Description: A scheme where donors precommit to subsidise the price of pneumococcal vaccines on development.
Start date: Launched in 2007.
Status: Operational.
The AMC for pneumococcal vaccines is a pilot scheme designed to test the efficacy of Advanced Market Commitments.
In general, AMCs function through donors committing funds to guarantee the price of vaccines once they have been developed. This creates an incentive for manufacturers to invest in R&D. Companies who take up the offer of a subsidised price for their vaccine commit to sell the vaccine at an affordable price.
The pneumococcal AMC is slightly different as at the time it was launched, pneumococcal vaccines already existed. This has led some to regard it more as an Advanced Procurement Commitment, which was indeed the name of the proposal until late in the process.1
Under the pneumococcal scheme, donor countries and philanthropies make grants to the World Bank, which disburses money to an organisation called GAVI, the Vaccine Alliance. GAVI passes this money on to manufacturers who have passed the application process and have won a supply agreement.2
In 2005 the Center for Global Development published a report on AMCs.3
In 2006 the G8 launched a consultative process for a pilot.
In 2007 a pilot was launched with Gates Foundation money.
In 2009 the pneumococcal vaccine AMC became operational.
In 2010 the first long-term manufacturing commitments were made.
Impact evaluation of the pneumococcal AMC suggests that:
A low-income country market for vaccines was successfully created.
The AMC did not accelerate R&D outcomes.
Supply shortages were rectified more quickly because of the AMC.4
Scope: AMCs are disease specific. The pneumococcal AMC targeted late-stage development. In theory an AMC could be run for basic research, but this has not been proven.5
Access: The cost of the drug is reduced through AMCs. They also incentivise distribution via donors’ commitments to purchase and distribute drugs.
Innovation: Incentives are not directly linked to health impact. AMCs could possibly reduce competition and therefore innovation.6 It is not clear whether the incentives offered are strong enough: in the case of the pneumococcal AMC, it seems that R&D outcomes were not accelerated.7
Efficiency: AMCs require a large amount of funding. AMCs are not market-based.
Governability: AMCs require a large amount of administration. They also require narrow specification, which is difficult to do correctly. It is also hard to set the price in advance without reference to the market. The selection process is at risk from political interference.
Political Feasibility: AMCs are attractive to industry and to beneficiaries, as they maintain intellectual property while increasing access.
The pneumococcal vaccine AMC is one kind of AMC or Advance Purchase Commitment (APC).
GAVI, the vaccine alliance, manages the pneumococcal AMC.
The US Project BioShield, which aims to reduce the risk of bioterrorism, created a fund to be spent on vaccines and other drugs for the national stockpile. Although not a formal AMC commitment, this acts as a similar kind of incentive.8
An AMC is a similar mechanism to a prize. Unlike most prizes, AMCs do solve the distribution problem, through donors’ commitment to purchase and then distribute drugs.
The pneumococcal AMC actually looks very like an APC because the vaccines had been developed prior to the commitment. Purchasing agreements of this sort are designed to maximise access. The opposite problem is sometimes experiences with antibiotics, were policy-makers seek to limit supply through purchase agreements to curb resistance. The WHO global consortium is an example of such a proposal.
Targeted at:
International organisations
Philanthropists
Drugs companies
Stakeholders on board:
GAVI
UNICEF
WHO
CGD
Gates Foundation
G8
Main web page: “About the Pneumococcal AMC.” Accessed June 26, 2017 http://www.gavi.org/funding/pneumococcal-amc/about/.
The CGD Report: Center for Global Development. “Making Markets for Vaccines: Ideas to Action.” Washington, DC: Center for Global Development, 2005. http://www.cgdev.org/doc/books/vaccine/MakingMarkets-complete.pdf.
Pneumococcal AMC impact evaluations:
“Pneumococcal AMC Process & Design Evaluation.” Accessed July 10, 2017. http://www.gavi.org/results/evaluations/pneumococcal-amc-process---design-evaluation/.
