Economics of vaccines

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The struggle to get access to vaccine in the 2013-2016 Ebola epidemic was primarily socio-economic, not technical Ebola Outbreak Map (ongoing).png
The struggle to get access to vaccine in the 2013-2016 Ebola epidemic was primarily socio-economic, not technical

Vaccine development and production is economically complex and prone to market failure. Many of the diseases most demanding a vaccine, including HIV, malaria and tuberculosis, exist principally in poor countries. Pharmaceutical firms and biotechnology companies have little incentive to develop vaccines for these diseases because there is little revenue potential. Even in more affluent countries, financial returns are usually minimal and the financial and other risks are great. [1]

Contents

Most vaccine development to date has relied on "push" funding by government, universities and non-profit organizations. [2] Many vaccines have been highly cost effective and beneficial for public health. [3] The number of vaccines actually administered has risen dramatically in recent decades. [4] This increase, particularly in the number of different vaccines administered to children before entry into schools may be due to government mandates and support, rather than economic incentive. [5]

Market concentration

While vaccine research and development is done by many small companies, [6] large-scale vaccine manufacturing is done by an oligopoly of big manufacturers. [6] [7] [8] A March 2020 New York Times article described the political effects of this market structure: "government and international health organizations know that any vaccine developed in a lab will ultimately be manufactured by large pharmaceutical firms. At this critical juncture with coronavirus, no health expert would publicly criticize drug companies, but privately they complain that pharma is a major speed bump in developing lifesaving vaccines." [7]

Concentration and monopolization of the manufacture of specific drugs has also led to supply shortages, and significant healthcare costs for employing people to track down hard-to-get drugs. [9]

This oligopoly power allows[ citation needed ] vaccine manufacturers to engage in price discrimination, and vaccine prices are often two orders of magnitude higher than the manufacturer's stated manufacturing costs, as of 2015. Sales agreements often require that the buyer keeps the price secret and agrees to other non-competitive restrictions; the exact nature and extent of this problem is hard to characterize, due to agreements being secret. [10] [11] Price secrecy also disadvantages vaccine purchasers in price negotiations. It also makes market analysis difficult and hinders efforts to improve affordability. [10]

The first decade of the 2000s saw a large number of mergers and acquisitions, and as of 2010, 80% of the global vaccine market was in the hands of five multinationals: GlaxoSmithKline, Sanofi Pasteur, Pfizer, Merck, and Novartis. [12] Of these, Novartis does not focus on vaccine development. [13] Patents on key manufacturing processes help maintain this oligopoly. [14] [15]

Epidemic response

In the past, the market power of pharmaceutical companies has delayed responses to epidemics. Manufacturers have successfully negotiated favourable terms, including market guarantees and indemnification, from governments, as a condition of manufacturing vaccines. This has delayed responses to some epidemics by months, and prevented responses to other pandemics entirely. [7] Some intellectual property issues also hinder vaccine development for epidemic preparedness, as in the case of rVSV-ZEBOV. [16]

Market incentives

There is also no business incentive for pharmaceutical companies to test vaccines that are only of use to poor people. [17] Vaccines developed for rich countries may also have short expiry dates, and requirements that they be refrigerated until they are injected and given in multiple shots, all of which may be very difficult in remote areas. In some cases it has simply never been tested whether the vaccine will still be effective if the requirements are not followed (say, if it retains potency for several days unrefrigerated). [10]

In almost all cases, pharmaceuticals including vaccines are developed with public funding, but profits and control of price and availability are legally accorded to private companies. [18] The profits of large pharmaceutical companies are mostly used on dividends and share buybacks, which inflate executive pay, [19] [20] and on lobbying and advertising. [21] [20] [22] Innovation is generally bought along with the small companies that developed it, rather than produced in-house; [19] [20] [22] low percentage R&D spending is sometimes touted as an attraction to investors. [23] The financialization focus of the pharmaceutical industry, especially in the US, has been cited as an obstacle to innovation. [20]

There have been ethical issues raised with accepting donations of generally unaffordable vaccines. [15]

