Introduction
Pneumococcal diseases have posed a real global health challenge. Streptococcus pneumonia is the dominant causative factor of the disease. Pneumococcal infections which patients are prone to attack include meningitis and pneumonia. A high mortality rate arising from pneumococcal infections has been recorded especially among children below the age of five years in developing countries. The main concern, however, remains to be the high cost of vaccines in the third world market. As a result, international agencies like the Advanced Market Commitment have developed real-time strategies to address this health menace.
What are the existing Pneumococcal vaccines in the market? Why is there a need for a different vaccine in developing countries?
There are several existing pneumococcal vaccines in the market today used in different countries. For example, the vaccination of children below the age of thirteen months was declared in early 2006 in Europe and which would incorporate the conjugate pneumococcal vaccine. This was a directive given by the European Medicines Agency which is mandated to oversee a myriad of immunization exercises throughout Europe. The vaccine is administered in four doses to the affected patient. On the same note, other varieties of the pneumococcal vaccine have been put into test ad equally recommended for use. For instance, the 9, 10, and 13 series are highly recommended.
Another variety is the pneumococcal polysaccharide vaccine which is mainly used by the older population. The vaccine has a lower rate of failure and can provide up to 85 percent prevention for a period not less than five years (Kaddar, Lydon & Levine 2004). The developing countries require a different vaccine to fight the prevalence of pneumococcal disease which has continued to claim the lives of both children and older people.
The existing vaccines in the market seem to be not effective in the developing world. Even as the existing vaccines are being used, the pneumococcal disease continues to be the main cause of concern in developing countries. The mortality rate among children below the age of five years stands at one million children on an annual basis. Therefore, there is a need for developing countries to have access to safe vaccines which are also effective when used.
Despite the available vaccines which are currently used in these developing countries to prevent pneumococcal disease, the majority of the population cannot easily afford the cost of vaccination. The high rate of poverty and poorly sustained economies make it difficult for patients to be vaccinated. It is therefore recommended that new vaccines which are not only effective but also cheap be introduced in the third world healthcare system to save millions of lives that are lost each year. There are several other varieties of vaccines available in the third world market but which may not be able to meet the disease challenges due to the resistance ability of the disease-causing organism.
How does the market for vaccines differ between developed and developing countries? Why is there a need for an AMC initiative?
The market for vaccines between the developed and developing countries has a great variation both in terms of the availability and cost of drugs. There is a myriad of reasons why pharmaceutical companies are not willing to invest in third-world countries. For example, bearing in mind that the cost of investment is quite large, not many drug suppliers are willing to set up manufacturing plants in third-world countries. This has acted as an impediment in the process of vaccine innovation.
Moreover, the developing world has no ready market for vaccines that are developed by the pharmaceutical companies due to the high-cost drugs which cannot be afforded by most patients. This high cost has been worsened by extremely high operating costs which include energy resources, acquisition of raw materials from overseas, and so on. Additionally, there is often an acute need for vaccine supply in developing countries.
There is a huge population that is in dire need of vaccines that can be used to protect against certain illnesses. This demographic factor makes third-world countries to be potential markets for vaccines. Unfortunately, the developing world markets do not get the most effective drugs which can effectively deal with the emerging challenges of disease control. This is the reason why the Advanced Market Commitment (AMC) for vaccines needs to chip in and speed up the development of vaccines which are highly required in developing countries indeed, one of the objectives of the Advanced Market Commitment is to implement an expeditious plan in the innovation of vaccines alongside its supply in developing countries.
Another prevalent feature of the third world vaccine market is the absence of effective and efficient pneumococcal vaccines. The market in the developed world is well endowed with up-to-date production and supply of vaccines. In other words, the capacity of production of pneumococcal vaccines is relatively high compared to the developing countries. The Advanced Market Commitment imitative aims at significantly improving the volume of production of these vaccines to meet the needs of the developing world.
Additionally, the element of cost has not eluded the developing world market. Most patients who eventually bow out and lose their lives mainly cannot afford the relatively high cost. This has simultaneously reduced the pneumococcal vaccine uptake among needy patients. The Advanced Market Commitment has initiated a prompt plan of price negotiations between manufacturers and developing countries. This broad objective by AMC also targets a long-term approach that can be made use of in the future (Acemoglu & Linn 2004). An AMC initiative will ensure the availability and affordability of these vaccines.
What incentives does the AMC scheme provide for suppliers, i.e. the pharmaceutical companies, to invest in new vaccines for pneumococcal in developing countries?
Due to the prevailing impediments in its mission which includes the high cost of vaccines and unavailability of the same in poor nations, the Advanced Market Commitment has so far opted to work hand in hand with the vaccine manufacturing companies to facilitate the supply of these important drugs.
