Estimating the costs of implementing the rotavirus vaccine in the national immunisation programme: the case of Malawi

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1 Tropical Medicine and International Health doi: /tmi volume 19 no 2 pp february 2014 Estimating the costs of implementing the rotavirus vaccine in the national immunisation programme: the case of Malawi Lizell B. Madsen 1, Marte Ustrup 1, Kristian S. Hansen 2, Peter S. Nyasulu 3, Ib C. Bygbjerg 1 and Flemming Konradsen 1 1 Department of International Health, Immunology and Microbiology, Faculty of Health and Medical Sciences, University of Copenhagen, Copenhagen, Denmark 2 Department of Global Health and Development, London School of Hygiene and Tropical Medicine, London, UK 3 School of Health Sciences, Monash University, Ruimsig, South Africa Abstract objectives Worldwide, rotavirus infections cause approximately child deaths annually. Two licensed vaccines could be life- and cost-saving in low-income countries where the disease burden is highest. The aim of our study was to estimate the total cost of implementing the rotavirus vaccine in the national immunisation programme of a low-income country. Furthermore, the aim was to examine the relative contribution of different components to the total cost. methods Following the World Health Organization guidelines, we estimated the resource use and costs associated with rotavirus vaccine implementation, using Malawi as a case. The cost analysis was undertaken from a governmental perspective. All costs were calculated for a 5-years period ( ) and discounted at 5%. The value of key input parameters was varied in a sensitivity analysis. results The total cost of rotavirus vaccine implementation in Malawi amounted to US$ 18.5 million over a 5-years period. This translated into US$ 5.8 per child in the birth cohort. With GAVI Alliance financial support, the total cost was reduced to US$ 1.4 per child in the birth cohort. Approximately 83% of the total cost was attributed to vaccine purchase, while 17% was attributed to system costs, with personnel, transportation and cold chain as the main cost components. conclusion The total cost of rotavirus vaccine implementation in Malawi is high compared with the governmental health budget of US$ 26 per capita per year. This highlights the need for new financing opportunities for low-income countries to facilitate vaccine implementation and ensure sustainable financing. keywords costs, cost analysis, developing countries, immunisation programmes, Malawi, rotavirus vaccines Introduction Rotavirus is the principal causative agent of severe childhood diarrhoea. Worldwide, rotavirus infections result in approximately 111 million episodes of diarrhoea, 25 million clinic visits and two million hospitalisations annually among children under 5 years of age (Parashar et al. 2003). In addition, rotavirus infections cause approximately child deaths each year, which equals 37% of all diarrhoeal deaths among children. The majority of these deaths occur in low-income countries (Tate et al. 2012). Presently, two oral, live rotavirus vaccines have been internationally licensed, a monovalent, attenuated human rotavirus vaccine, Rotarix â (GlaxoSmithKline Biologicals, Belgium), and a pentavalent, bovine human reassortant rotavirus vaccine, RotaTeq â (Merck & Co. Inc. USA) (European Medicines Agency 2006; United States Food & Drug Administration 2006). Rotarix â is administered in a two-dose schedule that must be completed by age 24 weeks, while RotaTeq â is administered in a threedose schedule that must be completed by age 32 weeks (GlaxoSmithKline 2010; Merck & Co. Inc. 2011a). Both vaccines have demonstrated good safety and efficacy profiles with a pooled vaccine efficacy of 91% against severe rotavirus-associated diarrhoea in high-income countries (Europe and USA). The corresponding efficacies in lowincome countries are lower, 50% in sub-saharan Africa and 43% in Asia (Fischer Walker & Black 2011). Possible explanations for the lower efficacies include a greater diversity of circulating rotavirus serotypes in Africa and Asia, a high prevalence of concurrent infections and 2013 John Wiley & Sons Ltd 177

