and financing structures. Almost every country signed up for COVAX, and it delivered its first doses in late February of 2021. The following month, due to the rapidly escalating number of cases in India, the Serum Institute of India (SII)—which COVAX had presumed would be its main vaccine supplier—stopped exporting its vaccine, which was made in collaboration with AstraZeneca and the University of Oxford (Cohen and Kupferschmidt, 2021). This move was predicted to create a 190-million dose shortage by the end of June 2021. COVAX had delivered just 4 percent of all vaccine doses administered worldwide as of May 2021, although its latest supply forecast (September 2021, WHO, 2021c) suggests that approximately 1.2 billion doses will be available for lower-income countries participating in its advance market commitment (AMC), enough to protect 40 percent of all adults in the 92 AMC countries, with the exception of India.

The COVAX experience highlights the difficulty facing global health coordination, particularly around broadening global access to vaccines in an era of geopolitical transformation and increasing nationalism. COVAX has certainly improved vaccine equity compared to a scenario without a multilateral procurement or allocation mechanism. However, progress toward equitable global vaccine allocation remains disappointing 18 months into the pandemic. The facility is unlikely to deliver doses representing 20 percent of each country’s population by the end of 2021, as originally committed.

Ultimately, HICs mostly bypassed COVAX and pursued bilateral advance purchase; for instance, the United States and the European Union bought 3-fold more vaccines than they would need for their entire populations (Cohen and Kupferschmidt, 2021). Moreover, population coverage targets differed between self- and aid-financed countries. Figure 5-1 depicts the global share of individuals who received at least one dose as of mid-June 2021, starkly illustrating the extent to which the worldwide rollout has been inequitable for less wealthy nations.

Many of the challenges that fueled this disappointing COVAX performance operate out of its direct control. These include multiple forms of vaccine nationalism and associated lack of donor support and industry behavior. For instance, the time lost in coaxing HICs to join in 2020 contributed to delays in fundraising and resource mobilization, and heavy reliance on a few technologies and manufacturers (mostly based in the United States and the European Union) limited the speed and capacity of vaccine scale-up. It could be argued that the major “failure” of COVAX is naivety in anticipating these challenges. However, a more “anticipatory” design may not have made much difference in terms of access during a time of vaccine shortage and could have even had the unintended consequence of legitimizing the political economy of vaccine nationalism.

by the mandate of the committee’s Statement of Task (which is focused on vaccines and vaccination). However, vaccine financing solutions should not be siloed. When a new pandemic strikes, it is not possible to know a priori the optimal combination of containment measures, such as vaccines, diagnostics, and therapeutics. Ideally, coordination and financing mechanisms would have built-in flexibility to develop, manufacture, and deliver vaccines as well as other therapeutic tools.

LESSONS FROM THE COVID-19 VACCINE EXPERIENCE

At least three valuable lessons can be gleaned from COVID-19. First, paying up front to develop a portfolio of vaccine candidates and maintain sufficient surge manufacturing capacity can yield a huge return on investment. Second, having vaccine governance structures before a pandemic is essential. Third, such structures should specifically target how to achieve equitable access for low-income settings.

COVID-19 has demonstrated that it is critical to have vaccine governance structures and financing before a pandemic strikes, because it can alleviate the scarcity and perverse nationalism that underpin and exacerbate global inequities. Up-front financing is needed not only for manufacturing capacity but also to facilitate pre-procurement of vaccines and therapeutics prior to the lengthy process of obtaining full regulatory approval. The pandemic illustrated how paying for overcapacity to deliver vaccines during a pandemic is an inexpensive and cost-effective strategy. If there were a single decision-making entity for the world, it would likely maintain that spending several billion dollars per year on pandemic preparedness is highly rational. For example, Operation Warp Speed (OWS) paid for itself many times over: with a cost of $13 billion, it would have paid for itself in just 12 hours by virtue of accelerated vaccinations. Furthermore, the global benefits of the first 3 billion doses likely generated worldwide social benefits of $17.4 trillion, or $5,800 in benefits per course (Kremer, 2021).

Vaccine governance structures should specifically target low-income settings whose varied funding needs are often overlooked during a response, as seen during the COVID-19 pandemic. To work toward developing systems that promote access to vaccines against future pathogens with pandemic potential, the needs of low-income settings should be considered specifically, rather than looking at funding considerations from an exclusively global perspective. In this sense, reframing acceptable wait times for pandemic vaccines could be heralded as a major achievement of the COVID-19 pandemic response. The global dialogue now centers on whether the poorest countries can receive vaccines 2–3 months rather than 2–3 years after wealthier countries. This represents a seismic shift in what is regarded as acceptable access.

to health security (Boyce et al., 2021), and the fund is the largest multilateral provider of grants for health system strengthening.

New and evolving financing arrangements during the COVID-19 pandemic illustrate what funding might be available, without significant changes in governance and financing instruments, for an influenza pandemic. COVID-19 funding can be loosely broken apart into investment to support preparedness or response, although those categories overlap somewhat.

