ISSN 2330-717X

New Ways For Financing Vaccination In Indonesia – OpEd


During autumn of 2016, the World Health Organization (WHO) announced that a vaccine to prevent Dengue Fever was available for people across the world aged 9 to 16 years old. This should have been exceptionally welcome news in Indonesia, where Dengue has affected more than 120,000 people at a cost of roughly US$323 million annually1. Accordingly, in September of last year, Indonesia’s Food and Drug Monitoring Agency approved the Dengue vaccine, making it widely available in the private market.

Unfortunately, the nation of 257 million people living across over 900 islands, continues to see its national coverage rates below the global average. Its vaccine delivery system has been plagued by several major hurdles including a strained public health infrastructure, the lack of a centralized body to manage vaccine procurement and delivery, and mixed public acceptance of immunization campaigns following a recent counterfeit vaccine scandal.

Unsurprisingly, Indonesia’s most significant challenge to vaccine delivery is cost. Although expenses related to the eight compulsory vaccines in Indonesia’s immunization program are covered by universal health care, vaccines for illnesses that fall outside of that program – such as Dengue – must be purchased out-of-pocket, an unaffordable option for many vulnerable, low-income communities.

According to a 2016 WHO report, the Indonesian government funds 83 percent of the total expenditures for routine vaccinations, with external donors like the Global Alliance for Vaccines and Immunizations (GAVI) stepping in for the rest. However, as Indonesia grows into a middle-income country, it is set to transition away from GAVI support and achieve full self-financing by 2018.

Today, Indonesia experiences the highest number of Dengue cases per year in the Southeast Asia region. This despite the fact that vaccinations for the disease would cost only US$26 million, a mere 8 percent of the current annual cost of the disease. Gaps in funding, particularly with the transition from GAVI support, could lead to even greater disruptions in scheduled immunizations and ever higher rates of vaccine-preventable diseases.

Innovative Funding Solutions to Overcome Delivery Barriers

Milken Institute Asia is examining potential models to address barriers to vaccination delivery. In a workshop organized in July 2016 by the Institute, health practitioners discussed financing options that introduce new sources of capital and leverage public sector funding to attract private investment, such as pooled procurement funds, development impact bonds, and conditional cash transfer programs. Full details of the solutions discussed are available in the report, “New Models for Financing Vaccination Programs in Southeast Asia”.

A pooled procurement fund engages public and private sources to establish sustained funding for procuring new vaccines that are otherwise too costly to obtain. Donors, such as bilateral and multilateral agencies or foundations, first seed the fund. Various local companies, like natural resource industries with a history of supporting community projects, then match the donations through their corporate social responsibility programs. In addition to their funding commitments, the donors also can use their collective bargaining power to access a stable supply of new vaccines at lower costs.

Development impact bond models can be used to address the shortage of qualified health care workers to administer vaccines. In this model, investors pay an existing intermediary like UNICEF to provide grants to scale up existing programs for the training and retention of health care workers. Those who benefit from the improved effectiveness of vaccination service delivery, such as the government, then pass their cost savings back to the investors. This model is useful when a measurable link can be established between an intervention and its cost-savings outcome. The challenge lies in mitigating the risk for investors who bear the burden of an unsuccessful program.

Conditional cash transfer programs provide cash or in-kind payments such as staple food items to families who bring their children in for vaccinations. This type of campaign, led by both the government and industry, can increase public awareness for and trust in the benefits of vaccinations. These programs incent families to engage in behavioral changes that have positive long-term implications for their children’s health and, potentially, the families’ overall socioeconomic situation.

Catalyzing Action, Now

The continued economic burden of vaccine-preventable disease, compounded by Indonesia’s upcoming transition away from GAVI support, requires urgent action. Philanthropists, private investors, and the government alike must be galvanized into implementing funding solutions along the vaccine delivery chain – and Indonesia’s timely approval of the dengue vaccine may prove to be the much needed catalyst. New and sustainable sources of vaccine financing are needed to pave the way making life-saving vaccines accessible to all citizens.

About the Authors:
Belinda Chng, Lena Sun and Dr. Jarir At Thobar
i are respectively, Director of Policy and Programs, Princeton-in-Asia Fellow at the Milken Institute Asia, and Assistant Professor of the Faculty of Medicine at the University of Gadjah Mada. This piece is adapted from the Milken Institute’s Financial Innovation Lab report on “New Models for Financing Vaccination Programs in Southeast Asia”. The authors can be reached at [email protected], [email protected] and [email protected]

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