Manufacturing costs of HPV vaccines for developing countries

Monday, 7th of November 2016

This article tests the claim of the manufacturers that they are providing HPV to the GAVI Alliance at cost price. It appears that they are not.

Vaccine, Volume 34, Issue 48, 21 November 2016, Pages 5984–5989

Manufacturing costs of HPV vaccines for developing countries

^a Department of Molecular Biology, Princeton University, Princeton, NJ 08544, USA
^b A.B. Yale School of Medicine, 333 Cedar St, New Haven, CT 06510, USA
^c School of Public Administration, University of Victoria, Victoria, BC V8W 2Y2, Canada
^d Department of Psychiatry, Rowan University School of Osteopathic Medicine, 2250 Chapel Avenue, Cherry Hill, NJ 08002, USA

Received 29 June 2016, Revised 19 September 2016, Accepted 20 September 2016, Available online 19 October 2016

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http://dx.doi.org/10.1016/j.vaccine.2016.09.042

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Excerpts below; full text is at http://www.sciencedirect.com/science/article/pii/S0264410X16308568

Highlights

•This is one of the few original investigations of vaccine manufacturing and costs.

•Manufacturing costs of Gardasil-4 are much lower than the “no profits” price to Gavi.

•Lower sales make per-unit costs of Cervarix much higher than Gardasil.

•This study may have relevance to the costs and fair pricing of other vaccines.

Abstract

Background

Nearly all of the 500,000 new cases of cervical cancer and 270,000 deaths occur in middle or lower income countries. Yet the two most prevalent HPV vaccines are unaffordable to most. Even prices to Gavi, the Vaccine Alliance, are unaffordable to graduating countries, once they lose Gavi subsidies. Merck and Glaxosmithkline (GSK) claim their prices to Gavi equal their manufacturing costs; but these costs remain undisclosed. We undertook this investigation to estimate those costs.

Methods

Searches in published and commercial literature for information about the manufacturing of these vaccines. Interviews with experts in vaccine manufacturing.

Findings

This detailed sensitivity analysis, based on the best available evidence, finds that after a first set of batches for affluent markets, manufacturing costs of Gardasil for developing countries range between $0.48 and $0.59 a dose, a fraction of its alleged costs of $4.50. Because volume of Cervarix is low, its per unit costs are much higher, though at comparable volumes, its costs would be similar.

Interpretation

Given the recovery of fixed and annual costs from sales in affluent markets, Merck´s break-even price to Gavi could be $0.50–$0.60, not $4.50. These savings could support Gavi programs to strengthen delivery and increase coverage. Outside Gavi, prices to lower- and middle-income countries, with profit, could also be lowered and made available to millions more adolescents at risk. These estimates and their policy implications deserve further discussion.

1. Introduction

Cervical cancer is the second most common cancer in females, with over 500,000 new cases per year worldwide. Approximately 85% of these new cases and over 90% of the 270,000 deaths from cervical cancer occur in lower- and middle-income countries, where cervical cancer remains a leading cause of death [1] and [2]. Human papillomavirus (HPV) infection is linked to >99% of cervical cancers [3]. While infection with most strains of HPV are transient and benign, 16 HPV strains are linked to cancerous and precancerous lesions in the genital and oral areas [4] and [5]. HPV-16 and -18 are associated with 70% of invasive cervical cancers worldwide, as well as cancer of the vulva, vagina, anus, and throat [6] and [7].

Two vaccines were developed to prevent HPV-16/18 related cancers. The quadrivalent HPV recombinant vaccine called Gardasil-4 and the bivalent HPV vaccine called Cervarix were developed by Merck and GlaxoSmithKline (GSK) respectively. Although Merck has subsequently developed Gardasil-9, Gardasil-4 and Cervarix remain widely used and are supplied by contract to Gavi, the Vaccine Alliance (Gavi), a public private partnership that provides financial subsidies to accelerate the introduction of new and under-utilized vaccines in the poorest countries of the world.