COVID-19: Funding for Preparedness

One month after WHO formally declared COVID-19 a Public Health Emergency of International Concern (PHEIC), its Contingency Fund for Emergencies and the United Nations (UN) Central Emergency Response Fund allocated just $23.9 million; 3 months later, the UN Global Humanitarian Response Plan remained only 5 percent financed. The World Bank’s Pandemic Emergency Financing Facility’s Cash Window did not trigger until 3 months after the PHEIC was declared and was inadequate for the COVID-19 response. The full $196 million insurance payout was released in late April 2020, but it was shared among 64 countries; 59 already had management programs. Other international facilities later came into play, such as the International Monetary Fund’s (IMF’s) Rapid Financing Instrument and Rapid Credit Facility, which provide emergency lending to eligible countries, and, according to a paper commissioned by the IPPPR, largely fulfilled their stated objectives to contain an outbreak with pandemic potential. However, the major barrier was the lack of facilities that were ready to fill the financing gap during the earliest days and weeks of a pandemic (Radin and Eleftheriades, 2021).

COVID-19: Funding for Response

Adequate response to a pandemic requires mobilizing billions of dollars to execute well-prepared response plans at short notice. Within 6 months of the COVID-19 PHEIC declaration, more than $70 billion were committed to LMICs through multilateral agencies, with an additional $50 billion disbursed from multilateral agencies to partners. But because greater than 90 percent of these funds were in the form of debt, wealthier middle-income countries—which have greater borrowing capacities—tended to receive more funds from multilateral agencies than poorer countries (Radin and Eleftheriades, 2021). Moreover, most of this funding was directed at mitigating the broader socioeconomic consequences of the health crisis rather than at addressing the crisis itself.

In terms of vaccine development and procurement specifically, an estimated $13 billion has been invested by governments and phil-

anthropic institutions to develop, produce, and purchase COVID-19 vaccines other than China’s. The Biomedical Advanced Research and Development Authority (BARDA) grants and advance market commitments alone exceeded $10 billion (Chagar et al., 2021; Sabin-Aspen Vaccine Science and Policy Group, 2021). As of May 2021, total funding for COVID-19 vaccines and treatments had reached $119.1 billion across 277 initiatives—51.6 percent of which is country specific, and 48.4 percent multi-region.

OWS represents the largest global effort for COVID-19 vaccines. As of June 2021, OWS had invested an estimated $18 billion, much of which was channeled into late-stage clinical development and early manufacturing. Agreements were put in place to buy 455 million doses to distribute in the United States. During the same period, CEPI invested just $1.4 billion to support COVID-19 vaccines. In contrast to recipients of OWS funding, who are committed only to the United States, CEPI’s funding is associated with recipients’ commitments to promote global access and ensure affordable costs. Manufacturers are directly approaching countries and organizations, creating a “complicated ecosystem for COVID-19 vaccines that is comprised of a patchwork of countries that have and do not have vaccines” (Kim et al., 2021, p. e1017). In the United Kingdom and the European Union, the Oxford-AstraZeneca vaccine development was funded almost exclusively by governments or foundations. Similarly, the German government contributed $445 million to Pfizer-BioNTech’s vaccine (Ramachandran et al., 2021).

However, as discussed at the beginning of this chapter, this financing has been inadequate to ensure timely global access to vaccines. According to the Rockefeller Action Plan for Financing Global Vaccination and Sustainable Growth (published in April 2021), ACT-A and COVAX will deliver 2 billion doses by 2021, but this rate (20 percent) is insufficient, and these initiatives face a shortfall of $22.1 billion. Even with a $12 billion infusion from the World Bank, The Rockefeller Foundation has argued that “the world needs to aim higher” (The Rockefeller Foundation, 2021). In spite of investments in developing COVID-19 vaccines and broadening access to them, the demand for multilateral development bank financing during the pandemic has generally been slow (Glassman, 2021). The Rockefeller Foundation has called for the use of instruments such as IMF’s special drawing rights to fill financing gaps in terms of long-term pandemic response. Similarly, the Center for Global Development has proposed creating a multilateral vaccine purchase window within IMF’s rapid financing instrument/concessional equivalent (rapid credit facility) (Hicklin and Brown, 2021).

New regional partnerships have recently been forged with the aim of filling the void left by COVAX’s budgetary shortfalls. For instance, the

COVID-19 African Vaccine Acquisition Task Team, the Africa Medical Supplies Platform, and the Africa Centres for Disease Control and Prevention (CDC) began a COVID-19 vaccines preorder program in 2021 for all African Union (AU) member states. Afreximbank will facilitate payments by providing advance procurement commitment guarantees of up to US$2 billion to the manufacturers on behalf of the AU member states.

FINANCING PPR: ECONOMIC PRINCIPLES

Our recommendations for expanding and coordinating investment in PPR do not require arcane economic reasoning but are based on broad lessons from the COVID-19 pandemic and basic economic principles.

