GAVI Alliance Board Meeting, 16 -17 June 2010 Do c 06 ? AVI Prog ress Report

FOR INFORMATION

GAVI Secretariat , 2 June 2010 1

At the request of GAVI Board members, the Secretariat was asked to provide an
update on the Accelerated Vaccine Introduction (AVI) initiative

Accelerated Vaccine Introduction Progress Report

The objective of AVI is to drive the sustainable introduction of rotavirus vaccine and
pneumococcal conjugate vaccine (PCV) in GAVI -eligible countries. Initial t argets
were set for 44 countries to launch rotavirus vaccines and 42 countries to launch
PCV by 2015 1. The longer term scope for AVI is to establish an organisational
platform to support the introduction of future vaccines 2.

AVI Structure and Management

The management of AVI is conducted by the AVI Management Team (AMT) which
consists of representatives of WHO, UNICEF Supply Division (UNICEF SD) ,
UNICEF Program Division (UNICEF PD) , and the AVI Technical Assistance
Consortium (AVI TAC 3) led by the GAVI Secretariat . The AMT operates through bi -
weekly teleconferences ; with more in depth anal ysis and work carried out by sub
teams .4 (see Annex 1 for more details )

Activities are consolidated between the aforementioned organi sations through an
integrated workplan and activities are grouped into five high level work streams 5
(see Annex 2):

? Generate informed country decisions
? Ensure sufficient supply
? Secure financing
? Facilitate country introductions
? Establish platform for sustained use

AVI?s objective is primarily to deliver health impact through accelerating introduction
and uptake of new v accines. The ability of AVI to achieve this objective is affected
by internal and external factors, whose impact is reflected in adjust ment s to the work
plan and if necessary, to the objectives too .

The remainder of this report will provide short brief ings on each of the high level
work streams referenced above.
1 In view of the funding situation, the targets may need to be assessed and if necessary changed by the Board 2 As per the Vaccine Implementation Strategy (VIS) implementation plan endorsed by the Board on 29 -30
October 2008, subject to separate approvals of funding. (Section 11 of the Minutes) 3 A consortium of PATH, Johns Hopkins University (JHU), US Centers for Disease Control and Prevention (CDC)
and others 4 Supplemental information on this and other aspects of AVI operation is available from the Secretariat upon
request. 5 The AVI work streams are synonymous with the outcomes of the Strategic Goal 2 in the GAVI Work -plan

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 07 ? Co -financing Policy R evision

FOR DECISION
GAVI Secretariat, 2 June 2010 1
































Co -financing Policy Revision: Principles and Objectives

Background and Overview
When approving GAVI?s co -financing policy the Board requested a review after two
years of implementation . The current co -financing policy objective underwent several
iterations with involvement by several expert advisory groups before it was finalised .
The final policy objective of the current policy ? to ?increase demand and access to
underused and new vaccines? while ?promoting nati onal ownership in the decision
making process? - differed from the Board?s original objective for developing the policy
for countries ?to gradually assume financial responsibility to purchase the vaccine at the
target price?.

The Board requested a review of GAVI?s co -financing policy after two years of
implementation. The Programme and Policy Committee (PPC) is overseeing the
policy revision and recommends that GAVI retain the following working definition of
financial sustainability as originally approved by the Board in 200N W

Although self -sufficiency is the ultimate goal, in the nearer term sustainable
financing is the ability of a country to mobilise and efficiently use domestic and
supplementary external resources on a reliable basis to achieve current and future
target levels of immuni sation performance.

Based on various analyses and extensive consultations across the Alliance and
tak ing into account GAVI?s new graduation policy , the PPC would like to request the
Board to approve certain co -financing objectives and principles . Pending board
approval of the proposed objective and principles, a second stage of work will define
policy optio ns for country groupings; co -financing levels and trajectories over time; the
default mechanism; and risk management.

The Programme and Policy Committee requests the Board approve the following:

? Overarching Policy Objective: To put countries on a traject ory towards financial
sustainability in order to prepare them for phasing out of GAVI support for new
vaccines, recognising that the time frame for attaining financial sustainability
will vary across countries.

? Intermediate Objective (for countries with a long timeframe for achieving
financial sustainability) : To enhance country ownership of vaccine financing.

? Policy Principles :
o To be transparent, fair, and feasible to implement;
o To build on existing systems and processes;
o To requi re all countries to contribute to new vaccine support,;
o To ensure that country co -financing of new vaccines represents new and
additional financing and does not displace financing from other vaccines;
o To provide countries with a long term planning horizon.

