Artificial Market Power

On February 9, officials from Italy, the U.K., Canada, Norway and Russia met in Rome, where they announced that their governments will commit $1.5 billion to supply developing nations with vaccines against pneumococcus, the leading vaccine-preventable killer of children younger than the age of five (it claims up to one million every year). These nations are creating a so-called advance market commitment to provide incentives for pharmaceutical companies to introduce next-generation pneumococcal injections more rapidly. This strategy requires donors to pay top dollar for a set number of doses, but once funds dry up, participating vaccine makers must supply them at below cost. An existing vaccine protects against as few as 50 percent of cases in parts of the world; however, both Wyeth and GlaxoSmithKline have vaccines in the pipeline that may bump that number closer to 80 percent, a more likely effectiveness requirement that vaccines will have to meet to be eligible for funds.

By: Minkel, J R, Scientific American, Apr2007