Prizes for vaccines for the poor

One way to structure a vaccine comitment would be to guarantee a price of, say, $15-20 per person for the first 200-250 million people immunized, in exchange for a commitment from the developer to subsequently drop the price in the poorest countries to a modest markup over manufacturing cost.  A commitment of this size would offer firms an opportunity for sales comparable to those available in commercial markets.  It would be extremely cost-effective, saving more lives than virtually any imaginable health expenditure.

That is from Strong Medicine, by Michael Kremer and Rachel Glennerster.  The authors have an excellent book and a noteworthy idea, but I have some worries.

Some poor countries, such as Ghana, have quasi-functional government.  But other governments won’t allow this to proceed unhindered.  Remember when some Nigerian states banned the polio vaccine for (supposedly) spreading sterility and AIDS?  That is an extreme example, but how about this?

In Africa, for example, it is estimated that only between 2-15% of children slept under bed-nets in 2001-a simple, effective and proven method to prevent malaria.   

If the cure for AIDS were a single glass of clean water, millions of the infected still would die.

This is why economic development is so hard and so resists formulaic treatment.  Correcting any single screwed up incentive won’t bring as big a payoff as you might think, given how many other things are screwed up.  We have to go one step at a time, but every step brings both short-term costs and political opposition, while not showing much in the way of immediate benefits.

Prizes work best when the prize-giver is aiming at a well-defined end, where success is easy to measure.  This fits "inventing a malaria vaccine" better than "distributing a malaria vaccine."  I would be willing to try this scheme, given the high upside returns.  But it is quite possible we could go ten years or more without seeing much in the way of tangible results, even once something is invented.


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