It is a real pleasure to be here to speak to you, but I am also here to speak to the Australian government about more money for immunisation and how that money can be deployed, because it is not just the volume of money we are looking for – it is how we can use it cleverly and perhaps with more intelligence.
That is largely what I would like to talk to you about today, because (as you know) there is a very exciting pipeline of new products coming through that we really need to take advantage of. What we need to do is to begin to address the inequity that people in some of the poorest parts of the world have had to wait 10 or 15 years before they can access vaccines that our children here in Australia, and my children in Europe, have had benefit from.
I am a public health physician, originally, and now I head up this organisation which is a partnership about raising finance and working in the poorest parts of the world to deliver some of those vaccines. But also, more recently, I have had to learn to work with people that work in the financial markets – people that work for Goldman Sachs, Linklaters – and I will come to that later. I think that we, as a public health community, need to learn a different kind of language to interact with different kinds of people, to raise the finance to deliver the science that many of you represent here.
GAVI’s mission would be well known to you. It is about saving children’s lives, it is about protecting people throughout their lives.
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Here is just a little bit of the stuff that you would also know, that the disease burden of under-five deaths is largely in Sub-Saharan Africa and South Asia, but of course also in this region, in East Asia and in the Pacific. These are the kinds of things that we are here to address.
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Major causes of mortality are still pneumonia and diarrhoea, once you get beyond the neonatal causes. Measles deaths remain substantial, though there has been fantastic recent progress there. And malaria remains one of the big challenges for children in the future.
Talking about new markets and how we are going to deal with those 10 million child deaths every year: the calculations that WHO has made are that perhaps a quarter, 2.5 million, of those child deaths could be prevented through the extended use of existing vaccines and the vaccines that we have in the pipeline.
How are we going to finance that? We need to address the financing that we raise from a different perspective. Looking at where those burdens of disease are, we need to turn it round and say, ‘Well, this is a potential market for industry. This is something that hasn’t been recognised. They focus mostly on the diseases of the rich parts of the world.’
GAVI was created largely to address that, to bring more manufacturers into the market, to result in a more secure product supply, to have more competition in the pricing (through economies of scale), and to encourage the entry of emerging-market vaccine manufacturers into our world.
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Perhaps the perfect example we have of success has been hepatitis B. But we need to understand why it has taken 10 or 15 years to generate this success.
Shown here is a map of the eligibility of GAVI countries. We work in the 72 poorest countries in the world; basically, the criterion is that anywhere with a GDP per capita of less than $1000 is eligible for GAVI support.
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Most countries eligible for GAVI support have now applied and are receiving that support. There are a couple of countries – East Timor and Haiti – which have yet to apply, but they should be doing that shortly.
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Basically, hepatitis B coverage, with GAVI support, has gone from practically zero coverage in the poorest parts of the world to where (the latest figures are better than those shown here) we are now looking at over 60 per cent coverage across the world for hepatitis B. What is it that made that difference?
I think that it could not happen until GAVI came along and worked with the markets where there were a lot of manufacturers, there was competition and that helped generate the demand and worked with the countries so that they could understand that there is a disease burden that needs to be tackled. You needed the finance of GAVI to be there. You need that long-term finance for the countries to make their applications to get our support, to move forward in that area.
We don’t have that in all areas. I think hepatitis has been a bit exceptional, and with some of the newer vaccines coming on it may be a little bit tougher.
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This is one of those ‘no brainer’ slides but it is something that we in GAVI did not pick up quickly enough, perhaps. In the early years of GAVI we were in the situation of there being only one manufacturer of this particular vaccine, DPT-Hep B, a combination vaccine, and we found that as demand goes up (as we generate the demand), surprise, surprise, the price goes up. We assumed that within five years we would be able, because of our bulk purchasing power and influence and the goodwill of companies, to drive prices down. Well, surprise, surprise, that is just not true. What we have to do is demonstrate that we are here, GAVI has sufficient finance and long-term finance and has built credibility, and the demand has been generated in countries, and then the new companies start coming in.
Now we have moved from one manufacturer to seven manufacturers, and we are beginning to see some dramatic declines in the price of that vaccine. But it is taking longer, and development finance traditionally is not long term.
Looking at traditional finance from bilaterals such as the Australian government, World Bank studies have shown that it is the most volatile and least predictable of financing. As governments come and go, and fashions come and go, that finance to countries becomes increasingly short-term and unpredictable. We need to find better ways, if we are going to do this market shaping.
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This is the other area that we work in. Shown here is the price of auto-disable syringes that GAVI insists have to be used. Our bulk purchasing power here has really shown some dramatic declines in prices, in that we are seeing these, as with vaccines, increasingly coming from the emerging-market suppliers, principally India.
