Thursday, May 28, 2020

Advanced market commitment for a successful COVID-19 vaccine

Vaccines take a long time to develop and test, and so are risky for pharmaceutical firms to invest in. Here's a NY Times op-ed by several prominent economists suggesting that a market design solution, a government commitment in advance to support the market price of a successful vaccine, could be applied to speeding the development and widespread availability of a COVID-19 vaccine.


In the Race for a Coronavirus Vaccine, We Must Go Big. Really, Really Big.
We should commit tens of billions toward a program.
By Susan Athey, Michael Kremer, Christopher Snyder and Alex Tabarrok

"Vaccines often take 10 years to bring to market. We want a new vaccine as fast as possible, where each month matters.

The fact is that starting from the early stages of development, most vaccines fail. We cannot afford to fail, so we need to plan for success. To do that, we must think and invest as ambitiously as we can — and that means in a Covid vaccine advance market commitment.

The A.M.C. model was proposed in the early 2000s. And in 2007, the pneumococcus advance market commitment guaranteed vaccine manufacturers sales at a fixed price in return for an effective vaccine. It led to the successful development and distribution of hundreds of millions of doses of vaccine ...

"An advance market commitment for Covid-19 should combine “push” and “pull” incentives. The “pull” incentive is the commitment to buy 300 million courses of vaccine at a per-person price of $100, for vaccines produced within a specified time frame. If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. So firms compete to serve the first 300 million people with the most attractive vaccines, and the “pull” component provides strong incentives for both speed and quality.

"The “push” incentive guarantees firms partial reimbursement for production capacity built or repurposed at risk and partial reimbursement as they achieve milestones. The partial reimbursement ensures that manufacturers have “skin in the game,” while inducing them to build large-scale capacity before approval is certain."
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Earlier post: Monday, March 16, 2020

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