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Urgently Needed: A New Financial Model for Vaccine Development

November 28, 2016, 4:56 PM UTC

This essay appears in today’s edition of the Fortune Brainstorm Health Daily. Get it delivered straight to your inbox.

A major new trial testing an experimental HIV vaccine regimen begins today in South Africa. The regimen—which consists of two vaccines, developed respectively by Sanofi Pasteur and GSK—is the first to be tried in wide-scale human testing since 2009, and is only the seventh full vaccine trial against the virus that now infects some 37 million people across the globe.

The 2009 vaccine, which was tested in Thailand, was moderately effective—reducing the risk of HIV infection in heterosexual men and women by around 31% during the three and a half years after vaccination. And if the current study shows more significant efficacy, it “would be a tectonic, historic event for HIV,” the director of the U.S. Military HIV Research Program, which oversaw the Thai vaccine study, told the Washington Post.

In such a moment of optimism, it seems a bit curmudgeonly to offer a question like, “What took so long?” But some of you may be wondering just that. HIV was discovered, after all, in 1983. Why are we still testing vaccines 33 years later?

There are lots of good answers to that question, and NAM has a terrific, thoughtful explanation here. (Another particularly telling report on why the virus is so dynamic and elusive can be found here.)

But studying the delay isn’t an exercise in cynicism. It gives us a case study in the challenges of vaccine manufacture and testing—and this goes well beyond HIV to a host of pathogens old and new that threaten humankind. “It takes a long time to discover a vaccine,” says Andrew Witty, the CEO of GSK, which is arguably more skilled at the art than any other drugmaker. “But my God, it takes a long while to build a factory to make a vaccine.”

While there’s, sadly, an enormous ready market for an HIV vaccine, and therefore an incentive for drugmakers to pursue decades worth of investment here, there are scores of infectious diseases for which there is no good pharma “business model” to develop a treatment or vaccine.

Earlier this month, Witty, Seth Berkley—chief executive officer of Gavi, the Vaccine Alliance—and I talked about this very real problem at Fortune’s Brainstorm Health meeting. Gavi is an extraordinary public-private partnership, founded at the World Economic Forum in 2000, that provides vaccines to the 73 poorest countries in the world.

One solution that both Berkley and Witty embraced is the notion of “market shaping” through the mechanism of an “advanced market commitment,” which was used to develop a pneumococcal vaccine tailored for viral strains in sub-Saharan Africa—a region where children die of pneumonia in staggering numbers. Gavi, which purchases and distributes tens of millions of doses of various vaccines a year, agreed to pay a low, but certain price for a pneumococcal vaccine that GSK and others would make—essentially guaranteeing a market.

The effect of this modest incentive was felt far beyond sub-Saharan Africa, says Berkley, who has led Gavi since 2011 and who is an especially creative problem-solver when it comes to getting essential medicines to children in the most impoverished and war-torn nations. Within a year of its development, the pneumococcal vaccine had entered its first developing nation, Berkley says. Five years later it’s in 54 countries.

Vaccine development is not a charity, he says. So we have to ask ourselves, “What are the incentives in place to get the best technologies, the best companies—not just large companies, but biotech companies, academic institutions—to be prepared to step in and bring science and technology to solve these problems?”

“I’m a great believer in science,” Berkley says. “It can solve this problem.” But to do so, we have to bring the same creative disruption that we bring to science and technology to new financial models for drug and vaccine development. That’s what Gavi is trying to do, he says—“bring lots of innovation, in different areas, to get the private sector to move things forward.”