So far, I’ve conducted a series of interviews with actual or former members of the British Department for International Development (DFID). The discussions turned around DFID’s implication in the Advance Market Commitment (AMC) for pneumococcal vaccine and the agency's enthusiasm for “market shaping”.
The interviewees highlighted, for example, the importance of being accountable to “the British tax-payer” for a state agency such as DFID, especially given that, while most of the budgets in UK public sector tend to diminish, aid expenditures still match the objective of 0.7 GDP (equivalent of more than 10 billions £). Consequently, “aid effectiveness”, which emerged as a concern among donor countries in the mid 2000s, is a goal explicitly pursued by DFID. The agency deploys a variety of tools, from the “business cases” justifying every future financial contributions to the Multilateral Aid Review conducted in 2011 (and updated in 2013) that assessed the “value-for-money” of multilateral organisations that the UK finances. The GAVI Alliance, which hosts the AMC (see below), is one of the organisations that performed well according to DFID’s criteria because of its focus on poor countries, its “cost and value consciousness”, and its “transparency and accountability”.
Another subject that emerged from the conservations was the problem of making political announcements credible, especially when donors have to interact with the private sector and engage in market relationships. For example, at the core of the AMC lies a very complex legal arrangement through which the promise made by donors, according to which, if a suitable pneumococcal vaccine is produced and if there is a demand for this vaccine, they will buy the product, is backed by legally binding documents. Incentivizing the pharmaceutical industry is not just a matter of having enough money and finding the right level of incentives (such as a subsidy), it’s also about designing contracts and legal agreements.
The last main theme evoked during the interviews was “market-shaping” as a way for DFID to act upon the vaccine markets. The expression covers a set of initiatives and devices recently developed by donors (governmental as well as philanthropical) and multilateral partnerships like the GAVI Alliance in order to negotiate better contracts and prices with pharmaceutical companies, and stimulate new entrants and therefore competition in health commodities markets. The AMC and its legal arrangements is actually an early example of market shaping, but a relatively encompassing one compared to the more punctual and ad hoc initiatives, such as providing demand forecasts or helping applications for licensure, that are favoured today.