2 malnutrition, and high titres of neutralising antibodies transmitted through breastfeeding (Cunliffe et al. 1998; Linhares et al. 2002; Dennehy et al. 2005; Santos & Hoshino 2005; Patel et al. 2009; Steele et al. 2011). Post-licensure studies have confirmed good effectiveness in middle- and high-income countries (Patel et al. 2011). The World Health Organization (WHO) recommends that rotavirus vaccines are included in national immunisation programmes worldwide. Currently, the vaccines have been licensed in more than 100 countries. However, by the end of 2012, they have only been introduced or partially introduced in 40 countries of which four are low-income countries (World Health Organization 2011b). To increase access to the vaccines, GlaxoSmithKline and Merck & Co. Inc. have proposed to the United Nations Children s Fund (UNICEF) and the international donor community to provide their vaccines to low-income countries at greatly reduced prices (GlaxoSmithKline 2011; Merck & Co. Inc. 2011b). In addition, the GAVI Alliance provides financial support for vaccine introduction to the world s poorest countries. By 2015, the GAVI Alliance plans to support more than 40 countries in introducing the rotavirus vaccines (GAVI Alliance 2011). The decision to implement new vaccines should be supported by public health and economic evaluations. While cost-effectiveness studies of rotavirus vaccination are numerous, these often exclude the system costs from the analysis or base these on assumptions, because these are expected to be too low to affect the overall cost-effectiveness conclusion (Atherly et al. 2009; Griffiths et al. 2009; Rheingans et al. 2009; Tu et al. 2011). However, for budgetary purposes and for assessing potentials for savings, it is crucial to estimate vaccine costs as well as system costs related to vaccine implementation (Griffiths et al. 2009). The aim of our study was to estimate the total cost of implementing the rotavirus vaccine in a low-income country, using Malawi as a case. Furthermore, the aim was to examine the relative contribution of different cost components to the total cost. Thus, our results fill an important gap in the economic knowledge base on rotavirus vaccine implementation. Our study aims at providing detailed economic insight to decision makers who plan and budget for vaccine implementation. Statistical Office of Malawi 2008; World Bank 2012). In 2011, the under-5 mortality rate was 83 per 1000 children and the infant mortality rate was 53 per 1000 live births. The total governmental health expenditure per capita was US$ 26 in 2010 (World Bank 2012). Rotavirus infections are common in Malawi (Berry et al. 2010). In a study conducted , rotavirus was detected in 33% of children hospitalised with acute gastroenteritis (Cunliffe et al. 2010). The Rotarix â vaccine was implemented in Malawi s national immunisation programme in October 2012 (GAVI Alliance 2012c). It has been estimated that the implementation could prevent 2582 deaths annually (Berry et al. 2010). Malawi has been approved for 3 years of financial support through the GAVI Alliance, and thus, the country only needs to co-finance a small fraction of the vaccine cost (GAVI Alliance 2012a). The GAVI Alliance also offers an introduction grant to cover system costs of a maximum of US$ 0.80 per child in the birth cohort of the year of introduction (GAVI Alliance 2012b). Study design The WHO Guidelines for estimating costs of introducing new vaccines into the national immunisation system were adopted to estimate the resource use and costs associated with rotavirus vaccine implementation in Malawi during a 5-years period ( ) (World Health Organization 2002). The cost analysis was undertaken from a governmental perspective, that is, the costs for patients and society were excluded. The total cost was estimated with and without financial support from the GAVI Alliance. Shared overhead costs in the health system were excluded. Costs were divided into capital costs for items lasting longer than 1 year and recurrent costs (World Health Organization 2002). All inputs were identified, quantified and ascribed a unit cost based on current prices and wage rates. Capital costs were annualised by applying an annualisation factor based on the expected lifetime of the items and a discount rate of 5%. Operational costs were also discounted at a 5% rate (Drummond et al. 2005). All cost calculations are presented in constant 2012 prices in US$. Methods Study area and population Malawi is a small country in Southeast Africa with a population of 15.4 million people and an annual birth cohort of approximately infants (National Data collection Malawi was used as a theoretical case for the analysis, and thus, only secondary data were used. Data were obtained from public data sources, including WHO, UNI- CEF, the National Statistical Office of Malawi, and the Ministry of Health, Government of Malawi. Local John Wiley & Sons Ltd

