Gavi should stop awarding special funds to Pfizer and GSK for pneumonia vaccine

A pneumonia vaccine from GSK that was used to vaccinate children in refugee camps in March.
Greece 2019 © Sophia Apostolia/MSF
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NEW YORK/TOKYO, AUGUST 26, 2019—Gavi, the Vaccine Alliance should stop giving Pfizer and GlaxoSmithKline (GSK) special financial incentives and should instead reserve this funding for a more affordable version of the vaccine that will soon become available, said the international medical humanitarian organization Doctors Without Borders/Medecins Sans Frontieres (MSF) Monday.

Pfizer and GSK—the only two companies currently producing the pneumonia vaccine—have long maintained a duopoly that allows them to keep pneumonia vaccine prices high. However, a third manufacturer, Serum Institute of India, recently announced its plans to make the pneumococcal conjugate vaccine (PCV) available at $6 per child by the end of this year, presenting Gavi and its donors with a clear pathway to vaccinate more children and protect them against pneumonia.

“More competition in the pneumonia vaccine market is desperately needed so that countries can afford to protect their children,” said Miriam Alia, vaccination and outbreak response referent for MSF. “As doctors and nurses we have seen far too many children die due to pneumonia as the current high price of the vaccine blocks kids from being protected against this childhood killer.”

Gavi—a public-private partnership that aims to increase access to vaccines for children in some of the world’s poorer countries—is set to launch a call this week at the upcoming Tokyo International Conference on African Development (TICAD) in Yokohama, Japan for its third replenishment to raise funds for its 2021-2025 programs. In calling for donor funding, Gavi should explore all ways to secure more affordable vaccines, including through promoting competition, which has been shown to drive down the prices of medicines.

“As Gavi launches its replenishment, it’s time to put an end to unnecessary funding that boost profits for multinational corporations when it could instead be held for a more affordable pneumonia vaccine,” Alia said. “What is the point of having such a good vaccine when it remains unaffordable and out of reach to protect the kids against this devastating disease?”

For more than a decade, Gavi has awarded millions to Pfizer and GSK as part of the Advanced Market Commitment (AMC), a special finance mechanism meant to stimulate development and access to the PCV in developing countries. The AMC was set up in 2007 by Gavi and six donors (Italy, the United Kingdom, Canada, the Russian Federation, Norway, and the Bill & Melinda Gates Foundation) to stimulate development of PCV that meets developing country needs and accelerates the  global rollout of this lifesaving vaccine that protects children against pneumonia.

AMC donors pledged $1.5 billion in a special subsidy fund. Gavi pays the base price of the pneumonia vaccines charged by each company, and also gives Pfizer and GSK additional money through this fund. Gavi has been paying about $9 per child for PCV, with an additional subsidy awarded to the two corporations on top of this base price.

The $1.5 billion AMC fund was intended to help encourage competition among manufacturers to reduce the price of PCV. However, Pfizer and GSK have been given more than $1.2 billion of this fund, in addition to more than $4 billion in revenues from PCV sales to Gavi. Just $262.5 million remains in the AMC fund, which is currently scheduled to conclude at the end of 2020.

MSF calls on Gavi to extend it beyond 2020 and to save the remaining funds for a new manufacturer offering a more affordable version in the near future.

PCV currently absorbs upwards of 40 percent of Gavi’s total budget for 13 vaccines. Switching to a more affordable version could potentially result in savings of up to $1 billion for the organization in the coming financial period. Additionally, having a third competitor will also make it easier for individual countries that have not yet introduced PCV into their standard vaccination packages and those that will lose Gavi support in the future to protect their children against pneumonia.

As high vaccine prices continue to be a barrier to access, pneumonia causes more than a quarter of all deaths in children under the age of five despite the fact it can be prevented with PCV. Yet, nearly one-third of the world’s countries have been unable to introduce the vaccine, largely due to its high price. While 60 developing countries have introduced PCV into their routine immunization programs with Gavi support, the vaccine remains priced out of reach in many developing countries—particularly middle-income countries ineligible for Gavi funding.

“Millions of kids around the world remain vulnerable to pneumonia because of exploitative pricing by Pfizer and GSK,” said Kate Elder, vaccines policy advisor for MSF’s Access Campaign. “Gavi has already awarded hundreds of millions to these two corporations in special funding under the AMC mechanism. With the expected entry of a new and more affordable pneumonia vaccine producer, Gavi now has a chance to stimulate real competition in the PCV market. We’re calling on Gavi to reserve the remaining AMC funds for new producers and to stop doling out subsidies to Pfizer and GSK, which have already reaped more than their fair share of the fund.”