NCPA - National Center for Policy Analysis

How To Spur Vaccine R&D For Poor Countries' Diseases

January 25, 2001

Societies have encouraged research in a variety of ways. Patents, government-funded research and development (R&D), and competitions for prizes traditionally have been used to solve problems or create innovation. However, these mechanisms have not spurred the research needed to develop effective vaccines against HIV, tuberculosis and malaria. Why?

  • Although HIV, tuberculosis and malaria kill five million people a year, the victims are mostly in developing countries and cannot afford to pay much more than pennies per dose.
  • To obtain existing vaccines and drugs at below-market prices, many governments have limited intellectual property rights and produce or import cheap generic versions -- discouraging private R&D.
  • In the case of AIDS, government-funded research in western countries is oriented mostly toward treatment, rather than an HIV vaccine, and almost all vaccine research is directed toward strains common in developed countries, rather than those in sub-Saharan Africa.

There is an alternative way to spur vaccine R&D. The government (or a private foundation) could make a commitment to purchase a specific quantity of an effective vaccine at a set price, if it were invented. Unlike government funded R&D, taxpayers would pay nothing unless and until those vaccines have been developed; nor would firms undertake such research unless the scientific prospects were worth the risk. The sponsor could then make the vaccine available to developing countries in exchange for modest co-payments.

The Clinton administration and the World Bank expressed interest in using such market incentives to spur vaccine development for neglected diseases. Advance commitments to buy large quantities of vaccines could lead to the development and delivery of effective vaccines at low cost, saving millions of lives.

Source: Rachel Glennerster (Center for International Development, Harvard University) and Michael Kremer (Brookings Institution), "A Better Way to Spur Medical Research and Development," Regulation, Volume 23, Number 2, Cato Institute, 1000 Massachusetts Avenue, N.W., Washington D.C. 20001, (202) 842-0200.

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