharing information and highlighting innovative finance mechanisms.

The Leading Group has also promoted the use of transaction taxes, solidarity levies and other mechanisms in international forums to help promote global health finance for organizations such as UNITAID.

For GAVI, innovative finance mechanisms are key to accelerating availability and affordability timelines for vaccine introduction in the broadest range of countries. They have helped GAVI substantially expand the scope of support it can provide to ensure the widest possible availability of affordable vaccines in the poorest countries of the world.

It is critical to maintain such progress, even in the face of global financial challenges.

It is encouraging that in this economic climate, GAVI’s private sector partners and other stakeholders have provided new sources of funding and resources to address health needs on a worldwide scale.

But the true value of public-private partnerships comes from leveraging what each group can contribute. For instance, civil society organizations have the credibility to engage with often underserved populations in their communities. And the private sector’s contribution through the GAVI Matching Fund goes well beyond financial support as corporations also bring vital business skills and powerful advocacy to the table.

The driving forces behind innovative finance – collaboration, long-term planning, emphasis on efficiency and results – can impact a whole range of global development challenges. This belief has helped GAVI substantially expand the scope of support we can provide to ensure that affordable vaccines reach the greatest number of people in the poorest countries as soon as possible.

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Seth Berkley, MD is CEO of the GAVI Alliance.