Vaccines Pipeline The challenge

1
Vaccines Pipeline The challenge
Potential vaccines
HIV/AIDS
Malaria
TB
Next generation
HPV
Pneumococcal
Typhoid
Available and underutilized
Rotavirus
General scientific/technical certainty
Cholera
Meningococcal A
Influenza
JE
HepB
YF
Polio
Measles
Tetanus
Traditional EPI
1960
1980
2000
1970
1990
2010
Year/anticipated year of registration
Size of circle indicates number of deaths
(400,000 deaths, 2002 data) Left side of circle
aligned with expected introduction date
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Vaccines Pipeline The challenge
HIV/AIDS
Malaria
TB
HPV
Pneumococcal
Typhoid
Rotavirus
General scientific/technical certainty
Cholera
Meningococcal A
Influenza
JE
HepB
YF
Polio
Measles
Tetanus
1960
1980
2000
1970
1990
2010
Year/anticipated year of registration
Size of circle indicates number of deaths
(400,000 deaths, 2002 data) Left side of circle
aligned with expected introduction date
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Developing a new vaccine takes 7-20 years
assuming success at each stage and costs
hundreds of millions dollars. Expectations of
future market determines todays investment
decisions and, therefore, tomorrows products.
Product Development Cycle
Low probability of market return
Manufacturing capacity scale-up
Decision gate Probability of a market return?
A disincentive to invest
Efficacy trials (phase III)
Cumulative investment
Primate/ early clinical
Research/pre-clinical
?
0
Elapsed time (years)
Source Mercer Management Consulting analysis
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Slow introduction Introduction of Hep B and Hib
vaccines into developing countries is occurring
10-15 years after initial availability
HepB -- all developing countries
The Vaccine Fund established
Hep B licensed in U.S.
HepB -- all developing countries, excl. India,
China, Indonesia
Million doses
Hib licensed in U.S.
Hib -- all developing countries
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
GAVI forecasts
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Package of solutions

• Buying and using existing products (GAVI, IFFIm)
  
• Improves market for existing products
• Strengthens delivery systems to reach children
• Increases predictability of funding
• Prepare for future products (GAVI, PPPs, WHO)
• Provide data for timely national decision on
  demand
• Improve accuracy of forecasting
• Invest public resources in early RD
• Product-development PPPs
• Enterprise for scientific collaboration

Missing Assurance that the market for future
products will exist
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Funding the pipeline
Discovery Research
Early Development
CapacityInvestment
Late Development
Supply
Licensure
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Advance Market Commitments (AMC)

• Problem
• Small, risky and unpredictable markets leads to
  under-investment in products of importance to the
  developing world
• Industrys investments in development/capacity
  determine what products are available, when and
  to whom
• Solution
• Assurances of a future market as incentive for
  more timely investment by industry
• Provide credible commitments to guarantee future
  financing for priority vaccines before funds
  are needed to purchase doses
• Only use funds and buy vaccines - if there are
  results

8
Typical vaccine supply and pricing
Price per dose
Millions of doses
1
5
10
15
Years after licensure
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AMC prices
12
10
Price
GuaranteedAMC price
8
6
AMC x billion
Post-AMC market
4
2
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Years
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AMCs A market-based incentive

• Create a market for new vaccines needed in poor
  countries (not a purchase guarantee)
• Donors commit upfront Donors fund an AMC of a
  specified market size and price for a target
  vaccine with set specifications (effectiveness,
  public health impact)
• Candidate vaccines become available an
  Independent Assessment Committee determines if a
  vaccine meets the target specifications
• Country demand Where recipient countries are
  interested in introducing a successful candidate
  vaccine, donors subsidize its purchase and
  recipient countries provide co-payment.
• Post-AMC predictable supply and pricing When
  AMC funding is depleted, manufacturer continue to
  provide the vaccine at an established price for a
  specified period.

