of the industry’s technical requirements and regulatory processes. The European Union (EU) has demonstrated how to change on a regional basis; now the move must be made to an international level of standardization and regulation. Cooperative measures short of thoroughgoing harmonization would help. Clinical trials and designs could be standardized, and testing authorities could begin to accept lot release test results without major structural changes on a national basis. By working with increased vigor toward the development of international standards and an international compact that would finally eliminate redundancy in a costly and time-consuming process, it may be possible to improve substantially the economic conditions that have in the past sharply reduced the number of firms contributing to vaccine innovation.

The pricing problem with vaccines is a critical issue. To prevent further defections from the industry and encourage healthy entry into the market, this problem must be addressed head-on. To some extent, a price-controlled market for vaccines exists in the United States, and to a greater extent, price control through government purchasing exists in much of the developed and developing worlds. Half of the vaccines in the United States are purchased by the Vaccines for Children Fund and other government-controlled programs. The creation of these funds was a major step forward. So, too, was the development of vaccine production capabilities in the developing world, where 75 percent of the world’s supply of vaccines is now manufactured. India, China, Pakistan, Egypt, Nigeria, Brazil, and other developing nations produce diphtheria, tetanus, and pertussis (DTP) vaccine for use in their countries. In Europe and Japan, government-controlled markets have long prevailed. Under political pressures to hold down costs, many government agencies place downward pressure on margins, which makes it difficult to sustain the needed level of innovation and production.

Only the developed nations can afford a pricing system that favors innovation. The manner in which vaccines are priced in the U.S. market cannot be applied to markets in Africa, Latin America, and Southeast Asia. The European market is also likely to have a different level of pricing, although that situation should change as the EU makes further progress toward consolidation and growth. With a consolidated market comparable to that of the United States, the EU should, at some point, be able to make a contribution to sustaining innovation similar to that of the United States. This development would have the enormous advantage of alleviating some of the political pressures that are mounting in the United States against differential pricing.

With the necessary political will and effective leadership from the developed world, a new economic environment for vaccine innovation can be created. By developing and deploying new vaccines, it will be possible to build on the tremendous accomplishments of the WHO campaigns; deal



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