Pneumococcal vaccine launches in Kenya

February 15, 2011

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Pneumococcal vaccine launches in Kenya © Clementine Lacroix / MSF

It's great news that children in developing countries will finally be protected against pneumococcal diseases by getting this new vaccine. But it's very disappointing that the prices agreed with two big pharma companies will be too high for countries to afford when donor support ends. Prices need to come down so that as many children as possible can benefit from this vaccine.

Dr. Tido von Schoen-AngererExecutive Director, MSF Campaign for Access to Essential Medicines

A vaccine to protect children against pneumococcal diseases will be launched in Kenya next week as part of an international programme to bring the new vaccine to poor countries. Kenya will be one of the first African countries to receive the new pneumococcal vaccine. Infants in wealthy countries have benefitted for more than a decade from a pneumococcal vaccine, and two new improved versions have just been introduced in the US and Europe. Children in developing countries will now finally also have access to this vaccine.

Introducing the new pneumococcal vaccine (PCV) in developing countries is a critical step that can prevent millions of bouts of illness and countless deaths in children. Medécins Sans Frontières (MSF) will start vaccinating children with PCV in Kenya this week. The rollout of this new vaccine also offers a window of opportunity to strengthen the coverage of other basic vaccinations in the developing world.

But a closer look at the financing mechanism to support this programme, called the Pneumococcal Advance Market Commitment (AMC), reveals that two multinational pharmaceutical companies – GlaxoSmithKline (GSK) and Pfizer/Wyeth – are receiving a significant subsidy, funded by donor governments, in order to secure their participation in the scheme. The companies have each agreed to sell 30 million doses annually for ten years in exchange for US$3.50 per dose, plus a total subsidy of $225 million for each company. If GSK and Pfizer increase the number of doses they supply annually, they will receive more subsidy payments.

 MSF analysis shows that the AMC has not paid enough importance to ensuring competition from developing country producers, even though such competition can lower vaccine costs. The AMC has allocated $1.5 billion in potential subsidy payments to pharmaceutical companies but does nothing to speed-up the development of competitive products. Emerging country suppliers have said they could sell similar pneumococcal vaccine products at $2.00 per dose, more than 40% less than the $3.50 per dose currently being paid by GAVI (the Global Alliance for Vaccines and Immunization. which is hosting the AMC.

In today’s funding climate, this difference is extremely important, especially for the sixteen countries that will no longer be eligible to receive GAVI support starting in 2015. In the long run, MSF is concerned high prices will make PCV unaffordable, and prevent children from receiving this important vaccine.

As we celebrate the introduction of the pneumococcal vaccine in Africa, MSF is advocating for efforts to find long-term pricing solutions for vaccines so that countries can continue to afford and implement improved vaccination coverage, even independent of donor support.

Questions and answers about the pneumococcal vaccine and pricing

What is the Pneumococcal Advance Market Commitment (AMC)?

The point of this Advance Market Commitment is to stimulate the much-needed roll-out in developing countries of an existing vaccine, thanks to the promise of a large market and the additional incentive of a subsidy to producers. In exchange for receiving a subsidy to create extra production capacity to cater to developing country needs, producers make a commitment to provide the vaccine at a set price ($3.50 per dose).

AMCs have been touted as a tool to stimulate the development of new tools for developing country needs. Yet when the pneumococcal AMC was created, the vaccines in question were already in late-stage development by GSK (PCV10 conjugate vaccine, marketed as Synflorix) and Pfizer/Wyeth (PCV13 conjugate vaccine, marketed as Prevnar 13) for sale in wealthy markets.

GSK and Pfizer today sell their products in the U.S., Europe and other wealthy countries where they charge more than $200 for the three doses needed to vaccinate a child. While GSK and Pfizer/Wyeth charge a much lower price to GAVI countries, the AMC subsidy of $225 million per company still provides them with additional income. MSF questions the necessity of the AMC subsidy being paid to pharmaceutical companies that already earn billions from wealthy country markets for the same product.