As a prerequisite in its mission initiative, the Advanced Market Commitment has opted to give financial incentives to pharmaceutical companies so that they can supply cheap and affordable drugs to the dying millions in third-world countries. The donor partners who work with AMC have committed substantial funds for this low-cost vaccine initiative. These funds are then channeled to vaccine manufacturers to lower the overall cost of drugs. In so doing, pharmaceutical companies have secured potential markets both for t6he present and future vaccine markets.
In March 2010, the development donor partners of Advanced Market Commitment applauded the first contract between ACM and the pharmaceutical companies of supplying affordable pneumococcal vaccines to third world countries. Among these donor partners was the Bill & Melinda Gates Foundation. One of the pharmaceutical companies under this long-term supply agreement is GlaxoSmithKline (GSK). Due to the financial incentives given to these companies by the Advanced Market Commitment, the pneumococcal vaccines will be accessible in the third world market towards the end of this year at a minimal price compared to the actual market cost in the developed countries. This will be by the initial strategic mission of the Advance Market Commitment.
In mid of 2009, the donor partners of AMC namely the Gates Foundation, Italian, UK, Norway governments, and the Russian Federation made a huge funding pledge amounting to one and half billion U.S dollars which would help boost the Advanced Market Commitment plan of giving financial incentives to pneumococcal vaccine manufacturing companies. Additional funding of slightly over one billion U.S dollars was channeled by GAVI. This will help loser the mean cost of these pneumococcal vaccines for a considerable length of time.
These financial incentives to vaccine manufacturers have gone a long way in assisting the latter in facilitating research work, capacity building, and training of its employees as well as expansion of vaccine manufacturing plants. Hence, there is a need for developing countries to have access to safe vaccines which are also effective when used.
Briefly describe how the funding mechanism works in the AMC pilot for pneumococcal vaccines. Who provides the funds? How is the price set?
The funding mechanism for the Advance Market Commitment is carried out by donor partners who involve governments, federations, and foundations. In this funding, Italy, United Kingdom, the Russian Federation, Norway, Canada, and the Bill & Melinda Foundation have already set aside a total of one and half billion U.S dollars which is aimed at expediting the process of acquiring cheap and effective pneumococcal vaccines to poor countries.
The funds from donors are directed to a reserve bank called the International Bank for Reconstruction and Development. Thereafter, the United Nations children fund is mandated with the duty of announcing offers twice on an annual basis after which vaccine companies have to append to a supply contract by AMC. When these offers for supply are initiated, they are supposed to run for not less than five years into posterity. The UNICEF then has to evaluate all the offers from potential supplies. The vaccines to be supplied must comply with the world health Organization standards before they are accepted. After this stage, an independent committee derived from AMC ensures that the proposed vaccines are proper as per the order requirements.
The price is set at seven dollars per single dose of the vaccine purchases from the pharmaceutical companies. This cost of a single dose includes the price which is dictated by each supplier which is however liable to a cap of three and a half U.S dollars per dose to be administered. The deficit price is then catered for by the AMC. Pharmaceutical companies which have won the supply bid are then liable to make a binding commitment to supply the vaccines for a whole decade amounting to two hundred million vaccine doses every year. After the supplying company has drained all its funds that were set aside for the supply of the vaccines, it is equally required by law to continue with the delivery of the vaccines but at a tail price.
Those countries which feel that they need to apply for this vaccine funding can do so according to the set guidelines by GAVI. Once the application has been approved by an independent committee, the funds are released to the respective country but subject to yearly reviewed regular evaluation of how the funding is being utilized. This monitoring and evaluation exercise is aimed at ensuring that the vaccines reach out to the poor population and especially children below the age of five years whose lives have been at risk with pneumococcal disease. This evaluation is carried out by the specifically prepared framework by AMC.
Discuss how the AMC aims to reduce health inequalities
Many children from poor countries cannot access the right vaccines as their counterparts in developed countries. They continue to die out of diseases that they could have otherwise been immunized against. According to the Advanced Market Commitment strategic plan, there is an urgent need to supply the right vaccines to the poor nations so that children can be immunized against pneumococcal disease. AMC confirms that many vaccines are safe for use and readily available to be supplied in poor countries. As a strategy, AMC is working with pharmaceutical companies to come up with better and well-sustained vaccines for poor and developing countries.
In addition, it is definite that developing nations have marginal finical resources and therefore are not in a position to adequately afford the cost of purchasing pneumococcal vaccines. One of the main goals of AMC is to ensure that such vaccines are easily affordable by the poor nations for a long period. The AMC assures that it’s funding for vaccines in poor countries will remain its top priority now and in the future.
Similarly, AMC has been looking up for ways and means of precipitating the innovation of better vaccines in developing nations. The big worry is that although many pharmaceutical companies have enough stock of viable vaccines, it may take a relatively long period before they are eventually delivered to patients in developing countries. To sort out this challenge, AMC has already put in place a mechanism that will ensure that once these vaccines are produced in factories, there will be ready markets. Besides, AMC guarantees cost-effective vaccines which can be accessed by all.
