GAVI said it secured lower prices for rotavirus vaccine through supply agreements that result is pricing 67% lower than before. GAVI noted that “had (it) been prepared to buy the vaccine at the previous price, it would have needed to pay US$650 million more.” The bulk of the supply volume contracted —132 million doses—will be procured at a cost of $5 dollars per (two-dose) course, a two-third price reduction compared to the previous lowest price offered to GAVI of US$15 a course. This price drop “is the result of an acceleration of GAVI’s market shaping activities and discussions with manufacturers carried out together with the Bill & Melinda Gates Foundation and the Supply Division of UNICEF, key Alliance partners.” GAVI CEO Dr Seth Berkley said, “Influencing vaccine markets to the benefit of children in the poorest countries is core to GAVI’s mandate. We strive to make our donors’ funds go further so we can help developing countries protect more children against deadly diseases and accelerate efforts towards reaching the Millennium Development Goals.” The supply agreements, covering purchases to 2016, were concluded with the two rotavirus vaccine manufacturers, GlaxoSmithKline (GSK) and Merck & Co. Inc. The announcement also noted that GAVI partners, including PATH, supported by the Bill & Melinda Gates Foundation, “are advancing the development of several promising new rotavirus vaccines by collaborating with emerging country manufacturers in the hope of new market entrances from 2015.”

GAVI, through its supply partner UNICEF, “applied some of the key elements of its new vaccine supply and procurement strategy” in achieving this pricing. These elements include:

– Committing to an “advance” purchase: by prepaying a portion of the vaccine supply, GAVI allows manufacturers to recoup their fixed costs earlier and offer a more competitive price.

– Offering mid-term market certainty: by extending the deal period – to five years in the case of the rotavirus vaccines deal – GAVI provides manufacturers with increased visibility, another incentive to commit to lower prices in return for more predictability of demand.

– Offering a long-term view of the market: by sending signals of a viable market to future manufacturers, GAVI aims at enlarging the vaccine supplier base and encouraging developing country manufacturers to join the market. Moving forward, GAVI said it will continue its proactive efforts to shape the vaccine market, and will seek to apply innovative measures specifically tailored to each vaccine. http://www.gavialliance.org/library/news/press-releases/2012/gavi-secures-lower-price-rotavirus-vaccine/