Demand

While the vaccine market makes up only 2-3% of the pharmaceutical market worldwide, it is growing at 10-15% per year, much faster than other pharmaceuticals (as of 2010). [12] Vaccine demand is increasing with new target population in emerging markets (partly due to international vaccine funders; [10] in 2012, UNICEF bought half of the world's vaccine doses [12] ). Vaccines are becoming the financial driver of the pharmaceutical industry, and new business models may be emerging. Vaccines are newly being marketed like pharmaceuticals. [12]

Vaccines offer new opportunities for funding from public-private partnerships (such as CEPI [7] [24] and GAVI [25] ), governments, and philanthropic donors and foundations (such as GAVI and CEPI's donors [7] [25] ). Pharmaceutical companies have representation on the boards of public-private global health funding bodies including GAVI [26] and CEPI. [27] [ example needed ] Private donors often find it easier to exert influence through public-private partnerships like GAVI than through the traditional public sector and multilateral government institutions like the WHO; PPPs also appeal to public donors. [25] Philanthropic funding means that vaccines are now rolled out to large developing markets less than 10 or 20 years after they are developed, [26] [28] during the patent validity term of the patent owner.[ citation needed ] Newer vaccines are much more expensive than older ones. [29] Lower-income countries are increasingly a profitable vaccine market. [10]

Public domain

Baker (2016) observed that the vast majority of the cost of most diagnostic, preventive and treatment procedures are patent royalties: The unit costs are almost universally a tiny fraction of the price to the consumer. Moreover, in the US "the government spends more than $30 billion a year on biomedical research through the National Institutes of Health". And researchers (individuals and organizations) routinely obtain patents on products whose development was paid for by taxpayers, per the Bayh–Dole Act of 1980. Baker claims that the US population would have better health care at lower cost if the results of that research were all placed in the public domain. [30]

Moreover, the cost of those diagnostic, preventive and treatment procedures would be lower the world over if the results of publicly-funded research were in the public domain. This would likely lead to better control of infectious diseases worldwide. That, in turn, would likely reduced the disease load in the US. [31]

Related Research Articles

<span class="mw-page-title-main">Médecins Sans Frontières</span> International humanitarian medical non-governmental organisation

Médecins Sans Frontières, named Doctors Without Borders in English, is a charity that provides humanitarian medical care. It is a non-governmental organisation (NGO) of French origin known for its projects in conflict zones and in countries affected by endemic diseases. The organisation provides care for diabetes, drug-resistant infections, HIV/AIDS, hepatitis C, tropical and neglected diseases, tuberculosis, vaccines and COVID-19. In 2019, the charity was active in 70 countries with over 35,000 personnel; mostly local doctors, nurses and other medical professionals, logistical experts, water and sanitation engineers, and administrators. Private donors provide about 90% of the organisation's funding, while corporate donations provide the rest, giving MSF an annual budget of approximately US$1.63 billion.

<span class="mw-page-title-main">Pharmaceutical industry</span> Industry involved with discovery, development, production and marketing of drugs

The pharmaceutical industry is an industry in medicine that discovers, develops, produces, and markets pharmaceutical drugs for use as medications to be administered to patients, with the aim to cure and prevent diseases, or alleviate symptoms. Pharmaceutical companies may deal in generic or brand medications and medical devices. They are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy using drug testing and marketing of drugs. The global pharmaceuticals market produced treatments worth $1,228.45 billion in 2020 and showed a compound annual growth rate (CAGR) of 1.8%.

The Campaign for Access to Essential Medicines is an international campaign started by Médecins Sans Frontières (MSF) to increase the availability of essential medicines in developing countries. MSF often has difficulties treating patients because the medicines required are too expensive or are no longer produced. Sometimes, the only drugs available are highly toxic or ineffective, and they often have to resort to inadequate testing methods to diagnose patients.

<span class="mw-page-title-main">James Love (NGO director)</span>

James Packard Love is the director of Knowledge Ecology International, formerly known as the Consumer Project on Technology, a non-governmental organization with offices in Washington, D.C., and Geneva, that works mainly on matters concerning knowledge management and governance, including intellectual property policy and practice and innovation policy, particularly as they relate to health care and access to knowledge.

