Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness

Ernst R. Berndt, Rachel Glennerster, Michael R. Kremer, Jean Lee, Ruth Levine, Georg Weizsacker, Heidi Williams

NBER Working Paper No. 11288
Issued in May 2005, Revised in July 2006
NBER Program(s):Health Care, Productivity, Innovation, and Entrepreneurship

To overcome the problem of insufficient research and development (R&D) on vaccines for diseases concentrated in low-income countries, sponsors could commit to purchase viable vaccines if and when they are developed. One or more sponsors would commit to a minimum price that would be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to short-run marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make the revenues from R&D investments on a malaria vaccine similar to revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various contract models and assumptions would affect the cost-effectiveness of such a commitment for the case of a malaria vaccine. Under conservative assumptions, we document that the intervention would be highly cost-effective from a public health perspective. Sensitivity analyses suggest most characteristics of a hypothetical malaria vaccine would have little effect on the cost-effectiveness, but that the duration of protection against malaria conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.

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Document Object Identifier (DOI): 10.3386/w11288

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