In his State of the Union address, President Clinton will call for concerted international action to combat infectious diseases in developing countries. These diseases cause almost half of all deaths worldwide of people under age 45, killing over eight million children each year and orphaning millions more.

The President committed the United States to addressing this terrible problem in his September speech to the United Nations General Assembly. Now the President is asking for foundations, pharmaceutical companies, international agencies, and other governments to join us in this task, and he is announcing these specific elements of his Millennium Initiative:

• A new financial commitment to purchase and deliver existing vaccines in poor countries. As Vice President Gore told the U. N. Security Council earlier this month, the Administration’s FY 2001 budget will include a proposed $50 million contribution to the vaccine purchase fund of the Global Alliance for Vaccines and Immunization (GAVI).

• Increased investments in health in developing countries. The President is calling on the World Bank and other multilateral development banks to dedicate an additional $400 million to $900 million annually of their low-interest-rate loans to expand immunization, prevent and treat infectious diseases, and build effective delivery systems for other basic health services. These investments are as central to economic progress as investments in education and physical infrastructure, and they would build on the new focus on basic health services that we have supported as part of the Highly Indebted Poor Countries (HIPC) debt initiative. This proposed shift in existing resources does not require additional U.S. budget expenditures.

• A significant increase in basic research on diseases that affect developing nations. The Administration’s FY 2001 budget for the National Institutes of Health includes a sharp step-up in research critical to the development of vaccines for malaria, tuberculosis, and HIV/AIDS.

• A new tax credit for sales of vaccines for malaria, tuberculosis, and HIV/AIDS to accelerate the invention and production of these vaccines. Because developing countries often cannot afford to buy vaccines, the market provides little incentive for pharmaceutical companies to develop vaccines for diseases that disproportionately affect those countries. This tax credit would provide such an incentive, because every dollar paid by a qualifying organization to buy a qualifying vaccine would be matched by a dollar of tax credits – representing up to $1 billion of additional funding for future vaccine purchases. The President is calling on other governments to make similar purchase commitments, so that we can ensure a future market for these critically needed vaccines.

ADDITIONAL EXPLANATION

Infectious Diseases Pose a Mounting Social and Economic Burden on Developing Countries – And a Threat to Our Health As Well.

• More than eight million children die each year of centuries-old diseases like malaria, tuberculosis, and respiratory and diarrheal diseases. Deaths from the modern scourge of AIDS are climbing rapidly. Altogether, as many children die of infectious diseases each year as the total number of combatants who perished in World War I.
• In an interconnected and highly mobile world, health crises in other countries are a threat to everyone. We have seen this with HIV/AIDS, with the resurfacing of tuberculosis, and with the outbreak last year of West Nile encephalitis in New York. According to the Global Health Council, during the past 50 years, at least five times as many Americans have died from communicable diseases that have come from the developing world than have died in military conflicts.

Vaccines Are One of the Most Cost-Effective Ways to Improve the Well-Being and Productivity of the Poorest Countries – And Medicines and Other Basic Health Services Are a Necessary Complement.

• It costs about $17 to immunize a child, but millions of children die each year of diseases that could be prevented by existing vaccines. Indeed, children in developing nations are 10 times more likely to die of a vaccine-preventable disease than children in developed nations. And these tragedies occur in spite of the enormous efforts of UNICEF and others to vaccinate children, which save 3 million lives each year.
• Highly effective vaccines do not yet exist for malaria, TB and AIDS, which take over 5 million lives each year. But developed nations have the scientific and technological capacity to make new vaccines possible. For example, recent work on genetic sequencing, including the human genome, will open vast possibilities.
• Another health investment with very high returns is simple preventive and curative services. Providing this basic health care together with vaccines would save millions of lives each year.

A $50 Million Contribution to GAVI to Buy Vaccines For Children – Which Will Save Lives Now and Create Confidence that a Market for New Vaccines Will Exist in the Future.

• GAVI, the Global Alliance for Vaccines and Immunization, was formed as a collaborative effort of UNICEF, the World Health Organization (WHO), the World Bank, private foundations, bilateral aid agencies (including the U.S. Agency for International Development), industry representatives, and developing countries. GAVI established the “Global Fund for Children’s Vaccines” with an initial grant of $750 million over 5 years from the Bill and Melinda Gates Foundation. The formal launch of GAVI, and the official announcement of the Gates gift, will occur shortly in Davos, Switzerland.
• A U.S. contribution will help to purchase vaccines for Hepatitis B, Haemophilus Influenzae B (Hib), and Yellow Fever, along with related safe delivery equipment such as auto-destruct syringes. To ensure that GAVI’s vaccine purchases complement, rather than replace, existing vaccination efforts, they will be conditional on a country achieving 50 percent coverage of the DTP (diptheria-tetanus-pertussis) vaccine, which is included along with measles and polio in the existing EPI (Expanded Program for Immunization).
• A U.S. contribution will hopefully catalyze significant contributions from other countries and foundations. It will also add crucial credibility to the international community’s commitment to provide a market for new vaccines when they are developed.

We Must Shift Existing International Resources Toward Building Health Infrastructure in Poor Countries That Can Deliver Vaccines and Medicines and Provide Essential Basic Health Services.

