WSJ.com - Gates Brings His Business Sensibilities To Efforts to Vaccinate the World

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December 3, 2001

Gates Brings His Business Sensibilities

To Efforts to Vaccinate the World's Poor

By RACHEL ZIMMERMAN

Staff Reporter of THE WALL STREET JOURNAL

MURANG'A, Kenya -- It was a typical morning at the Kangema Health Centre, a

dingy clinic in the highlands north of Nairobi. One patient had

accidentally cut off his hand with a machete. A pregnant woman moaned with

abdominal pain. An infant named Pius had a mysterious cough.

Then, without warning, a group of strangers arrived in a white jeep. They

told the head nurse that they needed to inspect the clinic's

child-immunization records. The nurse, Stanley Kagwi, was stunned.

" One minute there's a woman in labor, one minute there's a dying child, "

said Mr. Kagwi, as he rummaged for documents in a drawer. " As for the

records, it's very easy to forget about them. "

The visitors worked for the Global Alliance for Vaccines and Immunization,

a $1.01 billion aid project launched two years ago with major funding from

Microsoft Corp. Chairman Bill Gates's philanthropic foundation. GAVI is the

biggest of several huge, new, Gates-backed health initiatives that are

bringing the software mogul's famously hardball business tactics to a

philanthropic arena that has been hobbled by inefficiency and lack of

funds. Reflecting Mr. Gates's influence, many of the projects provide

financial incentives to the private sector and impose tough performance

targets on all participants.

For instance, the Gates-backed International AIDS Vaccine Initiative gives

money to vaccine makers with this stipulation: They can keep patent and

licensing rights to any AIDS vaccine they develop with the donated funds --

and charge high prices in rich countries -- provided they sell the vaccine

affordably in poor countries. Mr. Gates says he focuses on vaccination --

rather than treatment -- because the economics of disease prevention mirror

those of the software business: Vaccines, like computer programs, require

huge upfront investments, but once developed they are highly effective and

cheap to mass-produce and deliver.

[bill gates hedcut]

At GAVI, the Gates philosophy underlies the group's demand that rewards be

contingent on performance. The alliance pays for vaccines to protect poor

children against yellow fever, hepatitis B and other preventable diseases,

and also invests in vaccine research. Under its rules, countries can

qualify for cash or vaccines only if they first undergo a rigorous

application process and then document an increase in inoculations. If they

fail to meet contractual targets, the flow of aid can be stopped. To ensure

countries don't inflate numbers, GAVI has retained a team of auditors, such

as the group who paid a surprise visit to the Kangema Health Centre.

Mr. Gates argues that poor nations can benefit from a corporate-style

incentive system. " A lot of people hold back from giving because they think

it will go to some corrupt government or be wasted on some bureaucracy, " he

says. In his view, more donors will be prompted to step forward if they see

their money doing good, and more companies will make vaccines if they sense

increased demand. " It's all about leveraging, " he says.

But as GAVI begins making donations, it is encountering obstacles. Several

of the world's neediest nations aren't in a position to meet the

organization's demands. Some people say it's inappropriate -- and

potentially even dangerous -- to impose Western-style measures of

accountability on the world's poorest countries. So far, GAVI has rejected

12 of the 64 countries that have applied for aid, citing deficiencies in

their applications. Of the approved countries, 22 were initially turned

down and forced to reapply.

For example, GAVI in February rejected Nepal's application for hepatitis B

vaccines for 900,000 children. The decision was " surprising and shocking, "

says Benu Bahadur Karki, chief of policy planning and foreign aid for

Nepal's Health Ministry. It even prompted an internal rebuke from Carol

Bellamy, executive director of Unicef, the United Nations children's

agency, and chairman of GAVI's board. " I thought our rejection letter

didn't give enough guidance, " she says. Nepal scrambled to reapply and was

approved last week, but its vaccines won't arrive until next year.

[Go]Do Pharmaceutical Companies Play Too Large a Role in Vaccine Fund?

Mr. Gates defends GAVI's strict standards. " There's not going to be anybody

who eventually you don't get to 'yes' with, " he says.

GAVI has also drawn fire from critics who complain that the alliance isn't

tough enough on its drug-company members when it comes to pricing.

Because GAVI is so new, it's still unclear just how well the Gates approach

works. So far, the alliance has committed $96 million in cash and vaccines

valued at $92 million as part of a two-year donation to countries including

Afghanistan, Haiti, China and Mozambique. GAVI says the vaccines are enough

to immunize about seven million children, about 10% of whom would otherwise

have died.

