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Cost of vector control

DAVID MCGUIRE: Hello. My name is David McGuire, and I am with the IVCC and my role there is to work on market-shaping interventions that increase access to vector-control tools. In that capacity, I manage the next-generation IRS project, as well as the New Nets Project. Both are market-access projects that take the products in the IVCC pipeline and bring them to market, and make them accessible in Africa, where they’re needed in the fight against malaria. So what I’d like to talk a little bit about now is how vector-control tools, like nets and IRS fit into the bigger picture. The contribution of mosquito nets and indoor residual spraying IRS has been significant.
About 80% of the gains over the past 10 years are attributable to these vector-control tools. So I’d like to now share with you an example of the next-generation IRS project to talk about a real experience in overcoming market barriers and making indoor residual spraying more affordable and accessible to African malaria programmes. Before the project started, we were in a situation where the next generation of IRS products had become available through our joint development process. There was one product available that was not susceptible to resistance and was poised to take over the previously available products, but the problem was it was very, very expensive. And so programmes had to either decide whether to dramatically reduce coverage or drop IRS altogether.
And so as we came in, we tried to address that in multiple ways. So in terms of reducing the price, we had to do something about that. The market was small without much potential, so companies weren’t interested in investing in those markets. The company that was involved pointed out that there was a lot of volatility and uncertainty in the market, which adds costs and prevented them from offering things at a lower price– monopolistic environment, so there wasn’t much room for negotiation with these partners. They were the only ones with the needed product.
And very importantly, aside from the market factors, there was a non-existent evidence base showing that there was real public-health value in this product beyond the previously available products. So we, through the engineers project, have attempted to address each one of those market shortcomings and the overall market failure. I’d like to talk a little bit about our country partners. In 2016, when we launched the project, there were four countries that we worked with. We’re now working with 15 countries directly. And when I say working with them, I mean we have formal agreements in place to collaborate on this effort.
And what we provide is a volume guarantee to the manufacturers, based on joint forecasting with each of the countries, that we use to guarantee a certain volume of sales for each product that is available to them. In return for that guarantee, they offer a reduced price that makes the products more affordable. So the real drivers from the outset of this project to make these products more affordable and accessible were the forecasting related to the volume guarantee and a co-payment. So at the outset, we worked with the manufacturers to establish a target price.
If there were a mature market, if demand had reached a healthy level, if there was competition, what would a reasonable price target be that would allow for commercial sustainability, commercial viability without donor support? And we came up initially with a target of $15. So based on that and based on where the market was when we started and where it would be in each subsequent year, we calculated a co-payment that was the difference between the current price and where we wanted to be, the theory being that we were able to offer countries and the implementing partners a price that was equal to the commercially viable price that we projected at the end of the project.
So each year, there’s a re-evaluation with each of the partners looking at that price differential, providing a volume guarantee, and gradually withdrawing the co-payment support so that at the end of the project in 2020, we can walk away and leave a healthy market in place that offers multiple products at affordable prices. I’d just like to add, in addition to those two benefits that our direct partners have, there’s been a broader impact on the market. And the broader impact is significant. We have negotiated reduced pricing on an annual basis, and even the countries that aren’t benefiting from our co-payment support are getting access to this reduced price.
So year on year, the prices are coming down, and any malaria programme in Africa that wants to get these products can now pay significantly less because of the negotiation that we’ve led with the manufacturers. Let’s turn a little bit from the business side of this and look at the public-health impact. And so through almost three years of project implementation, we have had a significant impact. We have allowed our partners to protect, roughly, 80 million people in Africa.
I know it’s hard to wrap your mind around what that means, but what’s important to understand is that we have allowed our partners to protect over 20 million more people than they would have if this market intervention hadn’t taken place, and they had to pay full value for these products. So that is close to a 40% added value from the work we’re doing, and we’re hoping, at the end of this project, that that trend will continue. So we just talked about the public-health impact. Let’s look lastly at the overall impact on the market. How has the engineers project catalysed positive change in the IRS market?
