industry on everything from applied research and development to production scaleup (Table 6). Although UNICEF has already cofunded at least one vaccine clinical trial, the type of collaboration now envisioned would represent a significant shift in roles for the agency. It is unlikely that UNICEF would directly finance such activities, but so-called partnership sourcing could become part of a broader CVI strategy that draws support from other sources. It was unclear at the meeting whether the changes in UNICEF’s procurement strategy will markedly increase the interest of U.S. suppliers in providing vaccines to UNICEF.

A ROLE FOR INDUSTRY

Workshop attendees were nearly unanimous in the view that the ultimate success of the CVI depends on the involvement of the U.S. vaccine and biotechnology industries. Conversely, they noted, the U.S. public and private sectors have much to gain from greater involvement in the initiative. For instance, at least some new combination vaccines useful in the United States also might find application in the developing world. And given the rapidity with which infectious diseases can travel the globe, it is in the United States’ best interests to reduce the incidence of preventable illness outside its borders. In addition, in as much as the improved health resulting from immunization contributes to the economic growth and stability of developing and transitional nations, encouraging industry participation in the CVI could be viewed as benefiting U.S. foreign policy aims. Also, a robust CVI will fuel the U.S. biotechnology industry, in which much of the most inventive applied vaccine research occurs. Finally, by opening future overseas markets—for example, for pharmaceuticals—involvement in the CVI could benefit the larger U.S. vaccine manufacturers.

Barriers to Participation

Though there are clear advantages—both from a public health and commercial perspective—to U.S. vaccine industry involvement in the CVI, achieving such participation will be difficult. Several industry representatives pointed to recent, strongly negative public attention focused on vaccine manufacturers as one of the most serious obstacles. Such disapproving sentiments seem to be based on a perception that U.S. vaccine prices are too high, but they may be encouraged by misunderstandings of the pricing structure



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The Children’s Vaccine Initiative: Continuing Activities: A Summary of Two Workshops Held September 12–13 and October 25–26, 1994 industry on everything from applied research and development to production scaleup (Table 6). Although UNICEF has already cofunded at least one vaccine clinical trial, the type of collaboration now envisioned would represent a significant shift in roles for the agency. It is unlikely that UNICEF would directly finance such activities, but so-called partnership sourcing could become part of a broader CVI strategy that draws support from other sources. It was unclear at the meeting whether the changes in UNICEF’s procurement strategy will markedly increase the interest of U.S. suppliers in providing vaccines to UNICEF. A ROLE FOR INDUSTRY Workshop attendees were nearly unanimous in the view that the ultimate success of the CVI depends on the involvement of the U.S. vaccine and biotechnology industries. Conversely, they noted, the U.S. public and private sectors have much to gain from greater involvement in the initiative. For instance, at least some new combination vaccines useful in the United States also might find application in the developing world. And given the rapidity with which infectious diseases can travel the globe, it is in the United States’ best interests to reduce the incidence of preventable illness outside its borders. In addition, in as much as the improved health resulting from immunization contributes to the economic growth and stability of developing and transitional nations, encouraging industry participation in the CVI could be viewed as benefiting U.S. foreign policy aims. Also, a robust CVI will fuel the U.S. biotechnology industry, in which much of the most inventive applied vaccine research occurs. Finally, by opening future overseas markets—for example, for pharmaceuticals—involvement in the CVI could benefit the larger U.S. vaccine manufacturers. Barriers to Participation Though there are clear advantages—both from a public health and commercial perspective—to U.S. vaccine industry involvement in the CVI, achieving such participation will be difficult. Several industry representatives pointed to recent, strongly negative public attention focused on vaccine manufacturers as one of the most serious obstacles. Such disapproving sentiments seem to be based on a perception that U.S. vaccine prices are too high, but they may be encouraged by misunderstandings of the pricing structure

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The Children’s Vaccine Initiative: Continuing Activities: A Summary of Two Workshops Held September 12–13 and October 25–26, 1994 TABLE 6 Possible UNICEF–Industry Partnerships   Research Development Scale-Up Description Supplier conducts research We provide financial support Cooperate to develop vaccine We support clinical trial work We solicit government support Supplier provides vaccine and expertise Supplier scales-up vaccine Suppliers One to many One to many One Selection Criteria Research plan and research skill of supplier Vaccine performance, development plan, and development skill of supplier Vaccine approval, price Terms Joint funding of research Supplier controls decision-making on IPRs Supplier has first option to proceed with research; if it declines, we can go elsewhere Supplier commits to cost-plus pricing if/when vaccine is launched Supplier funds development activity UNICEF receives right to purchase vaccine at cost plus if/when developed Supplier incurs cost of scale-up and production Volume, Price Obligation None None UNICEF and supplier agree to specific price/volume commitments Assuming vaccine meets minimum performance and quality characteristics NOTE: IPR = intellecutal property rights. SOURCE: UNICEF, 1994

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The Children’s Vaccine Initiative: Continuing Activities: A Summary of Two Workshops Held September 12–13 and October 25–26, 1994 for vaccines sold in the United States.40 These negative views gained strength early in the Clinton presidency, when concern arose over less-than-optimal immunization rates among U.S. infants. Despite evidence41 that cost is only a minor barrier to immunization (and certainly not the most important), one response to the problem was congressional enactment of the Vaccines for Children (VFC) program42. Because it caps the prices of currently recommended immunizations at the May 1993 level and increases the number of children who can receive free vaccine, the VFC is expected to reduce vaccine industry revenues. One result, according to the head of a major U.S. vaccine firm, will be reduced spending on vaccine research,43 including on CVI-type products. This concern was echoed by biotechnology industry officials. The VFC may deal another blow to the CVI: Enactment of the program has made the vaccine industry extremely hesitant to propose pricing schemes—including reduced-price sales to the developing world—that might create a backlash in the United States. (See “Differential Pricing,” below.) Interestingly, since the price cap does not now apply to new vaccines or vaccine combinations, the VFC may have the positive (and unintended) effect of encouraging vaccine innovation. But innovation comes with a price—literally. The expected high cost of vaccines developed with proprietary technologies could delay, or perhaps even prevent altogether, the widespread use of these products in the developing world. (It should be noted that there is nothing preventing Congress from extending the cap to new vaccine products.) Cost is an issue both for industry, which requires a moderate profit to support its R&D activities, and 40   Vaccine manufacturers in the United States sell their products at one price to the private sector and at a lower price to the public sector. In effect, sales to the private sector have helped to subsidize purchases by the public sector. Until enactment of the Vaccines for Children program, the proportion of sales to both sectors was roughly equal. Now, considerably more vaccine is purchased at the cheaper, public-sector price. For more information on U.S. vaccine pricing policies, see pages 79-82 of The Children’s Vaccine Initiative: Achieving the Vision, National Academy Press, 1993. 41   See, for example, the Institute of Medicine report, Overcoming Barriers to Immunization: A Workshop Summary, National Academy Press, 1994. 42   The VFC, enacted as part of the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) is an entitlement program that expands the group of children eligible for free vaccine to include those without insurance. It also provides federal funds to pay for vaccine previously paid for by state Medicaid programs, in effect providing a windfall of millions of dollars to many state treasuries. 43   The U.S. National Vaccine Program Office has asked Mercer Management Consulting to examine this possibility as part of an in-depth look at the economics of the U.S. vaccine industry. Mercer presented preliminary results from its study at a May 11–12, 1995, meeting of the National Vaccine Advisory Committee in Washington, D.C. Public release of the Mercer findings awaits the completion of additional analyses requested by the NVAC.