Yeah aligning incentives here seems hard and tbh I don’t think it’s a sustainable option to have advocacy campaigns targeting pharma companies for every global health issue.
Quoting (on mobile so can’t seem to do the formatting):
A standard Advance Market Commitment (AMC) is a promise to subsidize the future purchase of a new vaccine in large quantities – if it’s invented – in return for the firm charging customers close to marginal cost (that is, with only a small mark-up).
Letʼs break it down. The subsidy incentivizes research by compensating innovators for their fixed cost investments in R&D and manufacturing capacity. The commitments to buy a certain quantity at a certain price ensure the vaccine is affordable and widely available. The subsidy is conditional on a co-payment (this is the part that is close to marginal cost) from governments in low and middle income countries – without it, the developer receives nothing. This incentivizes firms to develop vaccines countries will actually use, not just those that meet technical specifications.
So while patents trade-off innovation incentives with affordable access, AMCs help us achieve both. And the price strategy means that AMCs encourage deployment at scale in a way that most prizes do not.
AMCs are a kind of inversion to typical ‘push funding’ – they instead ‘pull’ innovation towards a goal by paying for outputs and outcomes. They don’t require funders to choose which research efforts to back in advance – they can just commit to rewarding the innovations that succeed. And they’ve been successful at doing so in the past.
Yeah aligning incentives here seems hard and tbh I don’t think it’s a sustainable option to have advocacy campaigns targeting pharma companies for every global health issue.
It was interesting to read about Advance Market Commitments from this piece (https://​​worksinprogress.co/​​issue/​​why-we-didnt-get-a-malaria-vaccine-sooner/​​#advance-market-commitments)
Quoting (on mobile so can’t seem to do the formatting):
A standard Advance Market Commitment (AMC) is a promise to subsidize the future purchase of a new vaccine in large quantities – if it’s invented – in return for the firm charging customers close to marginal cost (that is, with only a small mark-up).
Letʼs break it down. The subsidy incentivizes research by compensating innovators for their fixed cost investments in R&D and manufacturing capacity. The commitments to buy a certain quantity at a certain price ensure the vaccine is affordable and widely available. The subsidy is conditional on a co-payment (this is the part that is close to marginal cost) from governments in low and middle income countries – without it, the developer receives nothing. This incentivizes firms to develop vaccines countries will actually use, not just those that meet technical specifications.
So while patents trade-off innovation incentives with affordable access, AMCs help us achieve both. And the price strategy means that AMCs encourage deployment at scale in a way that most prizes do not. AMCs are a kind of inversion to typical ‘push funding’ – they instead ‘pull’ innovation towards a goal by paying for outputs and outcomes. They don’t require funders to choose which research efforts to back in advance – they can just commit to rewarding the innovations that succeed. And they’ve been successful at doing so in the past.
I agree that AMCs seem like a good idea!