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04/05/04 14:05:45

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[NVIC] Gates Foundation Funds Vaacines

 

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http://www.washingtonpost.com/wp-dyn/articles/A50514-2004Apr4.html

The Washington Post

Monday, April 5, 2004; Page A17

 

Opening the Gates

By Sebastian Mallaby

 

SEATTLE -- The Bill and Melinda Gates Foundation is the world's largest

private giver. It shells out nearly $600 million a year to fight disease in

poor countries, plus a similar amount to good causes in this country. It

outspends George Soros's philanthropic empire by three to one, and the Ford

Foundation by around two to one. Only governments and multilateral bodies

such as the World Bank are bigger.

 

But Gates is about more than money. The foundation's Seattle office -- an

unassuming structure across from Mani's Waxing and Facials and the Macintosh

Users' Group -- is packed with formidable talent. There are scientists

who've come from the National Institutes of Health. There are business types

from management consultancies. There are veterans of Microsoft. These

extremely smart people exercise extreme freedom, which makes for a powerful

mixture. Economists think a lot about how governments can correct the

failures of profit-seeking markets and how markets can correct the failures

of sluggish government. But big philanthropic actors have a shot at

correcting both.

 

Consider, for example, the conundrum of vaccines. Market forces cannot

deliver these to poor countries, because the poor can't afford them. Rich

donor governments have failed equally, because their budgets are hostage to

shifting political fashions: One year they give money for AIDS, the next

year they're hot for microfinance. Because of governmental unreliability,

vaccine companies stopped making long-term investments in production

facilities, and manufacturing capacity dried up. In the 1990s UNICEF, the

U.N. agency that pools donor funds to buy vaccines, periodically scraped

money together and put out a tender. Sometimes it got next to no response.

 

The solution? In 1999 the Gates Foundation plunked down $750 million to buy

vaccines, enough to tell manufacturers that if they invested in production

there would be a buyer. Manufacturers have duly responded: Now, when UNICEF

puts out a tender for hepatitis B vaccine, for example, there are 12 firms

ready to bid, up from three in 2000. In a little over four years, the

Gates-backed vaccine fund has reached 35 million children, saving perhaps

300,000 lives.

 

That alone is wonderful -- Bill Gates Sr., father of Microsoft's father,

chokes with emotion as he thinks of it. But the Gates solution is cleverer

than just plunking down money. Having made the initial grant, the foundation

persuaded traditional government donors to provide an additional $450

million. These donors came forward in the usual way: unpredictably,

haphazardly. But that was no longer debilitating, because the Gates money

was acting as a backstop, giving vaccine makers the confidence to ramp up

production. Now the Gates brain trust is working on the next stage of its

concept: What if the vaccine fund issued securities, using the proceeds to

smooth unpredictable donations from governments? On Thursday a meeting

convened by the French and British finance ministers will consider a version

of this concept.

 

Or consider another way in which the Gates Foundation complements government

donors. Politically driven aid programs can't take the heat for ignoring

large parts of the world and concentrating on one or two countries. But when

the Gates Foundation first became involved in AIDS, it devoted a large part

of its effort to Botswana, a country of just 1.6 million people. Working

with Merck, a pharmaceutical company, the Gates people sponsored a program

to show what could be done when financial constraints were removed: Can you

treat people successfully in poor settings? Do you need expensive blood

tests to diagnose patients, or is it enough simply to look at them? If the

World Bank or the Global Fund to Fight AIDS, Tuberculosis and Malaria had

focused so exclusively on one small country, there would have been an

uproar. But Gates could get away with that, and other donors are learning

from the Botswana experiment.

 

The Gates people have carved out a niche in medical research, too.

Private-sector research excels at creating medical products, but mostly for

rich people. Public-sector research focuses on basic science and thrives on

the decentralized pursuit of interesting hunches rather than on coordinated

problem-solving. The Gates Foundation aims to bring private-sector goal

orientation to public-sector endeavors, notably the search for an AIDS

vaccine. Last year the foundation convened the leaders in this field -- a

disparate band of academics, government scientists, nonprofit outfits and

firms -- and persuaded them to coordinate their efforts. Now it is building

a consensus on what the key bottlenecks are to developing an AIDS vaccine.

Next it will use its grants to ensure that all bottlenecks are tackled.

 

The Gates Foundation is young and gloriously experimental, and not all its

ideas will work. But that is the whole point: Because it is sitting on a $26

billion endowment, it can take more risks than taxpayer-backed

organizations. It is pursuing what you might call the venture capital model

of progress -- applied not to tech firms but to the health problems of the

world's poorest. The life expectancy for babies born in the richest fifth of

the world is 74 years; for babies in the bottom fifth it is 48 years. The

Gates Foundation aims to change that.

 

 

 

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