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 08 ? Next Steps on the Pneumococcal AMC

FOR DECISION

GAVI Secretariat , 2 June 2010 1
The decision to consider the recommendations of the October IRC after a
prioritisation exercise coupled with the new eligibility/graduation policies have
adversely affected the Strategic Demand Forecast (SDFs) for pneumococcal
vaccines and, consequently th e AMC programme in that the target demand of 200
million doses may not be reached .
The Programme and Policy Committee considered strategies for addressing this
issue with the PPC recommending to the Board that it:
? Approve grandfathering of the AMC deal to include all currently GAVI
eligible countries (2003 definition). These countries will be able to access
pneumococcal vaccines through GAVI at the AMC terms and conditions and
have access to AMC funding. However, graduated countries will need to
completely self finance the vaccine price (tail price) once GAVI support has
ended. Also, all countries must have achieved the DTP3 coverage above
70% in order to purchase under the AMC agreements.
? Approve channe lling through the GAVI Alliance from the World Bank the
AMC funding for purchase of pneumococcal vaccines for India.
It is important to highlight that, while these issues must be addressed, they are only
relevant in the context where:
1. GAVI is able to raise sufficient funding to meet country demand and thus
ensure maximum utili sation of the AMC funds.
2. India adopts pneumo within the expected timeframe.

Next Steps on the Pneumococcal AMC:
Accounting for the New Context
When the AMC was conceived, there were certain prevailing assumptions built into
the mod el. First, the model accounted for all countries that have been eligible for
GAVI support since 2003. Second, it assumed applications that were
programmatically and financially sound would be approved for funding; in other
words, would not have to be vet ted through a prioritisation process in a resource
constrained environment.

Times have changed. The board decisions of November 2009 with regard to
postponement of approval of the most recent In dependent Review Committee?s
recommendations (October 2009 ) and the newly adopted eligibility/graduation
policies have had an impact on the Strategic Demand Forecast for pneumococcal
vaccines and, consequently on the AMC programme.

The Programme and Policy Committee along with the Policy and Performance Team
wit hin the Secretariat have discussed ways to mitigate these factors and this paper
presents recommendations for the Board?s consideration. The Audit and Finance
Committee was also informed of the PPC?s recommendations.

GAVI Alliance Board Meeting 16 -17 June 2010 Doc 09 ? Prioritisation Mechanism

FOR DECISION

GAVI Secretariat, 2 June 2010 1


















GAVI Alliance Pilot P rioritisation Mechanism

Background

Current demand and resource forecasts suggest that GAVI faces a large fiscal deficit
in coming years if it intends to fully fund its ambition . Since GAVI may not be able to
fund all technically sound proposals for all vaccines in the current portfolio and/or
cash -based programmes at its November 2009 meeting the Board agreed that criteria
should be developed under the oversight of the Programme and Policy Committee and
submitted to the Board (or Executive Committee) for approval .1 The Board directed
that a ranking of vaccines to guide decisions about the portfolio and rules for deciding
which countr y proposals recommended for funding by the IRC should be funded in a
particular application round when resources are constrained.

A major objective of the new prioritisation mechanism is to inform decisions on the
twenty IRC -recommended proposals awaiti ng the Board?s consideration since October
2009.

1 Section 14 of the 17 -18 November 2009 Minutes
The Board requested that a prioritisation mechanism be developed during 2010 to
help inform future funding decisions on New Vaccine Support (NVS) and cash -based
programme country proposals recommended by Independent Review Committee
(IRC). The Programme a nd Policy Committee (PPC) took responsibility for
developing this mechanism and appointed a time -limited task team to guide the
analytical work, which was carried out by the Secretariat. The PPC reached
consensus on all aspects of the mechanism including the principles, objectives, and
criteria/indicators that should govern, direct and define the pilot phase of the
mechanism, as well as several rules and procedures necessary to implement the
pilot.

Concurrent with this, the PPC recommends that the Allia nce continue preparatory
activities for the four ?new? vaccines (HPV, JE, rubella and typhoid) and only open
new applications windows following the pilot period of the proposed prioritisation
mechanism and the definition of the 2011 -2015 GAVI Strategy, and subject to funding
availability.

Therefore the Programme and Policy Committee requests the Board to :
? Approve the GAVI Alliance Pilot Prioritisation Mechanism (Annex 1).

