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See Inside July 2006

Dangling a Carrot for Vaccines

Drug companies do not see much of a market in treating diseases of developing nations. Michael Kremer hopes to change that--with a plan that taps the profit motive
MICHAEL KREMER: DRUGS TO THE POOR



KATHLEEN DOOHER
It's a gray, drizzly March day at Harvard University. Economist Michael Kremer is recalling his postcollegiate year, 1985, spent teaching high school in Kenya, contracting malaria, recovering and watching sick Kenyans fare worse than he. Melancholy enters his voice. "The burden of disease is just very clear," he nearly sighs. "This is a terrible crisis. It seems vital to put the same sorts of entrepreneurial spirit and effort, and creativity, unleashed by the market sector"--he laughs dryly, as if in disbelief--"to work on these diseases as is being done for the diseases in rich countries."

Poor nations labor under the weight of malaria, AIDS, tuberculosis and a score of diseases lesser known in rich countries, but they cannot afford to pay the prices companies want for drugs. Whereas some might denounce the pharmaceutical industry's profit seeking, Kremer wants to harness it. He has championed the idea that governments and other donors should try to make a malaria or tuberculosis vaccine as attractive to industry as the average drug market is. "I want them to do the same thing for malaria they would do for breast cancer," he says.

Right now research and development for neglected vaccines occurs primarily through public-private partnerships, which have invigorated the field in the past half a decade. Nonprofit groups such as the International AIDS Vaccine Initiative channel money from donors into deals with biotech and pharma companies. Industry involvement is growing, says Michel Zaffran, deputy executive secretary of the Global Alliance for Vaccines and Immunization, "but it's still not at the level one would like to see." Aid groups negotiate with drugmakers to procure vaccines for poor nations, but industry remains wary it will be haggled down to an unwelcome price.

Kremer advocates constructing a kind of artificial market for a vaccine. A donor would commit to paying a certain sum, a few hundred million dollars up to perhaps $5 billion, on delivery of a viable vaccine. Once a vaccine is manufactured, the donor would purchase it at a high price per dose until the sum is exhausted; thereafter, the company would be obligated to supply the vaccine to poor countries at a low price. "The idea is quite simple, and it really gets at the heart of the problem--that there are insufficient markets in the developing world to attract industry," remarks Wendy Taylor, founder of BIO Ventures for Global Health.

The recipient of a MacArthur fellowship in 1997, the 41-year-old Kremer is adept at sketching out institutional fixes for problems in developing countries. To ease these nations' debt, he has argued that the international community should regard loans to odious regimes as loans to the ruling despots themselves, perhaps dissuading banks and other private lenders. To break up black markets surrounding the antiquities of poor countries, he proposes leasing the artifacts to museums.

His first foray into financial incentives for disease treatment was in 1998, when he studied the idea that the public sector could buy out the patents of working vaccines. A year later Kremer had an inspirational conversation with Jeffrey D. Sachs, a development economist at Columbia University. The concept evolved into a vaccine purchase fund, in which a donor would commit to buying doses of an already manufactured vaccine--something the World Bank had also recommended. "We were both quite enthusiastic about the idea of buying out the product," Kremer says. At a colloquium, Sachs and Kremer outlined the idea in front of attendees from international aid groups and industry, who were not immediately persuaded.


Malaria or Tuberculosis vaccines should be as attractive to industry as the average drug market is.

Undaunted, Kremer published a pair of subse-quent papers laying out the rationale, design challenges and trade-offs. He envisioned the purchase commitment as a long-term contract specifying clinical criteria, setting up an independent adjudicating committee and requiring poor countries that wanted the vaccine to make a small co-payment.

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