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Creating Markets for New Vaccines Part II: Design Issues

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  • Michael Kremer

Abstract

Several programs have been proposed to improve incentives for research on vaccines for malaria, tuberculosis, and HIV, and to help increase accessibility of vaccines once they are developed. For these programs to spur research, potential vaccine developers must believe that the sponsor will not renege on the commitment once research costs have been sunk. Given appropriate legal language, the key determinant of credibility will be eligibility and pricing rules, rather than whether funds are physically placed in separate accounts. Requiring candidate vaccines to meet basic technical requirements would help ensure that funds were spent only on effective vaccines. Requiring developing countries to contribute co-payments would help ensure that they felt that the vaccines were useful given the conditions in their countries. Purchases under a vaccine purchase program could be the conditions in their countries. Purchases under a vaccine purchase program could be governed by a market exclusivity provision similar to that in the U.S. Orphan Drug Act. A program could start by offering a modest price and increasing it if it proved inadequate to spur research. If donors pledge approximately $250 million per year for each vaccine for ten years, vaccine purchases would cost approximately $10 per year of life saved. No funds would be spent or pledges called unless a vaccine were developed.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7717.

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Date of creation: May 2000
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Publication status: published as Creating Markets for New Vaccines - Part II: Design Issues , Michael Kremer. in Innovation Policy and the Economy, Volume 1 , Jaffe, Lerner, and Stern. 2001
Handle: RePEc:nbr:nberwo:7717

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  1. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  2. Gilbert,Christopher L. & Vines,David (ed.), 2000. "The World Bank," Cambridge Books, Cambridge University Press, number 9780521790956, October.
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  4. Suzanne Scotchmer, 1999. "On the Optimality of the Patent Renewal System," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 181-196, Summer.
  5. Kremer, Michael R., 1998. "Patent Buyouts: A Mechanism for Encouraging Innovation," Scholarly Articles 3693705, Harvard University Department of Economics.
  6. William P. Rogerson, 1994. "Economic Incentives and the Defense Procurement Process," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 65-90, Fall.
  7. Michael Kremer, 1997. "Patent Buy-Outs: A Mechanism for Encouraging Innovation," NBER Working Papers 6304, National Bureau of Economic Research, Inc.
  8. Lanjouw, Jean O. & Cockburn, Iain M., 2001. "New Pills for Poor People? Empirical Evidence after GATT," World Development, Elsevier, vol. 29(2), pages 265-289, February.
  9. SHAVELL, Steven & VAN YPERSELE, Tanguy, . "Rewards versus intellectual property rights," CORE Discussion Papers RP -1597, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. David S. Salkever & Richard G. Frank, 1995. "Economic Issues in Vaccine Purchase Arrangements," NBER Working Papers 5248, National Bureau of Economic Research, Inc.
  11. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
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  13. Michael Kremer, 1998. "Patent Buyouts: A Mechanism For Encouraging Innovation," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1137-1167, November.
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