Advance market commitment

Advance Market Commitment (AMC) is a financial mechanism designed to encourage the development and production of vaccines for diseases that primarily affect low- and middle-income countries. The concept of an AMC involves a commitment by countries, international organizations, and other donors to purchase or subsidize a vaccine if it is successfully developed. This commitment aims to provide vaccine manufacturers with the certainty of a market and a return on their investment, thereby incentivizing them to invest in research and development for vaccines that might otherwise be neglected due to uncertain demand and low profitability.

Overview

The principle behind an AMC is to address market failures that prevent the development of vaccines for diseases that are prevalent in poorer countries. Diseases such as malaria, tuberculosis, and HIV/AIDS have a significant impact on public health in these regions, but the financial incentive for pharmaceutical companies to develop vaccines is limited. By guaranteeing a market and providing upfront funding or purchase commitments, AMCs aim to stimulate investment in vaccine research and development.

Mechanism

An AMC works by setting a predetermined price that the funders commit to pay for a vaccine once it meets specified requirements regarding efficacy, safety, and production volume. This price is intended to cover the costs of research, development, and production, providing a profit margin to the manufacturer. Once the vaccine is available, it can be purchased by low- and middle-income countries at a reduced price, which is often subsidized by the AMC funds.

Examples

One of the most notable examples of an AMC in action is the pneumococcal vaccine AMC, launched in 2009 by the GAVI Alliance, the World Health Organization (WHO), the World Bank, and several donor governments. This AMC aimed to stimulate the development and deployment of new vaccines against pneumococcal diseases, which are a major cause of pneumonia and meningitis in children under five years old in developing countries. The pneumococcal AMC has been credited with accelerating the availability of vaccines and significantly reducing the incidence of pneumococcal diseases in the countries participating in the program.

Benefits and Challenges

The AMC model offers several benefits, including accelerating the availability of vaccines for neglected diseases, reducing the financial risk for vaccine manufacturers, and improving public health outcomes in low- and middle-income countries. However, AMCs also face challenges, such as ensuring long-term funding, setting appropriate price levels, and managing the allocation and distribution of vaccines.

Conclusion

Advance Market Commitments represent a promising approach to addressing global health challenges by leveraging financial incentives to encourage the development of vaccines for neglected diseases. While there are challenges to their implementation, AMCs have the potential to significantly improve public health outcomes in the world's poorest regions.