E-DRUG: EU Urged To Back Poor Countries (2)
Of equal and pressing importance is the following. I would appreciate
THE G8: PROFITS BEFORE ERADICATING POVERTY
Despite Angela Merkel's pledge that global poverty is a priority for G8
policy, a little known commitment has been made to spend the $1.5 billion in
donations to eradicate diseases of the poor so that three-quarters of it
will go to extra profits for a global pharmaceutical company and one quarter to
meeting the costs of vaccines for pneumococcal diseases.
The contract being drawn up is called an Advanced Market Commitment, or AMC.
Originally, it was designed to match the revenues and profits that big
companies make on drugs for affluent markets so that investing in research
to discover vaccines for neglected diseases would be as attractive as
developing another drug for wealthy nations. In reality, a company would be
unlikely to receive the matching jackpot. It would depend on the long shot
of developing a successful new vaccine, on whether a competitor also
developed one, and on recipient poor countries agreeing to participate.
In the case of pneumococcal vaccines, however, the AMC rationale is
irrelevant because the vaccines have already been discovered and their
clinical trials are already funded out of the large expected profits from
sales in affluent markets. Thus this G8 "AMC pilot" is neither an AMC nor a
pilot of one. Yet advisers to Merkel, Gordon Brown and G8 leaders have
persuaded them it is both.
By using an AMC contract, the G8 is projected to pay $5.00 a dose for
pneumoccocal vaccines that cost about $1.25 on a sustainable, nonprofit
basis that includes plant and other set-up investments. Paying $5.00 means
the donations will buy 300 million doses, while 1.2 million children in the
world's poorest nations could be immunized at the breakeven price. Vaccines
lift the human and economic burdens of disease in one shot; so G8 leaders
should maximize the number of children immunized.
There is a larger concern as well. The AMC design, developed at the World
Bank in 2000 and promoted by the Gates Foundation, commercializes the global
campaign to reduce poverty by setting the precedent of pricing vaccines at
several times their breakeven level. The G8 contract is also turning the
organizations administering the program, like the GAVI Alliance, into agents
for helping global pharmaceutical companies make large profits on medicines for
poor nations. Already the rationale and rhetoric of the GAVI Alliance has
shifted to justify paying four times the sustainable price for these vaccines
that already are fully paid up in profitable sales. The same applies to the new
vaccines for rotavirus. Will donors stand for most of their money going to
profits rather than to helping the world's poorest children?
Pharmaceutical companies are committed to their social mission and programs
for the poor. They need to be approached on this basis to sell these
vaccines at a sustainable, break-even price. Even better would be to
negotiate licenses and permissions so that the donated money pays
third-world companies to make the vaccines for the poor. That way the
donated money would boost the economies of low-income countries. Their lower
cost structure might get the price down to $1.00 a dose so that 300 million
more children could be saved. This way, the donors would see their money
providing a double benefit, and companies would gain much-needed respect for
being good global citizens.
* * * * * * * * *
Donald W. Light is a Fellow at the Netherlands Institute for Advanced Study
and professor at the University of Medicine and Dentistry of New Jersey. He
is an expert in global pharmaceutical policy and helped develop AMCs.
Contacts: Light@nias.knaw.nl. Tel: 31-70-512-2742.