3 insights about the health system and the vaccine distribution system in Malawi were obtained by Peter S. Nyasulu. Input parameters The input parameters used to estimate the total cost of rotavirus vaccine implementation are listed in Table 1. The equations used for this estimation are described below. Vaccines. The annual vaccine cost, VC, was estimated by multiplying the annual number of vaccines needed by the vaccine price: 1 VC ¼ b i d ð1 wþ ð1þrþp v where b is the size of the birth cohort adjusted for the infant mortality rate, i is the immunisation coverage rate (%), d is the number of vaccine doses per fully immunised child, w is the wastage rate (%), r is the reserve stock (%), and p v is the price per vaccine dose (World Health Organization 2002). For subsequent years, the same formula was used except that the reserve stock was excluded. Cold chain and transportation. Vaccines are stored at four different levels in Malawi; 6 months at national level, 3 months at regional level, 1 month at district level and 1 month at health centre level. The costs of the cold chain and transportation expansion, CC, were estimated for each level in the distribution system by taking the storage volume of the vaccines into account: CC ¼ v v g n p c ðj v c Þ where v v is the packed volume per vaccine dose (cm 3 ), g is the grossing factor accounting for the extra space needed for air circulation in the cold rooms, refrigerators, freezers, and vehicles or for the extra space needed for ice packs in cold boxes, n is the annual number of vaccines purchased, j is the annual supply interval, v c is the storage capacity of the cold chain equipment or transportation vehicle (m 3 ), and p c is the price of the cold chain equipment or vehicles (World Health Organization 2002). Both the calculation of the cold chain and transportation expansion needed was incremental, that is, it took into account an existing available cold chain and transportation capacity in Malawi. It was assumed that Table 1 Input parameters for estimating the cost of rotavirus vaccine implementation in Malawi, Input parameter Baseline estimate Data sources Birth cohort adjusted for infant mortality National Statistical Office of Malawi (2008) rate (2012) Immunisation coverage rate (2012) 1. Dose 99% GAVI Alliance & Government of Malawi (2009) 2. Dose 70% No. vaccine doses per FIC 2 GlaxoSmithKline (2010) Wastage rate 5% World Health Organization (2009) Reserve stock 25% World Health Organization (2009) Vaccine price per dose, Rotarix â (without/with US$ 2.43/US$ 2.65 United Nations Children s Fund s (2011, 2012a) handling fees, freight and insurance fees) Vaccine price with GAVI Alliance financial US$ 0.20 GAVI Alliance (2012a) support Packed volume per vaccine dose, Rotarix â 17.3 cm 3 United Nations Children s Fund s (2012a) Capacity and price of transportation and cold chain equipment Varies according to type World Health Organization (2011c); United Nations Children s Fund s (2012b); Government of Malawi (2011) Annual recurrent costs of transportation and 5% of the total capital cost World Health Organization (2011a) cold chain equipment* HSA wage rate per hour US$ 5.31 World Health Organization (2011a) Vaccine administration time 4.30 min Carroll et al. (2010) Advocacy and social mobilisation cost per child US$ 0.05 GAVI Alliance & Government of Malawi (2009) Surveillance cost per child US$ 0.03 GAVI Alliance & Government of Malawi (2009) FIC, fully immunised child; HSA, health surveillance assistant. *Annual recurrent costs include costs of spare parts and maintenance John Wiley & Sons Ltd 179

4 the existing capacity could hold 50% of the rotavirus vaccine storage volume (Government of Malawi 2011). Personnel. The calculation of the annual cost of personnel to administer the vaccine was based on the annual number of vaccines needed, the amount of time used for vaccine administration (minutes) and the hourly salary of health surveillance assistants (HSAs). Each of the 794 immunising health facilities in Malawi has at least one HSA employed, and it was assumed that they also received 1 h of training every third year (Government of Malawi 2011). Advocacy, social mobilisation, and surveillance. An estimated annual cost for advocacy and social mobilisation per child in the birth cohort was applied, as was an estimated annual surveillance cost per child in the birth cohort. Scenario and sensitivity analyses Our baseline scenario for the cost analysis assumed that the existing cold chain and transportation capacity in Malawi could hold 50% of the rotavirus vaccines. To assess whether this assumption affected the results of the analysis, the following two scenarios were also included: 0% capacity available, that is, the cold chain is assumed to be fully used by existing vaccines, and 100% capacity available, that is, the cold chain is assumed to have enough space to accommodate the rotavirus vaccine. Furthermore, a one-way sensitivity analysis was undertaken to assess whether other parameter uncertainties affected the results of the analysis. The value of key input parameters was varied across a range of 50%, while holding all other parameters constant (Drummond et al. 2005). A discount rate of 3% was also included. Results Total cost and cost profile The total cost of a nationwide rotavirus vaccine implementation in Malawi over the 5-years period ( ) amounted to US$ 18.5 million, equalling an annual cost of US$ 5.8 per child