Well, we can look at several different variables in the market that we’ve been able to influence, one looking at price. The price that programmes, and donors, implementers are paying now for third-generation IRS is at least 30% less than what they were paying at the outset, which allows them to expand coverage, which is ultimately the goal. On top of the reduced price, there are now two products available, rather than just one, and there’s a third product about to hit the market and a fourth in the pipeline, hopefully, entering the market within the next 12 months. What’s critical about that is that in having choice, in having multiple classes of insecticide, the implementers can rotate the products, thereby preventing resistance.
The other benefit of having multiple products in the market is that it makes the market-intervention tools less relevant, and the price reductions are more, over time, a result of competition than external artificial levers that we’ve brought to the table, such as the volume guarantee and the co-payment. And that has made a significant difference. We believe that the overall market is up about 40% since 2015.
It’s interesting to look at what happened when the old insecticides that were being used, that were quite affordable and very effective until they weren’t in about 2011, and since that time, because there was a gap and there wasn’t an affordable alternative, there was a rapid and steady decline in demand for IRS that went from 2011 until about 2016, when we came on the scene. And as a result of our market-shaping intervention, we have managed to not only stop the downward trend, but reverse that trend. And we’re now seeing demand go back up.
That’s due to a combination of increased affordability and real data that’s coming out of the field showing that not only are these products more affordable now, but they’re really having a significant impact on reducing the cases of malaria. So there’s much more value put on them by malaria programmes and donors. So now, the big question become– we’ve had great success over a short period of time in catalysing this positive change in the market. Can it be sustained? And that is the million-dollar question. And it really depends, I think, on continued evidence coming from the field showing the cost effectiveness and impact of this and the sustained commitment of donors who are challenged with limited budgets.
There is a commitment by the donor community to provide universal coverage with bed nets, but that limits their ability to bring in new tools. So it also depends on the willingness and ability of country programmes to allocate domestic funds, to go beyond donor dependence and start investing their own money to bring in new tools and new technologies. So there needs to be more of a country commitment. And then lastly, the manufacturers that we work with over time are going to have to continue to see some commercial potential. Yes, there’s a strong CSR component to all of this.
And yes, the companies we work with are willing to support these products and the development of new products at a much lower rate of profitability than their broader product line, but there has to be something in it for them. These are companies that are accountable to their shareholders.
They have to show profit, they have to justify their investment at some level, and therefore, this needs to be truly commercially viable in order to be sustained– commitment from the donors, commitment from the countries that are the beneficiaries of these technologies, and the sustained commitment of the manufacturers, not only to make the newest technologies available, but to see that there’s a long-term need and to come forward with that longer-term commitment to start developing the new products now that are going to be needed 10, 15 years down the road.
So when you consider how to make the deployment of vector-control tools more cost effective, it is a complex question, but essentially, you need to look at every tool on its own and look at the relative impact that that has. And then more importantly, and much more difficult to do, you need to understand that there are limited resources. Every environment you work in is different. There are different transmission settings, there is different epidemiology and entomology in every region, and even variable within a country. So the real challenge now is looking at the toolbox of vector-control tools in addition to drugs, and monitoring, and evaluation and trying to figure out what combinations of these products are most appropriate in each setting.
And what is the most cost-effective way to use all the tools available to get us closer to elimination as quickly as possible? You can’t use everything everywhere, but if you use the most effective things together with the other available tools in a very smart way, you’ll be able to have a huge impact in a shorter amount of time and really help to achieve what we’re all set out to do, which is eliminate malaria by 2040.

Dr David McGuire will discuss the cost of vector control in this video, using the NgenIRS project of which he is the Programme Director as a case study. NgenIRS is a four year partnership (2016-2019), led by IVCC and funded by Unitaid, that includes the US President’s Malaria Initiative, The Global Fund, Abt Associates and PATH. This project works in close collaboration with leading insecticide manufacturers, national malaria programmes and other stakeholders to increase the use of 3rd Generation Indoor Residual Spraying (3GIRS) products. This is done by supporting insecticide resistance and management strategies throughout Africa.

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