Who is paying for the pneumo AMC?

The pneumococcal AMC, discussed at the G8 Summit in Russia in 2006 and signed at the G8 Summit in Italy in 2009, is being funded by the governments of Italy, the UK, Russia, Canada and Norway, along with the Gates Foundation, and hosted and run by the GAVI Alliance. Donors have committed to provide up to $1.5 billion in subsidies to pharmaceutical companies. But this US$1.5 billion does not include the price of $3.50 per vaccine; the unit cost is additional to the subsidy.

As GSK and Pfizer/Wyeth have agreed to supply 30 million doses a year, they will receive $225 million subsidy in just over two years. For each dose purchased over this period, GAVI will pay US$3.50 + US$3.50 in subsidy. If GSK or Pfizer/Wyeth are contracted to provide more than 30 million doses in future years, they will receive a larger share of the $1.5 billion subsidy.

How much will it cost to vaccinate a child through the pneumo AMC?

In an initial phase, GSK and Pfizer/Wyeth will receive $21 for each child vaccinated. Once each company’s receives their share of the subsidy they will charge $3.50 per dose, totalling $10.50 per child vaccinated. This is too high, considering pneumococcal is just one in a whole package of vaccines to be given to every child.

And it may yet rise: without competition, the $10.50 tail price could increase to over $12 by 2020 due to inflation adjustments. It is only through competition from new manufacturers that the long-term tail price can be expected to fall to more affordable levels.

What other vaccine costs are countries faced with?

Countries like Kenya are improving their overall vaccine strategies. PCV vaccine will be given at the same time as pentavalent vaccine, which protects against five common childhood diseases: diphtheria, tetanus, pertussis (whooping cough), haemophilus influenzae type B (causing meningitis and pneumonia) and hepatitis B.

It is encouraging that Kenya has decided to integrate PCV with its delivery of the pentavalent vaccine, but the real costs are worrying and illustrate the challenge facing donors and countries. Based on UNICEF pricing data, and taking into account the AMC subsidy, the average price of vaccinating a child in Kenya with these two vaccines is $28.80. This price will only rise if Kenya continues to add new vaccines to its routine immunization schedule. Securing the long-term affordability of vaccines is therefore critical.

Who is paying for these vaccines in developing countries?

GAVI currently helps Kenya and 71 other countries pay for vaccines, but once a country’s gross national income (GNI) exceeds $1500 per person, a country “graduates” from being eligible to benefit from GAVI’s low prices. Sixteen GAVI countries graduated this year, meaning they can no longer submit new proposals, and GAVI support to these countries will be tapered off over the next four years and will end in 2015. Vaccination coverage must be maintained over time, and once donor-funded programmes end, countries will have to shoulder the burden of high vaccine prices alone.

While Kenyan GNI was $770 per person in 2008, the country is already anticipating the day when it will graduate from GAVI. As a Kenyan health official stated last year, the process is like Kenya “taking out multiple mortgages on its house” – new vaccines keep being added at high prices. At current price levels, Kenya will not be able to pay for vaccines themselves. Prices are not coming down as fast as had been hoped.

What can be gained by greater price transparency for vaccines?

Increased price transparency by pharmaceutical companies could help lower- and middle-income countries, as well as the donor countries that support them, obtain fairer prices for vaccines that countries will be able to afford long-term. UNICEF has recently posted ten-year pricing data from some of their suppliers on their website, which is a positive first step: http://www.unicef.org/supply/index_57476.html

Without greater price awareness, pharmaceutical companies can charge exorbitant prices for vaccines in least-developed countries, putting life-saving immunizations out of reach for much of the population. But when pharmaceutical companies are held accountable for their vaccine prices, costs become more affordable for the people who need the vaccines. Following a November 2010 piece in the Financial Times on PCV prices in the private market in Uganda, GSK dropped the private market price of its vaccine from over $50 per dose to $20 in least-developed countries.

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