Where some see a small cadre of top-notch vaccine companies, others might see an oligopoly. Where some see innovation, others see hard-to-copy jabs that keep generics away and prices high.
Completed this month, a new report by the Italian Competition Authority raises such concerns about the competitive dynamics in the vaccine market. In its examination, the ICA found an industry that is “dominated by an oligopoly,” with Merck, GlaxoSmithKline, Sanofi Pasteur and Pfizer boasting a combined 80% of the market share.
The group said the world vaccine industry, at €23 billion in 2014, is forecast to grow to €35 billion by the end of this year, with many price increases being driven by “innovative” jabs such as those against HPV and pneumococcal disease. However, many vaccine purchasers and those in the public health space haven't changed their perspective on vaccines as prices and profitability have grown, a fact that may have contributed to the market's consolidation, the ICA said.
Another point of emphasis for the ICA: A tiered and “opaque” pricing model that lumps countries together by a variety of unknown characteristics and then assigns prices based on them. Often, vaccine sale agreements can include requirements that the buyers don’t share pricing info, resulting in “informational imbalances” that “can prevent the demand side from carrying out the comparability analyses and cost/opportunity evaluations on which, from the consumers’ perspective, any efficient procurement policy should be based.”
To alleviate this, the ICA said purchasers should be able to access broad vaccine pricing information and that it hopes negotiations can be "balanced ... in the most effective way possible." It added that any confidentiality agreements should be judged on a case-by-case basis.
And while multiple vaccines can in some cases protect against the same disease, differentiation efforts by companies can further the monopolies and cloud the decisionmaking process for purchasers. To tackle this issue, the ICA said that, on an international level, health authorities should examine "the preventive/therapeutic product equivalence" of vaccines and take a stance for purchasers to follow.
Further, because the newer vaccines are complex and have strong patent protection, developing generic vaccines isn’t an option to introduce market competition, the group said. The ICA said it hopes international authorities will examine whether such pathways could work.
Among its other conclusions, the team at the ICA says the vaccines oligopoly is likely to continue even though new players are capable of developing vaccines and implementing their own pricing models.