The June 23, 2009 Financial Times article by Andrew Jack entitled: “Vaccine system hampers progress in Africa” examines an important and often misunderstood issue relating to access to medicines in the developing world. Mr. Jack is right, that the issue of differential pricing between rich, poor and middle-income countries is contentious and that “tensions will increase”. Going beyond the hyperbole reported from the various stakeholders and examining the reality of the issue one can only conclude that the “vaccine system” does not hamper progress in less developed countries in Africa or elsewhere.
Let’s start at the beginning. Innovation in medicine saves lives; and innovation costs money. We all want the latest treatments for ourselves and our loved ones, but we don’t want to pay for it. These are universal attitudes and behaviours only mitigated by the economic realties of each country in which we live. It doesn’t matter where or how innovation and discovery occurs, only that it is commercialized to benefit humankind.
The overwhelming majority of medical innovation and discovery has come out of the United States and almost all of it from the private sector. Industry invests, takes risks, garners success, and reinvests profits in yet more scientific research. That is how the system works, and that is the only system to have produced results. Most countries with a research base, including my own – Canada, focus too much on research and not enough on development. The US has found the right balance.
The Financial Times article reports that the 30-year old “Revolving Fund for Vaccine Procurement” of the Pan American Health Organization (PAHO) that negotiates the “lowest possible price” for vaccines – thus enabling their wide-spread use throughout member countries – prevents lower prices being negotiated for the poorest of countries in Africa, South and Central America and elsewhere. Although not established as a true revolving fund that would have no fiscal year limitations , the PAHO Fund has had some success: school-age vaccination rates today in “south” America rival those of “north” America.
Differential pricing or “tiered pricing” has been successfully used in many industries for many years based upon identifying different “classes” of buyers for which differentiated pricing would be used. For over a decade the World Bank’s Human Development Network has endorsed tiered pricing for vaccines as a means to increase economies of scale in production through greater sales thus reducing costs, prices and distribution inequities around the world. Costs of vaccines are recovered through higher market pricing in rich nations, moderate bulk procurement pricing in middle income countries, and much reduced pricing in the poorest of countries.
Despite popular opinion amongst non-believers, this solution to vaccine access has been wholeheartedly supported by industry. And why not? It’s a win-win. Industry sells more – thus ensuring the financing of future innovation – and the poorest of nations gain access to medicines that they would not otherwise if a uniform “average” price was charged globally.
Most important to understand is that this is not subsidization of one country by another. Each country pays what it can afford for its citizenry – either through private plans or government plans (and mostly the latter for vaccines) thus removing financial barriers to access. According to the Global Alliance for Vaccines and Immunization (GAVI) this private sector mechanism benefits all humankind equally in that poorer nations can now afford brand new vaccines earlier in their life cycle putting them on par with the richest of countries – one of the few, measurable tactics that has moved the world towards the goal of health for all.
As I and many others have written elsewhere, the real barriers to access for vaccines and other pharmaceuticals are not prices but, in many poor countries, the lack of infrastructure, by which to deliver medicines; the corruption in those countries that diverts medicines from their intended recipients into black markets or military stockpiles; and the acceptance of inequality by the leaders of totalitarian regimes. Even President Obama got this right – when he told Africans to take responsibility for their own plight during his recent visit to that continent. It is not tiered pricing that is creating a barrier to access of vaccines in Africa; it is not pricing at all. It is the politics of this poorest region of the world that is to blame.
“American” nations other than Canada and the US often receive vaccines at one-third to one-tenth of the price paid in these two most northern of American nations. PAHO and its members must realize and accept the reality that their “fund” only ensures them the opportunity of negotiating the lowest possible price in their “class”. This is 2009 not 1979. Canada’s 2007 per capita income was $35,310 thus placing it in the higher price market segment. Haiti’s 2007 per capita income was $560 placing it amongst the poorest countries of the world, a market segment that also includes such African countries as the Democratic Republic of the Congo and Mozambique, which are most deserving of lowest possible GAVI prices. On the other hand PAHO has middle income member states such as Argentina that had a 2007 per capita income of $12,990, and Brazil which is often grouped with Russia, India and China into the BRIC group of rising economic powers.
Latin America must accept their share of the responsibility in ensuring health for all in the 21st century. Many Latin American countries are “rich” today compared to most African states and some of their sister “south” American nations. Middle income PAHO states cannot hold much of Africa or poorer member countries like Haiti hostage for their own self-interests.
D. Wayne Taylor, PhD, F.CIM
The Cameron Institute
Hamilton, Ontario, Canada