{
  "title": "Vaccine Finance and Epidemic Risk – IMF F&D",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2020/09/vaccine-finance-epidemics-and-prevention-bloom",
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  "summary": "The world faces a sustained threat of outbreaks and epidemics, but our approach to vaccine finance is ill-suited to addressing epidemic risk, writes David E. Bloom, Daniel Cadarette, and Daniel L. Tortorice.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The world faces a sustained threat of outbreaks and epidemics; COVID-19 continues to rage in many locations and the emergence of other known and unknown pathogens remains a material risk.\n- Biopharmaceutical countermeasures to prevent or quickly react to emerging infectious diseases have tremendous value; a growing body of research supports that the full societal value of vaccination far exceeds what traditional economic evaluations capture.\n- Reliance on population immunization requires substantial expenditure on R&D, manufacturing capacity, and delivery.\n- The article frames the problem as a cycle of “panic and neglect” in investment for diseases of epidemic potential."
    },
    {
      "heading": "Challenges in vaccine R&D, manufacturing, and delivery",
      "content": "- Market failures and incentives\n  - Current vaccine R&D and manufacturing rely substantially on the profit motive of major multinational pharmaceutical companies; this model produces many vaccines for endemic diseases affecting large numbers in wealthy countries but is less effective for diseases that primarily affect lower-income countries and for individually low-probability, high-severity epidemic threats (examples: Ebola-like hemorrhagic fevers, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome, Zika).\n  - The world’s failure to produce high-quality vaccines against tuberculosis, malaria, and human immunodeficiency virus is emblematic of system shortcomings.\n  - Vaccine nationalism during the COVID-19 pandemic threatens international cooperation and equitable allocation.\n- Cost, time horizons, and risk\n  - Estimates of total R&D costs range from roughly $200 million to $500 million per successful vaccine, inclusive of sunk costs for failures.\n  - Building and maintaining vaccine manufacturing facilities could add another $500 million to $1.5 billion to the total (Plotkin and others 2017).\n  - It is not uncommon for more than a decade to elapse between inception of initial research and the end of phase III clinical trials.\n  - A 2013 study found that, on average, 6.4 years elapsed between marketing authorization for new vaccines and population access in European countries.\n  - Vaccine sales generate roughly $40 to $60 billion in annual revenue; the global vaccine market accounts for approximately 3–5 percent of the total global pharmaceutical market.\n- Demand-side constraints and externalities\n  - Demand for epidemic vaccines is uncertain and contingent on outbreaks unless advanced stockpiling agreements exist.\n  - Growing vaccine hesitancy threatens to suppress demand.\n  - Vaccination produces positive externalities (interruption of transmission, reduced antimicrobial resistance, potentially improved macroeconomic performance), and vaccine R&D knowledge is a global public good, leading to free rider problems.\n- Political economy and collective financing barriers\n  - Democratically elected officials may lack incentives to approve investments with unlikely visible returns during their terms.\n  - Lack of public perception of epidemic threat and lack of trust in scientific and political authority can undermine preparedness efforts.\n  - Central decision-making faces the question of effectively identifying promising vaccine candidates relative to market forces."
    },
    {
      "heading": "Solutions and policy recommendations",
      "content": "- Accelerate R&D and manufacturing capacity\n  - Increase investment in cutting-edge vaccine platforms (example cited: mRNA technology) to accelerate development.\n  - Governments and international bodies such as the WHO can formalize special regulatory pathways to allow accelerated approval of vaccine candidates during epidemics while ensuring basic safety requirements.\n  - Governments and international funders (Gavi, the Gates Foundation, the Wellcome Trust) could contract with pharmaceutical companies for direct access to manufacturing facilities during emergencies.\n  - An international body such as the WHO or a novel technical advisory council on infectious disease threats could expand the blueprint list of priority pathogens to develop a global budget and action plan for financing relevant R&D and de-risking manufacture (Bloom and Cadarette 2019).\n- Strengthen collective financing and institutions\n  - Consortia of wealthy countries (examples: the Organisation for Economic Co-operation and Development, the Group of Seven, the European Union) could commit several years of earmarked funds for international organizations to finance R&D, production, and purchase of vaccines against emerging pathogens.\n  - Increase funding to CEPI, enlarge its pool of sponsors, and expand its authority to sponsor development of a greater number of vaccine candidates and support developers into (and perhaps through) phase III trials.\n  - Condition public grant funding of early R&D on price ceilings or the possibility of compulsory licensing to improve affordability and access for people in poor countries.\n- Address political economy and public persuasion\n  - Frame investment in vaccines and preventive measures as socially valuable insurance or analogous to stockpiling a standing army to respond to unknown threats, to persuade policymakers and the public and promote accountability.\n- De-risk private investment\n  - Governments or philanthropic organizations can provide guarantees that de-risk investment in successive stages of clinical trials and manufacturing capacity to overcome firms’ incentives to delay R&D projects with uncertain returns (reference to Pindyck 1991)."
