Every year, an estimated two to three million deaths and a greater burden of morbidity and disability are prevented through immunization.1 While significant progress has been made in improving global immunization coverage, an estimated 22 million children are still not reached by immunization programs.2 Global organizations and stakeholders continue to collaborate to shape the dynamics of the vaccine market so as to improve access to vaccines in low-income (LIC) and lower middle-income countries (LMIC). The vaccine market for these countries is structured such that funding and demand for vaccines are consolidated to Gavi, the Vaccine Alliance. Procurement is largely consolidated to the United Nations Children’s Fund (UNICEF)1 , which uses long-term agreements (LTA) to procure vaccines for committed volumes at a negotiated price, and the Pan American Health Organization (PAHO), which operates a regional pooled procurement system for vaccines in countries of Latin American and the Caribbean.3
When demand for a product is uncertain and the current market size is small, volume guarantees to supplier(s) can be used to improve market outcomes. Under a volume guarantee, the buyer agrees to purchase a specified quantity of product, in advance, over a specified period of time. In exchange for improved demand visibility provided by the volume guarantee, suppliers may offer reduced prices and better delivery terms, which can improve supply security.
The subject of this retrospective analysis is the volume guarantee and prepayment mechanism negotiated for Rotarix®, the rotavirus vaccine manufactured by GlaxoSmithKline (GSK), and the volume guarantee negotiated for Biological E’s (Bio E) pentavalent vaccine in late 2011. We evaluate the two vaccine markets before and after these volume guarantees, and assess the overall market impacts of the interventions. Following a description of the underlying dynamics of volume guarantees, we highlight key considerations of their use and discuss other interventions that could be used to achieve similar desired outcomes.