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This is the Haemophilus influenzae B story. In the early days of GAVI, things moved quite slowly. This wasn’t picked up. This was an expensive vaccine in its combination form, and we didn’t have the combination and we weren’t getting the demand.
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But now we are seeing a pretty dramatic pick-up in the demand from countries and we are beginning to see an impact on price. In the last 12 months there has been a doubling of the number of countries that have applied for support for tackling Haemophilus influenzae B. That has been for a combination of reasons.
I am here partly because in Papua New Guinea this month we will begin to introduce Hib, protecting the children of that country against major diseases. Clearly the Australian government is particularly interested in this, and AusAID is working with us to provide some technical assistance in that area.
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In other parts of the world we have had tremendous success with Hib. A study recently published has shown that essentially we have now got elimination of Hib meningitis in Uganda. That is a success story that helps sell us in other parts of the world, that this is what you can achieve.
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This slide illustrates the uptake of pentavalent vaccine. Thirty-eight countries are currently using or approving that vaccine; it is now proving to be quite popular.
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This is the other part of our success story, which is where we are purchasing our vaccines from. As we started out it was mostly from the developed world; now over 40 per cent of the vaccines we are purchasing are from emerging-market suppliers, which is increasing competition and is a wholly positive development.
I want to talk briefly about two new areas that we have got into recently. One is pneumococcal vaccine and the other is rotavirus.
We attempted, through an innovative structure, through participation of technical expertise and participation of donors and developing countries, to create a platform where we could facilitate more quickly the necessary studies that were required to demonstrate that these vaccines were safe and effective in the developing world. We set up what were called the ADIPs (Accelerated Development and Introduction Plans). There was the PneumoADIP and the RotaADIP, two platforms to accelerate the introduction of those vaccines.
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This was done specifically because among the burden of disease the vaccine-preventable diseases such as measles are well tackled, but pneumonia and rotavirus deaths remain extremely important and need to be tackled.
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Let’s return to the challenge of pneumonia as a major cause of death.
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One of the areas where we pushed very hard for new financing has been to get a pneumococcal vaccine out there much faster by using a mechanism called the Advance Market Commitment (AMC). This essentially, at its simplest, was a process by which we would secure legally binding commitments from donor nations to purchase a specified vaccine, at a certain price, that would have a certain level of effectiveness.
Pneumococcal vaccine was chosen for that, to get the right valent vaccine most useful for Africa and South Asia, and this year that should be signed off.
The principle of this is that we take a pre-financing position where we secure, over a short period of years, significant burden of the cost of that vaccine, but at a guarantee that the tail-end price to developing countries will be at an affordable level, maybe $2 or $3 a dose.
So instead of countries waiting 10 or 15 years for prices to decline as the demand builds up, we are going to take the risk. We are prepared to finance the first company that comes up with the appropriate vaccine – but being absolutely assured that we will have a price that is affordable after we have done the heavy financing, such that countries will be able to afford it in the long term.
The difference between doing that through the Advance Market Commitment and not is a difference of 4 million lives saved over this period of time.
I will continue with the new financing models and where we need to go to do what I have been outlining.
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Clearly, our main source of financing is traditional finance. To remind ourselves: we had huge slugs of money in 2000 and 2001, represented in green, contributed mostly by the Gates Foundation when we started out. That transformed the way that we could look at vaccines and how we could purchase vaccines. The government donors have come in and have built up their support, so we have now used that Gates Foundation finance to lever more and more donor support: we now have 13 donor governments supporting us. The Gates Foundation has now pledged us another US$75 million a year for the next 10 years.
And then the two areas in blue, in 2006 and 2007, which I would like to talk about just briefly, are the significant other innovative financing instrument we have developed, which in 2006 released a billion dollars to GAVI to deploy two programs.
These, in my experience, are unimaginable sums for programs in vaccines. We have never had that level of support and financing.
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I want to briefly talk about the International Finance Facility for Immunisation. This is where we have to become literate in working with financial communities and others.
Essentially, this facility released a billion dollars in 2006. The mechanism is that, basically, seven governments (including South Africa, which has just joined) have given a legally binding commitment by their countries to securitise finance over the next 20 years. That allows us to go the capital bond markets, which is what we did in 2006, and raise bonds – in this case US$1 billion worth – secured by those governments, such that those bonds go to your pension funds. It is that kind of use of the finance.
This has just transformed the way that we are able to talk to industry and talk to countries. We are now able to have 10 years of legally binding finance. This year we launched another $230 million in Tokyo, and each year we will be releasing another amount of money.
The graph here represents the amounts that are paid back over time by the governments. But for practical purposes it means that we can now realise US$400 million a year to vaccine programs for the next 10 years. That allows us to talk to developing countries and allows them to plan ahead over five to 10 years, to afford to bring onto their budgets those vaccines, to co-finance with us. And it sends a very powerful message to industry that GAVI is here in the long term. They are prepared to invest substantially, now, in the plant and production coming to the market.
