Advance Market Commitments

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Advance Market Commitments
Michel Zaffran Deputy Executive Secretary Chief
Technical / Policy Officer
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Ensure Vaccine Availability

• Buying and using existing products (GAVI, IFFIm)
  
• Strengthening delivery systems to reach children
• Increasing predictability of funding
• Improving market for existing products
• Preparing for future products (WHO, GAVI ADIPs,
  PPPs)
• Provide data for timely national decision on
  demand
• Improve accuracy of forecasting
• Investing public resources in early RD
• Product-development PPPs
• Enterprise for scientific collaboration
• Missing Assurance that the market for future
  products will exist in developing countries

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Advance Market Commitments

• The Problem
• Industry wont invest in vaccines for small,
  risky and unpredictable markets
• A Solution
• Assurances of a future market
• Provide credible commitments to guarantee future
  financing
• Only use funds if vaccines are developed and
  demanded by countries

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The AMC Mechanism
The AMC guarantees, in advance, a reasonable
price for the vaccine. The donor subsidy adds
to the small country co-pay and ensure firms can
make a return on investment if they develop and
supply the product.
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Price
GuaranteedAMC price
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AMC X billion
Contractually agreed Post-AMC price
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Country Co-Financing
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Years
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Choosing an AMC Pilot

• Independent Expert Committee convened in February
  2006 to select the most suitable
  diseases/vaccines for an AMC pilot
• 13 global experts in public health, epidemiology,
  industry economics, vaccine development and law
• A majority from developing countries
• The Expert Committee evaluated 6 candidates
  rotavirus, pneumococcal, human papillomavirus,
  malaria, HIV/AIDS and tuberculosis

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Choosing an AMC Pilot

• The Committee recommended pneumococcal disease as
  the most suitable candidate for an AMC pilot
• The Committee recommended that a second
  demonstration AMC for a malaria vaccine be
  explored to stimulate early RD investment and to
  pilot the impact of the AMC on early stage
  vaccines

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Pilot AMC Current Status

• GAVI and The World Bank have worked with G8 to
  help design pneumococcal malaria pilot AMCs
• Italy, Canada and the UK have accelerated plans
  to seek the support of other interested donors to
  launch a pilot and by the end of 2006
• Over the coming months briefings and technical
  meetings will be organised at the initiative of
  these three countries to build support among
  interested donors

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Implementing an AMC Pilot

• The World Bank and GAVI have worked with G8 to
  help design the technical components for a pilot
• Legal Framework
• Framework Agreement
• Guarantee Agreement
• Financing Arrangements
• Institutional Structure
• AMC Secretariat
• Independent Assessment Committee

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1. Legal Framework
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2. Financing Arrangements

• The success of an AMC will depend on the
  credibility and strength of financing commitments
  by donors
• Donor commitments will be bundled by the World
  Bank into a single financial instrument

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3. Institutional Structure

• The G8 requested an independent evaluation to
  consider the possible options for hosting an AMC
  Secretariat
• The evaluation concluded that GAVI should serve
  as the secretariat to the AMC with specific
  functions in the World Bank
• The administrative costs of implementing the AMC
  are expected to be low, with GAVI and the World
  Bank building on existing capacity

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3. Institutional Structure, contd

• Role of GAVI as the the programmatic leader on
  AMCs
• Ensure technical support to developing countries
• Provide linkages with immunisation stakeholders
• Process eventual country applications and
  provision of vaccines to qualifying countries
• Support the Independent Assessment Committee
  which will coordinate closely with existing WHO
  mechanisms (ECBS, SAGE, Prequalification)

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3. Institutional Structure, contd

• The World Bank would manage the financial and
  fiduciary functions of the AMC
• Working with donors to structure financial
  commitments
• Managing and disbursing funds to match vaccine
  payment schedules
• GAVI and the Bank would share tasks such as
  negotiating the framework and guarantee
  agreements and reporting on the AMC

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Risks (1) GAVI hosts the AMC Secretariat

• The pilot does not work (inadequate demand, or
  industry doesnt respond)
• Moderate risk
• Pneumococcal vaccine selected to maximise
  probability for success
• AMC funds are not released unless a vaccine meets
  specifications and countries demand the vaccine
• Undermining GAVI decision-making processes
• Low risk
• The AMC determines if a vaccine will be made
  available rather than the details of how it will
  be provided

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Risks (2) GAVI hosts the AMC Secretariat

• Over-burdening the Secretariat
• Moderate risk
• Additional workload will support the Independent
  Assessment Committee
• AMC Secretariat would require two additional
  full-time professionals
• Additional governance structures not required
• Perception that new vaccines are over funded
• High risk
• Current estimates suggest immunisation is
  dramatically under-funded
• GAVIs country financing policies could mitigate
  risk

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Risks (3) GAVI does not the AMC

• AMC less likely to succeed
• An opportunity for additional immunization
  resources and lives saved would be missed
• Fragmentation of efforts for new vaccine
  introduction into developing countries
• Two competing structures would provide new
  vaccines to developing countries
• GAVI does not fulfill its mandate
• The AMC is consistent with GAVI principles and
  plays to the strengths of the GAVI Alliance by
  drawing on the expertise of relevant Partners to
  implement

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AMC Secretariat Implications for GAVI

• If donors pledge funds to launch a pilot AMC in
  2007, the Board would be asked for guidance in
  setting up the Secretariat and determining the
  framework agreements
• Additional support
• 2 additional professionals to provide support to
  the Independent Assessment Committee and AMC
  Secretariat functions
• Short-term legal support during 2007 to begin
  work on framework agreement, should donors signal
  an intention to launch

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DECISION
The Executive Committees are requested to decide
whether the GAVI Secretariat should continue to
be involved in activities in support of an AMC

• Option 1 (RECOMMENDED)
• Agree to offer that the GAVI Secretariat hosts an
  AMC, should it be launched. The World Bank would
  be responsible for financial and fiduciary
  support and WHO would be instrumental in
  gathering experts and reviewing products.
• Option 2
• Do not agree to offer the GAVI Secretariat to
  host an AMC. This option would require
  development of a strategy to mitigate risks.

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