1. Introduction
Pneumonia remains one of the leading causes of childhood mortality, responsible for over 700,000 childhood deaths in 2021, with more than 50% of these deaths occurring in sub-Saharan Africa and south-east Asia [
1,
2,
3,
4]. While pneumococcal conjugate vaccine (PCV) has substantially reduced childhood morbidity and mortality [
4], adoption into Expanded Programs on Immunization (EPI) around the world has been uneven and country income-dependent [
5]. PCV was first introduced in high-income countries (HICs) in the early 2000s [
5,
6]. In 2007, the World Health Organization (WHO) issued a recommendation for all countries to include PCV in their EPI [
7]. With financial support from Gavi, the Vaccine Alliance, many low-income countries (LICs) have introduced PCV. Similarly, many countries in Latin America have introduced PCV with support for negotiated prices through the Pan American Health Organization (PAHO). However, by the end of 2021, only 148 out of 194 WHO member states had included PCV in national or subnational immunization programs [
8,
9], and approximately half (49%) of the global birth cohort had not received all recommended PCV doses by age 5, with the majority of these under-vaccinated children living in low- and middle-income countries [
9]. In particular, middle-income countries (MICs) that lack support from Gavi or PAHO and self-procure vaccines have lagged furthest in terms of vaccine introduction despite bearing the majority of the global pneumococcal disease burden [
5].
PCV has been found to be cost-effective or cost-saving in most countries [
10,
11,
12]. Nevertheless, alongside cost-effectiveness, considerations around vaccine price, affordability, financing, and financial sustainability are key drivers in decision making regarding the introduction of and sustaining new vaccines into the EPI [
13]. Unlike childhood vaccines that have been included as part of the EPI for decades, PCV is an expensive vaccine. A recent report from the WHO’s Market Information for Access to Vaccines (MI4A) initiative reported that the high price of PCV was mentioned by respondents in many MICs as a major barrier to introduction [
14]. An affordability analysis conducted by the WHO in 32 non-Gavi, non-PAHO MICs found that adding PCV to the vaccine schedule may be financially challenging in 6 of these countries, where introduction would require an estimated 53–87% increase to the existing immunization budget [
14].
To achieve the WHO’s Immunization Agenda 2030 (IA2030) [
15], there is an increasing need for strategic pricing policies to ensure vaccine affordability in every country, regardless of income. Current formal pooled procurement policies are available through Gavi, which negotiates the lowest prices in the world for the poorest countries and further subsidizes vaccine purchase costs, and PAHO’s Revolving Fund, which allows countries in the PAHO region to access the second lowest prices. However, self-procuring MICs outside the PAHO region and those ineligible or that have transitioned from Gavi support [
16] do not have recourse to these mechanisms. Some still access discounted (but higher) prices through the United Nations Children’s Fund (UNICEF), while other countries self-procure vaccines at prices similar to or sometimes higher than HICs [
17].
The inequitable PCV uptake across countries is well-known as UNICEF and the WHO publish global vaccine coverage data every year [
9]. However, the inequality in net societal value produced by PCV across countries and the extent to which the distribution of this value is influenced by current pricing and procurement policies remain less understood. To our knowledge, no study has explored the economic surplus of PCV. The economic surplus of a new technology or vaccine (which can also be referred to as the net societal value or total social welfare) is the sum of the consumer surplus (net economic benefits retained by consumers, in this case, countries, after paying for the vaccine) and the producer surplus (profits made by producers/manufacturers after recovering the cost of production) [
18]. The aims of this analysis were to estimate the global economic surplus of PCV and its distribution using an approach that has been utilized previously for the human papillomavirus (HPV) vaccine [
19]. Furthermore, we describe the effect of different pricing strategies on the distribution of economic surplus across country income groups and vaccine manufacturers.
4. Discussion
Our findings indicate that at current PCV pricing and uptake, HICs and manufacturers receive the largest share of the economic surplus generated by PCV. Even at 90% coverage, at current prices, low- and middle-income countries would still receive the lowest share of the economic surplus. These findings are consistent with previous findings for the HPV vaccine [
19]. One explanation for this similarity may be that the market supply for both vaccines has been dominated by only two manufacturers (Pfizer and GSK for the PCV and GSK and Merck for the HPV vaccine) based in HICs until recently. Due to a lack of competition, higher prices were set throughout the initial life cycle of the first generation of vaccines before the recent entry into the market of new suppliers based in low- and middle-income countries, such as Pneumosil. Furthermore, even though PCV13 was based on its precursor, PCV7, it came to the market at an even higher price [
45].
