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The Intersection of Economics and Access: Sustainability Issues. Andrew Farlow University of Oxford Oxford Conference on Innovation and Technological Transfer for Global Health 9 th -13 th September 2007. Overview of Session. Sustainable infrastructure and human resources
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The Intersection of Economics and Access:Sustainability Issues Andrew FarlowUniversity of Oxford Oxford Conference on Innovation and Technological Transfer for Global Health9th-13th September 2007
Overview of Session • Sustainable infrastructure and human resources • Sustainability of vaccine programs • Sustainability of global health funding • Power from the bottom to drive sustainability?
HIV/AIDS Reverses Life Expectancy Source: United Nations Population Division, World Population Prospects (2004 Revision)
Capital Flight at its Peak… Now the problem is human brain drain and depletion of human resources… With severe consequences…
Infrastructure: Health WorkersDistribution of health workers by level of health expenditure and burden of disease Source: WHO World Health Report (2006)
Infrastructure: Health WorkersCountries with a critical shortage of health service providers (doctors, nurses and midwives) Source: WHO World Health Report (2006)
Infrastructure: Consequences for Maternal Mortality Source: WHO “The World Health Report 2005 – make every mother and child count” (2005) http://www.who.int/whr/2005/chap1-en.pdf
Maternal Mortality per 100 000 Live Births in 2000 Source: WHO “The World Health Report 2005 – make every mother and child count” (2005) http://www.who.int/whr/2005/chap1-en.pdf
Sustainable Vaccine Programs?Countries with DTP3 Coverage < 50% 1990 DTP3 coverage < 50% (19 countries) 2000 DTP3 coverage < 50% (20 countries) 2004 DTP3 coverage < 50% (10 countries) Source: WHO/UNICEF estimates, 2005 192 WHO Member States. Data as of September 2005
Hib Vaccine and Hib3 Coverage 1997: 26 countries introduced Hib vaccine introduced but no coverage data reported (26 countries) Hib vaccine not introduced (166 countries) 2004: 92 countries introduced in infant immunization schedule Hib3 > 80% (78 countries or 41%) Hib3 < 80% (12 countries or 6% ) Hib vaccine introduced in part of the country (2 countries or 1% ) Hib vaccine not introduced (100 countries or 52% ) Source: WHO/UNICEF estimates, 2005192 WHO Member States. Data as of September 2005
$35.0 HepB DTP+HepB+Hib DTP+HepB (mono) $30.0 $25.0 $20.0 Non-Vaccine Costs $15.0 New/Underused Vaccines (HepB; Hib; YF) $10.0 Traditional Vaccines (BCG; DTP; Measles; Polio) $5.0 $- Mali Haiti Kenya Ghana Zambia Burundi Uganda Gambia Vietnam Rwanda Tanzania Lao PDR Tajikistan Kyrgyzstan Cambodia Uzbekistan Côte d'Ivoire Madagascar Mozambique Burkina Faso Cost / Fully Immunized Child Avg. Resource Requirements per DTP3 Targeted Child (Total Period)
Sustainability:Global Fund Requirements to 2010 for TB, Malaria, HIV/AIDS Source: The Global Fund “Partners in Impact Progress Report” (2007) http://www.theglobalfund.org/en/files/about/replenishment/oslo/Progress%20Report.pdf
Vaccine Funding 2005-15 18.0 New Vaccines Existing Vaccines Billions required to achieve targeted €vaccine programs over 10 yr. period. 8.5 3.4 2.7 1.4 0.9 UK Germany Poland Mexico Thailand GAVI A prospective analysis in UK, Germany, Poland, Mexico, Thailand - Smart Pharma Consulting
Financial Sustainability • GAVI: “Although self-sufficiency is the ultimate goal, in the nearer term, sustainable financing is the ability of a country to mobilize and efficiently use domestic and supplementary external resources on a reliable basis to achieve target levels of immunization performance.”