To make sure that the vaccine for all strategy does not fail, AMC confirms that the market atmosphere which has already been instituted in place will ensure the continuous production, supply, and delivery of these pneumococcal vaccines to the target population. Currently, markets that can absorb all the supplies from manufacturers are being set in place and once this will be done, a sustainable solution for the vaccine challenge in developing nations will be resolved once and for all.
Finally, the AMC pilot project is deemed a secure investment because there are thorough vetting exercises on all vaccines which are supplied by the drug manufacturers. This ensures that only the right vaccine products reach the patients thereby eliminating the risk of poor treatment and immunization procedures.
The AMC is a pilot scheme. Describe how the scheme will be monitored and evaluated over time
The process of monitoring and evaluation is undertaken by the Independent Assessment Committee (Anon. 2010). This special committee has the responsibility of overseeing the launching of TPPs. In addition, the committee has the role of invigilating and making reports regarding the detailed progress of the entire operations of the Advanced Markets Commitment. This may go a long way in adjusting the activities of the TPPs if it is deemed necessary. Also, the committee monitors the performance of the TPPs as well as conflict resolution.
There are several methodological procedures and frameworks which will be used to evaluate as well as monitor the AMC pilot scheme. To begin with, there will always be a need to revisit the background rationale for the formation of the AMC initiative. Important evaluation criteria like the effectiveness of the AMC initiative to provide pneumococcal vaccine should be inquired regularly.
On the same note, could there have been other cheaper and yet effective alternatives capable of attaining similar results as those achieved by the AMC initiative? In evaluating the performance of AMC, such questions will be relevant at all times so that a coherent relationship can be qualitatively drawn between the initial objectives of the vaccine initiative against the present reality platform. In giving a comparison between AMC and other possible alternatives which could have been used, there will be a need to draw parallels between AMC and other like-minded existing organizations or those which ever existed in the past. Such a comparison will enable the AMC evaluation committee to make any necessary adjustments where possible.
Moreover, the original design of the vaccine organization will have to be monitored and equally compared to check for any flaws and omissions in the original plan. Any assumptions which had been made during the inception of AMC will have to be perused to confirm their suitability. For any assumptions made during the formulation of the AMC initiative vaccine initiative, a thorough system of checks and balances will be instituted.
The modeling structure of AMC is relevant in the process of evaluation and monitoring. Additionally, the original design will have to be looked into to confirm that every detail is well understood as per the actual and intended aims of the pneumococcal vaccine initiative. The design of the entire program will. Have to be evaluated from time to time to ensure that it complies with both the short-term goals and long-term objectives. In doing this, the system should be a coherent one with details easy to understand and interpret by all the concerned parties.
Once the vaccine is developed, how would you undertake an economic evaluation to measure whether it is cost-effective? Describe other ways in which a health economist would evaluate the vaccine
An economic evaluation of the vaccines supplied in the market is necessary to determine economic usefulness. One of the elements of economic evaluation is the cost of the drugs or vaccines. After the price has been set by the manufacturing companies and then the vaccines supplied to the market, the cost factor is relevant both to the drug users and the pharmaceutical companies. Consumers in the market will have to undergo the process of opportunity cost by comparing which vaccines are cheaper. This enables the users to choose between the available vaccine options in the market.
Secondly, an economic evaluation involving the effectiveness of the drugs supplied is equally important. The vaccines should be able to effectively treat the target ailment for them to be economically viable. A less effective vaccine in the market will lead to economic losses to the consumers.
A cost-effective vaccine will have to meet the need for which it was manufactured. An evaluation of this vaccine in terms of cost will involve both the health impact it has on the user as well as the economic gain made by the manufacturer. Children from poor countries cannot access the right vaccines due to the type of wrong or outdated vaccines which have been administered for a long period. They continue to die out of diseases that they could have otherwise been immunized against (Morris, Devlin & Parkin 2007).
AMC confirms that many vaccines are safe for use and readily available to be supplied in poor countries. As a strategy, AMC is working with pharmaceutical companies to come up with better and well-sustained vaccines for poor and developing countries. In addition, it is definite that developing nations have marginal finical resources and therefore are not in a position to adequately afford the cost of purchasing pneumococcal vaccines. One of the main goals of AMC is to ensure that such vaccines are easily affordable by the poor nations for a long period. The AMC assures that it’s funding for vaccines in poor countries will remain its top priority now and in the future.
Similarly, AMC has been looking up for ways and means of precipitating the innovation of better vaccines in developing nations. will be ready markets. Besides, AMC guarantees cost-effective vaccines which can be accessed by all.
