For First Time, Unicef Reveals Differences in Prices It Pays Drug Companies for Vaccines
By Donald G. McNeil Jr.
(Story from The New York Times published on May 27, 2011)
NEW YORK, 27 May 2011 - The United Nations Children’s Fund on Friday publicly listed for the first time the price it pays for vaccines.
The decision — which immediately revealed wide disparities in what vaccine makers charge — could lead to drastic cuts in prices for vaccines that save millions of children’s lives.
Unicef paid $747 million for vaccines last year, buying over two billion doses for 58 percent of the world’s children.
Newer procurement agencies like the Global Fund to Fight AIDS, Tuberculosis and Malaria routinely reveal what they pay for drugs. But vaccines — shots or drops that prevent disease — have been largely exempt because Unicef has avoided confrontation with its suppliers, posting only the average prices it pays; and donors had not demanded more details.
Shanelle Hall, director of Unicef’s supply division and the driving force behind the new transparency policy, said she hoped to extend it to other goods that Unicef buys, including mosquito nets, diagnostic kits, essential medicines and ready-to-eat foods for starving children.
The medical charity Doctors Without Borders, which successfully pressed for lower AIDS drug prices in Africa a decade ago and has campaigned for the public posting of vaccine prices, declared the move a victory.
“This is going to make a huge difference,” said Daniel Berman, deputy director of the charity’s global access campaign. “As soon as the donors see the differentials, they’re going to insist that Unicef and GAVI get better prices.” GAVI, the Global Alliance for Vaccines and Immunization, collects billions of dollars from donors to help Unicef pay for vaccines.
Mr. Berman recently quit a GAVI committee to protest its resistance to revealing prices. Officials of several pharmaceutical companies sit on GAVI boards.
GAVI dragged its feet until Unicef forced the issue, he said.
Asked about that, Ms. Hall hesitated, then said: “There may have been doubts, but GAVI is now happy about it. Transparency is hard to argue against.”
Some of the price differences were stark. For example, an important compound vaccine that prevents diphtheria, tetanus, whooping cough, hepatitis B and haemophilus influenzae type B cost only $2.25 a dose from the Serum Institute of India last year, but $3.20 a dose from Crucell, a Swiss company that was just purchased by Johnson & Johnson.
“Oh my God,” Mr. Berman said when the new price list was read to him. “I had no idea the difference was so extreme. A dollar more? No wonder J & J bought Crucell. It gets 60 percent of its income from GAVI orders.”
Five companies now sell Unicef that vaccine. In earlier years, when GlaxoSmithKline was the lone bidder for the contract, it charged $3.60. (Ideally, every child gets three doses.)
Joan Howe, a Unicef spokeswoman, said the agency made the decision “in the hopes it will lead to a more competitive market and lower prices, especially for newer vaccines.”
While some vaccines, like polio, cost as little as 12 cents and are made by seven companies, the newest, against rotavirus and pneumococcal bacteria, are expensive and made by one or two.
For example, the pneumococcal vaccine is made only by Pfizer and GlaxoSmithKline, each of which gets $3.50 a dose from Unicef. However, under an arrangement called the Advance Market Commitment that was brokered by GAVI to entice vaccine companies to keep supplying poor countries, both companies get an additional $3.50 for the first six million shots. Even if a rival made the vaccine for $2, Mr. Berman said, it would get subsidies to bring it to $7.
The ideal, he said, is prices that are low, but still profitable enough to attract companies that can pass World Health Organization safety standards.
Unicef’s move is likely to push other buyers to ask for the lowest prices it gets. For example, the Pan American Health Organization negotiates the amount that poor and middle-income countries in the Western Hemisphere pay when buying in bulk through it. Like Unicef, it had been posting only average prices.
Unicef has now told all bidders that, in the future, it will publish how much it pays them. Until this week, several companies resisted its requests for permission to post what it paid.
They stalled by saying they had to consult their lawyers about antitrust consequences, Ms. Hall said. Both she and Mr. Berman noted the weak spots in that argument: prices that donors pay for drugs from the same companies were routinely posted, and antitrust complaints were more likely under the old regimen of hidden prices.
Ultimately, almost all the companies came around. The only major supplier still refusing is Novartis. A company spokeswoman said Friday that Novartis “does not disclose pricing information on its vaccines, as this information is competitive.”
Merck and Japan’s BCG Laboratory also refused, but each makes only one vaccine that Unicef buys.