In my day job, I am working on how we can accelerate research and development of new vaccines for malaria, AIDS and other diseases concentrated in developing countries.

Alan Beattie has an article in today’s FT on the topic (quoting me.)

You can read the article below.

This is the FT link (but it requires a subscription).

If you want to know more, you can read about it on the Center for Global Development website.

Pressure for Cheap Drugs Gives Companies a Headache

By Alan Beattie Financial Times: March 2 2005

For the billions of potential victims of Aids and malaria in the developing world, a reliable vaccine would be the holy grail. But for the pharmaceutical or biotech company that discovers it, it could be a poisoned chalice.

Owen Barder, who leads a public health program at the US Center for Global Development, a think-tank, says: “One representative from the pharmaceutical industry told us that in some ways, actually discovering a vaccine for Aids was their biggest nightmare.”

Malaria kills at least 1m people a year and HIV/Aids more than 3m, both mainly in sub-Saharan Africa. But the ambivalence of the big pharmaceutical companies, Mr Barder says, is evidence not of their immorality but of the perverse incentives they face in developing drugs and vaccines mainly of use in poor countries.

The Group of Eight rich countries is hoping to change those incentives. Plans for advance purchase schemes for malaria and Aids vaccines, under which donor countries would provide funds for drug development, could overcome what some see as a glaring failure of the market. The existing system of drug patents is designed to enable companies to recover development costs through the granting of a temporary monopoly. But the incentive for pharmaceutical companies to pour billions into researching and developing drugs is diminished by the ability of poor nations to override patents in case of medical emergency, a power granted to them by international rules on intellectual property rights, and their simple lack of funds. Given that researchers have been looking for an Aids vaccine for more than 20 years, any company that develops one would come under heavy pressure to produce it at a loss for developing countries.

Roger Bate, resident fellow at the conservative American Enterprise Institute in Washington, says research into Aids drugs and vaccines dropped by about a third between 1997 and 2003 after companies were pressed into selling antiretroviral Aids drugs cheaply.

“When you have middle-income countries like Brazil saber-rattling about wanting ARVs at cost price, companies can recoup their research outlays only from markets in the US, Europe, Japan and a couple of other countries,” says Mr. Bate. For tropical diseases such as malaria, the market in rich countries, apart from soldiers stationed abroad and frequent travelers, is likely to be insufficient to make the research pay off"

“When you don’t have a market you are not going to have much investment in these developing world diseases,” says Bill Gates, the Microsoft co-founder whose family foundation has ploughed billions of dollars into vaccine research. An advance purchase fund could offer an incentive to invest. The critical element of such a scheme, however, would most likely be a binding legal commitment from donor countries to pay out in the future for a successful vaccine. If designed intelligently, perhaps with a fee for each inoculation, such a fund could replicate the operation of the market by allowing the latest vaccines to supersede earlier ones rather than awarding the whole prize to the first one. Mr. Barder believes a fund of about $3bn for each disease should be enough to encourage development.

Another option might be to allow pharmaceutical companies to extend patents on existing drugs in return for distributing new vaccines cheap or for free.

Even the most fervent advocates of advance purchase schemes recognize their limitations. “Push” mechanisms the direct funding of research through agencies such as the US National Institutes of Health will still be required to do the basic science. “Pull” mechanisms, such as advance purchase schemes, would be needed later in the process.

Some skeptics question whether such incentives are needed at all. Chris Hentschel, chief executive of the Medicines for Malaria Venture, a non-profit, public-private sector alliance, says there is already incentive for companies to develop vaccines, including the billions of dollars available from the Geneva-based global fund for Aids, tuberculosis and malaria. Michael Sinclair, vice-president at the Kaiser Family Foundation, a health policy organization, says the problem with advance purchase schemes “is that they mortgage resources into the future that are needed now”.

But crucially, the industry is showing interest. Jeffrey Kemprecos, director of public affairs for Europe and Africa for Merck, which already has a large Aids vaccine research program, says: “Signals are very important to the private sector. We all need to take a look at how to turbo-charge the research already being done on tropical disease.”