Combining health and social protection measures to reach the ultra ...

Innovation
Financing Ultimate Intermediary User Use Financing modality Predictability &
mechanism sources (to/from flexibility (for
of funds intermediary) intermediary/user)
RECENT
Global Fund Donor Global Fund Developing Drugs, bednets, Pooled donations/ Weak/moderate
governments, country, govern- health services grants
foundations
ments, NGOs
IFFIm Bondholders, GAVI Developing Vaccine Bonds/grants Strong/moderate
with govern- country purchases
ment backing
governments
Pilot AMC Donor purchase GAVI Industry for Product Product purchase Strong/moderate
commitments R&D/developing development/ commitment/
countries for new vaccine purchase subsidy
vaccines purchases in
future
PDPs Donor PDPs (IAVI) PDPs and Vaccine R&D, Grants/grants Weak/moderate
governments, partner advocacy, etc.
foundations
organizations
NEW OR PROPOSED
R&D window in Various GAVI, PDPs PDPs and Vaccine R&D Variable Variable – depends
existing global science partners (grants, bonds, on source
health fund taxes)/grants of financing
Vaccine R&D Bondholders, PDPs, other? PDPs and Vaccine R&D Bond/grants Strong/strong
Bond with govern- science partners or equity
ment backing
AIDS Vaccine Gates IAVI IAVI and Early stage Grants/grants Medium/medium
Innovation Fund Foundation biotechs vaccine R&D or equity
Figure 2: Key dimensions of innovative financing for health
recent innovation in sources of financing for global health has
involved the establishment of new financing intermediaries,
including the PDPs as well as the Global Fund and the GAVI
Alliance, which pool funds from established sources. The
newly launched UNITAID is an interesting exception;
although its funds come from established donor nations,
they derive ultimately from a new earmarked tax on
airline tickets.
Use and user
R&D financing mechanisms can also be distinguished by the
activities they fund and by the organizations that carry out
these activities. Since different classes of organizations
specialize to a degree in different stages of R&D, there is a
rough relationship between use and user: financing
mechanisms aimed at earlier stages of R&D tend to focus on
academic labs and biotechnology companies, while support
for later stages generally targets larger firms.
Financing modality
Funding for vaccine R&D can also take a variety of financial
forms or use different financing tools to generate resources.
The public and non-profit sectors have typically supported
R&D through grants or tax concessions. Both approaches
partially or fully subsidize R&D with no expectation of
financial return. Private investors generally expect a return
and fund R&D through debt or equity investments. Each of
these financial instruments can be structured in many
different ways.
PDPs also support vaccine R&D through grants but
typically expect in return a mechanism to ensure that
developing countries would have affordable access to a
vaccine if it is developed.
Purchase funds or advance market commitments seek to
stimulate product development in the private sector by
creating a subsidized market. Choices among technologies
and product candidates are left to firms and the committed
funds are spent only if the desired product is developed,
produced and purchased in eligible developing countries.
In comparing the benefits and effectiveness of these
financing modalities, several characteristics should be
considered. These include the duration and predictability of
financing for both the intermediary and for the end user; the
flexibility of the funding and the user’s ability to target money
to its specific R&D needs. In addition, R&D users benefit from
funding tools with fewer associated administrative and
reporting requirements, while donors naturally prefer
mechanisms that make use of existing administrative
infrastructure to those that require new institutions and
procedures. Other important considerations are the incentives
the financing modality creates for recipients and how it
distributes risk between ultimate funders, intermediaries and
users.
Figure 2 describes several recently established and possible
090 ✜ Global Forum Update on Research for Health Volume 4