Vaccine prize fund’ might tempt industry
Or is it bad conditioning’?
When drug companies and biotech firms balk at the idea of sinking money into research on a TB vaccine, it’s because they see lots of heavy digging, lots of dry holes, and not enough dollars. Increase the dollars, and the pick-and-shovel work suddenly looks more enticing, says Michael Kremmer, PhD, professor of economics at Harvard University and a senior fellow at the Brookings Institution.
The mechanism Kremmer proposes is called a vaccine purchase fund. The idea is to amass what amounts to a prize fund and set it aside to be used to buy a vaccine and give it to poor countries once it has been invested. The mechanism offers two big advantages, says Kremmer: "First, it creates an incentive. Second, it ensures you get the vaccine to those who need it most."
The purchase-fund idea isn’t a new one, Kremmer notes; the International AIDS Vaccine Initiative (IAVI) first came up with the concept. Kremmer and his Harvard colleague Jeffrey Sachs have worked out some of the details and then customized the concept to fit TB.
Purchase fund is a good risk
The scheme has a wide-open-spaces feel to it that capitalists like, Kremmer notes. Because a centralized government agency doesn’t dole out the money, any company that wants to can jump into the ring. From the point of view of the donors — in this case, probably a mix of governments and charities — the fund is a good risk because no money gets spent until there’s a product in hand. "You pre-commit to spend the money, but no money actually gets spent until after the vaccine’s been developed," says Kremmer. "So you’re not wasting taxpayer money on something that might never come to fruition."
Still, "investors" won’t want to wait too long for their return; nor will drug companies, because lots of dry holes and wasted efforts mean purchase-fund prices begin to look increasingly meager as the years drag by. The answer might be to build in slight increases in what the fund is willing to pay for the vaccine, with the increases pegged to the passage of time, suggests Kremmer. "We don’t know in advance how hard a problem it will be to make a vaccine," he explains. "But we could say that if it’s developed by 2010, we’ll pay a certain price. If it’s developed by 2011, we’ll pay a little more . . . and so on."
But not too much more, he adds. "You wouldn’t want to actually encourage drug companies to hit dry holes." He’s confident the scheme won’t encourage intentional foot-dragging because companies that delay for too long risk getting beaten by a more efficient competitor.
That wouldn’t necessarily be a bad thing because it could mean more than one vaccine gets discovered, Kremmer points out. In that case, developing countries also win because they would get to choose which of several vaccines they want. "India might decide that a second vaccine will actually work better for it than the first, and so they choose that one," he says. The point is to make the whole process — inventing a product and then selling it on a competitive open market — as much like the "real-life" free market as possible, he adds.
Forward-looking governments probably can be counted on to donate to the purchase fund, Kremmer says; after all, investing in the health of developing countries is almost always a good bet. Because rich countries have a stake in a TB vaccine, too, they should think about putting in some dollars for their own citizens’ health care, he says.
So how much is enough?
That leaves one last question: Exactly how much money does the fund have to put up? "It’s a difficult issue," Kremmer concedes, "because of course the drug companies will tell you what they want to see." One former drug company executive has suggested the figure of $500 million a year. "He says if companies are guaranteed that much per year for a vaccine, they’d scramble to make one," Kremmer says.
Not everyone is enamored of the purchase-fund idea. To some, it amounts to giving in to the drug companies’ demands for unreasonably big profits.
"You say 1 million, and they say 2. Then they come back and say, Gee, we’ve thought about this, and now we think we’ll need 3 or 4 million instead,’" says Jim Yong Kim, MD, executive director of the Cambridge-based program Partners in Health and co-director of Harvard Medical School’s program in infectious disease and social change. "In the Skinnerian sense of the word," he adds, "I think it’s bad conditioning."
Well, counters Kremmer, who’s to say a TB vaccine isn’t worth $500 million a year to the world? And why not pander to the industry? "These drug companies have a choice," he says. "They can go to work on another cure for baldness, or they can work on a TB vaccine. What you want is to make it attractive for them to work on the TB vaccine."
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