Tania CernuschiAMC Secretariat

GAVI Alliance

The Advance Market CommitmentInnovative Finance for DevelopmentThe Advance Market CommitmentInnovative Finance for Development

A financial commitment by donors to subsidise vaccine purchase at a set price, if & when:

they are developed meet minimum specified criteria demanded by GAVI-eligible countries

What is an AMC?What is an AMC?

An AMC is a pull funding mechanism, additional to current package of solutions, e.g. push funding, support for purchase of

current products, system strengthening.

An AMC is a pull funding mechanism, additional to current package of solutions, e.g. push funding, support for purchase of

current products, system strengthening.

2

Source: GAVI

Price

Quantity(& time)9 10 11

AMC Funds

AMC price

Low tail price

The basic conceptThe basic concept

The AMC is designed to get life-saving vaccines to developing countries faster and at a sustainable price

The AMC is designed to get life-saving vaccines to developing countries faster and at a sustainable price

15~20 yrs

Guaranteedfirst stage price (AMC price)Guaranteedfirst stage price (AMC price)

In return, firms obliged to sell at lower long run price (tail price)In return, firms obliged to sell at lower long run price (tail price)

3

1. Accelerate and influence vaccine development

2. Ensure availability

3. Enhance uptake

Challenges to introduction of vaccines in developing

countries:

Challenges to introduction of vaccines in developing

countries:

Vaccine formulations and presentation for developing countries

Vaccines may not be available in sufficient quantity at the time of demand

Sustainable, affordable pricing

AMC Objectives:

Which challenges are we targeting?Which challenges are we targeting?

4

The AMC incentivises:

COUNTRIES – Guarantee of future financing before funds needed to purchase doses; predictability of long term tail price

INDUSTRY – Assurances of future price as incentive for more timely investment by industry; new “market” can bring in additional firms

How does an AMC help?How does an AMC help?

The AMC only provides funds if vaccines are developed and are requested by developing countries

The AMC only provides funds if vaccines are developed and are requested by developing countries

5

G7: Launch of consultation process

on pilot AMC2005

Legal AgreementsSignature of Final

T&C, Donors, Stakeholders' & Offer

AgreementsJuly 2008

Disease Expert Committee:

Recommendation on Pilot

Feb. 2006

Publication of Economic Expert

Group Final Report1 April 2008

2008

Launch of the Pilot AMC: 1.5 billion

US$Feb. 2007

Donors, GAVI and World Bank preparing AMC Pilot

implementation

Role of different organizations defined IAC members selected by panel of public

health leaders TPP approved by DG of WHO – Dec. 2007Consultations with different stakeholders M&E StudyLegal Agreements

Implementation details defined

May 2008

AMC timelineAMC timeline

6

Publication of ‘Making Market for

Vaccines’2005

2005

T&C, Offer, Stakeholders’

AgreementSigned2008

Guarantee terms setContract binding on sponsors

Product specifications set through TPP

Supply AgreementPrice guarantee

Manufacturing capacityCompanies sign on Vaccines delivered

FirstVaccine

Approved(2009)

SecondVaccine

Approved(2012)

ThirdVaccine

Approved(2016)

AMC timeline (cont’d.)AMC timeline (cont’d.)

7

2030

GAVI eligible countries can apply for AMC approved vaccines through regular application procedures

2008

Center for Global DevelopmentCenter for Global Development

http://www.cgdev.org/section/initiatives/_archive/vaccinedevelopment

Ruth LevineVice President for Programs and Operations and Senior Fellow

Michael KremerGates Professor of Developing Societies, Harvard University Department of Economics

Alice AlbrightCFO, GAVI Fund

Back

8

Disease considered: HIV, HPV, Malaria, Rotavirus, Disease considered: HIV, HPV, Malaria, Rotavirus, Tuberculosis, PneumococcusTuberculosis, Pneumococcus

Disease considered: HIV, HPV, Malaria, Rotavirus, Disease considered: HIV, HPV, Malaria, Rotavirus, Tuberculosis, PneumococcusTuberculosis, Pneumococcus

Disease Expert GroupDisease Expert Group

Decision: PneumococcusDecision: PneumococcusDecision: PneumococcusDecision: Pneumococcus

MembershipMembership

Composed of a range of experts in public health, developing country health systems, legal affairs

and immunization

Chair: Dr. Ntaba, former Minister of Health, Malawi

Mission: Recommend most suitable disease for pilot AMC

Timeline: Paris, February 2006

MembershipMembership

Composed of a range of experts in public health, developing country health systems, legal affairs

and immunization

Chair: Dr. Ntaba, former Minister of Health, Malawi

Mission: Recommend most suitable disease for pilot AMC

Timeline: Paris, February 2006

9

Why pneumococcal diseases?Why pneumococcal diseases?There is a high disease burden: Potential to prevent 5.8 million deaths by 2030

Quick measure of effectiveness of AMC concept:

o Science and technology for effective pneumococcal vaccine are well understood

o There is robust pipeline that includes several efficacious vaccines for target countries

Importance of accelerating the development, capacity scale-up and reducing manufacturing costs

Cost-effective intervention: Pneumo vaccines are likely to fit into existing delivery systems; concerns about growing antibiotic resistance

