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http://ssrn.com/abstract=696741
 
 

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Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness


Ernst R. Berndt


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Rachel Glennerster


Massachusetts Institute of Technology (MIT) - Department of Economics

Michael Kremer


Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER); Center for Global Development

Jean Lee


Harvard University

Ruth Levine


Center for Global Development

Georg Weizsacker


Humboldt University Berlin; DIW Berlin

Heidi L. Williams


MIT Department of Economics; National Bureau of Economic Research (NBER)

April 1, 2005



Abstract:     
To overcome the problem of insufficient research and development (R&D) on vaccines for diseases concentrated in low-income countries, sponsors could commit to purchase viable vaccines if and when they are developed. One or more sponsors would commit to a minimum price that would be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to short-run marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make the revenues from R&D investments on a malaria vaccine similar to revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various contract models and assumptions would affect the cost-effectiveness of such a commitment for the case of a malaria vaccine. Under conservative assumptions, we document that the intervention would be highly cost-effective from a public health perspective. Sensitivity analyses suggest most characteristics of a hypothetical malaria vaccine would have little effect on the cost-effectiveness, but that the duration of protection against malaria conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.

Number of Pages in PDF File: 29

Keywords: Advance purchase commitment, R&D, pharmaceuticals, vaccines, malaria

JEL Classification: I18, O19, O31, O38


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Date posted: April 6, 2005  

Suggested Citation

Berndt, Ernst R. and Glennerster, Rachel and Kremer, Michael and Lee, Jean and Levine, Ruth and Weizsacker, Georg and Williams, Heidi L., Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness (April 1, 2005). Available at SSRN: http://ssrn.com/abstract=696741 or http://dx.doi.org/10.2139/ssrn.696741

Contact Information

Ernst R. Berndt (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
Room E52-452
Cambridge, MA 02142
United States
617-253-2665 (Phone)
617-258-6055 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Rachel Glennerster
Massachusetts Institute of Technology (MIT) - Department of Economics ( email )
E53-320
77 Massachusetts Avenue
Cambridge, MA 02139
United States
Michael R. Kremer
Harvard University - Department of Economics ( email )
Littauer Center
Rm. 207
Cambridge, MA 02138
United States
Brookings Institution
1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Center for Global Development
2055 L St. NW
5th floor
Washington, DC 20036
United States
Jean Lee
Harvard University ( email )
Cambridge, MA 02138
United States
Ruth Levine
Center for Global Development ( email )
1750 Massachusetts Avenue, NW
Washington, DC 20036-1903
United States
Georg Weizsacker
Humboldt University Berlin ( email )
Spandauer Str. 1
Berlin, D-10099
Germany
DIW Berlin
Mohrenstr. 58
Berlin
Germany
Heidi L. Williams
MIT Department of Economics ( email )
50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
(617) 324-4326 (Phone)
(617) 253-1330 (Fax)
HOME PAGE: http://econ-www.mit.edu/faculty/heidiw
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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