Vaccines are a successful public health product, preventing an estimated two to three million deaths each year from diseases like diphtheria, tetanus, pertussis (whooping cough), and measles. The World Health Organization (WHO) recommends that children worldwide receive immunizations against six childhood vaccine-preventable diseases. This recommendation is known as the WHO’s Expanded Program on Immunization (EPI). Today, 85% of children receive EPI vaccines, up from 20% in 1980. Market intervention strategies have made this increase in global coverage possible by enabling access to very low-price EPI vaccines in developing countries.
Three factors contributed to the affordability of EPI vaccines in low- and middle-income countries: pooled procurement carried out by United Nations Children’s Fund (UNICEF) and the Pan American Health Organization (PAHO); differential pricing arrangements of multinational manufacturers; and the entry of emerging market manufacturers. This case study examines the first of these factors, pooled procurement, as used by UNICEF for purchasing vaccines for low and middle-income countries.
Pooled procurement refers to consolidating the purchase quantities of multiple buyers under one third-party entity, in order to leverage larger volume purchasing to obtain better pricing than the individual buyers could obtain by purchasing directly from manufacturers on their own. In the vaccine market, UNICEF’s Supply Division, PAHO and the Gulf Cooperation Council Group Purchasing Program (GCC) pool orders from individual countries and procure on their behalf.
Given that UNICEF is the world’s largest procurement agent of vaccines for developing markets, its experience in the procurement of vaccines provides an important learning for understanding market dynamics. As this case will show, the key shortcomings of the vaccine market required UNICEF to move from traditional pooled procurement to strategic pooled procurement. Considerations related to pooled procurement will be discussed as part of this retrospective analysis of UNICEF’s role and evolution in the global vaccines market.