Also note that the PPC recommended that GAVI should f und the centrally
administered Yellow Fever emergency stockpile in the amount of approximately
US$22 million for the period 2011 -20 13, given its potential impact . This will be
referred to the Audit and Finance Committee for financial review and the Executi ve
Committee f or approval in July.


.

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 10 ? Resource Envelope

FOR DECISION

GAVI Secretariat, 2 June 2010 1

At the recent Programme and Policy Committee (PPC) meeting a number of
Board members suggested that it would be useful to have a discussion on the
balance between cash -based support (a variety of instruments and windows at
present) and vaccine support (vaccine procurement , programme support and
preparatory work ).

Noting that whilst keeping a vaccine focus, an integrated vision of vaccines and
system building has become core to the G AVI mission and a powerful tool for
fundraising, the right balance needs to be struck. The issue is in part highlighted
by the prioritisation discussions and by the decision before the Board on the use
of the remaining notional Health Systems Strengthening (HSS) funds. Two
decision s are presented for the Board?s consideration:

First, th e Board is asked to decide the funding share allocated to cash -based
programmes ? a dec ision that is necessary to conduct the prioritisation exercise
which the Board has re quested. Specifically, t he Board is request ed to consider
the following options for the maximum share of funding for cash -based
programmes in a given proposal round and to also consider as an alternative ,
option 4 - that a range be set (and what that range might be) given that there has
been considerable variance year on year to date, reflecting for example, country
demand, and vaccin e availability :
? Option 1: 15%
? Option 2: 20%
? Option 3: 25%
? Option 4: a. 10 -20% or b. 15 -25%
Second, t he Board is asked to decide how the notional US$ 179 million , which
has not yet been allocated to countries from the US$ 747 million estimated
spend ing for HSS , should be handled :
? Option 1: Remove from the forward projections for HSS ;
? Option 2: Retain for the existing HSS window, subject to availab ility of
funds and in line with maintaining the appropriate balance between
vaccine and cash programmes .

Resource Envelope and Spending between Cash -based
and Vaccine P rogram me s

Funding share
GAVI provides financial support in two broad areas :

1. Cash based programmes . This includes vaccine introduction grants to
co untries; I mmunisation Systems Support (rewards -based )); Health
Systems Strengthening Support; support to Civil Society.

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 11 ? HSS Resource Allocation

FOR DECISION

GAVI Secretariat, 2 June 2010 1
The Programme and Policy Committee is recommending a new method for
allocating the maximum grant an eligible country could receive through the Health
Systems Strengthening (HSS) programme. C ompatible with the four principles the
Prioritisation Task Team identified ( supporting nationally -defined priorities,
objectivity, transparency and feasibility ), the new formula better allocates funds
toward the countries with the greatest need , another key principle the Prioritisation
Task Team recommend ed for cash gran ts.

The Programme and Policy recommends to the Board that it:

? Endorse a new HSS resource allocation m ethod whereby the maximum
potential amount of funding would be:
o Based on an eligible country?s total population and weighted against a
graded gross nati onal income ( GNI ) scale.
o Never less than US $ 3 million.

Some countries are GAVI -eligible but not Platform -eligible. If a future decision is
made to make HSS funding available to these countries, the same formula will be
applied, however, there will need to be a ceiling ? i.e. a maximum possible grant.
The Secretariat recommends that this ceiling be equal to the largest possible
allocation for Platform -eligible countries 1.

A decision is needed now because work on preparing for the Platform is underway.
Health Systems Strengthening Resource Allocation

To set a reasonable and fair ceiling on the amount of funding a country could
potentially apply for from the Health Systems Strengthening (HSS) programme,
GAVI set the following formula :

? Countries with an annual GNI higher than US$ 365:
o $2.50 x number of newborn children per year

? Countries with an annual GNI lower than US$ 365:
o $5.00 x number of newborn children per year

This system has major advantages in terms of equity, predictability and
transparenc y. Countries appreciate this system , and it prevents situations where the
first to apply could be awarded a disproportionate amount of funding.

Given the Health Systems Funding Platform, it is appropriate to re -visit the allocation
method . T he PPC hope s to put in place a system that better allocates funds toward
the countries with the greatest need without sacrificing the advantages of the current
system. In doing so, it also did not want to signal entitlement to funding; c ountries
would still have to ju stify their requests through the usual application channels.

