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

Author

Listed:
  • Ernst R. Berndt
  • Rachel Glennerster
  • Michael R. Kremer
  • Jean Lee
  • Ruth Levine
  • Georg Weizsäcker
Abstract
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.

Suggested Citation

  • Ernst R. Berndt & Rachel Glennerster & Michael R. Kremer & Jean Lee & Ruth Levine & Georg Weizsäcker, 2005. "Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness," STICERD - Political Economy and Public Policy Paper Series 02, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stipep:02
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    File URL: https://sticerd.lse.ac.uk/dps/PEPP/PEPP2.pdf
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    References listed on IDEAS

    as
    1. World Bank, 2005. "World Development Indicators 2005," World Bank Publications - Books, The World Bank Group, number 12426.
    2. Amy Finkelstein, 2004. "Static and Dynamic Effects of Health Policy: Evidence from the Vaccine Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 527-564.
    3. repec:wbk:wbpubs:12425 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    advance purchase commitment; R&D; pharmaceuticals; vaccines; malaria;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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