The key economic lessons are that pandemics can still happen in modern times despite medical and communications advances, they can explode rather than sputter out, and exploding can lead to almost incalculable social costs. Added to the enormous toll due to death and illness are the output losses as economies are shut down to mitigate the health losses. The U.S. Congressional Research Service (CRS, 2021) estimated that COVID-19 reduced global economic growth in 2020 to an annualized rate of -3.4 to -7.6 percent, with global trade falling by 5.3 percent. Major advanced economies may operate below their potential output level through at least 2024, with the local economic fallout leading to the worst unemployment levels since the Great Depression.¹

Basic economics propounds the principle of return on investment. According to this principle, projects are not worth undertaking if they do not generate sufficient benefits in excess of expenditures. On the other hand, investments that generate large benefits at moderate expense are particularly attractive. The principle holds true for consumers deciding whether to purchase a new appliance and firms deciding whether to enter a new line of business and also for societies—individual countries or international groups—deciding whether to undertake a new program. Prior to COVID-19, HICs may have considered the small benefit of quelling an exotic epidemic disease in the developing world only worth a fraction of a small aid budget. COVID-19 now shows that the losses are more in line with those that defense and health programs are designed to avoid, justifying much higher spending levels. The principles do not imply that countries should spend the whole of their defense or health budgets on PPR—this would only be justified if pandemics were certain to happen every year. However, the possibility that pandemics may arise every one or two decades may justify spending some fraction of these budgets.

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¹ This section is meant to be grounded in explaining the econometrics point of view, which the committee is not necessarily endorsing.

response, this may call for an international agreement, asking participating countries to boost spending—for example, through public policy legislation and taxation.

Even if the whole world were coordinated in a single country, pharmaceutical manufacturers and other firms in a free market could not be counted on to provide an adequate level of investment for an output, such as pandemic preparedness, due to the large gap between social and commercial incentives. We mentioned global social benefits from of a course of COVID-19 capacity estimated to be more than $5,000 (Kremer, 2021). However, the private value and return on investment for the companies actually installing this capacity does not match the social value. As noted by Michael Kremer, firms earned $6–$40 for a course of COVID-19 vaccine, orders of magnitude less than the social benefit. Competition and private information about benefits restrain the prices firms can charge. High prices are repugnant to consumers, and may spur regulation in ordinary times, but that is especially acute during a crisis. These forces are understandable, but reduced return on investment leads, by the aforementioned principle, to less investment and production. That repugnance during a pandemic may lead to acute undersupply. With firms rarely able to charge anything close to the social value, pharmaceutical companies should be offered substantial government incentives that are creatively structured to avoid getting the most value for spending—for example, through AMCs (Kremer, 2021).

Another relevant economic principle is the value of early investment. Due to compound interest, saving $100 per year for 10 years leads to a larger account than $1,000 saved in year 10. Investing before a pandemic has similar compound returns. Expanding vaccine capacity slowly during times of no disease pandemics can be much cheaper, avoiding price spikes, supply chain disruptions, and out-and-out stockouts of needed inputs. Forces for nationalizing resources present during a crisis are absent during times of no disease pandemics and may accumulate to an adequate level that can then serve the globe during crises.

Behavioral economics emphasizes the importance of salience to decision making. Rational computations based on deaths and other adverse events do not necessarily drive investments or shape decision making. (See the discussion of antimicrobial resistance and the O’Neill Report in Chapter 1.) Vocal supporters are a crucial catalyst in spurring investment, as evident in the relative wealth of funding for HIV and dearth of funding for efforts to combat influenza, noncommunicable diseases, and antimicrobial resistance. Momentum may also be an issue. As described in Chapter 1, the window of political will for rethinking global investment strategies may close quickly after the world’s recovery from the COVID-19 pandemic.

in LMICs (World Bank, 2020). Between 2007 and 2012, the Rockefeller Foundation’s Disease Surveillance Networks Initiative also provided grants, mostly targeted regionally. This funding led to a number of smaller regional networks, including the Mekong Basin Disease Surveillance network, East African Integrated Disease Surveillance network, and Southern Africa Centre for Infectious Disease Surveillance (The Rockefeller Foundation, 2013). REDISSE provides an example of how ministries of finance can be regionally linked for surveillance activities through regional grant funding or loan obligations. The East-Africa Public Health Laboratory Networking Project (EAPHLNP, 2021) and African Integrated Disease Surveillance network also show how national laboratories can function with regional interdependence. Each has received political buy-in and guidance from the African Union.

Additional surveillance strengthening programs include the PREDICT project, which was part of the U.S. Agency for International Development’s (USAID’s) Emerging Pandemic Threats program. It is led by the One Health Institute at the University of California, Davis, and has worked to improve both global surveillance for pathogens with spillover potential and workforce training. It received about $200 million over 10 years (Klein, 2020). The Preventing Emerging Pathogenic Threats program has also been allocated $9.97 million over 3.5 years by the U.S. Defense Advanced Research Projects Agency (DARPA) to focus on the Lassa and Ebola viruses (UC Davis News and Media Relations, 2019).

A major gap exists between these funding streams and the financing required to ramp up investments in surveillance for epidemic preparedness. As noted, McKinsey estimated that $25–$40 billion would be needed annually for 2 years, followed by $6–$10 billion per year for steady-state functions (Craven et al., 2020). In 2020, Dobson et al. called for an estimated $22–$31 billion per year on a global scale for preparedness against zoonotic disease outbreaks. This would support initiatives to monitor wildlife trade, programs to reduce spillovers, and programs for early detection and control, among other areas (Dobson et al., 2020). Morgan et al. (2021) estimated that supporting the implementation of integrated, sustainable, country-owned systems for national surveillance would require an investment of about $1–$4 per person each year.