So we can try and re-create that ‘perfect storm’ we had with hepatitis B but that we don’t yet have with other vaccines – more companies coming in, more competition, greater demand and a more secure supply.
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GAVI represents a new partnership. It is a fairly unique public-private partnership. It is made up of governments from industrialised countries, who are our main financers; governments from the developing countries, those who implement the programs; industry North and South; the major multilaterals; and the research and the technical health institutes – in this case John Clemens represents those on our board at the moment – but then, interestingly, as we are moving forward, one-third of our board seats will be non-affiliated individuals. By that we mean individuals who give of their time, mostly with expertise from the financial markets and from those parts that we in the public health community are less used to working with.
The kind of question we now get at our board, when we say we have immunised 290 million children, is, ‘Well, why wasn’t it 390 million? And why wasn’t it done for half the price?’ These are the kinds of challenges that we need to deal with.
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We are delivering against a promise – this is about the finance which is required to resolve bottlenecks in delivery. The countries are really the entrepreneurs. They are the people that apply to us for the support. This is about ownership, partnership, innovation and flexibility for the use of our finance.
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One particular kind of finance that we provide, we provide in different ways. Not only do we purchase vaccines, but we provide the finance to strengthen the systems for the delivery of those vaccines.
This graph illustrates one example, Immunisation Services Support. Basically, we provide US$20 to a Ministry of Health for each additional immunised child. We don’t specify how that finance should be used; we merely say, ‘Use that to build your system, and we will measure the improvements in your DTP3 coverage.’
We have looked recently at how that finance has been spent, just so that we understand it. A big chunk is being spent, perhaps not surprisingly, at the peripheral levels – human resources and incentives to do that, some of the infrastructure, such as vehicles and transport, and cold chain and maintenance.
The other part of what we have done has been opening up a new window building on that success (which I’ll come back to) for more fundamental health system strengthening, whereby we have opened up another window of finance so that countries can strengthen the services platform not only for the delivery of vaccines but also for integrating the delivery of vaccines into broader maternal and child health programs. That is very much the way to go.
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What is the result of this? These are the huge success stories of Africa. I gave you Uganda and Hib, but here you see DTP3 coverage. This is the global coverage. At the outset of GAVI we had declining immunisation coverage globally; it is just over 60 per cent now, getting up to 80 per cent. But in Sub-Saharan Africa we have gone from the low 40s to close to 80 per cent coverage.
A large part of that success has been due to this $20 of additional money per immunised child to strengthen the basic system. That has been independently validated, controlled for health budget, changes in investments in education, and development budget, and it is pretty clear that this finance, and the flexible use of this finance – which was a GAVI innovation from the outset – has really allowed immunisation systems to be significantly strengthened and to get those levels of coverage.
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It is a success story. I think the statement here testifies to that, both through its nature, that we use finance from organisations such as the Bill and Melinda Gates Foundation, and also in that we are trying to do business in a different way, in a public-private way. So we are not only raising very significant amounts of finance, but also trying to deploy that finance to shape markets longer-term, and with innovative mechanisms such as the Advance Market Commitment to get some of those vaccines out faster.
Discussion
Question: I noticed that you are on the board of the International AIDS Vaccine Initiative. I was wondering if you might talk to us a little bit about the interaction between the scientific community and, particularly, the GAVI Alliance and the GAVI partners.
Julian Lob-Levyt: I think that we rely heavily on the multilaterals, principally WHO and Unicef, for our support, and on the scientific community to advise GAVI on the right approaches. But we are principally a financing instrument to support programs and delivery, so we don’t invest in the basic research. Our aim is to create markets where markets did not exist before, to generate demand from countries for new technologies and new products, such that industry will respond. We think that has a pull effect on the research community as well.
But we are largely talking around the vaccine industry, North and South, and looking at the incentives that allow them to come on board and bring the better products faster and at better prices.
Question: If we consider that this program now is just eight years old, isn’t it a phenomenal, stunning, unparalleled success? We’ve got to say that. GAVI is an experiment that has done an enormous amount in a very short time, and yes, there is a hell of a lot more to be done! So there is really no disagreement.
Do you believe that you will be able to keep up the momentum of these new financing mechanisms as a whole slew of considerably more expensive vaccines comes through the R&D pipeline?
Julian Lob-Levyt: That is a very good question. The first thing we have been able to do is to get longer-term finance. So the IFFIm is US$4 billion, a significant amount of money that is unprecedented in the immunisation world, and over 10 years.
