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Innovative funding

GAVI is at the forefront of finding new ways of raising and disbursing money for immunisation.

Private-sector thinking

GAVI uses two mechanisms that draw heavily on private-sector thinking to help overcome historic limitations to development funding for immunisation. These mechanisms are the AMC and the IFFIm. The former reflects the need to meet disproportionately high costs in the early stages of implementing aid programmes; the latter developing countries' need for sustainable predictable funding.

An Advance Market Commitment (AMC) provides a way of accelerating the development and manufacture of vaccines. Through an AMC, donors commit money to guarantee the price of vaccines once they are developed, provided they meet stringent, pre-agreed criteria on effectiveness, cost and availability, and that developing countries demand them.

By guaranteeing an affordable long-term price, that is often referred to as the "tail price", the AMC also supports sustained use of the vaccine.

In June 2009, GAVI, the World Bank, WHO and UNICEF, five national governments and the Bill & Melinda Gates Foundation signed legal documents to formally kick-off the first-ever AMC, designed to accelerate access to vaccines against pneumococcal disease.

Pneumococcal disease takes the lives of 1.6 million people each year, including up to one million children before their fifth birthday. It is estimated that the pilot project, which capped two years of financial and legal preparatory work, could prevent more than seven million childhood deaths by 2030.

In the AMC pneumococcal pilot, the governments of Italy, the United Kingdom, Canada, Russia, and Norway and the Bill & Melinda Gates Foundation committed US$ 1.5 billion with GAVI promising to allocate $ 1.3 billion through 2015. Implementing countries will provide a small co-payment to contribute towards the cost of the vaccines. The World Bank provides fiduciary support, WHO has established the minimum technical criteria for a suitable pneumococcal vaccine and UNICEF will be responsible for vaccine procurement and distribution.

In March 2010, GlaxoSmithKline (GSK) and Pfizer Inc. became the first two companies to make long-term commitments to supply new vaccines for the Pneumo AMC. The two participating firms committed to supply 30 million doses each per year, for a 10 year period.

These vaccines will be made available at US $ 3.50 per dose to be paid by GAVI and the developing country governments that introduce the vaccines. For approximately 20% of the doses, companies will also receive an additional payment of US $ 3.50 for each dose they provide, which is paid with donor commitments (AMC funds). In total, this is a fraction of the current cost of pneumococcal vaccines in many industrialised countries.

Firms can still make offers under the AMC as new calls for supply offers will be issued over time. As more companies participate in the AMC, the long term vaccine price could drop further.

Before introduction can begin, vaccines must be prequalified by the World Health Organization and approved by the AMC’s Independent Assessment Committee (IAC); approval is expected in 2010.

The International Finance Facility for Immunisation (IFFIm), developed in conjunction with GAVI, was proposed to the Group of Seven (G7) countries by the UK government in 2005. Donor countries make 10-20 year, legally-binding aid commitments. IFFIm borrows against these pledges on capital markets, raising funds that can be disbursed in an optimal way. The November 2006 IFFIm bond launch raised US$ 1 billion. US$ 854 million of this has already been disbursed to developing countries, as at January 2008.The aim of IFFIm is to raise US$4 billion on capital markets over the next 10 years – enough to support the immunisation of half a billion children through immunisation campaigns against measles, tetanus, and yellow fever.

Direct funding over many years

In addition to receiving IFFIm and AMC funding, GAVI also seeks direct funding from donor governments. 67% of donor governments make multi-year (spanning three years or more) donations to GAVI, as at January 2008. This has risen from 33% of donor governments in 2005.

Countries co-financing their immunisation

Stable funding to GAVI in turn helps GAVI supported countries plan and progressively undertake the financing of their own vaccine programmes to ensure long-term sustainability. GAVI introduced the principle of co-financing immunisation in 2007. But some countries were already co-financing before then. Those that were not are now being asked to start co-financing when they introduce new vaccines, and to co-finance existing vaccines beyond the first five years (or equivalent) of GAVI support.

GAVI-eligible countries have been grouped according to their expected ability to pay, and the co-financing levels vary across the different groups. GAVI will conduct an evaluation of the co-financing policy in 2009. Based on the outcomes of the evaluation, current co-financing levels, country groupings and eligibility criteria are expected to be revised in 2010.