Back

10

Attribute Minimally Acceptable Profile

Vaccines sereotypes• Must cover at least 60% of invasive disease isolates in target region• Must include 1,5,14

Immunogenicity In accordance with WHO criteria: non inferiority to a licensed pneumo vaccine

Target population Prevent disease among children < 5, in particular < 2

Safety, reactogenicity Similar to currently licensed vaccine

Dosage and schedule Compatible with national infant immunization programmes and no more than 3 doses in first year of life

Interference No significant interaction or interference with currently administered vaccines

Routes of administration Intramuscolar or subcutaneous

Product presentation Mono-dose or low multi-dose

Product Formulation Liquid formulation

Storage and cold chain Stable at 2-8 °C with shelf life of at least 24 months

Packaging and labelling In accordance with WHO recommendations

Product registration and pre-qualification WHO pre-qualified

Post marketing surveillance In accordance with national regulatory authorities and WHO prequalification requirementsBack

Target Product ProfileTarget Product Profile

11

ECONOMIC EXPERT GROUPECONOMIC EXPERT GROUP

Lead world experts in development economics, health economics, contract law, vaccine delivery

systems, vaccine business development, public health

Mission: Recommend financial terms of AMC

Timeline: Summer 2007- April 2008

ECONOMIC EXPERT GROUPECONOMIC EXPERT GROUP

Lead world experts in development economics, health economics, contract law, vaccine delivery

systems, vaccine business development, public health

Mission: Recommend financial terms of AMC

Timeline: Summer 2007- April 2008

AMC Donor Committee: AMC Donor Committee: Analyses report and makes a decisionAnalyses report and makes a decision

AMC Donor Committee: AMC Donor Committee: Analyses report and makes a decisionAnalyses report and makes a decision

1 April 2008: Final Report1 April 2008: Final Report1 April 2008: Final Report1 April 2008: Final Report

Consultations with stakeholders Consultations with stakeholders andand empirical analysis/scenariosempirical analysis/scenarios

Consultations with stakeholders Consultations with stakeholders andand empirical analysis/scenariosempirical analysis/scenarios

Optimising the AMC designOptimising the AMC design

12

Economic Expert Group (EEG): Overview of findingsEconomic Expert Group (EEG): Overview of findings

1.

13

SPECIAL NATURE OF PNEUMO

Key issue is to incentivize manufacturing capacity Demand risk A lucrative market exists in high- and middle-income countries There is relatively little competition likely at least in early years

2.

Modify the basic AMC structure to increase efficiency and efficacy of AMC. In Modify the basic AMC structure to increase efficiency and efficacy of AMC. In particular, need to ensure building of sufficient capacity to meet particular, need to ensure building of sufficient capacity to meet GAVI demandGAVI demand

0

25

50

75

100

125

150

175

200

225

Dos

es (M

illio

ns)

Updated, December 2007. Source: Pneumo ADIP

Strategic demand forecast for GAVI countries – Accelerated Introduction Plan – Vaccine Demand Routine Immunizations

14

Companies should commit to supply portion of forecast developing country demand. In return, companies would be apportioned access to share of AMC’s $1.5bn resources.

For example, if a company guarantees to supply 30% of forecast demand, then 30% of available AMC funds would be allocated to subsidise purchase of its vaccine.

After these funds are used up, the company would be obligated to supply a proportional amount vaccines at AMC tail price.

How to modify the AMC A. Supply commitmentsHow to modify the AMC A. Supply commitments

15

If demand substantially less than anticipated, frontloading reduces firms’ financial exposure.

Firms value earlier revenues. Frontloading would not increase overall amount of AMC subsidy that any one

company receives. It only means that each company receives its portion of an AMC faster – but would also transition faster to supplying at low tail price.

Framework Design Frontloading 1

Tail Price Tail PriceThe Donor Committee agreed to mitigate industry’s risk with frontloading of price.

B. Mitigate risk by frontloading priceB. Mitigate risk by frontloading price

16

The AMC funds will most likely be divided and allocated within sequential offers. The first offer would be available from start of the AMC and accessible for all companies that produce vaccines in the early years. The remaining funds would be made available under future offers, during later years of the AMC period.

WHY?

Uncertainty about demand will be resolved through first round of tender/deliveryPermits market to be split among additional entrants (potentially including emerging)Increases responsiveness to country choice

C. Sequential tenderingC. Sequential tendering

17

Price

Quantity(& time)

14

The AMC ensures the long term price is sustainable in the long term

AMC price

Low tail price

D. Ensure there is low and hard cap on tail priceD. Ensure there is low and hard cap on tail price

AMC Funds

18

Correct formulation and presentation of vaccines will be developed

They will become available faster and in the right quantities to cover demand

The price for developing countries will be known years before procurement starts

Availability of support funding is known years in advance GAVI countries are empowered to chose the vaccine they

want

What does it mean for GAVI-eligible countries?What does it mean for GAVI-eligible countries?

19

We believe the AMC can be an effective ‘incentive mechanism to addressing the

linkage between the cost of research and development and the price of vaccines’

World Health Assembly Resolution 60.30World Health Assembly Resolution 60.30

20

Thank you for your attentionThank you for your attention

21