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Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness

Ernst R. Berndt, Rachel Glennerster (), Michael R. Kremer, Jean Lee (), Ruth Levine and Georg Weizsäcker

STICERD - Political Economy and Public Policy Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: To overcome the problem of insufficient research and development (R&D) on vaccines for diseases concentrated in low-income countries, sponsors could commit to purchase viable vaccines if and when they are developed. One or more sponsors would commit to a minimum price that would be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to short-run marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make the revenues from R&D investments on a malaria vaccine similar to revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various contract models and assumptions would affect the cost-effectiveness of such a commitment for the case of a malaria vaccine. Under conservative assumptions, we document that the intervention would be highly cost-effective from a public health perspective. Sensitivity analyses suggest most characteristics of a hypothetical malaria vaccine would have little effect on the cost-effectiveness, but that the duration of protection against malaria conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.

Keywords: advance purchase commitment; R&D; pharmaceuticals; vaccines; malaria (search for similar items in EconPapers)
JEL-codes: I18 O19 O31 O38 (search for similar items in EconPapers)
Date: 2005-04
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Working Paper: Advanced purchase commitments for a malaria vaccine: estimating costs and effectiveness (2005) Downloads
Working Paper: Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness (2005) Downloads
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