Advance Market Commitments: Insights from Theory and Experience

Ten years ago, donors committed $1.5 billion to a pilot Advance Market Commitment (AMC) to help purchase pneumococcal vaccine for low-income countries. The AMC aimed to encourage the development of such vaccines, ensure distribution to children in low-income countries, and pilot the AMC mechanism for possible future use. Three vaccines have been developed and more than 150 million children immunized, saving an estimated 700,000 lives. This paper reviews the economic logic behind AMCs, the experience with the pilot, and key issues for future AMCs. Michael Kremer Harvard University Department of Economics Littauer Center M20 Cambridge, MA 02138 and NBER mkremer@fas.harvard.edu Jonathan D. Levin Stanford University Department of Economics Stanford, CA 94305-6072 and NBER jdlevin@stanford.edu Christopher M. Snyder Department of Economics Dartmouth College 301 Rockefeller Hall Hanover, NH 03755 and NBER chris.snyder@dartmouth.edu A data appendix is available at http://www.nber.org/data-appendix/w26775