What would you do if you made something no one can afford but can’t live without? Biotech companies working on developing drugs for diseases of poverty face this daunting question every day. Pursuing an idea that could potentially save millions of lives from malaria, tuberculosis or other neglected diseases requires a substantial financial investment with little to no financial returns. This was at the heart of an innovative financing discussions at the Partnering for Global Health Forum and the Rethinking Financing for Global Health panel at the Milken Institute Global Conference.
According to experts on these panels, this challenge could be addressed through push or pull mechanisms
- “Push mechanisms” incentivize investments by subsidizing (or directly paying) biotechs to conduct R&D through product development partnerships, tax credits, and grants. These offer the least risky scenario for biotechs, but are costly for donors and require them to take on the full risk of failure.
- “Pull mechanisms” create a guaranteed market, for example, or increase the value of a more marketable product. These typically require companies to take on more risk at the onset but also provide a financial reward for success when a product is approved and reaches the market. If the reward is priced high enough, investors might see the up-front investment as being more worthwhile. For cash-strapped biotechs, one solution might be to establish interim rewards, granted for reaching specific milestones in the development process (i.e., completion of a Phase 2 trial). Panelists at the Forum suggested that such a system might increase the willingness of companies to shoulder some of the burden.
What is clear is that this kind of constructive and creative thinking is vital to curing diseases of the developing world.
- Rethinking Financing for Global Health panel at the Milken Institute Global Conference.
- Archived Webcast of Partnering for Global Health Forum