Considerations for Future Financing

Ensuring future financing for surveillance warrants several key considerations. A crucial lesson learned from the COVID-19 pandemic is that collecting data daily—which is not currently done for influenza and many other diseases—can be a powerful, positive incentive for investment. Additionally, funding and governance should emphasize local ownership rather than a top-down approach. Domestic financing at the local level is critical,

because implementing and maintaining systems for disease surveillance cannot rely exclusively on global funds. The tendency is to focus on the genomic and centralized aspects of surveillance at the expense of on-the-ground molecular testing. Thus, financing needs to address broader steps crucial to effective surveillance systems, such as national planning for the use of those systems.

Financing Structures to Generate Incentives

Financing structures can be leveraged to generate incentives to fund surveillance systems. For example, external financing has significant positive externalities and a powerful argument for it, but this may require core funding and defined contributions for sustained investment. Attempting to fund surveillance through episodic sources, such as the World Bank’s International Development Association, is problematic. An alternative option is using funds earmarked for surveillance for governmental and nongovernmental recipients (e.g., REDISSE II, Africa CDC). The Global Fund and Gavi use co-financing arrangements as a model for incentivizing domestic investment alongside external financial support. An opportunity also exists in the investments in surveillance for COVID-19, and other diseases could be leveraged as a foundation for building broader national and/or regional capabilities, including for influenza.

R&D

Pandemic vaccines require the ability to undertake R&D for new vaccines and manufacture the vaccines at scale. Dedicated push funding is required because the pull from seasonal influenza vaccines is not sufficient to drive pandemic vaccine development.

Current Funding for Influenza

Funding for platform technologies and next-generation influenza vaccines is small relative to their potential to transform the vaccine landscape (see Chapter 4). Although the Sabin-Aspen Vaccine Science and Policy Group has called for a well-funded moonshot program for a universal vaccine, this has largely not been met with commensurate financing (Sabin-Aspen Vaccine Science and Policy Group, 2019). The most substantial investments are from HICs and high-income regions, such as the United States and the European Union. CEPI has made significant strides in forging alliances for financing and coordinating R&D for new vaccines to prevent and control infectious diseases during epidemics. However, CEPI’s mandate is mainly focused on developing vaccines in the early stages, through Phase

II clinical trials, and influenza is not in its portfolio. New solutions are needed to fund high-cost, late-stage development (Sabin-Aspen Vaccine Science and Policy Group, 2019).

On the positive side, some political buy-in exists for the universal influenza vaccine. The U.S. National Institutes of Health’s National Institute of Allergy and Infectious Diseases (NIAID) 2018 strategic plan highlights its commitment to support the research needed to advance the development of a vaccine that provides long-lasting protection against multiple strains for seasonal and potentially pandemic influenza (Erbelding et al., 2018). The strategy notes that “advances in influenza virology, immunology, and vaccinology make the development of a ‘universal’ influenza vaccine more feasible than a decade ago” (Erbelding et al., 2018, p. 347) due to efficiencies and insights in deep-gene sequencing and advances in structural biology, among other scientific innovations. In September 2019, the Trump administration issued an executive order directing the U.S. Department of Health and Human Services to modernize production by supporting the development of new manufacturing technologies for more robust and longer-lasting vaccines against a broader range of influenza viruses (Schnirring, 2019).

Although the committee did not systematically compile financial data, it identified illustrative examples of the current scale of funding for influenza vaccine R&D. The U.S. government spends $250–$300 million annually on influenza research, in addition to further spending on related programs, such as biodefense and biotechnology (Sabin-Aspen Vaccine Science and Policy Group, 2019). The European Innovation Council Accelerator Pilot has invested €148 million in 36 companies, including for the multi-season universal influenza vaccine OXIVAX (European Commission, 2021). As of 2019, the European Union had also funded initiatives for novel influenza vaccine development through the seventh Framework Programme for Research and Technological Development (FP7) and Horizon 2020, its research and innovation program. FP7 funded 25 influenza vaccine projects for about €87 million; an additional €18 million was granted under Horizon 2020 (Navarro-Torné et al., 2019), which also established a new influenza research partnership with India that includes matched financing (Press Trust of India, 2018).

In 2018, BMGF launched a $12 million Universal Influenza Vaccine Development Grand Challenge with the goal of identifying

reimbursement—were hindered by funders’ lack of visibility into firms’ private cost information (Snyder et al., 2020). However, push funding could be used for early influenza vaccine dosing trials. For example, during the 2018 yellow fever epidemic, Brazil reduced the vaccine dose to one-fifth—in accordance with WHO’s advice—which accelerated deployment. Evidence is promising that this approach might be effective for SARS-CoV-2, which could also be an analog for an influenza vaccine. For influenza, some evidence indicates that reducing the dose of an interim musculature shot or switching to intradermal could be effective strategies for vaccine dose-stretching (Kremer, 2021).