Pharma fraud is a term to describe several illegal activities involving the manufacturing, marketing, and distribution of pharmaceuticals.

<span class="mw-page-title-main">Lupin Limited</span> Indian multinational pharmaceutical company

Lupin Limited is an Indian multinational pharmaceutical company based in Mumbai. It is one of the largest generic pharmaceutical companies by revenue globally. The company's key focus areas include paediatrics, cardiovascular, anti-infectives, diabetology, asthma and anti-tuberculosis.

The cost of HIV treatment is a complicated issue with an extremely wide range of costs due to varying factors such as the type of antiretroviral therapy and the country in which the treatment is administered. The first line therapy of HIV, or the initial antiretroviral drug regimen for an HIV-infected patient, is generally cheaper than subsequent second-line or third-line therapies. There is also a great variability of drug prices among low, middle, and high income countries. In general, low-income countries have the lowest cost of antiretroviral therapy, while middle- and high-income tend to have considerably higher costs. Certain prices of HIV drugs may be high and difficult to afford due to patent barriers on antiretroviral drugs and slow regulatory approval for drugs, which may lead to indirect consequences such as greater HIV drug resistance and an increased number of opportunistic infections. Government and activist movements have taken efforts to limit the price of HIV drugs.

<span class="mw-page-title-main">GAVI</span> Global health organization

GAVI, officially Gavi, the Vaccine Alliance is a public–private global health partnership with the goal of increasing access to immunization in poor countries. In 2016, Gavi channeled more than half of total donor assistance for health, and most donor assistance for immunization, by monetary measure.

<span class="mw-page-title-main">Joanne Liu</span>

Joanne Liu is a Canadian pediatric emergency medicine physician, Associate Professor of Medicine at the University of Montreal, Professor of Clinical Medicine at McGill University, and the previous International President of Médecins sans Frontières. She was elected president during MSF's International General Assembly in June 2013.

<span class="mw-page-title-main">Novavax</span> American biotechnology company

Novavax, Inc. is an American biotechnology company based in Gaithersburg, Maryland, that develops vaccines to counter serious infectious diseases. Prior to 2020, company scientists developed experimental vaccines for influenza and respiratory syncytial virus (RSV), as well as Ebola and other emerging infectious diseases. During 2020, the company redirected its efforts to focus on development and approval of its NVX-CoV2373 vaccine for COVID-19.

The Coalition for Epidemic Preparedness Innovations (CEPI) is a foundation that takes donations from public, private, philanthropic, and civil society organisations, to finance independent research projects to develop vaccines against emerging infectious diseases (EID).

Access to medicines refers to the reasonable ability for people to get needed medicines required to achieve health. Such access is deemed to be part of the right to health as supported by international law since 1946.

Inovio Pharmaceuticals is an American biotechnology company focused on the discovery, development, and commercialization of synthetic DNA products for treating cancers and infectious diseases. In April 2020, Inovio was among some 100 companies, academic centers, or research organizations developing a vaccine candidate for treating people infected with COVID-19, with more than 170 total vaccine candidates in development.

<span class="mw-page-title-main">Access to COVID-19 Tools Accelerator</span> G20 COVID-19 global initiative

The Access to COVID-19 Tools Accelerator, or the Global Collaboration to Accelerate the Development, Production and Equitable Access to New COVID-19 diagnostics, therapeutics and vaccines, is a G20 initiative announced by pro-tem Chair Mohammed al-Jadaan on 24 April 2020. A call to action was published simultaneously by the World Health Organization (WHO) on 24 April. As of January 2022, it was the largest international effort to achieve equitable access to COVID-19 health technologies.