Gardasil-4 consists of four virus-like particles derived from HPV types 6, 11, 16 and 18. Cervarix consists of two virus-like particles derived from HPV types 16 and 18. When administered before sexual activity, these vaccines are 99 percent effective in preventing associated cancers [8]. Gardasil-4 also protects against genital warts associated with HPV-6 and -11 [9] and may induce cross-protection against oncogenic serotypes HPV-31 and -45 [10]. In 2009, the World Health Organization (WHO) recommended both HPV vaccines for girls aged 9–13, which Gavi promptly adopted [11]. As of 2015, WHO now recommends two doses of these vaccines, spaced 6–12 months apart, for girls aged 9–13 [12].

As the first vaccines against HPV-related cancers, the retail prices for Gardasil-4 and Cervarix were high, at US$150–$190 per dose. Negotiated prices to third parties are usually undisclosed. The lowest known prices outside Gavi are US$12.83 for Gardasil-4 in Brazil and $12.87 for Cervarix in South Africa [2]. Although these vaccines have been licensed in over 100 countries, several factors have contributed to low uptake [13], [14] and [15]. Chief among these factors is the price of the vaccines [14].

In 2013, Merck offered to sell Gardasil to Gavi for US$4.50, and the President of Merck Vaccines said, “The price is what we calculate to be our cost of goods. As we expand volumes, the cost per unit can go down. Our intent is to sell it to Gavi at a price that does not bring profit to Merck.” She made it clear that manufacturing costs do not include research and other costs. [16]. GSK made similar statements and offered Cervarix for $4.60 a dose. Since neither manufacturer provided evidence of its cost of goods, this study was undertaken to determine what they are and how they vary by volume. Determining these closely held costs is difficult, and few detailed studies have been published [17]. This study presents the first detailed cost estimate of the complex manufacturing process of new-generation vaccines Gardasil-4 and Cervarix. It provides important insights into global price barriers and a useful framework for research and decisions concerning accessible pricing. Its limitations underscore the need for greater transparency in vaccine pricing.

. . .

4. Discussion

Based on the best available information from public sources, company reports, and interviews with experts, this study uses sensitivity ranges to estimate the manufacturing costs of Gardasil-4 and Cervarix. For the first set of 15.4 million doses of Gardasil-4, manufacturing costs lie between US$2.07 and $3.05. Manufacturing costs for a second set are about US$0.48–$0.59 per dose. These estimates are well below the price of US$4.50 given to Gavi by Merck.

For this study, an analysis of sales, volume and profits was carried out and is reported in Appendix B. Merck has enjoyed substantial sales and gross profits. From 2006 to 2015, Merck took in about US$13.7 billion from sales of Gardasil-4. Its gross profits more than match any reasonable estimate of past corporate research and development costs incurred for this vaccine, net of taxpayer subsidies [23] and [24]. Since 2010, Merck´s sales have steadily risen to more than 21 million doses in 2015; so the manufacturing costs for the second set sold to Gavi and developing countries range between $0.48–$0.59 per dose. Ten-dose vials could lower costs further.

The estimated manufacturing costs of Cervarix for the first set lie between US$6.16 and $9.39 which is well above the price to Gavi. Appendix B shows that from 2006 to 2015, GSK received gross revenues of about US$2.9 billion from Cervarix sales. Its gross profits of $2.6 billion more than covered its past, net corporate costs for research and development. Outside its contract to Gavi, GSK has the most to gain by competing on price against Merck for market share. Thus, even with only two companies, lively price competition could take place. This would make HPV vaccines more accessible, as happened when competition lowered prices for the first generation of HIV-AIDS drugs [25].

