Select Committee on International Development Minutes of Evidence

Attachment 1



  A vaccine for HIV will not achieve the ultimate goal of bringing the AIDS epidemic under control unless it is rapidly and widely accessible around the world. Communities in lower and middle-income countries (LMICs) have typically waited a decade or more for new vaccines after they have been licensed in industrialised countries. Given the urgent nature of the AIDS crisis, such a delay in the delivery of an HIV vaccine would have catastrophic public health implications.

  A credible and well-funded initiative to guarantee or expand the market for HIV vaccines in the developing world could significantly accelerate their development and have a profound impact on the AIDS pandemic. It would also set a valuable precedent for delivery of other pharmaceutical products to populations in the developing world. First, a purchase guarantee would assure private sector vaccine developers of an LMIC market for an HIV vaccine, encouraging companies to initiate or intensify research and development efforts on HIV vaccines appropriate for LMIC populations.

  Second, a purchase guarantee mechanism would enable multi-lateral health organisations and LMIC governments to acquire an HIV vaccine soon upon its licensure, both because the initiative would provide funds for immediate product acquisition, and because vaccine developers would be encouraged to build HIV vaccine manufacturing facilities large enough to meet LMIC demand.

  The concept of a purchase fund or pre-commitment to purchase HIV vaccines has been endorsed by international organisations and academic leaders, and is the subject of legislation in the US Congress. Several of these proposals are outlined below. It is unlikely that any single initiative in and of itself will create a sufficiently funded, credible, and sustainable system for HIV vaccine procurement by all LMICs. Multiple programmes will probably be needed.

Current proposals to expand the market for HIV vaccines

Vaccines for the New Millennium Act of 2000—S. 2132 and H.R. 3812

  Legislation introduced by Senator John Kerry and Rep. Nancy Pelosi seeks to establish a "Lifesaving Vaccine Purchase Fund" administered by the US Treasury. The Secretary of the Treasury would be authorised to spend up to $100 million per year from the Fund for purchases of vaccines for HIV, malaria, and tuberculosis for distribution in developing countries. The Act would also direct the President to enter into negotiations for creation of a "multilateral vaccine purchase fund" that would accept contributions from governments and use them to purchase and distribute these priority vaccines.

Presidential Proposal for Tax Credit on Vaccine Sales

  In his fiscal year 2001 budget, the President proposed a 100 per cent tax credit on the sale of vaccines for malaria, TB, HIV or any infectious disease that kills one million or more people annually. Under the proposal, if a vaccine manufacturer sold a quantity of HIV vaccine for $2 million, it could claim a $2 million tax credit. Vaccine manufacturers could claim the credit only for vaccine sales to nonprofit organisations that purchase and distribute vaccines to developing countries. The credit proposal is "capped" at a total of $1 billion in tax credits over 10 years.

World Bank International Development Association "Replenishing Fund"

  World Bank President James Wolfensohn has proposed that the Bank create a special $1 billion fund of International Development Association (IDA) loans for communicable disease programmes. This "replenishing fund," re-capitalised as necessary, would provide interest-free financing for the purchase of vaccines against HIV and malaria, and vaccines and improved treatments for TB. Funds would also be available for a variety of programmes to combat communicable disease. The IDA programme provides long-term loans to the 78 poorest countries in the world where per capita income in 1998 was less than US $895.

Vaccine Purchase Pre-Commitments

  Jeffrey Sachs and Michael Kremer of Harvard University have proposed a system of purchase pre-commitments for vaccines for HIV, TB, and malaria. Under the proposal, governments and international organisations would commit to purchase products meeting certain specifications, but would not be required to actually appropriate funds for these purchases until products are licensed. A commission with members from industry and the public sector would be charged with determining "minimum technical requirements" for vaccines, such as efficacy level. A base price for particular vaccines would be set in advance and "bonus" prices would be paid for vaccines meeting higher standards of efficacy and other measures of usefulness. IMICs would be given separate country accounts to use in partial payment for vaccines, in order to build "ownership among participating countries," and allow them to evaluate the usefulness of vaccines for their own populations.

Key issues in development of a market expansion programme

  Proposals to create market expansion mechanisms for HIV vaccines are untested, but there are several elements that will likely be important in designing successful programmes, including: credibility—industry must be convinced that promised funding for purchase of a vaccine will be readily available when a product is licensed; adequate resources—in order to motivate industry R & D on vaccines for developing world populations, funding of $250 million to $500 million annually may be required, adequate return on investment—a market assurance system should not have the effect of reducing the per unit price of a vaccine to the point where industry questions its ability to recoup at least its manufacturing costs for the vaccine; multiple products—a vaccine purchase system must anticipate the need to purchase multiple HIV vaccine products as vaccines improve over time and as different products meet different needs in countries around the world.

International AIDS Vaccine Initiative

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Prepared 29 March 2001