    },
    {
      "heading": "Key findings and statistics (exact figures preserved)",
      "content": "- R&D cost estimates: roughly $200 million to $500 million per successful vaccine (inclusive of sunk costs for failures).\n- Manufacturing facility costs: another $500 million to $1.5 billion.\n- Time from research inception to end of phase III: more than a decade is not uncommon.\n- Average lag from marketing authorization to population access in Europe: 6.4 years (Blank and others 2013).\n- Global vaccine market revenue: roughly $40 to $60 billion in annual revenue.\n- Vaccine market share of total pharmaceuticals: approximately 3–5 percent."
    },
    {
      "heading": "Conclusion / Public intervention needed",
      "content": "- Because vaccine R&D and administered doses produce global public goods and positive externalities, the market tends to undersupply them.\n- Public intervention is needed to support R&D, manufacture, financing, and delivery—likely via collective financing and regulation of existing institutions.\n- Strengthening systems for vaccine development, manufacture, and delivery before the next emerging pathogen gains a foothold is imperative.\n\nSource: Vaccine Finance and Epidemic Risk – IMF F&D (F&D Magazine: \"An Ounce of Prevention\", DAVID E. BLOOM, DANIEL CADARETTE, DANIEL L. TORTORICE, September 2020)\n\n---\n\n Content in this bundle\n\n- Más vale prevenir ● Finanzas y Desarrollo ● Septiembre de 2020\n  - Más vale prevenir ● Finanzas y Desarrollo ● Septiembre de 2020 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Más vale prevenir ● Finanzas y Desarrollo ● Septiembre de 2020 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Mieux vaut prévenir\n  - Mieux vaut prévenir (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Mieux vaut prévenir (PDF){rel=\"external\" type=\"application/pdf\"}\n- Vaccine Finance and Epidemic Risk – IMF F&D\n  - Vaccine Finance and Epidemic Risk – IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Vaccine Finance and Epidemic Risk – IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2020/09/vaccine-finance-epidemics-and-prevention-bloom"
    }
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    "Authors: DAVID E BLOOM, DANIEL CADARETTE, DANIEL L TORTORICE",
    "Published: September 2, 2020",
    "The world faces a sustained threat of outbreaks and epidemics; COVID-19 continues to rage in many locations and the emergence of other known and unknown pathogens remains a material risk.",
    "Biopharmaceutical countermeasures to prevent or quickly react to emerging infectious diseases have tremendous value; a growing body of research supports that the full societal value of vaccination far exceeds what traditional economic evaluations capture.",
    "Reliance on population immunization requires substantial expenditure on R&D, manufacturing capacity, and delivery.",
    "The article frames the problem as a cycle of “panic and neglect” in investment for diseases of epidemic potential.",
    "Market failures and incentives",
    "Cost, time horizons, and risk",
    "Demand-side constraints and externalities",
    "Political economy and collective financing barriers",
    "Accelerate R&D and manufacturing capacity",
    "Strengthen collective financing and institutions",
    "Address political economy and public persuasion",
    "De-risk private investment",
    "R&D cost estimates: roughly $200 million to $500 million per successful vaccine (inclusive of sunk costs for failures).",
    "Manufacturing facility costs: another $500 million to $1.5 billion.",
    "Time from research inception to end of phase III: more than a decade is not uncommon.",
    "Average lag from marketing authorization to population access in Europe: 6.4 years (Blank and others 2013).",
    "Global vaccine market revenue: roughly $40 to $60 billion in annual revenue.",
    "Vaccine market share of total pharmaceuticals: approximately 3–5 percent.",
    "Because vaccine R&D and administered doses produce global public goods and positive externalities, the market tends to undersupply them.",
    "Public intervention is needed to support R&D, manufacture, financing, and delivery—likely via collective financing and regulation of existing institutions.",
    "Strengthening systems for vaccine development, manufacture, and delivery before the next emerging pathogen gains a foothold is imperative.",
    "**Más vale prevenir ● Finanzas y Desarrollo ● Septiembre de 2020**",
    "**Mieux vaut prévenir**",
    "**Vaccine Finance and Epidemic Risk – IMF F&D**"
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