• The World Bank and other multilateral development banks (MDBs, such as the African Development Fund) lend money on highly favorable terms to the world’s poorest countries. Today, roughly $1 billion to $1-1/2 billion of this so-called “ concessional funding” is devoted to health care each year. The Administration proposes to increase that amount by $400 million to $900 million per year, with a focus on:
• immunization;
• prevention of diseases using basic measures such as information and condoms for AIDS, treated bed nets for malaria, and stronger systems for containing TB;
• treatment of diseases, including common respiratory and diarrheal infections; and
• more effective provision of basic health care.
• The Administration is exploring ways to use the HIPC debt reform to support this part of the Millennium Initiative. One possibility is to make an increase in vaccination rates one of the performance targets monitored in the HIPC progress reports. This could be accompanied by debtor countries’ agreements to include specific improvements in vaccine delivery systems as priority uses of debt relief proceeds. We also expect that all Poverty Reduction Strategy Papers that are prepared for HIPC candidates will discuss the adequacy of budget resources and suggested policy reforms devoted to basic health care.
• This re-direction of resources supports the Administration’s overall strategy for global development, which emphasizes poverty reduction and gives a central role to “global public goods” – like health or the environment – in which positive actions taken in one country benefit other countries as well. To meet this objective, these funds should not come from spending on other basic social programs, such as education and health care.
• This aspect of the Millennium Initiative does not require a new budgetary commitment by the United States (or other donor countries). However, the U.S. ability to influence the direction of MDB lending and the use of HIPC proceeds depends crucially on meeting our existing commitments to these aid programs. We will work with other G-8 finance and development ministries to refine this proposal.
• A conservative estimate suggests that if basic health care including immunization were made broadly available, up to 2 million children’s lives could be saved each year.

Higher Funding for Basic Scientific Research Through the National Institutes of Health (NIH) and Elsewhere Will Hasten the Development of Vaccines for Malaria, TB, and AIDS.

• The Administration’s FY 2001 budget for NIH includes a significant increase in research critical to creating vaccines for these diseases. For malaria and TB, this increase will build on recent advances in the genetic sequencing of these diseases, which have set the stage for major breakthroughs in vaccine development.
• Funding for NIH malaria vaccine research will increase more than 10 percent over the FY 2000 level. Future research will range from pre-clinical studies aimed at improving our understanding of the malaria parasite, through the development of vaccine candidates, to clinical trials judging vaccine efficacy and safety. NIH will also expand its collaboration with scientists in malaria-endemic regions, especially in Africa, to strengthen those regions’ capacity for conducting clinical trials of malaria vaccines in the future.
• NIH research on a tuberculosis vaccine will receive over 40 percent more funding than in FY 2000 and more than double the FY 1999 level. NIH will focus on studying the body’s defense mechanisms against TB, and developing and studying vaccine candidates. Through its Tuberculosis Research Unit, NIH supports an international multi-disciplinary team to translate advances in basic research into new tools for fighting TB.
• NIH funding for AIDS vaccine research will increase substantially in FY 2001 and will have more than doubled since FY 1997. These additional resources will allow NIH to accelerate basic research on developing vaccine candidates and to significantly expand testing of potential vaccine candidates in both developing and developed countries. The new Vaccine Research Center on the NIH campus, which will be occupied this summer, will receive a sizeable increase in funding for the development and pre-clinical testing of HIV vaccine candidates.
• The Administration is providing strong support for the path-breaking research on infectious diseases being conducted by U.S. military scientists, including the opening (in October 1999) of the Walter Reed Army Institute of Research/Naval Medical Research Center. Working in close collaboration with scientists worldwide, military scientists have developed and tested successful vaccines against Japanese encephalitis and hepatitis A – and they are working to create vaccines and medicines to protect service people, travelers, and millions of others from malaria, HIV/AIDS, and other infectious diseases.

A New Tax Credit Would Effectively Provide Up to $1 Billion for Future Vaccine Purchases, Speeding the Invention and Production of New Vaccines.

• Current tax law provides substantial incentives for pharmaceutical research and development, including the research and experimentation (R&E) tax credit, the orphan drug tax credit, and an enhanced deduction for charitable contributions of certain products. Nonetheless, pharmaceutical companies may be reluctant to invest in developing vaccines for diseases that primarily afflict people in poor countries, because little or no paying market exists in those countries.
• Under the proposal, the seller of a qualified vaccine could claim a tax credit equal to 100 percent of the amount paid by a qualifying organization that received a “credit allocation” by the U.S. Agency for International Development (AID). The tax credit would match the qualified organizations’ expenditures dollar-for-dollar, thereby doubling their purchasing power. A qualifying vaccine would be a new vaccine that received FDA approval for use against malaria, tuberculosis, HIV/AIDS, or any infectious disease that causes over 1 million deaths annually worldwide.
• For 2002 through 2010, AID could designate up to $1 billion of vaccine sales as eligible for the credit. This tax credit would be limited to new vaccines developed to fight these terrible diseases. The credit would provide a specific and credible commitment to purchase future vaccines at reasonable prices. Together with similar commitments from foundations and other governments, it would provide a critical and powerful incentive to accelerate vaccine research and development.

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