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Far Low Malaria

Far Low Malaria

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The Science, Economics, and Politics of Malaria Vaccine Policy
Andrew Farlow
Department of Economics, and Oriel College, University of Oxford,
March 2006
1

The Science, Economics, and Politics
of
Malaria Vaccine Policy

Andrew Farlow

Department of Economics
and Oriel College
University of Oxford1
3 April 2006

PREVIEW COPY
A submission to
UK Department for International Development2
and
The Malaria Vaccine Technology Roadmap3
and a response to the
Tremonti Report to G8 Finance Ministers4
1 \u00a9 Andrew Farlow 2006. Further papers on vaccines, neglected diseases, and pharmaceutical R&D at:
www.economics.ox.ac.uk/members/andrew.farlow. In particular, previous papers contain many more
angles on \u2018Advance Purchase Commitments/Contracts\u2019, APCs, than are contained in the current report.

Feedback and corrections greatly appreciated:andr ew.farlo w@econ o mi cs . ox.ac.uk. A list of thanks is to be added when those involved agree to be listed or to remain as anonymous referees, given the sensitivity of some of the feedback the author has received.

2 UK Department for International Development consultation process on Advance \u2018Market\u2019 Commitments.
3www. malar iavacciner oad ma p.net. The draft \u201cMalaria Vaccine Technology Roadmap\u201d (henceforth

MVTR) is available onwww. ma lariav accineroad ma p .net/pdfs/roadma p_071905.p d f. The \u201cRoadmap Summary Results\u201d (henceforth RMSR) is atwww. mala riavaccineroad ma p.net /pd fs/road ma p_r esult s.pdf. The \u201cMalaria Vaccine Vision Meeting Summary Results\u201d (henceforth VMSR) is here:

www.malariavaccineroadmap.net/pdfs/summary.pdf.
4 \u201cAdvance Market Commitments for vaccines: A new tool in the fight against disease and poverty.\u201d

Report to the G8 Finance Ministers by Giulio Tremonti, Minister of the Economy and Finance, Italy, London, December 2, 2005,www. d fi d. go v. uk/co nsulta ti ons /a mc-r epor t- tre mo nti. pd f. Background papers to the \u2018Tremonti Report\u2019 at:www.dfid.gov.u k/consu ltat ions /backgrou nd- papers -tre mon ti.pd f.

The Science, Economics, and Politics of Malaria Vaccine Policy
Andrew Farlow
Department of Economics, and Oriel College, University of Oxford,
March 2006
2
Contents

Executive Summary.......................................................................................................... 6 1. Introduction................................................................................................................. 16 2. The Scientific Challenges of Malaria Vaccines........................................................ 24

2.1. Emphasis on current leading candidates for the goal-1 vaccine............................ 24 2.2. Goal-1 50% efficacy for one year: But many scientific unknowns....................... 26 2.3. The human immune response................................................................................ 28 2.4. Polymorphism and antigenic variation.................................................................. 32 2.5. Subunit and combination vaccines......................................................................... 35 2.6. New technology..................................................................................................... 37 2.7. Evidence that a malaria vaccine will ultimately work........................................... 39

3. A Leading Candidate Malaria Vaccine: A Timely Case Study.............................. 41

3.1. Introducing RTS,S/AS02A.................................................................................... 42 3.2. Control group given unrelated vaccine.................................................................. 47 3.3. Lack of correlation with antibody titres against circumsporozoite........................ 49 3.4. Parasite density figures.......................................................................................... 51 3.5. Case definition....................................................................................................... 53 3.6. Duration of response.............................................................................................. 55 3.7. Protective efficacy that is not strain specific......................................................... 57 3.8. Worries about the statistics and the nature of what is happening.......................... 58 3.9. Problems in generalizing results to all potential users and infants........................ 59 3.10. Keeping the malaria vaccine playing field open and level.................................. 63 3.11. A few closing thoughts........................................................................................ 66