We found even higher levels of inequality in the distribution of economic surplus across country income groups compared to what was estimated for the HPV vaccine. Based on 2015 prices, Herlihy found that per child vaccinated, HICs received two times, four times, and five times the HPV vaccine economic surplus of UMICs, LMICs, and LICs, respectively [
19]. Our findings indicate that, based on 2021 PCV prices, HICs received 6 times, 12 times, and 24 times the PCV economic surplus of UMICs, LMICs, and LICs, respectively.
To reduce this inequity, innovative pricing policies, among other strategies, are required if the full benefits of PCV are to be achieved globally and, in particular, for those with the highest burden. An affordable vaccine price can be achieved through buyer-led (for example, pooled procurement mechanisms or joint efforts to subsidize vaccine purchase cost) or manufacturer-driven (for example, greater tiered pricing) initiatives [
54]. In an effort to address the high cost of vaccines and crowding of the current EPI schedule, clinical trials have been completed for PCV10 and PCV13 to evaluate the potential for using two rather than three PCV doses and the use of fractional doses for PCV [
55,
56,
57,
58]. These trials have been funded by philanthropy or public funds. Additionally, over the past two decades, there have been several developments in fair vaccine pricing policies and mechanisms, such as Gavi negotiating lower prices for eligible countries via its advance market commitment (AMC) [
59], an innovative financing mechanism intended to guarantee a market for pharmaceutical companies for the development of new vaccines. Another example includes the new Gavi MICs strategy adopted in December 2020 to address some key issues related to new vaccine introduction with a focus on PCV, rotavirus vaccine, and HPV in some former Gavi-eligible countries [
60]. However, there remains a large, unaddressed gap in providing solutions for equitable pricing and procurement [
61] for MICs, some of which have been paying even higher vaccine prices than HICs [
17,
61]. Despite calls by organizations including Médecins Sans Frontières (MSF) for price reductions [
62], median PCV prices increased by 43% from 2019 to 2021 for self-procurement MICs, according to the WHO MI4A report [
17]. In recognition of this, the World Society for Pediatric Infectious Diseases has launched a Call to Action for fairer vaccine prices [
61].
While existing PCV 10 and PCV 13 with WHO prequalification remain underutilized in low- and middle-income countries, HICs are already transitioning to higher-valency PCVs [
63,
64]. As the use of these higher-valency PCVs increases, the incremental cost-effectiveness of the vaccines will change. Consequently, the model inputs will need to be updated based on the effectiveness of these new vaccines. These extended valency PCVs that are currently in the market in HICs or under development will provide additional protection for up to 25 serotypes. Although the vaccine costs for these are not known, it is highly likely they will be even more expensive, and therefore, the adoption of these vaccines by low- and middle-income countries will be delayed, and this will further drive inequity.
Our results indicate that the distribution of consumer surplus is more equitable if prices are tiered compared to scenarios without tiered pricing. We found that if all countries paid the same (high) price for PCV, the total consumer surplus would shrink, and many countries, particularly low- and middle-income countries, would be paying more than the value of the vaccine benefits. Our analysis based on 2021 tiered prices indicates that the majority of benefits still favor HICs and manufacturers, highlighting the insufficiency of current tiered pricing to fully address the existing inequitable distribution of social welfare from PCV across countries and manufacturers. Additionally, the mechanism by which prices are set for self-procuring countries is unclear [
65]. This study implies that one potential solution to achieve equitable distribution of social welfare from PCV is to explicitly set vaccine prices based on the net societal value of the vaccine to different countries.
Furthermore, results indicate that even the tiered pricing offered to LICs by multinational companies was inferior to competitive prices from developing country manufacturers (DMCs). The economic surplus accrued to low- and middle-income countries substantially increased when applying the Pneumosil
® price. This suggests that lowering the intellectual property and technological barriers that LMICs to develop and manufacture vaccines may enable lower prices [
66]. The recent WHO prequalification of Pneumosil
®, a 10-valent pneumococcal conjugate vaccine developed by SII in partnership with PATH and the Bill and Melinda Gates Foundation, has resulted in LMICs being able to access lower PCV prices [
67]. In 2023, Pneumosil
® was available for LICs at a price of USD 1.5, compared to USD 2.75 for Prevnar 13
® and USD 2.9 for Synflorix
® after both being available on the market for more than 13 years [
33].