Phasing in… • 5 year Vaccine Fund commitment extended over 8 year phase • Countries will be notified of 5 year Vaccine Fund commitment Investments in Immunization program
Meeting the Resource Gap Immunization Program Financing
Future Resource Requirements, Financing & Gaps $250 $200 Gap $150 Other Bilaterals Multilaterals GAVI Government $100 $50 $- Pre-VF Year VF Year 2004 2005 2006 2007 2008
Financial Sustainability ‘Innovative’ Financing Mechanisms • Global Alliance for Vaccines & Immunization • The Vaccine Fund • Advanced Development & Introduction Plans • International Finance Facility for Immunization • Other Funding Mechanisms • PAHO Revolving Fund • Vaccine Independence Initiative • ARIVAS (Appui au Renforcement de l’independence Vaccinal en Afrique Sub-Saharien ) • ‘Advance Market Commitments’/prize funds GAVI, IFFIm, and prize funds $5bn-$10bn 2006-2010
1. What is the IFFIm? • An IFF for immunization (IFFIm) has been proposed as a pilot for the IFF mechanism in general • IFF a large-scale US$50-75 billion per year mechanism to double global aid and help meet the MDGs • On September 9th 2006 the IFFIm was launched in London with the five donors - UK, France, Italy, Spain, and Sweden: now Norway and Brazil have announced contribution as well; South Africa is considering a contribution • Estimated disbursable of $3.2 billion before 2015 • Ongoing effort to secure resources from additional donors to reach $4 (now $6) billion resource goal • First bond issuance took place late 2006
$700 Over 2005-15, 5.3 million under 5 deaths and an additional 5 million adult deaths could be prevented $600 New and under-used vaccines: $1.9 b $500 Systems support for new vaccine introduction: $290m US$ (millions) $400 Mortality reduction campaigns: $515m $300 $200 Funds for services strengthening: $1.1b $100 Polio stockpile: $175m 2010 2015 2005 2006 2007 2008 2009 2011 2012 2013 2014 International Finance Facility for Immunization • IFFIm will raise additional funds for GAVI programs • Pilot of the UK-sponsored International Finance Facility to frontload immunization financing over 10 years • $4 billion borrowed from the capital markets in the form of bonds
The IFF: Donor Pledges Disbursements (to programs) Pledges from Donors Spare cash – “cushion”
Implications of the IFFIm • Influencing the market • Long-term predictable commitments allow longer-term planning for supply strategy • Increased industry capacity and lower vaccine prices • Better planning and sustainability for countries • Commitments can be made to countries over longer-term allowing for better integration within national planning cycles and longer lead time to plan for country financing and eventual sustainability
Implications of the IFFIm • Additional financing & donors • Countries not previously contributing to GAVI attracted • Accelerating coverage of immunization with traditional and new and under-used vaccines • But: • Transaction costs have proved much higher than expected (not per se negative, but must be factored in) • It has to be repaid, and will phase out at a later date • How will funding be sustained if still needed?
Price declines over time Marginal cost Prizes: Previous Vaccine Prices Price pays for R&D Quantity(& time)
sponsorsguarantee to top upprice developing countriesbuy at lowprice sponsors top upthe price for a maximum numberof treatments Prize: Two Stage Pricing Guaranteedfirst stage price Price In return, firms obliged to sell at lowerlong run price $(x)bntotalmarket Marginal cost Quantity(& time)
Some Issues Though • No Simple one-off vaccine solution, • Can’t have a quantity guarantee • Must allow less exhaustive technical standards • Firms must face demand risk? • How to set right? • How to make credible and avoid time inconsistency • Still need to keep pressure on affordability • If a package of measures, how to use a ‘prize’ for one of them? • What about all those ‘on-the-ground’ infrastructure failures? • How to fit in with the typical ‘philosophy’ of PDPs?
Pneumococcal Vaccine Pipeline:Recent Developments Pre-clinical stage Clinical trial Phase I Clinical trial Phase II Clinical trial Phase III Launched Development Stage Multi-national 13-valent 9-valent Prevnar (7-valent) ~20 vaccines in research/ Pre-clinical stage (includes conjugate & protein-based vaccines) Steptorix1 10-valent Expected launch 2008 11-valent 7-valent Emerging suppliers >5 mulit-valent conjugate vaccine projects Discontinued 1Completed first Phase III trial; results announced in Jun05 Source: BCG Global Supply Strategy 2005 PneumoADIP team analysis
Projected Impact from Accelerated Pneumococcal Vaccination 3.9 million child deaths prevented by 2025 5.4 million by 2030
Strategic Demand Financing Requirements US$ millions
However… • According to key sponsor files, most resources are gone by 2015 • Leaving 98% of total burden out to 2030 • Follow on vaccines • Capacity risks • Cost of goods • Packaging issues in first round countries • Costs of sustaining first round countries
THANK YOUComments and feedbackalways welcome:andrew.farlow@sbs.ox.ac.uk