Low cost pneumonia vaccine deal officially announced

The GAVI Alliance officially announced the deal that will bring thousands of pneumonia vaccines to the under-developed world. The GAVI Alliance negotiated a deal with drug makers Pfizer and GlaxoSmithKline to provide the vaccines at a reduced cost. The drug companies are guarantied a small profit even with the lower price and a new market.

This deal has already been mentioned in the press but the formal announcement was made today.

From the New York Times, writer Andrew Pollack gives more details on the deal.

Under the agreement, Pfizer and GlaxoSmithKline will provide up to 300 million doses each of their vaccines over a 10-year period. The price for the first 20 percent of the supply will be $7 a dose. Then the price will drop to $3.50 a dose for the remainder. The vaccines would be paid for by donations raised by GAVI and by the governments of the countries that ordered the vaccines.

In Western markets, the pneumococcal vaccines sell for $54 to $108 a dose.

“For the price of a Starbucks latte, developing countries are going to be able to buy a dose of a life-saving vaccine,” said Orin Levine, director of the international vaccine access center at the Johns Hopkins Bloomberg School of Public Health, who has worked with GAVI.

But Tido von Schoen-Angerer, who directs the essential medicines program at the international group Doctors Without Borders, said that even with the discounts, “it’s still quite an expensive vaccine in a developing country context.” With at least three doses required, the price would initially be $21 per patient.

The agreement is the first example of GAVI’s program called advance market commitments, in which donor money is used to essentially guarantee a market for vaccine companies if they undertake development of vaccines for poor countries, or if the companies agree to build extra capacity to supply those markets with an existing vaccine.

Such a strategy, if it works, might be particularly useful in spurring companies to develop vaccines for diseases like malaria, for which virtually the entire market would be in developing countries.