Nevertheless, recent years have seen progress in reducing vaccine prices, leading many countries to introduce PCV into routine schedules [
33]. Additionally, prices of PCV are anticipated to drop further after the entry of new manufacturers based in developing countries into the market and the expiration of patents in 2026 [
68]. However, even though generic vaccines and developing country-based vaccines tend to be less expensive [
33], their adoption into routine schedules might be delayed due to insufficiency of real-world data to support decision making into EPI, particularly as their counterparts HICs are already moving to high valent vaccines. Delays in adopting affordable PCVs can cause preventable deaths and disabilities. A more steeply tiered pricing policy for already existing vaccines would improve the distribution of the net societal value across countries faster rather than relying solely on new market dynamics.
Findings from this study highlight the importance of cross-subsidies in removing or alleviating the financial barriers to accessing PCV. We found that increasing subsidies to LICs and LMICs could contribute to achieving equitable prices that could accelerate vaccine uptake in these countries while maintaining high consumer surpluses for HICs and positive surpluses for manufacturers. However, implementing this policy would be challenging as it requires an increase in vaccine prices to wealthier countries and/or a reduction in manufacturer revenues with a potential negative impact on the R&D products pipeline. For example, if HICs subsidized vaccine costs for LICs and LMICs, HICs would need to pay up to USD 117.20 per dose, assuming no change in manufacturer profits. While this price is lower than the price USA was paying in 2021 (~USD 150.83 per dose), it is likely to be higher than many other HICs were paying in the same year.
Our findings emphasize the value of pooled procurement mechanisms for MICs; if Gavi-ineligible non-PAHO MICs accessed PCV at PAHO prices, the economic surplus to these countries would more than double. This policy scenario would also result in an increased surplus for manufacturers. There has been some success in regional pooled procurement outside of Gavi pooled procurement through UNICEF and PAHO’s Revolving Fund [
54,
69]. For example, in May 2012, three Baltic countries (Estonia, Lithuania, and Latvia) initiated a partnership agreement aimed at pooling pharmaceutical and vaccine procurement [
69]. The group was able to secure a reduction in price by 17–25% per immunization course compared to what each individual country had previously spent. Data extracted from the MI4A database [
31] indicated that countries involved in pooled procurement mechanisms were able to achieve 42% lower prices than self-procurement for 18 widely used vaccines in MICs in 2022, though savings varied across specific vaccines. Hence, international organizations and governments should explore alternative procurement strategies and promote regional cooperation to encourage these pooled procurement mechanisms [
61].
There are several limitations of the analysis to note. First, the indirect benefits of childhood PCV on the adult population were not captured, which may lead to an underestimation of the consumer surplus of PCV, particularly in HICs with older populations. Another source of underestimation of the surplus is the use of a healthcare system perspective to estimate healthcare cost savings rather than a societal perspective due to a lack of data to inform the latter. Furthermore, the unknown but potentially beneficial impact of PCV on antimicrobial resistance was not considered. Second, the model used in this analysis assumed that the PCV serotype carriage would be eliminated after immunization, but this has not been observed in many low- and middle-income countries [
70,
71,
72,
73]. This may lead to overestimation of vaccine impact and thus economic surplus, especially in low- and middle-income countries with a high force of infection [
72]. However, we found that even for the lowest vaccine impact, the distribution of economic benefits across country income groups remained the same, and if a lower vaccine impact was selectively considered in low- and middle-income settings, their share of the global economic surplus of PCV would be even lower than currently estimated. Third, this analysis attributed the entire producer surplus to vaccine manufacturers, but some of these profits might be shared with distributors like wholesalers. Fourth, the cost of research and development borne by manufacturers may have been offset by research grants, funds, and loans from public institutions. This might have led to an underestimation of the manufacturers’ economic surplus. Fifth, due to insufficient data on the cost of adverse events following PCV administration, our analysis did not include these events. This may result in an overestimation of the consumer surplus. However, even if our model could account for these adverse effects, it is unlikely that the results regarding current inequality would change. Sixth, data on disease burden and the economic costs of pneumococcal disease are limited in many parts of the world; hence, our results should be interpreted in the context of the sensitivity analyses we conducted around key parameters. Furthermore, private healthcare in low- and middle-income countries is often unmonitored, complicating accurate calculations of vaccine impact and cost-effectiveness. While these limitations may influence the overall magnitude of the estimated global economic surplus, they are unlikely to have a major impact on the distribution of economic surplus across country groupings and producers, nor influence this study’s conclusions with respect to the impact of different pricing policies.