1 Health Syst ems Strengthening: Resource Allocation Paper presented at May 17 -18 PPC meeting

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 12 ? Financial Outlook

FOR INFORMATION

GAVI Secretariat, 2 June 2010 1
This document is provided for information only and includes:

? An overview of GAVI?s financing needs for the period 2010 -20
? A summary of the GAVI Alliance?s 2009 draft consolidat ed financial
statements

Financial Outlook


Financing needs through 20 20

An overview of financing needs through 2020 indicates a levelling -off of country demand
at approximately US$1.1 billion per year in the years from 2016. This reflects the
graduation of previously eligible countries , pentavalent price reductions and the
reduction of pneumococcal price s towards the AMC ?tail price? (see table below).

If more aggressive assumptions of price reductions and co -financing are factored in, the
demand would reduce to a level of approximately US$0.8 billion per year towards 2020
(see page 5) .

GAVI Alliance Board Meeting, 16 -17 June 2010 Doc 13 ? Programme Fund ing Polic y ? Concept Paper

FOR DECISION

GAVI Secretariat, 2 June 2010 1










GAVI?s Programme Funding Policy ? Concept Paper

Context
Increasing Country Demand

The success of the GAVI Alliance in making new and underused vaccines available
to children in the world?s poorest countries over the past ten years has transformed
this aspect of life -saving healthcare in the developing world, diminishing the inequity
in access to immunisation between these countries and the rest of the world.
Countries ? supported by Alliance partners ? have seized that opportunity, enabling
them to expand the coverage and range of key vaccines. Until recently, GAVI has
had sufficient resources to meet that growing demand.

Resourc e Constraints and Prioritisation

In the midst of global economic pressures that have limited the new resources the
Alliance expected to be available, in November 2009 ? for the first time ? the
Secretariat proposed and the Board agreed that resource con straints forced GAVI to
defer funding of country applications that had been recommended by its Independent
Review Committee (IRC) following its October 2009 meeting, until the prioritisation
process be approved. The Board launched a process under the guid ance of the
PPC to determine how it should prioritise IRC -recommended applications when
resources were insufficient to fund all such applications but also to develop principles
of prioritisation as good practice. A complementary consideration is measureme nt of
the resources deemed to be available for allocation amongst the prioritised
applications. A policy governing this area would supplement the policy on the cash
In the context of a resource -constrained environment, and at the Board?s request,
GAVI is establishing a system for prioritising country applications for funding. As
a complement to this, the Secretariat , with the input of the Programme and Policy
Committee and the guidance of the Audit and Finance Committee , has developed
a system for determining the amount of resources available for approval of new
applications. Collectively, these two components (prioritisation and resource
measurement ) could comprise GAVI?s Programme Funding Policy.

The Board is requested to:

? Approve the p roposed system for determining the amount available for
funding new programmes (page 4)

? Provide guidance t o the Secretariat regarding the o ther matters for
consideration as future additions to proposed system (page 6)

GAVI Alliance Board Meeting, 16 -17 June 2010 Do c 14 ? Fiduciary Risk Management

FOR INFORMATION

GAVI Secretariat , 2 June 2010 1
This document concerns GAVI?s approach to risk m anagement as seen from the
perspective of the recently established Internal Audit function and covers:
? GAVI?s current approach to risk management
? recent important improvements
? suggestions for further improvem ent

No requests are being made of the Board at this time .

Fiduciary Risk Management

Risk management is an important topic for GAVI. A breakdown in controls, especially
when it relates to cases of significant fraud or corruption, will hurt GAVI?s cause.
Similarly, if activities that are undertaken are inefficient or ineffective, outcomes will
be sub -optimal. Hence, GAVI has continually made this a priority.

Recent audits and inquiries from several donors have further reinforced the
importance of good ri sk management . At the same time, GAVI?s structure as a
partnership presents specific challenge s and opportunities as to how risk can be best
managed .

To further improve risk management, GAVI establish ed a one full time equivalent
(FTE) Internal Audit func tion and the current Director of Internal Audit started 1
November 2009 . This update is to inform the Board of Internal Audit?s current views
on GAVI?s approach to risk management.

GAVI?s Current Approach to Risk M anagement

The following is an overview o f the different risk areas GAVI deal s with on an
ongoing basis:

The Secretariat maintains an inventor y of the (35 or so) most significant risks and
mitigating controls (the ?Risk Register?). The Risk Register is discussed on a regular
basis among senior management and any identified possibilities for improvements
are followed up for implementation. At a more granular level, the Finance function
also maintains a very detailed inventory of risks and controls that concern GAVI?s
own internal financial accou nting and reporting processes .