“The Advance Market Commitment Pilot for Pneumococcal Vaccines: Outcomes and Impact Evaluation.” Accessed July 10, 2017. http://www.gavi.org/results/evaluations/pneumococcal-amc-outcomes-and-impact-evaluation/.
Further information on the pneumococcal AMC:
Cernuschi, Tania, Eliane Furrer, Nina Schwalbe, Andrew Jones, Ernst R. Berndt, and Susan McAdams. “Advance Market Commitment for Pneumococcal Vaccines: Putting Theory into Practice.” Bulletin of the World Health Organization 89, no. 12 (December 2011): 913–18. doi:10.1590/S0042-96862011001200015.
Snyder, Christopher M., Wills Begor, and Ernst R. Berndt. “Economic Perspectives On The Advance Market Commitment For Pneumococcal Vaccines.” Health Affairs 30, no. 8 (August 1, 2011): 1508–17. doi:10.1377/hlthaff.2011.0403.
“WHO | Advance Market Commitment for Pneumococcal Vaccines: Putting Theory into Practice.” WHO. Accessed June 26, 2017. http://www.who.int/bulletin/volumes/89/12/11-087700/en/.
Donald W. Light. “Advanced Market Commitments: Current Realities and Alternate Approaches.” Health Action International (HAI) Europe, 2009.
General information on AMCs:
“Advanced Market Commitments (AMC) [GOV.UK]{.underline}](http://gov.uk/)." Accessed June 26, 2017. [https://www.gov.uk/guidance/advanced-market-commitments-amc.
Barder, Owen, Michael Kremer, and Heidi Williams. “Advance Market Commitments: A Policy to Stimulate Investment in Vaccines for Neglected Diseases.” The Economists’ Voice 3, no. 3 (2006). doi:10.2202⁄1553-3832.1144.
Sloan, Frank A., and Chee-Ruey Hsieh. Pharmaceutical Innovation: Incentives, Competition, and Cost-Benefit Analysis in International Perspective. Cambridge ; New York: Cambridge University Press, 2007. http://www.loc.gov/catdir/enhancements/fy0668/2006031632-t.html.
Berndt, Ernst R., Rachel Glennerster, Michael R. Kremer, Jean Lee, Ruth Levine, Georg Weizsäcker, and Heidi Williams. “Advance Market Commitments for Vaccines against Neglected Diseases: Estimating Costs and Effectiveness.” Health Economics 16, no. 5 (May 1, 2007): 491–511. doi:10.1002/hec.1176.
Farlow, Andrew W.K., Donald W. Light, Richard T. Mahoney, and Roy Widdus. “Concerns Regarding the Center for Global Development Report ‘Making Markets for Vaccines.’” Submission to WHO Commission on Intellectual Property Rights, Innovation and Public Health., n.d. http://www.who.int/intellectualproperty/submissions/Vaccines.FarlowLight.pdf.
Hollis, Aidan. “A Comprehensive Advance Market Commitment.” Submission to the World Health Organization Public Health, Innovation and Intellectual Property Intergovernmental Working Group, 2007. http://www.who.int/phi/public_hearings/second/contributions_section2/Section2_Aidan_Hollis_Full_Contribution.pdf.
“Is the Price Right? Evaluating Advanced Market Commitments for Vaccines.” Center For Global Development. Accessed June 26, 2017. https://www.cgdev.org/blog/price-right-evaluating-advanced-market-commitments-vaccines.
Kremer, Michael. Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases. Princeton, NJ ; Oxford: Princeton University Press, 2004.
Towse, Adrian, and Hannah Kettler. “Advance Price or Purchase Commitments to Create Markets for Treatments for Diseases of Poverty: Lessons from Three Policies.” World Health Organization. Bulletin of the World Health Organization 83, no. 4 (2005): 301–7. doi:10.1590/S0042-96862005000400015.