Economic modeling has demonstrated that pull incentives awarding advance purchase agreements to bidding firms were effective for late-stage vaccine development (i.e., Phase III clinical trials and manufacturing) during COVID-19 (Snyder et al., 2020). The optimal pull programs incentivized participation of nearly all the pharmaceutical firms involved in developing 10 COVID-19 viable candidates, nearly doubling the net benefits generated from the free market. AMCs can be an effective pull funding mechanism when the target is sufficiently defined. An AMC works by reducing risks—it defines the target vaccine minimum standards (efficacy, public health impact), total AMC market size, contract price, and predicted demand. Innovators and firms are assured of a subsidized price if they develop a product meeting standards and can agree to abide by affordable prices even after the AMC is depleted. Donors or country government funders are assured that funds will only be used if a highly valuable product is developed, that a competitive market is established for firms, and that their up-front investment results in sustainable supply after the AMC is depleted. Although it is not yet clear that the influenza target is well defined, working toward a universal vaccine should be a priority.

There is a strong economic case for middle-income countries, such as Russia and China, to invest in influenza vaccine R&D (Yang, 2021). The GPMB suggested several mechanisms for structured funding of vaccine development—albeit not influenza specific (World Bank Group, 2019). The first is to establish CEPI-like mechanisms for diagnostics and therapeutics to jump-start product development. This could be accomplished by new entities, an expanded CEPI structure, or an expansion of structures like GloPID-R. The second is to create research funders preposition funds—for example, through a multi-donor trust fund at the World Bank—that can be released to research organizations within days to kick-start essential research when an outbreak occurs. Additionally, the World Bank could add a senior health scientist to its own leadership to spearhead its initiatives to strengthen R&D preparedness during inter-pandemic periods. The third suggestion is that “no regret” funding should be always available to incentivize at-risk R&D before a PHEIC is declared. This amount should

be reasonable to spend or lose, even if an outbreak does not expand to a major epidemic or pandemic.

Manufacturing

The next pandemic will not necessarily be caused by an influenza virus—it might even be a pathogen currently unknown to cause human disease (i.e., “Disease X”). Thus, vaccine manufacturing networks should not focus exclusively on influenza. This will require garnering broader investment in pathogen R&D alongside a universal influenza vaccine and establishing incentives for rapid scale-up of production capacity. It could be possible to create a ranked system of regionalized manufacturing centers aligned with existing agreements for clinical trials.

Current Funding for Influenza

It is critical to explore strategies for keeping mRNA and other platform technology manufacturing processes warm between pandemics for both influenza and coronavirus vaccines. The Pandemic Preparedness Partnership, launched by the UK government, prepared a report for the 2021 G7, mapping a 100 Day Mission to respond to future threats by embedding pandemic-ready manufacturing processes and capacity into business as usual (PPP, 2021). The report identifies multiple opportunities to leverage expanded vaccine production capacity between pandemics to justify maintaining surge capacity—for instance, via mass adult vaccination campaigns for various diseases, including influenza and coronaviruses. However, as discussed in Chapter 4, mRNA/platform technology mapping for influenza demonstrates that the current system for keeping facilities warm is ill prepared for these rapidly evolving new technologies. Moreover, there remains no clear cost estimate for achieving an ever-warm state for influenza vaccine platform technology, which warrants urgent research.

Considerations for Future Financing

Considerations related to future financing to keep vaccine production systems warm between pandemics are influenced by the current impetus toward distributed manufacturing, for both influenza and other pathogens with pandemic potential. However, it is important to carefully consider the distributed manufacturing business model, rather than merely distributing for the sake of doing so. If the desired outcome is to administer the greatest number of vaccines to the most people as quickly as possible, the best strategy may not necessarily require excessive differentiation between consolidated and distributed manufacturing. For example, if the United States had the

entire global vaccine capacity and had immunized its population first, this might have only delayed global distribution by a few weeks. The more effective solution might involve early investment in critical technology that is generating returns, thus reducing scarcity of vaccines and associated products.

For suppliers of lifesaving materials, the general rule of thumb is at least five different manufacturers in at least five different locations. Regional and international collaborations can bolster efforts to create more diversified configurations of vaccine manufacturing, thereby promoting equity. For instance, the goals of the Africa Union Partnership for African Vaccine Manufacturing, launched in April 2021, include (1) developing a coordinated manufacturing agenda across the continent, (2) bolstering five regional partnership production sites over 10–15 years, (3) mobilizing financing, (4) strengthening regional regulation systems, (5) increasing technology transfers, and (6) developing African universities as R&D hubs (Jerving, 2021).

Most pressingly, in a distributed context, incentives need to be established to build the demand and expand the market for pandemic vaccines, because the private market alone will likely be insufficient to meet demand. Analyses of emerging infectious disease vaccines typically show that under realistic financing assumptions, expected returns are significantly negative (Vu et al., 2020).

