Italy, UK and Canada will create a $1.5 billion fund to buy vaccines for infectious diseases that afflict children in poor countries, according to the Italian Finance Ministry.
Italy is leading the effort and contributing €500 million ($650 million) to the initiative, which has been a subject of discussion between G-8 countries for the past two years. Italian Finance Minister Tommaso Padoa-Schioppa will meet with his UK and Canadian counterparts on February 9 to sign the accord, a spokeswoman for the Finance Ministry said.
The fund will pay above market price for some vaccines to create a financial incentive for the pharmaceutical industry to develop treatment for diseases that afflict the developing world, such as pneumococcus, a form of bacterial pneumonia. Wyeth produces one such vaccine, Prevnar. The vaccine scheme has the support of Microsoft Corp. Chairman and philanthropist Bill Gates, who co-founded the Bill & Melinda Gates Foundation. So far Gates hasn't committed any funds.
About 10.5 million children die each year from preventable diseases, and governments and donors must increase spending by about $7 billion annually to meet goals to cut the rate by two-thirds by 2015, according to medical journal the Lancet. Diarrhea and pneumonia are the leading killers of children. Pope Benedict XVI, British Chief Rabbi Jonathan Sacks and rock star Bono last year were among bondholders placing $1.7 billion of orders for a $1 billion sale of securities promoted by UK Chancellor of the Exchequer Gordon Brown.
Britain, France and Italy promised $4 billion over 20 years to the GAVI Alliance, a group set up by Gates to vaccinate against diseases such as polio, hepatitis B and yellow fever. By selling debt backed by their pledges, the governments allow GAVI to spend the money straight away. Brown wants to use the bond market in this way to provide $50 billion a year of aid. (Bloomberg)