IFF for Immunziation Andrew Jones Senior Programme Officer, Innovative Financing

1. IFF for ImmunziationAndrew JonesSenior Programme Officer, Innovative Financing 0

2. GHP: The GAVI Alliance • The PPP model • Works through and using partners’ comparative advantages • Quick learning and driver for innovation • Coordinationand consensus building amongpartners • Around policies, strategies and priorities related to vaccines and immunisation 1

3. The GAVI Alliance 2

4. The IFF • Need for predictable long-term resources- not just more – but better aid • The IFF has been conceived as a large-scale US$50 billion per year mechanism to double global aid and help meet the MDGs • An IFF for immunization (IFFIm) has been proposed as a pilot for the IFF mechanism 3

5. The IFFIm • On September 9th, 2005 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 • Estimated disbursable of $3.2 billion before 2015 • Ongoing effort to secure resources from additional donors to reach $4 billion resource goal • Target date for first bond issuance is September 2006 4

6. Components of the IFFIm • Donors enter into 20 year legally binding commitments • These commitments are leveraged in the bond market • Proceeds distributed to countries and for supply procurement • Resources nominally split 50/50 systems and vaccines 5

7. The IFF: Donor Pledges Long term commitments generate near term resources Disbursements (to programs) Pledges from Donors Spare cash – “cushion” 6

8. Offers of DTP + HepB Vaccine to UNICEF For both WHO prequalified & non-prequalified vaccines 12 $1.20 Weighted average price Weighted average price 10 $1.00 $0.80 8 Number of Manufacturers Price per Dose $0.60 6 $0.40 4 $0.20 2 $0 2001 2002 2003 2004 2005 2006 The IFFIm: Speeding Availability Predictable, long-term flows can accelerate market forces GAVI’s significant resources have stimulated the entry of additional manufacturers for combination vaccines, resulting in a price drop ultimately delivering more vaccines to children 7

9. The IFFIm: Leverage in Market IFFIm funds could lower prices more rapidly Price per dose Source: CGD Working Paper “The costs and benefits of front-loading and predictability of immunization” 8

10. Implications of the IFFIm • New donors • Countries not previously contributing to GAVI attracted by innovative nature of IFFIm supplying additional resources • Influencing the market • Long-term predictable commitments allow longer-term planning for supply strategy • More flexibility for contracts with manufacturers with a potential to negotiate a lower price or accelerate supply through strategic use of long-term contracting • 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 sustainablility 9

11. Cost vs. Benefit Additional IFFIm impact IFFIm Funds Continued growth of current funding Continued gains in lives saved due to growth of current funding The IFFIm raises additional monies through a borrowing mechanism (securitization)….. …but saves many additional lives more quickly. 10

12. Cost vs. Benefit • Principal IFFIm benefits are: • Accelerating coverage of immunisation with traditional and new and under used vaccines, and • ‘pulling’ the vaccine industry through predictable market, leading to increased industry capacity and lower vaccine prices • Key benefits are 5.3 million additional children’s lives saved over 10 years, ( Africa 3.1 million, Asia 2.1 million and others 0.1 million) • A further 5 million adult lives saved through HepB • Estimated “financial cost” of IFFIm at 3.5% against IRR of accelerated benefits of 18% 11