by Loren Becker, Global Health Program Analyst, FasterCures
There is a vital need for creativity and innovation in our thinking about how to fund medical R&D targeting diseases of the developing world, according to a panel of experts from the financial, pharmaceutical, and nonprofit sectors. The discussion focused on innovative financing for global health research and development is part of the health track at the 2010 Milken Institute Global Conference.
Moderator Hannah Kettler, Senior Program Officer and Health Economist at The Bill & Melinda Gates Foundation laid the groundwork for the discussion by invoking the name of the late C.K. Prahalad, who was a leading thinker on the concept of the market at the bottom of the wealth pyramid. Although Prahalad, who died last week, did not focus specifically on health, Kettler drew the connection between his broader concept and the market for new medical tools that target diseases disproportionately affecting the poor in developing countries. The question, according to Kettler, was how to attract more investment of resources, financial and otherwise, from a broader set of actors to help meet the health needs of the poor.
Holly Wong, Vice President of Public Policy at the International AIDS Vaccine Initiative pointed to a proposed product development partnership (PDP) financing facility that would rely on a donor-backer bond issue to generate upfront funding while reinvesting some of the proceeds from product sales into the development of new products. The idea, according to Wong, would build more sustainability into the model and allow for cross-subsidization by directing proceeds from one disease area to potentially fund R&D in another.
Eric Easom, Program Leader for Neglected Diseases at Anacor Pharmaceuticals, represented the perspective of a small, privately-held biotechnology company that is collaborating with several PDPs. Easom said that, for smaller companies, “push” funding, which provides capital to companies looking to invest in R&D for developing country needs, is preferable to “pull” funding, which rewards companies for their successful investments.
Stephen Sands, Vice Chairman of Investment Banking and Global Co-Head, Lazard Healthcare, proposed making the investment climate for neglected diseases look more like the one for orphan diseases, which are very attractive to investors because of preferential payment and taxation environments and active patient populations. Sands felt that the credit markets and venture philanthropy models could provide a source of capital that is better aligned with the high risk nature of investment in medical research than debt instruments such bonds.
The audience also brought a variety of perspectives to the discussion. Robert Sebbag of Sanofi-Aventis provided insight on how major pharmaceutical companies make decisions about whether and how to get involved in global health R&D. When asked about how we can ensure products developed for chronic diseases that affect people in both the developed and developing worlds (e.g., diabetes) are accessible to poor populations, Kettler said efforts to make anti-retroviral drugs for HIV/AIDS more accessible as a potential model; however, she also cautioned that affordability issues need to be addressed early in the R&D process in order to ensure that products are accessible to poor patients in the developing world.