What are possible reasons for market failure in the AMC pilot scheme for pneumococcal vaccines? Discuss how the scheme plans to address them?
Market failure is applied in economics refers to a situation whereby there is an inadequate supply of goods and services in the target market (Acemoglu & Linn 2004). In a perfect market failure scenario, unsatisfactory results are usually recorded despite the optimum effort directed towards the marketing activity. In most cases, market failures are more prevalent in less competitive where one or a few firms dominate the operations of the market.
To begin with, one of the causes for market failure in the AMC pilot scheme would be the pharmaceutical companies that supply vaccines if they happen to gain strong market power and therefore giving them a way to restrict other trade benefits which can be of importance to all. This is one main cause of inefficiency because there will be no competition bearing in mind that the contracted supplies will be more or less enjoying the monopoly.
Another possible cause for market failure to the AMC pilot scheme is the market role which can be played by the pharmaceutical companies supplying the vaccines. The externalities which may arise from the operation procedures of these supplies can be a hindrance to the supply of the vaccines to the needy population. One major hindrance may be the cost of manufacturing the vaccines. Even as the price is set in advance by AMC and the supplying company, this may sometimes lead to challenges due to the dynamic market which is affected by the increasing cost of raw materials alongside other overheads
Currently, markets that can absorb all the supplies from manufacturers are being set in place and once this will be done, a sustainable solution for the vaccine challenge in developing nations will be resolved once and for all. The review of the funds dispatched to beneficiary nations is carried out once per year which ensures a regular assessment of the progress. There have been many reported cases of abused funds meant for such noble cause in the developing world and hence it is imperative to institute regular systems of checks and balances (Institute of Medicine 2003). It is important for the AMC pilot scheme to broaden its funding structure as well as evaluating the funds which have been disbursed in developing countries.
In resolving the intrigues of market failure, AMC can work with respective governments which are under the beneficiary scheme to introduce tax regimes to the monopoly supplies. Pollution levies will also control externalities. Moreover, AM C can recommend to the beneficiary governments to institute price control mechanisms so that price of the vaccines is not distorted within a short period.
What are the policy implications of the AMC scheme? What are the potential drawbacks of such a pilot?
The AMC pilot scheme receives its funding from donor partners who remit their donations to AMC through the development bank. Currently, the initiative has four government partners, a federation, and a foundation. The main role of the AMC is to coordinate the funding of vaccine companies which then are supposed to supply the required vaccines to developing countries through the scheme provided by this organization. Moreover, AMC through the World Health Organization has to ensure that the vaccines and other drugs being supplied by these manufacturers are appropriate for use in poor countries (Anon 2010).
Another policy implication at AMC is the setting of the price of a single dose of the Pneumococcal vaccine. The drug is acquired at seven U.S dollars per dose whereby AMC has to foot half of this cost while GAVI tops up the remaining amount. Eventually, funding can be released to needy nations in the developing world upon application of the same by the respective governments. To ensure that these funds are used for the purpose they were meant for, there is an evaluation and monitoring Committee charged with the duty of reviewing the progress of each country under the pilot scheme. This is done on an annual basis.
From these policy implications of AMC, quite a several potential setbacks can be experienced with time. For instance, the funding system of this pilot program may not be sustainable in the future especially if new players do not chip in. although there is a general feeling by AMC initiative that the pilot program will be sustained by the market forces of demand and supply, this may not be definite at all bearing in mind the dynamic nature of the modern markets which has been modified by the raging effects of globalization. Moreover, the developing nations have a higher demand and need for vaccination due to the high population of the masses who mainly operate below the poverty line. It will be a demanding task for the AMC vaccine initiative to cater to these surging medical needs in countries with marginal resources.
Conclusion
In summing up this paper, it is imperative to underscore the fact vaccination remains to be the most viable medical solution in tackling the health menace brought about by pneumococcal infections, especially in developing countries. In achieving this, the Advanced Market Commitment alongside other development partners has devised ways of reducing the cost of pneumococcal vaccines in third world countries by offering financial incentives to pharmaceutical companies who on the other hand agree to supply affordable vaccines. This pneumococcal vaccine supply contract will indeed alleviate the mortality rate especially among children under the age of five years.
Reference List
Acemoglu, D. and J. Linn (2004). Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry. Quarterly Journal of Economics 119 (3): 1049–90.
Anon. (2010). Fact sheet. Web.
Institute of Medicine (2003). Financing Vaccines in the 21st Century: Assuring Access and Availability. Washington, D.C.: The National Academies Press.
Kaddar, M., P. Lydon and R. Levine (2004). Financial Challenges of Immunization: a Look at GAVI. Bulletin of the World Health Organization 89 (2): 697–702.
Morris, S., N. Devlin, and Parkin D. (2007). Economic Analysis in Health Care. Chichester: John Wiley and Sons, Ltd.