4. Malaria Vaccines:Pa rt of a Malaria Control Package............................................ 70

4.1. The Implied mix of malaria vaccines and other malaria interventions.................. 70
4.2. Purchasers do not drive what they get under an APC............................................ 74
4.3. Unbalanced subsidies harm other R&D, including R&D to tackle resistance...... 78
4.4. Unbalanced subsidies create coordination difficulties........................................... 82
4.5. The impact of market and delivery risks on vaccine R&D incentives.................. 83
4.6. Problems with trust: The case of polio.................................................................. 89
4.7. Safety and liability issues impact R&D incentives................................................ 90
4.8. Why did purchaser co-payments stay as key to the working of an APC?............. 92
4.9. Emphasizing an overall malaria control strategy is good for vaccine R&D
incentives too................................................................................................................ 94

5. Minimizing Malaria Vaccine Development and Production Costs and Securing
Long-Term Supply.......................................................................................................... 97

5.1. The challenge of low costs..................................................................................... 97 5.2. APC contracts to repay malaria vaccine R&D costs?............................................ 98 5.3. Worries about costs undermine R&D incentives................................................. 102 5.4. Incentives to drive costs lower will increase the value of R&D.......................... 108

The Science, Economics, and Politics of Malaria Vaccine Policy
Andrew Farlow
Department of Economics, and Oriel College, University of Oxford,
March 2006
3

5.5. Goal-1 vaccine costs............................................................................................ 108
5.5.1. Capacity issues push up average costs.......................................................... 109
5.5.2. Higher production costs because of low follow-on incentives..................... 110
5.5.3. Less incentive to lower costs for less efficacious products.......................... 111
5.5.4. The high \u2018global\u2019 costs of goal-1 vaccines due to the technical challenges of
the malaria parasite................................................................................................. 111
5.5.5. Higher costs because of rent-seeking and other strategic behavior.............. 111
5.5.6. Higher costs because of weak distribution and health systems.................... 112
5.5.7. Liability worries raise costs.......................................................................... 113
5.5.8. Higher costs of a \u2018global\u2019 package................................................................ 113
5.5.9. Conclusion.................................................................................................... 113
5.6. When legally-binding long-term supply contracts undermine R&D incentives.. 114
5.6.1. This cannot be done...................................................................................... 116
5.6.2. What if long-term price does not go low enough?........................................ 118
5.6.3. Long-term price and follow-on issues.......................................................... 121
5.7. The destructive impact of a waiver on long-term supply obligations.................. 122
5.8. The problems of \u2018top-up\u2019 production subsidies and of flexible costing rules..... 125
5.9. The need for more production capacity and competition.................................... 127
5.10. Hepatitis B: A case study................................................................................... 128
5.11. Is it better to go with the ultimate \u2018best\u2019 malaria vaccine(s)?............................ 129
5.12. \u2018Manufacturability\u2019 is hard to judge.................................................................. 129
5.13. The need for innovative vaccine delivery mechanisms..................................... 130

5.14. Capacity: Firms are willing if the terms are right, but what are the right terms?

.....................................................................................................................................131 5.15. More competition to avoid R&D failure: The value \u2013 as well as the problems \u2013 of procurement................................................................................................................ 132 5.16. Some conclusions and a summary on production costs and supply issues........ 133

6. Recent Malaria APC Cost-Effectiveness Evidence................................................ 136

6.1. Ignoring technological complexity and true underlying development costs....... 138
6.2. Ignoring other components of cost of development............................................ 145
6.3. Ignoring delay and the \u2018mechanism risk\u2019 of an APC........................................... 147
6.4. Treating the usefulness of a malaria vaccine as being for ever........................... 149
6.5. Presuming low production costs and very low long-term vaccine prices............ 150
6.6. Treating a malaria vaccine as outside of a package of treatment and prevention 151
6.7. Assuming masses of failure elsewhere but not of the APC itself........................ 152
6.8. Hiding behind the value of a malaria vaccine even if not achieved or achievable
via an APC.................................................................................................................. 153
6.9. Bold claims based on this methodology.............................................................. 156

7. First and Second Malaria Vaccine Goals: Tradeoffs and Risks........................... 159

7.1. There is no \u2018pull\u2019 for the goal-2 vaccine: All emphasis is on the goal-1 vaccine 159 7.2. More on rates of compounding/discounting........................................................ 162 7.3. Tradeoffs between vaccine goals given the financing constraint........................ 164 7.4. Dangers to the second goal from the first goal.................................................... 166 7.5. Dangers to the first goal from the second goal.................................................... 167

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