Financing Structures to Generate Incentives

To keep vaccine manufacturing facilities warm between pandemics, several options for financing structures can generate market incentives. One strategy is to subsidize dormant capacity directly; however, maintaining facilities on standby is an expensive option. Another approach is to use manufacturing capacity for seasonal influenza to produce pandemic vaccines, although relying exclusively on this option is less viable as the system transitions away from egg-based technologies. A third option is to use the manufacturing capacity for other respiratory infections or diseases, such as adult vaccination for seasonal influenza or tuberculosis. This may be a more effective option in the shift to more versatile platform technologies.

Procurement and Access

For vaccine procurement and access, a future COVAX-like facility for influenza or other pandemic-potential pathogens should be designed with a focus on ensuring that it is resilient to deep political pressures.

Current Funding for Vaccine Procurement

Vaccine procurement methods fall into three main categories: self-procurement, donations through international organizations, and interstate

procurement. Within the self-procurement approach, a government purchases vaccines from manufacturers directly on the open market. This method typically allows states to independently select the manufacturer of their choice. Although the negotiation process can result in lower prices per unit, this approach requires specialized technical knowledge in medicine and law, the financial resources necessary, a certification process for licensing vaccine safety and efficacy, and the downstream-appropriate cold-chain infrastructure to store and deliver vaccines. Some self-procuring states use advance purchase agreements (APAs), which are contracts between a manufacturer and the government that lie dormant and unenforceable until triggered by a predetermined event, when they become legally binding. The second method is to procure through international organizations (sometimes called “pooled co-procurement”), in which nongovernmental and intergovernmental organizations, such as Gavi, UNICEF, and WHO, acquire vaccines, typically through tiered pricing, and countries pay a percentage of the cost through co-financing. This approach can support providing vaccines to LICs lacking the capacity to self-procure. In some cases, the organizations procure and administer the vaccines directly if the state lacks the infrastructure. AMCs can fall under and support this mechanism; for example, the G7 and BMGF committed to buy a vaccine against LMIC-specific strains of pneumococcal disease when this vaccine was developed.

The third method involves the interstate sale of vaccines. This approach is relatively rare, but it was used during the 2009 H1N1 influenza pandemic (Turner, 2016). During that pandemic, HICs mostly used self-procurement, while LICs tended to depend on donations through international organizations. Of the more than 634 million doses obtained, almost 60 percent were via central government purchases, nearly 30 percent from other sources, and only about 12 percent deployed internationally through donations to WHO’s Vaccine Deployment Initiative, which was created specifically to manage the distribution of vaccines then (see Chapter 2). That 12 percent of donated vaccines accounted for about 94 and 91 percent of the African and Southeast Asian regions’ vaccines, respectively. Self-procurement was heavily associated with HICs—nearly 99 percent of vaccines in the European region were acquired through self-procurement, compared to just 6 percent in Africa. In a case study of vaccine procurement during the 2009 pandemic, Eccleston-Turner maintains that these methods were ineffective for developing states and predicts that during the next influenza pandemic, global demand for vaccines will exceed the worldwide supply, which is dominated by developed states with existing APAs (Turner, 2016).

Similar trends have emerged during the COVID-19 pandemic. HICs have cornered the vaccine market through APAs with prices that are heavily dependent on individual procurement contracts. Only a relatively small percentage of vaccines are donated or sold to international organizations for

allocation to LMICs through entities such as COVAX. Even before vaccines were authorized and approved, many countries entered into bilateral bulk purchasing agreements with individual manufacturers to secure doses at lower negotiated prices. For instance, through two separate agreements, Moderna secured a $3.2 billion contract to provide the United States with 200 million doses at roughly $16 per dose; the European Union secured doses from Moderna at $18 per dose. Pfizer also received two separate contracts for a total of 200 million doses at $19.50 per dose, while the European Union paid just under $15.15 (Ramachandran et al., 2021).

However, prices of vaccines may not reflect a fair return on public investments in vaccine R&D, and these types of “competitive pricing” could quickly make vaccines unaffordable for LMICs. At a 2020 hearing of a U.S. House Oversight and Investigations Subcommittee, leading manufacturers were asked whether they would supply COVID-19 vaccines at cost or no profit. Only two—AstraZeneca and Johnson & Johnson—stated that they would be willing to do so for a limited number of doses or during “the emergency pandemic period.” Both Pfizer and Moderna said that they would not. Further uncertainty is fueled by the lack of clarity around how to define the “pandemic period” during which companies have promised to supply their products at lower prices or to share technology with other manufacturers. Although AstraZeneca pledged not to profit from its vaccine during the pandemic period, the company also specified that it could declare the pandemic over by July 2021. Pharmaceutical executives have stated they anticipate returning to “commercial pricing” as early as late 2021, and Pfizer has already raised the prices of the European Union’s future orders by more than 60 percent (Ramachandran et al., 2021).

In early March 2021, COVAX declared its intention to make 1.8 billion doses available to countries with AMCs by the end of 2021, which would cover an estimated 28 percent of those countries’ populations (Hall et al., 2021). In the interim, some LMICs and regions have used self-procurement. However, this has exacerbated problems related to manufacturers charging customers different prices for the same product. For example, according to a senior health official in South Africa, the country purchased 1.5 million doses of the Oxford/Astra-Zeneca vaccine for health workers at $5.25 per dose, more than double the price ($2.15 per dose) for the European Union. This price disparity emerged only due to inadvertent disclosures, as the European Union had kept its prices confidential in exchange for vaccine discounts. The South African Deputy Director-General of Health said his government had been told that $5.25 was the set price for a country classified by the World Bank as upper middle income (Dyer, 2021).

