Monday's Wall Street Journal (subscription required) ran a column by Nick Timiraos about the "big obstacles" facing application of the advance market commitment (AMC) - a novel approach in which donors promise in advance to buy a not-yet-licensed product for the developing world, if and when one is created that meets pre-established specifications. (Readers of this blog will know that a couple of years ago I co-chaired a CGD working group which set out the potential merits and practical implementation of an AMC in Making Markets for Vaccines: Ideas to Action and helped to launch the current international experiment.)
Nick concludes with a tepid endorsement of AMCs: "These questions don't mean the experiment is without merit. If it works, it could produce huge societal and economic benefits." But readers might be forgiven for infering that it's hardly worth a try after he first presents a mishmash of genuine obstacles to an AMC success and tired canards that have been addressed by the AMCs many enthusiastic backers. Given WSJ's role as cheerleader for market-driven solutions, it's puzzling and a little disappointing that Nick didn't offer his readers a more balanced picture.
The article starts with an irrefutable fact: getting the pharmaceutical industry to invest precious R&D resources in products for developing countries is hard. If it were easy, it would already be happening - and pharmaceutical executives would be devoting as much effort to filling up the pipeline with vaccines against malaria as they are to finding the next treatment for erectile dysfunction. It's definitely not easy, and every approach that has been tried or is being proposed - from AMCs to pooled patents to public-private research partnership - has to jump over major hurdles.
The article then repeats some oft-heard concerns about AMCs, all of which merit a response:
For one thing, drug companies may not be willing to bet their development budgets on these commitments. Before a deal can be reached, drug makers, donors and recipient countries have to agree on a price and specifications for the vaccine. "Pharmaceutical companies will always be concerned about how reliable those [advance market commitments] really are, whether the plug could be pulled out at the 11th hour," says Peter J. Hotez, a tropical-disease specialist at George Washington University.
Dr. Hotez, one of the greats of international public health, has a good point, but AMCs are not like the vague and often illusory promises we are used to in global health. The commitments have to be legally binding, with an enforceable contract to back them up and a rock solid financing arrangement. These will be drawn up and made public, making it virtually impossible for funders to withdraw support. It's crucial to make the commitments credible, but the chances of a last minute withdrawal from the deal by the funders is close to nil.
Moreover, though advance market commitments were first conceived as a way to spur research and development of vaccines still at an early stage - those for HIV, tuberculosis and malaria, for example, which remain years or even decades away from completion - they may not be well suited for that. Science, not money, presents the biggest hurdles for those diseases, says Adel Mahmoud, the former head of vaccines at Merck. That suggests advance commitments may be better suited to vaccines in the late stages of development, where funding is the biggest obstacle.
There is a role for AMCs at all stages of R&D. Arguably, the earlier commitments are made, demonstrating a potential market for a given product, the more potential they have to affect whatever decisions firms are making about the resources to devote to one project versus another. The scientific pathway is indeed important, as Dr. Mahmoud has repeatedly said, but there must be some relationship, albeit not a proportional one, between the amount of resources devoted to a particular scientific problem and the pace of progress. If this were not the case, why would anyone bother to lobby for more money for research on one diseases or another? I imagine that when he led the vaccine division at Merck, Dr. Mahmoud often heard his colleagues advocate for a particular project, making a compelling case that the firm's investments in more intensive discovery work would pay off in revenues over the long term. Money alone cannot overcome scientific barriers like those faced in development of an AIDS vaccine, but without money the cause surely is hopeless.
Skeptics contend that the pilot project [for a pneumococcal AMC] won't prove that advance market commitments can deliver big scientific breakthroughs because the initiative is targeting a mostly developed vaccine. Such commitments aim for low-hanging fruit, they say, rather than delivering true scientific innovation.
It's absolutely true that no single AMC pilot will "prove" the applicability of the concept for other types of research and financing problems. What the pneumo AMC does have the potential to demonstrate is that donors can make binding commitments, and that firms will agree to a relatively high price up front in exchange for providing a product at a predictable lower price over the long term.
Oxford economist Andrew Farlow argues that the opportunity costs of an advance market commitment are too high. Even if such arrangements save some lives, he says, they will peel away money and energy that could instead go to less-costly treatments for people already afflicted: "You may get your success story, but it's what you'll lose in the process that you might have had." He and others say that more people would be helped by paying for things like measles immunizations, improved water quality and sanitation or mosquito nets in malarial regions.
Dr. Farlow repeats here one of several critiques he has voiced before. The basic idea of the AMC is that a contract would bind the donors, but would not require that they put money on the table at the start of the process. Given the peculiarities of public budgeting in at least some countries (such as the UK) obligations of this type do not "score" against current-year budgets. This means that there is, in fact, no real-world trade-off between spending today and spending tomorrow (or, as the case may be, in 10-15 years). This may be an affront to those who know there is no free lunch, but the reality is that there can be a deeply discounted lunch. Today's funding can and should be used for interventions that save lives today - but there is great value in making a commitment to accelerate progress to innovations that will save lives tomorrow. There may be some opportunity cost associated with the commitment, and in the case of the pilot pneumo AMC some donors may put money into the "pot" early in the process. So the analytic work to figure out whether the AMC is cost-effective has to take that into account - and will. But a sweeping statement about the harmful trade-offs just obfuscates. (For those who are interested, my former colleague Owen Barder has previously posted a more detailed critique of Dr. Farlow's views.)
And while the "pull" funding of the commitments isn't meant to replace research grants and other "push" funding, some politicians have hailed commitments as a silver bullet. That has critics worrying that other policy approaches could be shortchanged.
Politicians have not hailed commitments as a silver bullet. As for whether AMCs will crowd out other approaches: Even the most ardent advocates of AMCs recognize that they will not work in all cases, and there is little question that the search for other creative solutions must and will continue. For example, there has been very rapid and enthusiastic policy endorsement of the idea of providing FDA priority review vouchers to companies that successfully obtain approval for a drug or vaccine against neglected diseases, which was proposed at about the same time as an AMC. Similarly, there is much momentum behind greater funding for public-private partnerships and innovations related to patent regimes. All of this is for the good. As the Wall Street Journal says, "creative thinking will be needed to overcome the world's most daunting health problems."
Disclaimer
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
