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2000 contents page
A smarter way to buy
As demand for vaccines outstrips
supply, Lisa Jacobs finds out how the system for buying them is
IF only it were as easy as telling
a company, "We need three times more vaccine this year than we did
last year. If you can make it, we will buy it." Crank up the manufacturing
capacity and start producing, right? Not quite. A company must invest
huge amounts of capital and time to build a new vaccine production
unit, or create a significant expansion. So when vaccine needs change
over time, supply can be hard to find.
The emergence of GAVI and the
Vaccine Fund has generated a great deal of new demand for hepatitis
B (hep B) vaccine. And already, GAVI has run into a problem with
supply. While global capacity for supply of monovalent hep B vaccine
is sufficient to meet demand, a significant proportion of the demand
is for combined diphtheria, tetanus and pertussis (DTP) and hep
B. And while a number of companies are developing this combination
vaccine, only one company, SmithKline Biologicals, currently has
this combination pre-qualified by WHO and available for sale. Significant
increases in supply will not be seen very quickly.
In the meantime, GAVI Board has
made a policy decision to reserve the available stock of combination
vaccines for countries with relatively weaker systems. The burden
of introducing new vaccines additional training, cold chain
and logistics requirements are minimized through the use of
combination vaccines. Furthermore, vaccines given in combination
necessitate fewer injections per child, thereby enhancing safety.
The countries with the stronger systems will be encouraged to introduce
the monovalent vaccine into routine immunization.
"The situation is not ideal, but
until combinations become available in greater quantity, we have
tried to develop a transparent and equitable allocation policy that
ensures the highest degree of safety and allows as many countries
as possible to access combination vaccines through the Vaccine Fund,"
says Steve Landry, of USAID and a member of the GAVI Working Group.
At press time, officials from
UNICEF and WHO were to meet with a number of developing country
health officials to discuss the available vaccines, and try to match
need with supply.
A predictable supply
Vaccines are unlike most products pharmaceutical
and otherwise in that they are biological compounds. They are
alive, needing cultivation and care through their entire development
process, sensitive to tiny discrepancies in manufacturing procedures.
All components for their manufacture
must be constructed to very specific standards of temperature, moisture,
air pressure and of course, safety and hygiene. Not only is scaling
up capacity time-consuming, vaccine production is also highly regulated
with each batch, or lot, requiring stringent
testing. When errors occur and
they do occur a whole lot can be rendered useless.
The size of investment necessary
to create and maintain vaccine manufacturing capacity, therefore,
means that companies must operate at or near full capacity, most
of the time. Sudden increases in demand cannot be easily met. Scaling
up can take years.
This is all to say that the manufacture
of vaccines is fraught with difficulty and risk. If a manufacturer
underestimates demand, it risks losing market share; if demand is
over-estimated, expensive facilities are underused, and investments
turn into losses.
Buying vaccines for the worlds
The six vaccines introduced on
a large scale in the developing world through the global Expanded
Programme on Immunization, or EPI, were already mature products
when the programme started. Product maturity in the vaccine field
means that vaccine production is smoother, more manufacturers in
the field means that demand can be more easily met, and more manufacturing
capacity means that costs are reduced, and prices can follow costs
In this environment, it made sense
for UNICEF to pursue a procurement policy that achieved the lowest
prices possible. To do this, it has used what is known as a tender
approach issuing requests to all qualified manufacturers every
or every other year for quotes on a specific amount of a particular
This policy has its benefits;
the low vaccine prices achieved through this method were critical
in helping even the poorest countries introduce basic routine immunization
into their health systems. But the singular focus on price with
the necessary attention to quality, of course has downsides
as well. For one thing, since EPI began in the 1970s with six vaccines,
new vaccines have been
developed. Many children in the
richer countries are now protected against 11 or 12 vaccine-preventable
diseases. But the newer vaccines are not available for most children
in developing countries, for two reasons that are inextricably linked:
greater costs and limited supply.
Developing country health programmes
have come to regard vaccines as low price commodities. In fact,
vaccine costs are only a small fraction of the total estimated cost
of providing routine immunization to a child. Of the estimated $20
it costs to protect one child, the cost of the required doses of
the six vaccines comes to less than $1 the great majority of
costs involved are staff, vehicles and maintenance, cold chain equipment,
training and other overhead. The thought of paying more than a few
pennies for the vaccine is anathema to many health officials.
But the focus on low prices has
not helped to convince manufacturers that making the necessary investments
on development and manufacturing capacity for vaccines for the developing
world can make business sense.
A new approach to procurement
With the emergence of GAVI, and
its focus on reducing the gap between the time that a vaccine becomes
available in rich and poor countries, UNICEF Supply Division has
taken the opportunity to restructure its relationships with companies.
For the purchase of new and under-used vaccines, UNICEF has decided
to use a request for proposals method.
Through this route, UNICEF is
asking companies to make offers that cover a longer term, affording
companies more stable commitments over three to five years to ensure
sustained supply of vaccines over longer periods. In addition, the
vaccine industry has offered UNICEF additional components to contribute
to the GAVI objectives including: training and materials, donations,
bundling of vaccines to improve delivery and injection equipment.
How have the companies responded?
"The companies have exceeded our expectations," says Steve Jarrett,
Deputy Director of the UNICEF Supply Division. "There are many interesting
offers on the table."
"In the vaccine business, there
are enough uncertainties during the development and manufacturing
process; UNICEF is committed to working with industry to establish
a reliable and predictable vaccine supply environment," says Jarrett.
With the global increase
in immunization coverage from about 5% in 1974 to nearly
75% today, UNICEFs purchasing role has grown; in 1999, UNICEF
supply division shipped 104 million doses of measles vaccines,
102 million doses of BCG, 100.4 million doses of tetanus toxoid,
and 90 million doses of combined diphtheria/tetanus/pertussis
Of course, with the increasing
demands of the global polio eradication efforts, the bulk
of UNICEFs vaccine purchases in 1999 were for oral polio
vaccine (OPV) UNICEF shipped 881 million doses of OPV in
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