In Kenya, the first half of GAVI's promised $1.2 million cash donation

arrived in February. The money was earmarked for distribution to local

clinics for improvement of immunization facilities and education. In late

September GAVI also delivered vaccines for two million Kenyan children, for

diseases including yellow fever, hepatitis B and hemophilus influenza B, a

major cause of childhood meningitis. These donations represent the initial

two-year installment of GAVI's five-year commitment to Kenya.

When two GAVI auditors and several local health workers visited the rural

Kangema Health Centre late last summer, the bare, bloodstained examination

room reeked of industrial disinfectant and sweat. Chege, a nurse who

had spent the previous night treating the machete-wound victim, apologized

to auditor Vicki Doyle, a Ph.D. in health systems from Liverpool, England,

as she rifled through drawers and closets. She said no one had ever asked

to examine the tally sheets on which hospital workers are supposed to

record vaccinations. " Sometimes, you just forget to fill in the record

books, " she said.

Ms. Chege's supervisor, Mr. Kagwi, told the auditors he hadn't heard about

the GAVI program or seen any extra money. He said the Kangema clinic

inoculates about 1,350 kids a year with three basic vaccines -- measles,

polio and a combination shot called DTP3 that protects against diphtheria,

tetanus and pertussis -- but could reach many more children if the clinic

had a vehicle. Mr. Kagwi said the clinic also desperately needed other

vaccines and cash to pay for a new exam room and additional nurses.

The auditors heard similar complaints in the malaria-plagued Bondo district

of Western Kenya. There, just over a third of infants receive the DTP3

vaccine, according to the Kenya Ministry of Health. On a late afternoon in

the district hospital, the dimly lit wards were crowded with skeletal young

men wasting away with cholera and AIDS. A mother and daughter held a pair

of twins dressed in pink as they waited with about 30 other mothers for

polio and DTP3 shots -- " a slow day, " according to public-health nurse

Okerosi.

When the GAVI auditors requested tally sheets, Mr. Okerosi at first

objected. " Why should outsiders be allowed to see our hospital records? " he

asked. " It's like if someone comes into your house when you're not there

and goes through your things. " He ultimately handed over the few records

available.

At the Ndori Dispensary, a one-room clinic about 10 miles down a pot-holed

dirt road from the hospital, bats crawled across the ceiling, there was no

refrigerator to store vaccines, and there were no tally sheets to be found.

Gideon Obara, the partially blind clinic officer, said he sends a volunteer

by bike once a week to the district hospital to pick up vaccines, and that

he sometimes returns half-empty vaccine vials to be reused. At this,

auditor Max Moyo, a health statistician from Malawi, shook his head, noting

that some vaccines are deadly if used more than a day after opening.

Elsewhere, the auditors found tally sheets being used to line cold-metal

baby scales, or as lab-test request forms, or to wrap medicines. " They are

just not serious about the importance of these records, " said Mr. Moyo.

Kenya's rampant disorganization and distribution problems are partly the

legacy of a world-wide decline in vaccine funding. Back in 1990, Unicef

declared it had achieved its target 80% " vaccination rate " -- meaning it

immunized 80% of all children against six major vaccine-preventable

diseases, including measles, polio and childhood tuberculosis. At the time,

some critics charged that the Unicef figure was based on inflated reports

from countries that felt pressured to reach the target. Still, the agency

had clearly made major strides since the mid-1970s, when the vaccination

rate hovered around 20%.

But after 1990, Unicef shifted funds away from immunization and toward what

it considered more pressing needs: education, children's rights and the

brutal AIDS epidemic. According to a report by the General Accounting

Office, Unicef spent $51.5 million on immunization in 1998, less than a

third of what it spent in 1990.

Meanwhile, virtually no other aid groups, governments or other major donors

stepped in to help. And as vaccine funding dried up, key drug makers left

the field in favor of more lucrative markets. By 2000, the world-wide

childhood vaccination rate for the six diseases had slipped, and in some

African countries the DTP3 vaccination rate dropped below 50%. According to

GAVI, about 30 million children weren't immunized, and three million people

a year died of vaccine-preventable diseases. Some big health organizations

tried to start a new children's-vaccine project but wound up bickering over

turf.