in the birth cohort. With GAVI support, the total cost was reduced by approximately 76%, equalling an annual cost of US$ 1.4 per child in the birth cohort. A detailed distribution of the costs is shown in Figure 1. While 83% of the total cost was attributed to vaccine purchase, 17% was attributed to system costs. The main components of system costs were personnel, transportation and cold chain costs. With GAVI support, vaccine purchase was reduced to constitute 29% of the total cost. Vaccines. The total vaccine cost amounted to US$ 15.4 million over the 5 year period, equalling an annual cost of US$ 4.8 per child in the birth cohort (Table 2). With GAVI support, the total vaccine cost was reduced by approximately 92%, equalling an annual cost of US$ 0.4 per child in the birth cohort. System costs. The total system cost amounted to US$ 3.1 million over the 5-year period, equalling an annual cost of US$ 1.0 per child in the birth cohort. The cold chain investments needed to accommodate the rotavirus vaccines are summarised in Table 3. The total cold chain cost amounted to approximately US$ The majority of costs were attributed to the investments in cold boxes and ice pack freezers. The costs of expanding the transportation system for the vaccines are summarised in Table 4. The total transportation cost amounted to approximately US$ Without GAVI support With GAVI support* 2.8% 1.5% 11.4% 0.7% 0.4% 6.1% 3.1%1.9% 11.9% 28.9% 83.2% 48.1% Vaccine Personnel Cold chain Transport Advocacy Surveillance Figure 1 Cost profile. The relative contribution of cost components to the total cost of a nationwide rotavirus vaccine implementation in Malawi, Percentages of the different cost components of rotavirus vaccine implementation in Malawi are indicated in the figure. The left side shows the cost distribution when GAVI support is excluded, whereas the right side shows the cost distribution when GAVI support is included. *With GAVI support, the country co-finances US$ 0.20 per vaccine dose (GAVI Alliance 2012a) John Wiley & Sons Ltd

5 Table 2 Vaccine cost of a nationwide rotavirus vaccine implementation in Malawi, Birth cohort (millions)* Doses per FIC Vaccine coverage for 2nd dose (%) Wastage (%) No. of vaccines (millions) Price per dose (US$) Total vaccine cost (millions US$) Without GAVI support With GAVI support FIC, fully immunised child. *Projected accumulated birth cohort size adjusted for infant mortality rate (National Statistical Office of Malawi 2008). Coverage is assumed to be 70% in 2012, 97% in 2013, and to reach 98% after three years (Government of Malawi 2009). Number of vaccines for the introduction year includes a 25% reserve stock (World Health Organization 2009). Price includes handling fees, freight and insurance (GAVI Alliance 2012a; United Nations Children s Fund s 2012a). Future costs are discounted at a 5% rate. Table 3 Cold chain costs of a nationwide rotavirus vaccine implementation in Malawi, Item Quantity* Lifetime (years) Annualised capital cost (US$), Annualised operational costs (US$), Total cost for 5-year period (US$) Cold rooms Generators Ice pack freezers Refrigerators Cold boxes Total *Quantities of items are summed over the different levels in the cold storage system in Malawi. Annualised by applying an annualisation factor based on the expected lifetimes of items and a 5% discount rate. Future costs are discounted at a 5% rate. Operational costs include spare parts and maintenance. The total cost of personnel for vaccine administration, including training, amounted to approximately US$ 2.1 million (data not shown). The total cost for advocacy and social mobilisation amounted to approximately US$ (data not shown). The total surveillance cost amounted to approximately US$ (data not shown). Scenario and sensitivity analyses The results of our scenario analyses of alternative assumptions about the available cold chain and transportation capacity in Malawi are shown in Table 5. Compared with our baseline scenario, the total cost of vaccine implementation over the 5-year period increased and decreased by 4.3% in scenario 2 and scenario 3, respectively. This translated into a total cost per child in the birth cohort ranging from US$ in the different scenarios. The results of our sensitivity analysis showed that the total cost was most sensitive to assumptions about vaccine price and personnel. Furthermore, when changing the discount rate to 3%, the total cost increased by 5.5%. Discussion In this study, we estimated the total cost and identified the cost components of a nationwide rotavirus vaccine implementation in Malawi over a 5-year period. These results fill an important gap in the economic knowledge base on rotavirus vaccine implementation. By using WHO guidelines for cost analyses, we followed appropriate methods to ensure scientific quality of our findings as well as comparability with other studies. However, our cost estimates are conservative and should be taken as indicative approximations for budgetary purposes. Overall, we demonstrated that the total cost of implementing the rotavirus vaccine in the national immunisation programme in Malawi is high compared with the governmental health budget of US$ 26 per capita per year. Our study showed that vaccine purchase was the main item of expenditure. This has also been reported in other costing studies of new vaccines (Wolfson et al. 2008; Griffiths 2013 John Wiley & Sons Ltd 181

