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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)


Projections of Future Burden due to HIV/AIDS


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)


Estimated DeathsSaved by Vaccination


EPI Coverage, Select Countries


27 Million Children Still Not Vaccinated (DTP3 2003a)


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


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