That's when Mr. Gates says he sensed a deadly " market failure, " and decided

to step in. The $24 billion philanthropic foundation he established with

his wife, Melinda, announced a five-year grant of $750 million to support

GAVI, which had begun as a much smaller project. (The gift technically went

to GAVI's independent fund-raising arm, now known as the Vaccine Fund.) The

governments of the U.S., Britain and the Netherlands, among others,

contributed roughly $263 million.

GAVI is governed by a board of 15 institutional members -- four permanent

and 11 rotating -- including Unicef, the World Health Organization, the

World Bank, the U.S. Centers for Disease Control and Prevention, the

Paris-based Institut Pasteur, and the trade group International Federation

of Pharmaceutical Manufacturers Associations, which represents

multinational drug companies. The Gates Foundation is a permanent member,

represented by the software billionaire's father, Bill Gates Sr. There's

also one seat each for representatives of a developing and an

industrialized country, currently Bhutan and the Netherlands.

The decision to make aid strictly contingent on performance was one of the

board's major priorities. The basic plan was this: Each country would get

half its promised cash up front, and the rest would depend upon proof that

additional kids had been immunized. Vaccines would be delivered in regular

installments, but GAVI reserved the right to suspend shipments if there was

evidence that the vaccines weren't being properly used. " It's like working

in a company where you get rewarded on the basis of what you do, not what

you say you're going to do, " says Gordon Perkin, executive director for

global health at the Bill & Melinda Gates Foundation.

GAVI retained a group of 10 auditors on a contract basis, who toured eight

countries this year. That was a departure from traditional aid agencies,

which typically don't use auditors to examine clinic records to see if aid

is being properly used. Instead, Unicef and WHO collect annual reports from

countries about their vaccination rates.

For its reports to Unicef and WHO, the Kenyan government relies primarily

on unaudited regional data and household surveys. The surveys are typically

conducted by district health officials who ask mothers to show them

immunization cards -- the small forms on which households are supposed to

keep records of children's shots. But this system tends to measure little

more than how many mothers used the cards.

In their two-and-a-half-week trip to Kenyan clinics chosen at random, the

GAVI auditors tabulated tally sheets where they could find them. They

focused on a key indicator of infant care -- DTP3 vaccinations of babies

under one -- and compared the numbers they found with the numbers compiled

by regional health districts. Back in Nairobi, Ms. Doyle and Mr. Moyo then

spent a long weekend comparing the local and regional DTP3 numbers with

those reported by the Kenyan government to Unicef and WHO.

Their conclusions were pessimistic. Some of the figures seemed to be wildly

high. Some were oddly low. It appeared that Kenya was a long way from

reaching the goals it had promised to GAVI. " Are we being ridiculous,

expecting this quality of recording in poor countries? " Ms. Doyle asked.

" You just can't have this huge fund and none of the countries qualifying

for a second round of funding. Then all you're left with is a big failure. "

Ms. Doyle said she planned to recommend to GAVI that it expand future

audits to assess not just clinics' records but their overall quality of

care. That way, she said, GAVI could immediately reward clinics for making

such improvements as putting immunization posters on the walls and

broadening outreach to rural areas, even if the vaccination record-keeping

remained a problem.

GAVI now says it will consider making these factors part of its audits.

Importantly, GAVI also decided that the auditors' first-year reports won't

be binding, so that Kenya and other countries won't face any immediate aid

cutoffs. However, GAVI plans to send auditors to all recipient countries

next year and to suspend aid if necessary.

When the Kenya auditors presented their findings to government officials at

Afya House, headquarters of the national Health ministry, the meeting

didn't begin well. The Kenyan delegation arrived an hour late. Then Ms.

Doyle had to wait while aides searched for a screen for her PowerPoint

presentation. Eventually, someone taped four white pieces of paper together

and hung them on the wall. Ms. Doyle began on a positive note, praising the

well-meaning nurses she encountered. But her message was tough. " Poor data

storage is leading to reporting inaccuracies at all levels, " she said.

Officials sat politely through the presentation. When it was over, they

said they would crack down on lagging health districts. Said Amos Chweya,

Kenya's Vaccine Control Officer: " The days when people just bring in

vaccines as we ask for them are long gone. "

Write to Zimmerman at rachel.zimmerman@...

--------------------------------------------------------

Sheri Nakken, R.N., MA

Vaccination Information & Choice Network, Nevada City CA & Wales UK

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