6 Table 4 Transportation costs of a nationwide rotavirus vaccine implementation in Malawi, Item Quantity* Lifetime (years) Annualised capital cost (US$), Annualised operational cost (US$), Total cost for 5-year period (US$) Vehicles Motorcycles Bicycles Total *Quantities of items are summed over the different levels in the distribution system in Malawi. Annualised by applying an annualisation factor based on the expected lifetimes of items and a 5% discount rate. Future costs are discounted at a 5% rate. Operational costs include spare parts and maintenance. Table 5 Comparison of the costs of a nationwide rotavirus vaccine implementation in Malawi for three scenarios, Baseline scenario Scenario 2: 0% cold chain and transportation capacity available Scenario 3: 100% cold chain and transportation capacity available Total cost (millions US$) Total cost per child in the birth cohort (US$) System costs millions US$) et al. 2009; Madsen et al. 2012). With financial support through the GAVI Alliance, the total cost of vaccine implementation for the Government of Malawi was reduced to US$ 1.4 per child in the birth cohort, as shown in our analysis. The high vaccine cost could therefore pose a significant challenge for low-income countries once GAVI support expires. Consequently, this puts the long-term sustainability of the vaccination programme at risk. In addition, the lower- and middle-income countries that are not eligible for GAVI support will face significant difficulty in financing the implementation of new and expensive vaccines (Madsen et al. 2012). System costs constituted approximately 17% of the total cost of vaccine implementation. This equalled an annual cost of US$ 1.0 per fully immunised child. Transportation and cold chain investments were shown to be among the main components of the system costs. This finding is supported by other vaccine costing studies (Wolfson et al. 2008; Griffiths et al. 2009). Rotarix â occupies 17 times more space than the smallest size of the EPI vaccines, while RotaTeq â occupies 46 times more space (World Health Organization 2012). The implementation of these vaccines therefore puts an unprecedented strain on the cold chain system, making it necessary for many low-income countries to expand its cold chain capacity (World Health Organization, United Nations Children s Fund & World Bank 2009). This expansion is expensive, as shown in our scenario analyses. When no existing available storage capacity for the vaccines was assumed, the system costs increased to US$2.0 per fully immunised child. Thus, the GAVI Alliance introduction grant of US$ 0.80 per child in the birth cohort will not cover all system costs, which may affect the decisionmaking on vaccine implementation. We assumed the existing cold chain and transportation capacity in Malawi could hold 50% of the rotavirus vaccines. Before the rotavirus vaccine implementation, the Government of Malawi purchased an 80 m 3 cold room at national level and three cold rooms at regional level (GAVI Alliance & Government of Malawi 2009). This is considerably above our estimated cold chain expansion. Our study has a number of limitations. No primary data collection was undertaken, which makes the cost analysis subject to uncertainty around the data and assumptions used. However, we used Malawi as a case, a low-income country for which much data on rotavirus vaccine implementation were available. Data limitations were taken into account by means of scenario and sensitivity analyses. We did not include electricity, gas and kerosene used for cold chain power. Transportation costs did not include fuel costs based on distance travelled and drivers salaries, which may have led to underestimation. This should be incorporated into the WHO guidelines for vaccination costing studies to strengthen its accuracy. Before the WHO s recommendation to include rotavirus vaccines into all national immunisation programmes could be implemented, several financial challenges need to be addressed. Of critical importance is the prompt identification of new sustainable financing opportunities for low-income countries to facilitate vaccine implemen John Wiley & Sons Ltd