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Market incentives

• An AMC is tailored to the technical challenges
  and market conditions of each disease to provide
  an appropriate incentive for greater investment
• Market entry Open to all players multinational
  and emerging, biotechs and vaccine manufacturers
• Competition Designed to sustain 2-3 firms to
  encourage adequate capacity and price competition
• Continued innovation Designed to last 7-10
  years to allow time for 2nd and possibly 3rd
  generation products

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The objective is to motivate increased investment
and activity across the RD pipeline, enabling
the availability of better vaccines, sooner.
Late-Stage Continue/accelerate late
development Increase planned manufacturing
capacity
In-Market Increase capacity
Early-Stage Advance proof-of-concept Resurrect
latent projects
Research Stimulate new or refocus
research activity
Research
Pre-Clinical
Phase I
Phase III Build capacity
Approval
In Market
Phase II

• HIV/AIDS
• Malaria
• TB

• Pneumococcal

• Rotavirus

• HPV

13
Legal framework
Framework Agreement

• Donors sign binding financial commitments
• Companies sign on

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AMC complements other strategies

• Increased investment in RD (push)
• Direct investment in vaccine candidates
• Investment in establishing development capacity
  (clinical trial field sites etc)
• Investment in public-private partnerships
• Strengthened delivery systems to ensure vaccines
  reach target populations
• Strengthened demand forecasting to reduce
  industry risk
• Strengthened national planning of health
  priorities and budgets
• Credible assurance of future commitment to
  purchase priority new vaccines -- AMC

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BACKGROUND
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Next steps

• Technical dialogue on AMC as requested
• Further work on ..
• Second meeting of Donor Consortium in
  late-October

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GAVI, IFFIm and AMCs

TNZ
CAR
Ken
Nig
Eth
Laos
Cam
Haiti
Tajik
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Typical vaccine pricing
Gradual Market penetration
New on market
Mature product
Year from first licensure
1-5 years Capacity small, few suppliers
(usually 1 or 2) Prices premium Limited
to wealthiest
6-10 years Capacity expanding with experience,
2 -3 suppliers Prices tier for industrial and
middle income Industrial plus middle income
countries
10-15 High capacity Better yields and 3-6
suppliers Prices lower, tiered for industrial,
middle income low income countries Global
Capacity
Pricing
Availability
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The case for vaccines

• Safe, effective, sustainable
• Low systems costs
• Highly cost effective
• 15-30 per DALY
• 100 yardstick in developing countries
• 100 000 yardstick in US
• Huge benefits
• Lives saved
• Economic productivity
• Demographic transition
• 50 improved standard of living in 20th Cthe
  result of improved longevity

References See Barder, Kremer, Williams (2006)
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Diverging Causes of Death
Communicable disease 6
Communicable disease 56
Injuries9
Injuries11
Noncommunicable disease 33
Non-communicable disease 85
Industrialized
Least Developed
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Vaccine Preventable Deaths
5 million deathsfrom AIDS, TB, malaria
4.5 million deaths per year
vaccines on horizon
vaccines in the distance
vaccines in use today
millions of deaths per year
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Advance Market Commitments
Response to Vaccine and Biotech Industrys
concerns to initial AMC proposal
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Size of the AMC

• CGD proposal 3.0 billion AMC size for all
  products (average market size for successful
  pharmaceutical products
• Industry reaction Market size most critical
  factor in AMC. Size must be tailored to
  specific scientific and market conditions
• Current AMC work AMC estimates tailored to
  each product based on risk-adjusted, net-present
  value return to industry. Model allows scenarios
  to be run with different assumptions.

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Continuing Demand Uncertain

• CGD proposal The proposal assumed that the AMC
  guarantee addresses financing risk and demand
  risk
• Industry reaction There is a continued high
  level of risk associated with timely knowledge
  about developing country demand for vaccines even
  with AMC support.
• Current AMC work Agree, ongoing discussion to
  explore parallel activities to improve accuracy
  of forecasts e.g.
• support PPPs and other partners in ensuring
  govts have necessary data to make decisions
• Strengthen forecasting
• Explore govts signing intent to introduce or not
  to introduce an AMC vaccine
• Explore possibilities of capital investment or
  small guarantees through other entities