<span class="mw-page-title-main">COVAX</span> Initiative to provide COVID-19 vaccines

COVID-19 Vaccines Global Access, abbreviated as COVAX, is a worldwide initiative aimed at equitable access to COVID-19 vaccines directed by the GAVI vaccine alliance, the Coalition for Epidemic Preparedness Innovations (CEPI), and the World Health Organization (WHO), alongside key delivery partner UNICEF. It is one of the four pillars of the Access to COVID-19 Tools Accelerator, an initiative begun in April 2020 by the WHO, the European Commission, and the government of France as a response to the COVID-19 pandemic. COVAX coordinates international resources to enable low-to-middle-income countries equitable access to COVID-19 tests, therapies, and vaccines. UNICEF is the key delivery partner, leveraging its experience as the largest single vaccine buyer in the world and working on the procurement of COVID-19 vaccine doses, as well as logistics, country readiness and in-country delivery.

<span class="mw-page-title-main">Deployment of COVID-19 vaccines</span> Distribution and administration of COVID-19 vaccinations

As of 3 January 2024, 13.53 billion COVID-19 vaccine doses have been administered worldwide, with 70.6 percent of the global population having received at least one dose. While 4.19 million vaccines were then being administered daily, only 22.3 percent of people in low-income countries had received at least a first vaccine by September 2022, according to official reports from national health agencies, which are collated by Our World in Data.

The TRIPS Agreement waiver is a joint intervention communication by South Africa and India to the TRIPS council of the World Trade Organization (WTO) on 2 October 2020.

Vaccine equity means ensuring that everyone in the world has equal access to vaccines. The importance of vaccine equity has been emphasized by researchers and public health experts during the COVID-19 pandemic but is relevant to other illnesses and vaccines as well. Historically, world-wide immunization campaigns have led to the eradication of smallpox and significantly reduced polio, measles, tuberculosis, diphtheria, whooping cough, and tetanus.

<span class="mw-page-title-main">Priti Krishtel</span> Pharma lawyer + activist

Priti Krishtel is a lawyer and advocate for health justice and increased public participation in the patent system. She co-founded the United States-based nonprofit organization the Initiative for Medicines, Access, and Knowledge.

<span class="mw-page-title-main">Initiative for Medicines, Access, and Knowledge</span> Nonprofit organization

The Initiative for Medicines, Access, and Knowledge, known as I-MAK, is a U.S.-based global 501(c)(3) organization that advocates in the public interest for affordable access to medicines, and a medicines system that is more inclusive of patients and the public.

