Its impact on vaccine market is bringing down prices, GAVI says

HANOI, Vietnam — Following the increasing impact of the GAVI Alliance on the vaccine market, the price of one of the major combination vaccines, the pentavalent, is falling considerably, enabling GAVI’s partners to vaccinate millions of more children in the developing world, the organization said Nov 18.

News of the progress was announced just before the GAVI Partners’ Forum, which unites approximately 400 participants from all over the world including ministers of health, donors, civil society and industry representatives, researchers and development experts.

“This is the GAVI effect at work: encouraging and pooling growing demand from countries, attracting new manufacturers and increasing competition to drive down prices,” GAVI CEO Julian Lob-Levyt said. “The price drop has come later than we had hoped and it needs to fall further. But this is a clear indication that our market-shaping efforts work.”

Lob-Levyt stated that pentavalent is projected to be GAVI’s single biggest expenditure through 2015, accounting for about 40 percent of vaccine spending. “Its price, and those of other GAVI vaccines, is the major determinant of the future support that the GAVI Alliance will be able to provide to countries.” 

Most vaccines financed through GAVI are purchased by alliance member UNICEF. A recent tender for pentavalent vaccine has shown a significant price drop with the weighted average price for 2010 falling below $3, a decrease of almost 50 cents per dose on the 2009 price. This will create approximately $55 million in savings in 2010 and enable GAVI to finance the immunization of 6.3 million more children.

Data presented by Ibrahim El-Ziq, chief of the immunization center at UNICEF’s Supply Division, indicated that by 2010 his agency expects to pay $2.94 per dose for pentavalent vaccine. It is widely considered the gold standard for childhood immunization because it delivers protection against five diseases: Hib (Haemophilus influenzae type b); diphtheria; pertussis; tetanus; and hepatitis B.

As recently as 2004, the vaccine cost $3.65 per dose. El-Ziq said the price is expected to decline even further, to $2.83 per dose by 2012, for a total reduction of 22 percent over an eight-year period.

“This price drop is no accident, but rather the result of a strategy to leverage the purchasing power of hundreds of millions of people,” said Saad Houry, UNICEF’s deputy executive director. “Clearly, industry understands and responds to a market, regardless of whether that market is in poor or rich countries. The alliance’s model is beginning to work, and we are optimistic that the trend will continue, as competition and demand increase over time.”

GAVI’s business model is based on the expectation that rising demand for immunization in developing countries induces more companies to produce vaccines, thus creating competition and driving prices down. Through the new data, success becomes evident.

Whereas in 2001, there was only one company producing the pentavalent vaccine, now there are four. Two are Indian companies, whose products came on the market in 2008.

Today, 50 percent of the vaccines funded by GAVI are from developing country manufacturers.

Health experts believe the effect of lower prices for pentavalent vaccine could extend beyond the core beneficiaries of GAVI assistance, which are the world’s 72 poorest countries. For example, many middle-income countries are viewed as more likely to adopt the pentavalent vaccine now that its price is headed below $3 for the poorest countries.

 “There are two ways to increase the number of children we can reach with life-saving vaccines,” Lob-Levyt said. “First, we can raise more funds. Secondly we can push to bring vaccine prices down further. Considering the current economic climate and the difficult funding decisions that donors will have to make, I hope the vaccine industry will do their part to ensure that we can get prices down faster.”