With Vaccines, Bill Gates Changes The World Again

Matthew Herper, Forbes Staff

This is the cover story of the November 21, 2011 issue of Forbes Magazine.

The Republic of Chad, a landlocked desert dictatorship once described by FORBES as the planet’s most corrupt, is a strange place to find Bill Gates. Yet there he was in September, beside Chad’s Qaddafi-trained president, General Idriss Deby. “He and I walked around giving polio drops to a bunch of kids,” recalls Gates. “I shared in confidence with him some views of how he might be even more effective in the way he manages his campaign.”

Yes, a far cry from hunkering down with Paul Allen in an Albuquerque motel to reimagine how the world conveys information, or with Warren Buffett in Sun Valley to brainstorm the future of philanthropy. But to Gates diplomacy with thugs is now just as important, a dispassionate component of what he views as his final legacy. “The metric of success is lives saved, kids who aren’t crippled,” says Gates. “Which is slightly different than units sold, profits achieved. But it’s all very measurable, and you can set ambitious goals and see how you do.”

GlaxoSmithKline and other pharma giants to produce enough expensive vaccines for children who need them most but can afford them least? The answer, Gates increasingly believed, lay in making Adam Smith’s invisible hand more visible, giving the newly formed market a benevolent shove in the direction of free enterprise.

Here’s the truest definition of power: When you have the ability to not just solve a problem but also to create a sustainable market that addresses it. “There was nobody you could a write a check to,” remembers Gates, who stood ready a decade ago to buy billions of vaccine doses. In the 1980s Unicef had tripled the percentage of children who got basic vaccines for polio, diphtheria, tetanus and other diseases by corralling public funds, negotiating on price with other aid agencies and deploying thousands of aid workers to deliver them. But those efforts still fell woefully short of the need, and new medicines hitting the U.S. market faced an intolerable 15-to-20-year lag before reaching the kids of Tanzania or Nicaragua. “The chance of death from those diseases is 50 times greater in poor kids than in rich kids!” says Gates, his voice rising.

The first critical step, he realized, was forging a lasting public-private partnership. The public half of that equation was solved quickly with his checkbook: Previous attempts had faltered due to lack of funds and infighting among aid organizations over scarce dollars. But the private component was trickier. Compared with manufacturing pills, making vaccines is difficult and expensive. Drug companies wanted to immunize kids in, say, Afghanistan, but couldn’t count on demand that would be large and predictable enough to cover their costs. They faced the unappetizing choice of being humane or profitable.

So back in 1999 Gates traveled to Bellagio, Italy to hammer out a solution, along with Unicef, the World Bank, the UN, various pharmas and aid groups. The result was the Global Alliance for Vaccines & Immunisation, now called the GAVI Alliance, which Gates ultimately backed with a $2.5 billion pledge and personal will, exhibiting the tough-guy tactics, when necessary, that earned Microsoft the fear of its rivals and enmity of U.S. antitrust regulators. “Bill was a little like a poker player who put a lot of chips on the table and scared everyone else off,” says Seth Berkley, who ran a Gates-funded AIDs vaccine effort and is now GAVI’s chief executive.

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