7 tation and to avoid future funding gaps. In particular, there is a great need to identify the means of financial support for lower- and middle-income countries that are not eligible for GAVI support. This priority should rank high on the agenda of international health and development organisations. Furthermore, there is a need for both government and donor commitments to ensure that low-income countries can be financially self-sustainable once GAVI support expires. In addition, the GAVI Alliance is urged to allocate more resources for support of system costs associated with the implementation of new and bulkier vaccines, such as the rotavirus and pneumococcal vaccines. On the supply side, further reduction of the vaccine price is needed. This could be accomplished by creating a more competitive market with several vaccine manufacturers and by offering tiered pricing. Manufacturers should also reconsider the presentations and formulations of their vaccines with the focus of further minimising the volume and thus put less strain on transportation and cold chain capacity. Overall, our results indicate that while favourable costeffectiveness estimates of new vaccines make them attractive to decision makers and politicians, more detailed analyses of the costs, and not least of expenses after withdrawal of external support, are useful. Any new medical product, including new vaccines, must go through the obligatory phase I IV trials as well as post-marketing follow-up. Before being rolled out, particularly in low- and middle-income countries, it should also be considered to undertake an analysis in line with ours for budgetary purposes and for assessing potentials for savings. Finally, it should be emphasised that rotavirus vaccination is only one component of a comprehensive approach to prevention and management of childhood diarrhoea. It is important to ensure the widespread use of oral rehydration therapy and to continue investing in preventive interventions, such as improvement in hygiene, sanitation and water supply, to achieve a continued reduction in diarrhoea morbidity and mortality. Conclusions In this study, we demonstrated that the total cost of implementing the rotavirus vaccine in Malawi is high compared with the country s governmental health budget. Initially, GAVI support will cover the majority of the costs. However, once this support expires, Malawi could face significant financing challenges. The same is evident for lowerand middle-income countries that are not eligible for GAVI support. In addition, many low-income countries need to expand their cold chain capacity before implementing the rotavirus vaccine, and the GAVI Alliance introduction grant will only cover a fraction of these costs. Therefore, it is of critical importance that new global initiatives to reduce the costs of rotavirus vaccine implementation and ensure sustainable financing are identified. In addition, minimising the volume of the vaccine is a major potential for savings in storage capacity costs. Acknowledgements We thank Kim Moesgaard Iburg, Associate Professor, Aarhus University, Denmark, for his contribution to the health economic analyses. References Atherly D, Dreibelbis R, Parashar UD, Levin C, Wecker J & Rheingans RD (2009) Rotavirus vaccination: cost-effectiveness and impact on child mortality in developing countries. Journal of Infectious Diseases 200(Suppl 1), S28 S38. Berry SA, Johns B, Shih C, Berry AA & Walker DG (2010) The cost-effectiveness of rotavirus vaccination in Malawi. Journal of Infectious Diseases 202(Suppl), S108 S115. Carroll S, Adlard N, Gibbons B, Martin S & Pym N (2010) Evaluation of Consultation Time for Paediatric Vaccines. Health protection agency annual conference. 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9 World Health Organization (2009) Introduction of Rotavirus Vaccines into National Immunization Programmes. World Health Organization, Geneva. World Health Organization (2011a) CHOosing Interventions that are Cost Effective (WHO-CHOICE). World Health Organization, Geneva. World Health Organization (2011b) Countries Using Rotavirus Vaccine in National Immunization Schedule in 2010 and Planned Introductions from World Health Organization, Geneva. implementation/en/index1.html World Health Organization (2011c) PQS Catalogue: Prequalified Devices and Equipment. World Health Organization, Geneva. pqs_catalogue/categorylist.aspx?cat_type=device World Health Organization (2012) Vaccine Volume Calculator World Health Organization, Geneva. who.int/immunization_delivery/systems_policy/logistics/en/ index4.html World Health Organization, United Nations Children s Fund & World Bank (2009) State of the World s Vaccines and Immunizations. World Health Organization, Geneva. Corresponding Author Lizell Bustamante Madsen, Department of International Health, Immunology and Microbiology, Faculty of Health and Medical Sciences, University of Copenhagen, Copenhagen, Denmark. lizell@sund.ku.dk 2013 John Wiley & Sons Ltd 185