Second Discussion

Are advance purchase contracts the answer?

A proposal for accelerating vaccine research has been made by a Working Group sponsored by the Centre for Global Development . It is available on our website and can be accessed by clicking here.

The basic idea of this is simple. Governments, international organisations and other possible funders such as foundations would enter into a contract which would promise the developer of a vaccine (with defined characteristics) a guaranteed market at a price which would reward investment in the R&D necessary to develop such a vaccine. A specified number of doses would be purchased at this (higher) price. Thereafter the contract would specify distribution at a cost-plus price.

As a concrete example, it is proposed that sponsors (funders) would make a legally binding promise to pay 90% of the cost of up to 200 million treatments for a malaria vaccine at $15 a dose (i.e. $3billion in total). This is intended to mimic the working of the market for a sub-blockbuster drug. In order to qualify, the vaccine would need to meet various technical requirements concerning efficacy, duration of protection and others.

The idea of this scheme is to stimulate R&D on vaccines needed by developing countries, but to reconcile through the tiered pricing scheme the incentive for R&D with the objective of affordable access in developing countries.

But there are many issues in making such a scheme operational:

:: Specifying the exact characteristics of a vaccine to qualify for the "prize". In the real world, there will always be uncertainties as to whether or not these had been met.

:: A Committee is proposed to rule on such matters, independent of sponsors or companies. Would such a committee have sufficient credibility? Would it not become politicised, given the potential rewards at stake, and the potentially conflicting interests of sponsors and companies?

:: Will potential funders, governments or non-profits, be prepared to make cast-iron legally binding promises in the undefined future to potentially large financial commitments? Even if they do, can one guarantee that their successors will not try to avoid such commitments when they arise?

:: Given the uncertainties generated by the above, are companies likely in practice to shift resources to work on vaccines needed by developing countries?

There are many other issues but these seem to the Secretariat of the Commission to be key ones. We would welcome other views on this particular scheme.

Secretariat of the Commission on
Intellectual Property Rights,
Innovation and Public Health (CIPIH)