Editor's Note: Charles Kenny is a Schwartz Fellow at New America Foundation and Senior Fellow at the Center for Global Development. This post is part of the Global Innovation Showcase created by the New America Foundation and the Global Public Square.
By Charles Kenny - Special to CNN
Innovation isn’t necessarily a word most people associate with aid programs. The popular image is of aid organizations too often just building one darn road after another - or sending off armies of consultants to offer irrelevant and unheeded advice.
But, thankfully, there’s a lot more to aid agencies than stodgy bureaucrats shoveling money out the door. One recent example is called the advanced market commitment, and it is helping to develop new treatments for diseases, which kill millions in Africa, Asia and Latin America.
Developing countries are home to a whole load of diseases that hardly affect rich countries any loner. Diarrhea, the subject of late-night comedy in the U.S., is the leading cause of death amongst children in the developing world. Malaria - prevalent in the south of the United States a few generations ago - is now limited to poorer parts of the planet.
One reason these diseases persist in poor countries is there is a lack of cheap and effective vaccines to prevent them.
And here’s the problem: Why would drug makers spend money on research and development for vaccines that affect people in low-income countries who have no more than $10 a year on healthcare when these drug manufacturers could be working on treatments for ailments in the rich world - where per capita expenditure on healthcare is closer to $6,000 per year as it is in the U.S. according to data from the World Bank?
Imagine these drug makers create the perfect vaccine for a tropical disease, what hope could pharmacy companies have that they’ll sell enough of the drug to make back all of their costs?
One example of this problem is pneumococcal diseases - the bugs that cause pneumonia, meningitis and sepsis. Pneumonia, with its cough, fever, chills, chest pains and shortness of breath all associated with lung inflammation is a major killer worldwide. It was responsible for most of the deaths from the global flu pandemic in 1918 which killed around 25 million people. Drug companies have developed vaccines that work against pneumococcal diseases in rich countries, and that, combined with widespread use of antibiotics and other treatments, has considerably reduced death rates from pneumonia in rich countries.
But poor countries haven’t been so lucky. Pneumococcal diseases still kill 1.6 million people each year in poorer countries. They account for one out of every four child deaths in the developing world. And the disease strains common in developing countries are different from those in rich countries, so the same vaccine wouldn’t work. Worse, the rich world pneumococcal vaccine is sold for $70 a dose - a price far out of reach of developing country health ministries even if a suitable variant was developed.
This is where the aid innovation came in. A meeting of the G-8 finance ministers in Lecce, Italy in 2009 mobilized $1.5 billion from aid agencies and the Gates Foundation. That money was earmarked to be spent on buying a pneumococcal vaccine suitable for use in the developing world - one that didn’t exist yet.
It was a commitment in advance to provide a market for a drug if it was developed - thus the name Advanced Market Commitment, or AMC. The donors set out conditions on things like price and efficacy, but promised to support the purchase of any vaccine that met those standards. Aid agencies already involved in vaccination efforts like the Global Alliance for Vaccines and Immunizations would purchase the drug, and the AMC would ‘top up’ the price to $7 a dose.
The good news is that, only a couple of years later, the vaccine is being rolled out across the developing world. GlaxoSmithKline and Pfizer have already developed suitable products and a number of other drug makers - including Chinese and Indian firms - are likely to follow soon. Nicaragua started vaccinating kids in December 2010. Thirteen more countries will have started rollout by the end of this year.
With this hugely successful pilot underway, donors are looking for the next candidate for an advanced market commitment. Perhaps a malaria or HIV/AIDS vaccine. Or maybe something outside health altogether - a commitment to buy up solar power generators that meet a certain standard and cost or maybe a new strain of rice that can survive better in arid climates. By leveraging private innovation with public financing to help meet the challenges of the world’s poor, aid agencies could make a huge difference to worldwide quality of life.
Read more pieces on innovation at CNN.com/innovation.