Making vaccines more affordable

Business challenge

Achieving low and sustainable vaccine prices for GAVI-eligible countries is one way of making donor money go further and increases the ability of countries to fund vaccines in the long-term.

Lower vaccine prices allow more children to be immunised with a given amount of resources. An active approach to market shaping is essential to achieve this objective.

Various factors influence the price of a vaccine

While prices of traditional childhood vaccines are as low as a few cents per dose, the prices of new and underused vaccines supported by GAVI currently tend to be higher. Several factors influence the vaccine price, including:

• Vaccine production: the technology used to make some vaccines (including pneumococcal conjugate vaccines) can be very complex and therefore expensive. Products containing multiple antigens or serotypes require sophisticated manufacturing processes, which add to costs. Strict regulatory requirements that ensure the quality and safety of vaccines further increase production costs.
• Market environment: the number of suppliers producing a quality vaccine suitable for use in developing countries, production capacity and the willingness or ability to supply influence the prices offered to GAVI.
• GAVI’s relative market power: relative market power is how GAVI’s engagement can influence the market. This can be measured, for example, in terms of volumes, revenues and profits relative to other purchasers/markets or products.

GAVI's value-added

Ensuring a lasting impact on the vaccine market to the benefit of the low- and lower middle-income countries underlies the GAVI business model. In the first ten years of operation, the GAVI Alliance influenced vaccine prices using several strategies: :

Aggregating demand and procurement

Pooling demand and purchasing activities have been effective mechanisms to reduce prices through increasing demand certainty and placing larger order purchases. The creation of a strategic demand forecasting platform and the use of long-term commitments have increased the certainty of demand, enabling manufacturers to plan production more effectively, which in turn reduces the risk of supply shortages and allows GAVI to obtain prices lower than for contracts spanning only one year.

Encouraging competition

GAVI’s initial impact is evidenced by the changing production and supply base, in particular with pentavalent and tetravalent vaccines, and accelerated price decreases. As Haemophilus influenzae type ib- and hepatitis B-containing vaccines have shown, the entrance of new suppliers (including from emerging markets) can increase competition and drive down prices.

GAVI and its partners are also actively engaged in a range of push and pull funding mechanisms to ensure that new suppliers will enter the market in the medium to long-term.

Ensuring increased transparency

GAVI strongly believes in timely, transparent and accurate information on vaccine demand, supply dynamics and pricing. UNICEF approached manufacturers in 2010 to make public the historical vaccine prices. Most of this information is now available on the GAVI and UNICEF websites.

Since January this year, UNICEF has included a clause in vaccine tenders whereby it reserves the right to disclose awarded prices. Clauses around price transparency will be included in future tenders and prices will be published on the GAVI and UNICEF websites. [add link]

Encouraging tiered pricing

The significant volume and value of aggregated demand from GAVI countries have created sufficient incentives for the pharmaceutical industry to establish a low-pricing tier, allowing GAVI-eligible countries to access the same product at a fraction of the price charged in high-income countries.

Access to sustainable prices for graduating countries

In order to sustain immunisation programmes in countries that graduate from GAVI support, it is important to ensure that these countries continue to have access to low vaccine prices.

Some vaccines including pentavalent, measles, polio, yellow fever and meningococcal vaccines are available to graduating countries at a price similar or equal to the price UNICEF pays for GAVI-eligible countries.

Under the pneumococcal Advance Market Commitment (AMC), graduating countries will be able to access pneumococcal vaccines at the same low, long-term price paid by GAVI. The GAVI Alliance partners will continue their efforts to ensure affordable prices for graduating countries where this is not currently the case.