An advance market commitment (AMC) is a promise to buy or subsidise a product if it is successfully developed. AMCs are typically offered by governments or private foundations to encourage the development of vaccines or treatments. In exchange, pharmaceutical companies commit to providing doses at a fixed price. This funding mechanism is used when the cost of research and development is too high to be worthwhile for the private sector without a guarantee of a certain quantity of purchases.

This article possibly contains original research. (February 2024)

The idea of advance market commitments was developed by economists in the 2000s. This idea was applied to finance the pneumococcal conjugate vaccine. During the Covid-19 crisis, the COVAX AMC provided 1.8 billion vaccine doses to 87 low and middle-income countries.^[1] AMCs could be used to stimulate research on universal vaccines, which would contribute to pandemic preparedness. An AMC has also been launched for carbon-removal that meets certain technical specifications.

In the case of vaccines, an advance market commitment is a contract between three types of parties: the sponsors, the recipient countries, and the firms.^[2] The sponsors promise to largely subsidise vaccines that meet certain eligibility requirements, up to a fixed number of doses. For example, a global fund can guarantee to pay $14 out of $15 for the first 200 million doses of vaccines that have an efficacy of more than 70%. Countries benefiting from the vaccines agree to pay the remaining part of the price ($1 in the example). This small co-payment ensures that there is an actual demand for the vaccines. In return, the firms commit to provide further doses at a small price, close to the cost of production. In the example, the pharmaceutical companies which develop an eligible vaccine would benefit from the high $15 price for the first 200 million doses, but would have to provide all further doses at a low price, like $1 per dose.^[2] This stipulation ensures that the product stays affordable for developing countries in the long run.^[2]

While using a pull funding mechanism intended to supplement direct support for R&D (classified as push funding), AMC aims to navigate the challenge of selecting promising projects in advance amid conditions of asymmetric information.^[3] This approach incentivizes successful vaccine development by offering financial rewards based on outcomes, thereby facilitating investment in research without the necessity to accurately predict project success from the outset.^{[citation needed]}

In 1998, Michael Kremer published an academic article on patent buyouts: he argued that governments could improve access to treatments by buying patents and placing them in the public domain.^[4] Inspired by his experiences in Kenya, where he contracted malaria, he then proposed the idea of a "vaccine purchase commitment" to encourage research on neglected diseases.^[5][6] In 2001, a report of the United Kingdom mentioned that a potential global fund to fight HIV/AIDS, malaria, and tuberculosis could also make advance purchase commitments.^[7] This idea continued to gain traction in 2004, when Michael Kremer and Rachel Glennerster published a book advocating for it.^[6] It gained additional momentum in 2005 with the publication of a report by the Center for Global Development.^[2] In 2006, the G8 was considering setting up an "advance market commitment", and this expression was used in an academic paper estimating the cost-effectiveness of the measure.^[8]