Creating Markets for New Vaccines

Several programs have been proposed to improve incentives for research on vaccines for malaria, tuberculosis, and HIV, and to help increase accessibility of vaccines once they are developed. The U.S. administration's 2000 budget pro-posed a tax credit that would match each dollar of vaccine sales with a dollar of tax credit. The President of the World Bank has proposed a $1 billion fund to provide concessional loans to countries to purchase vaccines if and when they are developed. European political leaders have spoken favorably about the concept of a vaccine purchase fund. This paper explores the design of such pro-grams, focusing on commitments to purchase new vaccines. For vaccine purchase commitments to spur research, potential vaccine devel-opers must believe that the sponsor will not renege on the commitment once vaccines have been developed and research costs sunk. Courts have ruled that similar commitments are legally binding contracts. Given appropriate legal language, the key determinant of credibility will therefore be eligibility and pricing rules, rather than whether funds are physically set aside in separate ac