Background
Group A Streptococcus (GAS) leads to 500,000 deaths and 600 million cases of pharyngitis annually worldwide. GAS has long been a promising target for vaccine development. Yet it is unclear how much funding should be allocated to develop such a vaccine.
Methods
We develop an economic model of optimal spending, from a global, societal perspective, on research and development (R&D) for vaccines and treatments for a known disease. The model takes as inputs total harm caused by the disease, the probability an R&D project will succeed, the cost of an R&D project and the fraction of total harm an approved product will alleviate. Based on these inputs the model outputs an optimal total amount of spending and a social rate of return on this spending. We calibrate the model to GAS using parameters from the medical and economics literature.
Results
Optimal spending is estimated to be $US 33.9 billion. This spending leads to $US 1.85 trillion in benefits and an annual real return of 23%. Sensitivity analysis shows an optimal spending range of 16.2 to 59.4 billion USD, a benefits range of 1.82 to 3.74 trillion USD, and a return range of 18.8% to 29.4%.
Conclusion
Investment in GAS vaccine development could create enormous benefits for comparatively little cost. It represents one of the highest return uses of public spending. Public policy can promote GAS vaccine development through direct funding of projects and by promoting financial mechanisms that allows the private sector to diversify over multiple risky investments.