Figure 5-3 provides an overview of COVID-19 vaccine supply agreements by country and group, illustrating the extent to which APAs have dominated the market, often leaving behind LMICs. For instance, COVAX

collectively procured approximately the same percentage of vaccines as the United States has individually, as of June 2021. UNICEF has tracked reported COVID-19 vaccine prices per dose, which demonstrates how the procurement system has led to wide variances in cost (for the same vaccines) for different customers (see Figure 5-4).

Considerations for Future Financing

The global distribution of seasonal influenza vaccines remains highly inequitable across regions. The PIP Framework’s procurement system for LMICs covers just a small percentage of the total vaccine capacity, so a new COVAX-like procurement and access facility will likely be required to ensure that countries in the WHO Eastern Mediterranean, South East Asia, and Africa Regional Offices have access. Between 2004 and 2017, the share

of seasonal doses increased in the Americas (41–55 percent) and declined in both Europe (34–22 percent) and the Western Pacific (24–17 percent). In Africa, the Eastern Mediterranean, and Southeast Asia, the combined share of doses increased from 5 to 6 percent. The latter is unacceptably low, given that these regions represent almost half of the world’s population (Sparrow et al., 2021). Furthermore, in determining the optimally equitable distribution, it is important to consider economic losses in addition to death rates.

The COVID-19 pandemic has demonstrated that theoretical models for effective and equitable delivery may not stand up to political pressure. Efforts by COVAX and other entities to improve global access were undermined by vaccine nationalism; amid the chaos of competing priorities, HICs tended to embrace bilateral deals that would allow for scale-up. Successful incentives to promote equitable distribution must be catalyzed by political commitments and supported by mechanisms and models of cooperation that can withstand political pressure.

Game theory analyses have identified two ways that mechanisms such as COVAX can shape incentives to promote scale-up and broaden global access to vaccines. The first is to leverage self-enforcing good behavior norms, global prestige, and social sanctioning. This approach is based on articulating principles of how countries ought to structure bilateral deals and transparency. The second strategy is to create extra benefits that only those making equitable or “good” deals can enjoy (McAdams et al., 2020). There have been calls to create separate versions of COVAX-like mechanisms for different diseases and expand existing facilities to vaccines against pandemic pathogens. However, it is difficult to predict the type of pandemic that is likely to strike next and important to design a platform specific to the immediate situation.

Financing Structures to Generate Incentives

Appropriate financing structures can generate procurement incentives and promote equitable access worldwide. For example, vaccine supplies for LICs should be included as components of grants and contracts with vaccine developers, as CEPI did with some manufacturers for COVID-19. This should be done before Phase III trials, when efficacy will be established and global demand will be high. Furthermore, providing up-front, at-risk manufacturing to global procurers, such as Gavi and the Global Fund, can enable large-volume pre-purchasing, as done by both the United States and the United Kingdom during COVID-19.

After its inception in 2016, CEPI developed an equitable access policy with input from key stakeholders and formed an Equitable Access Committee as a subcommittee of the CEPI Board. Early in the COVID-19 pandemic, CEPI included clauses in partnering agreements with vaccine

manufacturers that included a manufacturing component to secure doses for “a global procurement and allocation entity” that had not yet been developed. CEPI has sought to enable low pricing by requiring developers to enter into procurement deals with Gavi for COVAX. In such cases, the price is determined by negotiations between the developer and Gavi on behalf of the facility. In addition, CEPI has the right to redirect the supply to another public-sector procurer. All the agreements require compliance with CEPI’s equitable access policy and/or contain similar commitments in principle, including pricing at levels that are affordable to the people who need the vaccines (CEPI, 2021). This provides a model for how future equitable access clauses may be built into AMCs for influenza vaccines.

Delivery and Deployment

Although delivery and deployment of vaccines (“vaccination”) faces serious challenges—particularly in LICs—the financing for this is often overlooked.

Current Funding for Influenza

Delivery is often an underconsidered and underresourced cost, yet it can be more substantial than the cost of vaccine production. CARE estimates that countries or donors should invest $5 in delivery for every $1 invested in COVID-19 vaccine doses (Janoch et al., 2021). Although the delivery cost of influenza vaccines globally during a future pandemic has not been clearly quantified, estimates of the delivery component’s cost for COVID-19 may be instructive.

McKinsey has reported that during COVID-19, far less has been invested in planning for and implementing country vaccine rollout than for procurement. According to COVAX reports, in-country rollout costs about $1.50 per dose for delivery to the first 20 percent of the population, which does not include the health care workforce required. COVAX would only be able to provide a small percentage of this cost. An estimated $1 per dose—about $1.3 billion—would need to come from other domestic, bilateral, and/or multilateral sources. The World Bank’s $12 billion lending programs could theoretically help provide vaccine delivery support, but countries may not choose this borrowing mechanism (Hall et al., 2021).