GAVI Alliance Board Meeting , 16 -17 June 2010 Doc 15 ? Revi sed Docume nt Retention Policy

FOR DECISION


GAVI Secretariat, 2 June 2010 1

The Director of Internal Audit proposed to the Audit and Finance Committee that
it review several modest revisions to the Document Retention Policy.

The Audit and Finance Committee recommends to the Board that it:
? Approve the revised Document Retention Po licy .

Revised Document Retention Policy

The Board approved the document retention policy in June 2009 which governs the
preservation and, where applicable, permissible destruction of certain GAVI Alliance
documents 1. It is intended to meet recognised p ractices and accounting standards
for retention periods and to provide guidance on the circumstances which could
require longer or indefinite periods of document preservation.

Since its approval, the Director of Internal Audit has reviewed the policy and has
suggested that it reflect that he will maintain custody of internal audit records. In
addition, the retention periods of these records have been extended.

Also the names of certain archiving teams have been changed to reflect the new
Secretariat struc ture. (For example, ?Corporate Services Team? has been rolled into
the ?Finance & Operations Team.)

Given that the Board approved the original policy upon the Audit and Finance
Committee?s recommendation, the Committee reviewed the suggested changes and
found them fit for recommendation. 2 The Board is now requested to approve the
changes to the policy (a red -lined version of which is enclosed ).




















1 Resolution 9 from the 2 -3 June 2009 Minutes. 2 Section 4 from the 11 March 2010 Audit and Finance Committee Minutes

GAVI Alliance Board Meeting, 16-17 June 2010 Doc 16 ? Resource Mobilisation

FOR GUIDANCE

GAVI Secretariat, 2 June 2010 1
To save an additional 4.2 million lives and to have real impact on preventing
disabilities and chronic illness by 2015, the GAVI Alliance needs to raise US$ 4.3
billion over the next six years (2010 -2015). This entails raising an additional US$
2.6 billion ? beyond sustaining current levels of funding.

This resource challenge is significant but achievable if GAVI?s traditional
approach to resource mobilisation is re-engineered in ways described herein.
This paper presents the progress to date in implementing the strategies
approved by the GAVI Board in June 2009, lays out the Secretariat?s integrated
Communication, Advocacy and Resource Mobilisation (CARM) framework and
discusses quantitative targets for complementary resource mobilisation
approaches . These latter include traditional development assistance, innovative
finance and private finance. It is important to note that being able to draw down
on the level of Advance Market Commitment ( AMC) donor contributions is
contingent on a corresponding amount being spent by the GAVI Alliance. If the
GAVI portion of funds is not available, neither are the AMC donor funds to match
them.

Given the level of anticipated demand, total additional cash inflows of US$ 303
million will be required between 2010 and 2012 and US$ 776 million will be
required on average each year between 2013 and 2015 . W hile the se additional
funds will only start to be spent in two years time, pledges will be required in
2010, in order to allow GAVI to commit to new programmes . Followin g the
recommendation of donors at the High- Level Meeting on Financing Country
Demand in The Hague in March 2010, the GAVI Secretariat will organise a
pledging/light replenishment meeting in October 2010. This document clarifies
how an annually renewable, m ulti-year pledging mechanism would work and how
this would underpin responsible financing decisions.

Mobilising for GAVI?s success requires the support of all stakeholders. This
paper concludes with suggestions for enhanced Board support to GAVI?s
resource mobilisation strategy.


A Call to Action ? Resource Mobilisation 2010- 2015

GAVI faces historic demand from implementing countries at a time of unprecedented
fiscal constraints. Many of GAVI?s donors face major pressures on development
budgets due to difficult economic circumstances, other commitments to the
Millennium Development Goals (MDGs) and growing support to commit 0.7% of
national budgets to Official Development Assistanc e (ODA) targets. Some donors
have seen their budgets erode. M any are continuing to operate under extreme fiscal
pressure. Despite these challenges, most of GAVI?s historical donor base has
maintained or increased contributions to GAVI. This is due to GAVI? s ability to
produce evidence -based results that demonstrates a cost-effective, poverty -focused
approach to equity in immunisation access. These results, along with G AVI?s
innovative business model and cross -cutting impact on the MDGs, in particular the
health MDGs (4, 5 and 6), continue to galvanise and inspire its donor s.