Working Paper: NBER ID: w11288
Authors: Ernst R. Berndt; Rachel Glennerster; Michael R. Kremer; Jean Lee; Ruth Levine; Georg Weizscker; Heidi Williams
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: Malaria; Vaccine Development; Advance Purchase Commitments; Cost-Effectiveness
JEL Codes: I18; O19; O31; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| commitment size (D25) | likelihood of vaccine development (I15) |
| commitment to pay $15 per person immunized (F53) | cost < $15 per DALY saved (J17) |
| commitment size of $31 billion (G34) | willingness of firms to invest in R&D (O31) |
| adjusted commitment size of $28 per person immunized (H56) | market of $52 billion (D49) |
| adjusted commitment size (G31) | cost < $21 per DALY saved (J17) |
| duration of protection conferred by vaccine (C41) | cost-effectiveness (D61) |