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

28 Pages Posted: 11 Jul 2008

See all articles by Ernst R. Berndt

Ernst R. Berndt

affiliation not provided to SSRN

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; Harvard University - Harvard Kennedy School (HKS)

Jean Lee

Harvard University

Ruth Levine

Center for Global Development

GEORG WEIZSÄCKER

affiliation not provided to SSRN

Heidi L. Williams

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

Date Written: April 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.

JEL Classification: I18, O19, O31, O38;

Suggested Citation

BERNDT, ERNST R. and Glennerster, Rachel and Kremer, Michael R. and Lee, Jean and Levine, Ruth and WEIZSÄCKER, GEORG and Williams, Heidi L., Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness (April 2005). LSE STICERD Research Paper No. PEPP02. Available at SSRN: https://ssrn.com/abstract=1158324

ERNST R. BERNDT (Contact Author)

affiliation not provided to SSRN

No Address Available

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

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
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 WEIZSÄCKER

affiliation not provided to SSRN

No Address Available

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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