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Post-AMC pricing and volume commitments

• CGD proposal Once AMC depleted, companies
  benefiting from the AMC would be required to drop
  prices substantially (marginal costs discussed)
  and commit to supply to meet all demand from
  eligible developing countries
• Industry reaction Commiting to a long-term
  (post-AMC), low prices before there is knowledge
  about the costs of production or investment might
  mean companies forced to sell at a loss. No
  company will commit to this.
• Current AMC work Agree, ongoing discussion to
  explore options.
• Favored idea is that each firm sets post-AMC
  price at time that they submit product for review
  to the IAC. Post-AMC price then used to
  establish co-pay so incentive for industry to
  keep low.

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Superiority vs Comparability for Second Entrants

• CGD proposal The second entrant to the AMC
  would be required to prove their product was
  superior to the first entrant
• Industry reaction Extremely complex to
  implement
• Current AMC work Agree, this is now deleted
  from the AMC. Any products that meet the IAC
  product standards are eligible for AMC funding.
  Multiple entrants will be encouraged (through
  decisions on size and duration of AMC) to assure
  capacity and promote competition.

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Structure and Function of the IAC

• CGD proposal An independent expert body needed
  to set the product Goals to trigger an AMC and
  determine if a given product achieves the goal.
  Also need entity to lower requirements in
  necessitated.
• Industry reaction Unease over adding another
  layer of bureacracy on-top of national licensing
  requirements and WHO pre-qualification
• Current AMC work Understand concern but IAC
  plays unique role. Attempt to minimize
  requirements and avoid any duplication
• Endorse licensing decision of credible NRA
• Set public health performance goal for target
  countries
• Early communication of minimum data to show
  performance
• Working with WHO to harmonize with
  pre-qualification process

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Credibility of donor agreements

• CGD proposal Guarantee agreement with each
  qualifying firm is signed by all donor
  governments with donors making binding
  commitments.
• Industry reaction Transaction costs and risk of
  donor reneging too high with multiple signatories
  or multiple contracts.
• Current AMC work Agree, donors also wish to
  avoid complexity of multiple signatories and
  multiple contracts. On-going discussion to
  explore options but probable that a single agent
  for the donors will hold binding commitments and
  sign contracts on strength of commitments.

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Product Specifications

• CGD proposal IAC should define the product
  goals that will trigger AMC funding.
• Industry reaction Value in having clear product
  goal but the actual product specifications will
  strongly affect the attractiveness of the AMC.
• Current AMC work Understood. Work on-going to
  determine AMC composition to ensure critical
  skills and knowledge on public health goals,
  state of science and commercial implications
  product goals. Uncertain how to engage firms
  without losing independence and credibility of
  decision.

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Milestone payments or push funding

• CGD proposal AMCs are a market based mechanism
  that ensures funding at a reasonable price when
  the desired product is demanded by a given
  government.
• Industry reaction The market return is far in
  the future for early stage and still has large
  demand risks. Milestone payments at key points
  (e.g. proof of concept, finish 2b clinical trial,
  finish phase 3 trials, make capital investment in
  capacity)
• Current AMC work Understand but not feasible
  within the AMC given G8 focus on market
  mechanism. Flat payments to industry too risky
  and politically untenable. Will explore
  potential of other partners to make investment
  with link back to AMC.

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AMCs A market-based incentive

• AMCs are designed to provide an adequate return
  on manufacturer investment in target vaccines.
• AMC process
• Donors commit to fund AMC for target vaccine.
• Target vaccine specifications (effectiveness,
  public health impact), tailored AMC market size
  and AMC price are established.
• An Independent Assessment Committee determines if
  a vaccine meets the target specifications.
• When a vaccine meets the specifications and
  countries are interested in introducing the
  vaccine, donors pay subsidy and recipient
  countries provide co-payment.
• When AMC funding is depleted, manufacturer is
  obligated to continue to provide the vaccine at
  an established price for a specified period.
• AMC complements direct RD funding as well as
  efforts to strengthen current immunization
  programs and systems.