CID Archive: Publications Archive

UK Chancellor Gordon Brown Announces Vaccine Purchase Commitments for HIV/AIDS and Malaria

Gordon Brown, UK Chancellor of the Exchequor, recently announced innovative plans to address two of the world’s most pressing health problems – HIV/AIDS and malaria.  Brown committed the UK government to working in cooperation with other governments and organizations to purchase 200-300 million doses of a malaria vaccine, if and when a vaccine is developed.  He also announced a similar commitment for an HIV/AIDS vaccine.  In a recent book, Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases (Princeton University Press 2004), Michael Kremer, Gates Professor of Economics and CID Faculty Associate, and Kennedy School Adjunct Lecturer Rachel Glennerster argue that this type of commitment may provide the incentive that has been so desperately lacking for biotechnology and pharmaceutical companies to focus attention on these vaccines.

Research and development on pharmaceutical products for diseases which primarily affect low-income countries is scant – one commonly cited estimate being that 90 percent of R&D expenditure is oriented towards the needs of the top 10 percent of the world’s population.  Kremer and Glennerster argue that in part this reflects small market sizes: the entire market for childhood vaccines in low-income countries is only a few hundred million dollars a year, less than a single blockbuster drug can earn in the U.S.  Most childhood vaccines sell for only pennies per dose in most low-income countries – providing little incentive for firms to spend the millions necessary to develop products to fight these diseases.

Strong Medicine argues that commitments to purchase vaccines, of the type proposed by Brown, can provide incentives for the private sector to develop these vaccines and, in addition, can ensure that if workable vaccines are developed, they will reach those who need them.  Kremer and Glennerster note that by committing to pay for results, these proposals ensure that if no vaccines are developed, no payments would be made.  The book addresses the details of how this type of commitment could be implemented.

A Working Group recently convened by the Center for Global Development, with funding from the Bill & Melinda Gates Foundation, brought together a group of pharmaceutical lawyers, representatives from industry groups, public health organizations, and economists, to examine how such proposals could be practically implemented (draft report available at http://www.cgdev.org).

In their book, Kremer and Glennerster argue that committing to purchase enough malaria vaccine to immunize 200 million people at a price of $15 per person immunized would generate a market similar to that for pharmaceutical products in developed countries, and that this would be among the most cost-effective public health interventions imaginable.

Gordon Brown has asked other governments to join this initiative.  One possible structure could be a collaborative commitment undertaken by several national governments, private foundations such as the Bill & Melinda Gates Foundation, and international organizations such as the World Bank.

Michael Kremer is Gates Professor of Developing Societies at Harvard University, a Senior Fellow at the Brookings Institution, and a non-resident Fellow at the Center for Global Development. Rachel Glennerster is Executive Director of the Poverty Action Lab at MIT and an Adjunct Lecturer at Harvard’s Kennedy School of Government. They are co-authors of Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases (Princeton University Press 2004).

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Last revised 11/01/2007