Healthy Skepticism Library item: 15375

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Publication type: report

Light DW
Advanced Market Commitments: Current Realities and Alternate Approaches
: HAI 2009 Mar
http://www.haiweb.org/31032009/27%20Mar%202009%20AMC%20Current%20Realities%20&%20Alternate%20Approaches%20FINAL.pdf

Abstract:

The purpose of an advanced market commitment (AMC) was to motivate research and development
(R&D) based pharmaceutical companies to conduct research into the so called ‘neglected diseases’
that primarily afflict low-income countries. In addition, AMCs were to speed-up access to new
vaccines that are often delayed by 10-15 years because of their high prices when new on the market.
The essential AMC idea is for donors to match the revenues that companies earn from developing
medicines for affluent markets so they have the same incentive to research a neglected disease. The
price and volume of this large buyout are pre-set by a committee, and winning companies promise, to
make their product available at a low initial price, while keeping their intellectual property (IP) rights
intact. Thus, a new medicine might be discovered for a neglected disease, made immediately available
to low-income countries, and supplied forever.
Despite endorsements ranging from the World Bank to The Vatican, there are reasons for concern
about the way the AMC concept is designed. Too many uncertainties and contingencies in the AMC
design may keep companies from initiating research to discover new vaccines. A major study of
proliferating research projects on neglected diseases found radically different patterns of funding,
motives, and organisation than envisioned by the AMC ‘big-payoff’ model. The authors of this study
warned that an AMC could seriously damage these thriving arrangements, especially those involving
multinationals.
Because the AMC provides no funding until a new vaccine is fully developed and considered
necessary by low income countries, it discourages all but a few large companies to participate because
the investment costs remain extremely high. Secondly, its competitive design could undermine
cooperative efforts and grant-based “push” funding. Thirdly, by favouring large companies with deep
pockets over biotech companies and teams of researchers at universities or non-profit institutes that
require intermediate funding, AMC could actually decelerate R&D, although alternative approaches
could address these design problems. Finally, even the sharply discounted post-buyout prices would
still not be affordable, and past experience with AIDS drugs shows that manufacturing in developing
countries can supply medicines at much lower prices.
Before the current AMC model was designed by Michael Kremer, he considered a variety of
alternatives for how to structure advanced purchasing, including patent buyouts, required licensing
cooperative payback with push funders, milestone payments, higher technical requirements for followon
vaccines, and bonuses for vaccines that are easier to administer or store. Yet, by 2004, Kremer and
the Gates Foundation put these flexibilities aside. Donors would not have to pay anything for years,
probably not until after they left office, a donor’s dream but a developer’s nightmare. Property rights
were no longer mentioned.
Despite these substantive issues with the AMC, the design problems became irrelevant when the AMC
idea was transferred to purchasing extra doses of already-discovered pneumococcal vaccines that have
been developed and fully paid for by multinational corporations for large affluent markets. This
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represents simply an advanced procurement commitment and so cannot be considered a pilot of an
AMC because it is not an AMC.
By 2004-5, many impracticalities and inconsistencies with the AMC design had been presented to the
Working Group assembled to launch it. Suggestions that the AMC design include sharing IP
technology, helping developers fund late-stage trials, addressing issues of delivery, or coordinating
with push funding were rejected as part of the AMC design. The AMC was promoted energetically
well before its launch in 2005. Members with reservations about the AMC design withdrew their
support or voted against it. Their names are not listed as members of the Working Group in the launch
document. The AMC concept was thus presented to the G8 finance ministers as unanimously
endorsed.
Recently, the Global Alliance for Vaccines and Immunisation (GAVI) reports have focused on ways
to sustain the AMC-style procurement by giving companies higher prices and longer delays before
delivery. This, it is suggested, will significantly increase the proportion of funds that to go extra profits
for the winning multinational corporations and reduce the number of children saved from
pneumococcal diseases. By requiring dedicated manufacturing facilities, the new terms preclude
alternative approaches that would develop less expensive vaccines designed for prevalent serotypes in
different regions of the world and use low-cost manufacturing in developing countries. If the goal
were to maximise the number of children saved in the shortest time, one would not consider an AMC
approach to a supply contract but work with the pharmaceutical industry to arrange for low-cost
production under limited licensing.
Better designed advanced purchase commitments could complement funded research to increase the
discovery of diseases prevalent in developing countries. More flexible approaches are needed in their
design that require sharing or licensing intellectual property and know-how, and that help developers
of promising products to complete their trials. One needs to use different approaches for diseases with
large affluent markets than for diseases with predominantly low-income markets. AMCs need to
strengthen the public health systems on which sustained vaccination programs depend as well as
pursue manufacturing at prices that countries can afford.