But already in our discussions with governments we talk through to 2015, 2020. If they are going to take on expensive products, they need to know that we are there in the long term, that they are not left holding the baby and blowing their health budgets because we have pulled out – which is the history of development finance, quite frankly. And so we are a very different model.
We have done some quite sophisticated work looking at this particular issue, and together with the World Bank we have modelled a package of existing and new vaccines, including a theoretical malaria vaccine and what that might cost. Our conclusions are that – with the exception of three or four or five basket-case countries (to put it crudely) – in most of the poorest countries of the world, if we take a long-term view, 10 to 20 years, with a combination of declining vaccine price and growing economies and health budgets, the proportion of the health budget which is spent on immunisation as a whole never rises above 5 per cent. And that remains a fantastic buy.
So I am much more confident now than I was perhaps in the early GAVI days about the affordability of that. That being said, IFFIm is 10 years. I am now talking to you about 20 years of what we need to do. So two things are happening.
One is that we are looking for a round 2 of IFFIm; we are looking to discuss with donors that as the IFFIm spans out through 2015, we’re already picking up in 2008 with another 10 years of finance, and we need to convince governments that this is worth doing.
Secondly, the first AMC is for pneumococcal vaccine, to be launched this year, and already we have an independent expert committee looking at AMC 2: which vaccine will that be? The two vaccines which seem to be of most interest at the moment or potential areas where an AMC might have impact include malaria and TB, for example.
But we have got to make a paradigm shift in the way development finance works. GAVI, as I agree with you – and I am not going to take credit for it, it is my predecessor and her partners – is a phenomenal success. I don’t think we imagined we would achieve the levels of hepatitis coverage we have, or the Hib levels we are getting to now. We have just introduced pneumo and rota; this June we will be looking at another raft of vaccines to introduce, which I hope will include HPV. These are things that we need to get the finance for.
I was at a meeting with the UN Secretary General at a round table on the Millennium Development Goals, and it was pointed out that the major donor nations were behind on their commitments. The OECD, all of them, were behind on their commitments to live up to the promises that they had made. And so we need to keep the pressure up – because this works!
The nice thing about GAVI is that we can measure the dollar in, we can measure the vaccine given, we can measure the lives saved. Very few partnerships have got that beautiful, clean relationship, and that is a very powerful, convincing message to take to donors.
Sorry, it’s a lengthy response, but I think we are on the right path. But I think we need to keep the pressure up.
Question: I had not realised that the $20 inducement per vaccinated individual was an aspect of the GAVI program. Was that there ab initio, so that it started off that way? And is that an average figure – do you have to stratify that a bit, as it were, for this country versus that – or is it $20 flat for everyone?
Julian Lob-Levyt: It started in the early days of GAVI, and it is a flat amount, essentially, for all of those that are eligible to get that. You have got to start off from a minimum level of coverage, but after that it is really to try to boost it up to the high levels of coverage.
Question (cont.): Does that tail off?
Julian Lob-Levyt: No, it is a $20 amount, and it can be reapplied for once they have used that over the period of time. It is independently audited; you independently audit the coverage. We don’t totally rely on the WHO and Unicef figures. We have that audited to make sure the countries have done what they have achieved. And it has been very hands-off. If you get there you get your $20 and you’re making your progress.
There are some concerns in just using an output driven model which measures the results you get to release the finance, for all the obvious reasons. I think ours is a very good model. We’ve had one or two problems on the way – Uganda misappropriated the funds. We had to suspend finance to Uganda. There is a success story on Hib, but on this particular area there was a problem with an administrator for health, he went to prison and is now on trial and the government has paid the money back so we can resume the program.
It’s a pretty innovative model, but I suspect that in the future it will be hard to have such a hands-off model.
Question (cont.): How did you come to that figure? Does that have a rational basis or did $20 sound about right?
Julian Lob-Levyt: I think it was, ‘how much money do we have in our pockets at the moment and that’s to be divided by the additional number of children to be immunised and that sounds like quite a good figure’, and it worked out. An awful lot of GAVI is prepared to take risks. I think the beauty is the simplicity of the model, but also that it gives sufficient incentive to make a difference.
The great thing is, and I’m a firm believer of this (I mean, I’ve spend most of my life working in developing countries): give the money directly to the peripheral managers, and this is what this program does. They’ll get on with the job. This $20 is used to buy petrol for the vehicle, to get the bicycle fixed, to buy some ice from the market for a couple of dollars. It is the ability to draw on a few tens of dollars at the clinic to fix the little bottlenecks on a day to day basis, which you don’t have in normal budgets in developing countries. You have to go all the way up the system with a requisition order to buy your dollar’s worth of ice, by which time you’ve given up.Visit these websites
The Sir Mark Oliphant Conference Series is supported by the Australian Government under the International Science Linkages Program.
© 2008 Sir Mark Oliphant Conferences.
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