Advance Market Commitments are an innovative solution to address shortcomings in the pharmaceutical market with regard to the poorest countries. Contractual partnerships between donors and pharmaceutical companies aim to ensure research on neglected diseases and once research is completed the distribution of medicines on the market at affordable prices for recipient countries.
Since up until now there has not been solvent and predictable demand, pharmaceutical companies have focused their research on diseases affecting the richest countries: over 80% of medical research is on diseases affecting less than 20% of the world’s population. Over 800,000 children under 5 die every year from the pneumococcal virus even though very advanced research has been conducted. A pilot project of advanced market commitments has been implemented to correct these problems in pharmaceutical markets (Advanced Market Commitments, AMC).
Since the mid-1990s, these types of partnerships have been advocated by such NGOs as Center for Global Development and the IAVI (International Aids Vaccine Initiative) as well as such renowned academics as Jeffrey Sachs. They have a dual commitment:
They enter into partnerships with pharmaceutical companies to be sure that research into diseases affecting the most vulnerable people is conducted effectively. The partnerships have a dual commitment:
Donors need to ensure predictable and solvent demand once research is completed. The uncertainty generated when demand is not solvent in markets of southern countries is a strong deterrent for pharmaceutical companies. Since research efforts are expensive and have substantial risk, a price and demand must be guaranteed making investment economically viable for companies.
Companies need to commit contractually to conducting the necessary research. They also commit once the research is completed to ensuring that medicines are sold at affordable prices for target consumers.
Unlike mechanisms such as the IFFIm or central procurement agencies (e.g. UNITAID which use their funds to purchase existing medicines, advanced market commitments are a necessary supplement to finance research on medicines in the pipeline.
The pilot project for an advanced market commitment for pneumococcal diseases
The most prevalent pneumococcal strains in the poorest countries do not have a specific vaccine at this time and claim nearly one million lives per year, half of them children. A serotype vaccine, at an advanced stage in the pipeline, has long stagnated because demand is not solvent.
In February 2007 at the instigation of Italy, five countries including Italy, the United Kingdom, Canada, Russia and Norway, pledged with the Melinda and Bill Gates Foundation $1.5 billion to an advanced market commitment for this new vaccine for pneumococcal diseases (pneumonia and meningitis in particular). An independent committee headed by Malawi’s former Health minister, Dr Hetherwick Ntaba, chose this vaccine for the first pilot project.
This pilot project, backed by the G8, aims to get this new vaccine on the market in a few years’ time. Manufacturers have committed to selling it at a low price ($3.50) for ten years with a subsidy for the same amount for approximately a fifth of the doses distributed. A small part of the amount of doses will be provided by other bodies (GAVI, UNICEF) and gradually by recipient countries. The initiative steered by the GAVI Alliance, the World Bank and UNICEF is supervised by an independent committee of experts who ensures transparency and checks the progress of ongoing research and the conformity of vaccines put on the market by partner countries.
The project is expected to pave the way for other initiatives and could save an estimated 900,000 lives by 2015 and nearly 7 million by 2030.