References

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  2. ↑ Olesen OF, Lonnroth A, Mulligan B (January 2009). "Human vaccine research in the European Union". Vaccine. 27 (5): 640–5. doi:10.1016/j.vaccine.2008.11.064. PMC   7115654 . PMID   19059446.
  3. ↑ Jit M, Newall AT, Beutels P (April 2013). "Key issues for estimating the impact and cost-effectiveness of seasonal influenza vaccination strategies". Human Vaccines & Immunotherapeutics. 9 (4): 834–40. doi:10.4161/hv.23637. PMC   3903903 . PMID   23357859.
  4. ↑ Newall AT, Reyes JF, Wood JG, McIntyre P, Menzies R, Beutels P (February 2014). "Economic evaluations of implemented vaccination programmes: key methodological challenges in retrospective analyses". Vaccine. 32 (7): 759–65. doi:10.1016/j.vaccine.2013.11.067. PMID   24295806.
  5. ↑ Roser, Max; Vanderslott, Samantha (2013-05-10). "Vaccination". Our World in Data.
  6. 1 2 Peter Coy (13 February 2020). "The Road to a Coronavirus Vaccine Runs Through Oslo". Bloomberg News . Retrieved 7 March 2020.
  7. 1 2 3 4 5 Gerald Posner (2 March 2020). "Big Pharma May Pose an Obstacle to Vaccine Development". New York Times . Retrieved 8 March 2020. Drug companies on CEPI's scientific advisory panel, including Johnson & Johnson, Pfizer, and Japan's Takeda, pushed back. CEPI mostly capitulated in a December 2018 two-page declaration in which it jettisoned specifics but gave lip service to its founding mission of "equitable access to these vaccines for affected populations during outbreaks."
  8. ↑ Patrick, Kate. "FDA commissioner decries drug industry oligopoly". Supply Chain Dive.
  9. ↑ Vaillancourt, R (May 2012). "Drug shortages: what can hospital pharmacists do?". The Canadian Journal of Hospital Pharmacy. 65 (3): 175–9. doi:10.4212/cjhp.v65i3.1138. PMC   3379822 . PMID   22783027.
  10. 1 2 3 4 5 "The Right Shot: Bringing down barriers to affordable and adapted vaccines - 2nd Ed., 2015". Médecins Sans Frontières Access Campaign. 20 January 2015.
  11. ↑ "GAVI money welcome but could it be more wisely spent?". Médecins Sans Frontières (MSF) International.
  12. 1 2 3 4 Kaddar, Miloud. "Global Vaccine Market Features and Trends" (PDF). World Health Organization.
  13. ↑ Stanley A. Plotkin; Adel A.F. Mahmoud; Jeremy Farrar (23 July 2015). "Establishing a Global Vaccine-Development Fund" (PDF). The New England Journal of Medicine . 373 (4): 297–300. doi: 10.1056/NEJMp1506820 . PMID   26200974.
  14. ↑ Buranyi, Stephen (4 March 2020). "How profit makes the fight for a coronavirus vaccine harder". The Guardian.
  15. 1 2 Hamblin, James (14 October 2016). "Doctors Refused a Million Free Vaccines–to Make a Statement About the Pharmaceutical Industry". The Atlantic.
  16. ↑ "MSF's response to CEPI's policy regarding equitable access". Médecins Sans Frontières Access Campaign. 25 September 2018.
  17. ↑ Belluz, Julia (4 March 2020). "A guide to the vaccines and drugs that could fight coronavirus". Vox.
  18. ↑ Mazzucato, Mariana; Momenghalibaf, Azzi (18 March 2020). "Drug Companies Will Make a Killing From Coronavirus". The New York Times.
  19. 1 2 Lazonick, William; Tulum, Öner (26 February 2019). "How High Drug Prices Inflate C.E.O.s' Pay". The New York Times.
  20. 1 2 3 4 Tulum, Öner; Lazonick, William (February 2019). "FINANCIALIZED CORPORATIONS IN A NATIONAL INNOVATION SYSTEM: THE US PHARMACEUTICAL INDUSTRY" (PDF). International Journal of Political Economy.
  21. ↑ Lerner, Sharon (13 March 2020). "Big Pharma Prepares to Profit From the Coronavirus". The Intercept.
  22. 1 2 "Analysis: Large pharma companies do little new drug innovation". STAT. 10 December 2019.
  23. ↑ Vara, Vauhini. "Billions and Billions for Botox". The New Yorker.
  24. ↑ "Norway has invested 200 million euros in epidemic preparedness, but are they getting what they're paying for?". Médecins Sans Frontières Access Campaign. 7 March 2019.
  25. 1 2 3 Storeng, Katerini T. (14 September 2014). "The GAVI Alliance and the 'Gates approach' to health system strengthening". Global Public Health. 9 (8): 865–879. doi:10.1080/17441692.2014.940362. ISSN   1744-1692. PMC   4166931 . PMID   25156323.
  26. 1 2 "Pneumococcal Vaccine is Launched in Africa, But Are Donors Getting a Fair Deal from Companies?". Doctors Without Borders - USA.
  27. ↑ Røttingen, John-Arne (21 July 2017). "Coalition for Epidemic Preparedness Innovations (CEPI): Presentation to the WHO" (PDF). CEPI.
  28. ↑ MSF. "Pfizer and GSK should not get huge subsidy for pneumonia vaccine". Médecins Sans Frontières (MSF) International.
  29. ↑ "Vaccination". Doctors Without Borders - USA.
  30. ↑ Dean Baker (2016), Rigged: How globalization and the rules to the modern economy were structured to make the rich richer, Center for Economic and Policy Research, Wikidata   Q100216001 .
  31. ↑ See also the 2021-02-23 interview with Baker in "v:Unrigging the media and the economy".
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