PHM-Exch> Unicef Reveals Differences in Prices It Pays Drug Companies for Vaccines

[Claudio Schuftan]

From: Rebecca Brown <rbrown at escr-net.org>
  <ESCR-Right-to-Health at yahoogroups.com>


For First Time, Unicef Reveals Differences in Prices It Pays Drug Companies
for Vaccines
By DONALD G. McNEIL Jr.
Published: May 27, 2011


The United Nations Children’s Fund on Friday publicly listed for the first
time the price it pays for vaccines.

The decision — which immediately revealed wide disparities in what vaccine
makers charge — could lead to drastic cuts in prices for vaccines that save
millions of children’s lives.

Unicef paid $747 million for vaccines last year, buying over two billion
doses for 58 percent of the world’s children.

Newer procurement agencies like the Global Fund to Fight AIDS, Tuberculosis
and Malaria routinely reveal what they pay for drugs. But vaccines — shots
or drops that prevent disease — have been largely exempt because Unicef has
avoided confrontation with its suppliers, posting only the average prices it
pays; and donors had not demanded more details.

Shanelle Hall, director of Unicef’s supply division and the driving force
behind the new transparency policy, said she hoped to extend it to other
goods that Unicef buys, including mosquito nets, diagnostic kits, essential
medicines and ready-to-eat foods for starving children.

The medical charity Doctors Without Borders, which successfully pressed for
lower AIDS drug prices in Africa a decade ago and has campaigned for the
public posting of vaccine prices, declared the move a victory.

“This is going to make a huge difference,” said Daniel Berman, deputy
director of the charity’s global access campaign. “As soon as the donors see
the differentials, they’re going to insist that Unicef and GAVI get better
prices.” GAVI, the Global Alliance for Vaccines and Immunization, collects
billions of dollars from donors to help Unicef pay for vaccines.

Mr. Berman recently quit a GAVI committee to protest its resistance to
revealing prices. Officials of several pharmaceutical companies sit on GAVI
boards.

GAVI dragged its feet until Unicef forced the issue, he said.

Asked about that, Ms. Hall hesitated, then said: “There may have been
doubts, but GAVI is now happy about it. Transparency is hard to argue
against.”

Some of the price differences were stark. For example, an important compound
vaccine that prevents diphtheria, tetanus, whooping cough, hepatitis B and
haemophilus influenzae type B cost only $2.25 a dose from the Serum
Institute of India last year, but $3.20 a dose from Crucell, a Swiss company
that was just purchased by Johnson & Johnson.

“Oh my God,” Mr. Berman said when the new price list was read to him. “I had
no idea the difference was so extreme. A dollar more? No wonder J & J bought
Crucell. It gets 60 percent of its income from GAVI orders.”

Five companies now sell Unicef that vaccine. In earlier years, when
GlaxoSmithKline was the lone bidder for the contract, it charged $3.60.
(Ideally, every child gets three doses.)

Joan Howe, a Unicef spokeswoman, said the agency made the decision “in the
hopes it will lead to a more competitive market and lower prices, especially
for newer vaccines.”

While some vaccines, like polio, cost as little as 12 cents and are made by
seven companies, the newest, against rotavirus and pneumococcal bacteria,
are expensive and made by one or two.

For example, the pneumococcal vaccine is made only by Pfizer and
GlaxoSmithKline, each of which gets $3.50 a dose from Unicef. However, under
an arrangement called the Advance Market Commitment that was brokered by
GAVI to entice vaccine companies to keep supplying poor countries, both
companies get an additional $3.50 for the first six million shots. Even if a
rival made the vaccine for $2, Mr. Berman said, it would get subsidies to
bring it to $7.

The ideal, he said, is prices that are low, but still profitable enough to
attract companies that can pass World Health Organization safety standards.

Unicef’s move is likely to push other buyers to ask for the lowest prices it
gets. For example, the Pan American Health Organization negotiates the
amount that poor and middle-income countries in the Western Hemisphere pay
when buying in bulk through it. Like Unicef, it had been posting only
average prices.

Unicef has now told all bidders that, in the future, it will publish how
much it pays them. Until this week, several companies resisted its requests
for permission to post what it paid.

They stalled by saying they had to consult their lawyers about antitrust
consequences, Ms. Hall said. Both she and Mr. Berman noted the weak spots in
that argument: prices that donors pay for drugs from the same companies were
routinely posted, and antitrust complaints were more likely under the old
regimen of hidden prices.

Ultimately, almost all the companies came around. The only major supplier
still refusing is Novartis. A company spokeswoman said Friday that Novartis
“does not disclose pricing information on its vaccines, as this information
is competitive.”

Merck and Japan’s BCG Laboratory also refused, but each makes only one
vaccine that Unicef buys.

Rebecca Brown
Program Officer
ESCR-Net / Red-DESC / Reseau-DESC
 New York,
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