A report from UNICEF, WHO, Gavi, BMGF, Harvard, ThinkWell, and the World Bank experts estimated that delivering COVID-19 vaccines to approximately 20 percent of the population in the 92 AMC countries would cost $2.018 billion—including country, regional, and global costs—about $1.66 per dose or $3.70 per person vaccinated with two doses (COVAX Working Group on Delivery Costs, 2021). Of this total cost, 57

percent is in-country outreach and fixed site delivery costs and 28 percent is country up-front fees (e.g., cold-chain installation, training). The report notes that delivery costs will vary substantially based on a range of factors, including specific target groups, population outreach strategies, geography, and local prices.

Another analysis estimated that about $74 billion would be required to reach COVID-19 vaccine herd immunity in LMICs—67 percent of this ($50 billion) for procurement and 33 percent ($24 billion) for delivery. This delivery cost is prohibitive for many countries; an estimated 20 percent of LMICs would have a total vaccine cost that is at least 10 times higher than their baseline annual immunization spending (Mustafa Diab et al., 2021).

Considerations for Future Financing

In considering financing strategies for vaccine delivery and deployment, a key lesson from the COVID-19 pandemic and other recent outbreaks is that most countries are far from adequately prepared to deploy critical medical supplies to their populations at the breadth and speed required. Health systems in LMICs typically lack capacity to deal with infectious diseases—particularly providing adult vaccines. In HICs, infectious disease control also tends to be a weak point in otherwise strong health systems. Successful responses to outbreaks tend to occur more often in countries with relatively strong existing health systems and recent infectious disease experience, such as Vietnam.

Furthermore, it is not efficient to create exclusively influenza-specific systems (e.g., cold chains, workforce). Thus, efforts to strengthen delivery and deployment capacity should build on and expand existing influenza frameworks such that they can be leveraged for a range of respiratory pathogens. Vaccine hesitancy continues to hinder influenza vaccine uptake, but local manufacturing capacity and stronger regulatory structures could increase local trust.

COVID-19 revealed the absence of an entity responsible for ensuring that liability policies and vaccine injury compensation programs were in place before the vaccine. However, COVAX did create a new program to compensate eligible individuals in 92 LMICs without requiring legal processes. The program, funded by a small levy on each dose, is the first and only vaccine injury compensation mechanism established on a global scale. Only 25 countries, including the United States and wealthier regions within Asia and Europe, have mechanisms to compensate individuals who receive serious vaccine-related injuries for routinely recommended vaccines (Sabin-Aspen Vaccine Science and Policy Group, 2021).

• that benefit all countries. This makes surveillance an area where there is a strong logic for sustained domestic and external financing. It should therefore not compete with other development priorities.

R&D, Manufacturing, and Procurement Financing

• For influenza and other pathogens with pandemic potential, industry is often insufficiently certain of the government interests and regulatory pathway to bring a profitable product to the market.
• A concerted effort is needed to demonstrate the direction that pharmaceutical companies should be moving in within the influenza space, toward transformation next-generation technologies and universal influenza vaccine targets.
• A moonshot for universal influenza vaccines should be initiated to support a portfolio of next-generation/platform vaccines, which would offer higher efficacy and the potential for a more sustainable business model for scale-up. Such an effort should benefit from and include a similar quest for more broadly protective (“variant-proof”) vaccines against coronaviruses with pandemic potential.
• The scale of investment in universal influenza vaccines to date (millions) is nowhere near the scale required (billions) to incentivize the risky undertaking of such R&D.
• Both push and pull incentives will be critical to demonstrate a proof of concept for the market of influenza vaccines. A massive push will be required to elicit pre-competitive scientific and biological analyses for influenza vaccine targets. AMCs (pulls) have most commonly been used by HIC donors to incentivize vaccine production and capacity for proven vaccine approaches, rather than to drive new science. AMCs can be usefully deployed as an incentive to solve hard biology problems such as those implicit in a universal influenza vaccine.
• Universal influenza and platform technology push and pull instruments should include equitable access provisions, in line with CEPI’s model during the COVID-19 pandemic.

Markets and Deployment

• The scalability of influenza vaccines is limited by the number of companies and production processes and by limited markets where the burden of this illness is uncertain.
• A vaccine market supported by an immunization program able to deliver vaccines, coupled with a population demand for these vaccines, are essential elements to ensure a sustainable vaccine manufacturing base.

• Stronger national plans for deploying seasonal influenza vaccines (using next-generation/platform technologies) and recognizing that vaccines will increasingly be available across the lifespan (in line with the WHO Immunization Agenda 2030) are essential for vaccine markets and have a strong public health rationale.
• Deployment activities require proper technical guidance and designated financial resources, but care should be taken to not frame deployment as a positive externality. Vaccine deployment requires designated financing from high- and middle-income countries according to a Global Public Good framework and also national accountability.
• UNICEF and Gavi have decades-long experience in deployment planning, implementation, supply chains, monitoring, and policies. Both are well positioned to take the lead on global coordination for vaccine deployment, particularly in LMICs.

REFERENCES