Creating Markets for New Vaccines Part I: Rationale

52 Pages Posted: 12 Jun 2000 Last revised: 3 Aug 2022

See all articles by Michael Kremer

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)

Date Written: May 2000

Abstract

Malaria, tuberculosis, and the strains of HIV common in Africa kill approximately 5 million people each year. Yet research on vaccines for these diseases remains minimal largely because potential vaccine developers fear that they would not be able to sell enough vaccine at a sufficient price to recoup their research expenditures. Enhancing markets for new vaccines could create incentives for vaccine research and increase accessibility of any vaccines developed. Private firms currently conduct little research on vaccines against malaria, tuberculosis, and the strains of HIV common in Africa. This is not only because these diseases primarily affect poor countries, but also because vaccines are subject to severe market failures. Government- directed research programs may be well-suited for basic research, but for the later, more applied states of research, committing to compensate successful private vaccine developers has important advantages. Under such programs, the public pays only if a successful vaccine is actually developed. This gives pharmaceutical firms and scientists strong incentives to self-select research projects that have a reasonable chance of leading to a vaccine. Committing to purchase vaccines and make them available to poor countries may also be attractive relative to other ways of rewarding vaccine developers.

Suggested Citation

Kremer, Michael R., Creating Markets for New Vaccines Part I: Rationale (May 2000). NBER Working Paper No. w7716, Available at SSRN: https://ssrn.com/abstract=232102

Michael R. Kremer (Contact Author)

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