Gavi´s leadership has been criticized for not investigating real manufacturing costs and bargaining for lower prices that would be sustainable for its countries [26]. In our view, Gavi and Merck leaders need to re-price Gardasil-4 at $0.59 or less. While Gavi emphasizes vaccine introductions [27], it appears to be meeting little of the overall demand from member countries, which is estimated to rise to 39 million doses a year by 2020 [28] and [29]. A price at manufacturing cost would greatly increase Gavi´s capacity to vaccinate more children.

Despite being cost-effective in most countries [30], globally the burden of HPV cancers and loss of productivity in the prime of life have hardly been touched. In the 33 countries where HPV vaccines are likely to have the greatest benefit, only 4 had introduced national vaccination programs as of January 2012 [2]. Agosti and Goldie estimated a decade ago that “with every 5-year delay in bringing [HPV] vaccination to developing countries, 1.5 million to 2 million more women will die.” [14].

Setting low vaccine prices for Gavi-eligible countries is an important moral commitment by the companies to reduce global health inequities by preventing cancer and deaths in lower-income countries. Merck and GSK have discount and charitable programs that increase access to their HPV vaccines for some countries. Both companies rank high in the global Access to Medicines Index: GSK ranks first and Merck sixth in the world. Both are strong supporters of Gavi. As producers of global public health goods, they need to be transparent about their costs and negotiate prices accordingly. For countries just above the threshold income for Gavi subsidies, the lowest world prices of $12–13 per dose are much higher than what scores of those countries can afford. As Agosti and Goldie wrote, for lower-income countries, “…per-dose cost may need to be as low as $1 to $2…” [14]. This study challenges the manufacturers and Gavi to commence vigorous discussion about how to achieve such prices now and lower prices in the future.

5. Limitations

This analysis has several limitations. While it is based on the best available information, the lack of access to verifiable manufacturing information from the companies has prevented more accurate figures. The high, middle, and low ranges are estimates, and actual costs will depend on the details of each variable in our estimates, such as the manufacturing site, details of manufacturing, the costs of GMP, the number and costs of personnel needed to make each vaccine, and fluctuations in costs of raw materials. This analysis is limited to the two HPV vaccines used by Gavi, and much work is underway to develop cheaper HPV vaccines that are better suited to the realities of vaccination in developing countries.

Authors´ contributions

DWL conceived the project, oversaw it, and co-authored the main text. CC researched the costs and co-authored the main text and Appendix A. YZ researched and drafted the Introduction, and contributed to all aspects of the paper and calculations. RW was involved in the cost calculations, revisions, and served as a senior economic advisor.

Conflicts of interest

Over the period of 2013–2015, DWL´s department received $28,200 from MSF based on a research contract to carry out this research. He received none of this money, but some of it went to general support for his regular salary. He has received no payments from pharmaceutical companies and declares no conflicts of interest.

CC received $1700 from MSF through Rowan University for this research. She has received no payments from pharmaceutical companies and declares no conflicts of interest.

YZ has received no payments from pharmaceutical companies and declares no conflicts of interest.

RNW has received no payments from pharmaceutical companies and declares no conflicts of interest.

Role of the funding source

MSF staff commented on drafts of the final report but did not participate in the study design or analysis. They suggested names of experts in vaccine manufacturing. MSF interns researched the sales, volume, and profit figures in Appendix B. Rowan staff played no role in the study.

Funding

Partial funding from Médecins Sans Frontières (MSF) to Rowan University. Salary support from Rowan University. In-kind library and IT support from Princeton and Rowan.

Possible summary

This study finds that manufacturing costs for the most widely used vaccine against cervical cancer are low. It could be affordably priced, with profits, for millions of patients in countries where most cases occur.

Acknowledgements

We are grateful for the above funding support. This project greatly benefitted from the advice and support of Kate Elder (MSF), Stephen Scheinthal (Rowan), Thomas Cavalieri (Rowan), and Vaccine´s anonymous reviewers.

Appendices A and B. Supplementary material

Supplementary Appendix A.

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Supplementary Appendix B.

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