Africa: Gavi Must Stop Giving Millions in Subsidies to Pfizer and Gsk for Pneumonia Vaccine

press release

New Delhi/New York — Gavi, the Vaccine Alliance should immediately stop giving millions of dollars in financial incentives to pharmaceutical companies Pfizer and GlaxoSmithKline (GSK) for the pneumococcal conjugate vaccine (PCV), said the international humanitarian organization Doctors Without Borders/Médecins Sans Frontières (MSF) ahead of the group's board meeting in New Delhi, India on December 4 and 5. Instead, Gavi should use the remaining US $262 million of the US $1.5 billion subsidy fund to support the rollout of a more affordable version of the vaccine that is expected to be available in the next few months.

"Pfizer and GSK have reaped more than their fair share of donor money for the pneumococcal vaccine, on top of the combined nearly US $50 billion in sales they have made over the last 10 years from the vaccine, so it's time for Gavi to stop this big pharma payout," said Kate Elder, senior vaccines policy advisor for MSF's Access Campaign. "Instead of throwing more money at Pfizer and GSK, Gavi should start supporting countries to prepare for the alternative supplier that promises lower pneumococcal vaccine prices for all countries."

Gavi, the Vaccine Alliance--a public-private partnership that aims to increase access to vaccines for children in some of the world's poorer countries--uses donor funds to pay for vaccines in the poorest countries. Recognizing that newer vaccines often take more than a decade to reach developing countries after their introduction in high-income countries, in 2007 Gavi and six donors (Italy, the United Kingdom, Canada, the Russian Federation, Norway, and the Bill & Melinda Gates Foundation) set up a special fund called the Advance Market Commitment (AMC) to speed up the global rollout of the lifesaving PCV in the poorest countries.

This special fund, the AMC, also aimed to incentivize vaccine manufacturers to produce suitable and affordable versions of the pneumococcal vaccine. The donors pledged $1.5 billion in a special subsidy fund that is used to top up the base price of the pneumococcal vaccine charged by each company.

Pfizer and GSK charge Gavi roughly US $9 for each child to be vaccinated in the poorest countries, and then receive a top up from the subsidy fund that amounts to each company being paid $21 per child for the vaccine. In middle-income countries that don't qualify for Gavi support, Pfizer and GSK charge as much as US $80 per child (through UNICEF Supply Division) to be vaccinated. As a result, many middle-income countries have not started using the vaccine at all.

The AMC has already paid more than US $1.2 billion to Pfizer and GSK, leaving just US $262 million remaining in the special fund. The AMC fund was supposed to encourage new producers to enter the market and help bring prices down. So far, Pfizer and GSK are the only two companies currently producing the pneumonia vaccine and have long maintained a duopoly that allows them to keep pneumonia vaccine prices high. MSF is calling on Gavi to reserve its remaining funds under the AMC for a new pneumococcal vaccine manufacturer offering a more affordable version in the near future.

The first alternative pneumococcal vaccine from a third manufacturer--the Serum Institute of India--is expected to be available in the next few months and promises to be significantly less expensive than Pfizer and GSK's products. The company has stated previously that they plan to sell the vaccine at about US $6 per child to Gavi and the poorest countries, and no more than US $11 in middle-income countries.

"Donors supporting the AMC fund must take urgent steps to halt further subsidies to Pfizer and GSK for a vaccine that they have already been generously rewarded for," said Elder. "It's time now to break the existing Pfizer/GSK duopoly and hold any further public money for a truly new and more affordable vaccine."

Having an affordable version of the vaccine will offer a better chance of self-financing the pneumococcal vaccine for countries that have not yet introduced it in their programs and for those that will lose Gavi support in the future. Switching to a more affordable version could also potentially result in savings of up to US $1 billion for Gavi in the coming financial period.

"We hope that with the end of the Pfizer/GSK duopoly fast approaching, many more countries that have not been able to protect their children against pneumonia because of the high-priced vaccine will now be able to do so," said Miriam Alia, MSF's vaccination and outbreak response referent. "It's unconscionable that almost 20 years after the pneumococcal vaccine first became available, over 55 million children in the world still aren't receiving it."

About a quarter of the world's countries have not been able to introduce the vaccine to protect their children against pneumonia largely because of the high price charged by Pfizer and GSK. Pneumonia causes more than a quarter of all deaths in children under the age of five globally-nearly one million young lives lost every year. With the entry of a more affordable product, these countries should be able to start using the vaccine routinely in their vaccination programs.

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