Global Public Health Product Innovation: Theory and Practice

1. Global Public Health Product Innovation: Theory and Practice Saul Walker Senior Access to Medicines Policy Advisor Berkeley Law, 19 February 2009 1 Palace Street, London SW1E 5HE Abercrombie House, Eaglesham Road, East Kilbride, Glasgow G75 8EA

2. Outline • DFID, health and product innovation • Challenges for Bilateral Agencies • Designing incentives • One Size Fits All? • Push and Pull • What DFID has done • Where next? 1 Palace Street, London SW1E 5HE Abercrombie House, Eaglesham Road, East Kilbride, Glasgow G75 8EA

3. DFID, Health and Innovation • DFID’s mission: reduce poverty • Health has reflexive relation to poverty • Commission for Macroeconomics and Health • Systems based approach (plus priorities) including access to medicines • Numerous places to intervene along the medicines value chain • Not a given that development money should fund R&D

4. Approve & Register Demand & Use Scale-up & Manufacture Develop & Test Prescribe & Dispense Distribute Discover Procure Breaks in the ATM Value Chain • Poor demand data • IP challenges • Limited technical capacity for some products • Regulatory • Weak logistics, infrastructure and information • Poor coverage • Leakage • Mark-ups • Inefficiencies • Affordability/ lack of social financing • Limited access • Social barriers • Poor information • Low health literacy • Poor adherence • No utilisation data • Low commercial incentives • Limited product development expertise in public sector • Limited R&D/trial capacity in developing countries • Limited ID and Dev Country expertise in private sector • Limited and/or unpredictable financing • Multiple channels • Poor use of pricing info • Non-transparent • Poor demand forecasting • Lack of EML and STG • Limited HR (MDs and pharmacists) • Informal sector • Limited regulation • Unethical promotion • Poor practice • Unclear pathways for first launch in DCs • Multiple approvals and registration (little harmonisation) • Standards for new classes • Very limited capacity at country level – approval, quality, pharmacovigilence

5. Approve & Register Demand & Use Scale-up & Manufacture Develop & Test Prescribe & Dispense Distribute Discover Procure Value Chain: DFID Responses Push Investment Pull Mechanisms Innovation Regulatory Paths and Capacity TRIPS Flexibilities/Patent Pools/IP Enabling Environment Industry Good Practice Global Funds Bilateral Country Programmes Affordable Medicines Facility Malaria Medicines Transparency Alliance Health Systems International Health Partnership

6. Bilateral Support for R&D • Development agencies have accepted R&D is a legitimate investment • Innovation necessary for sustainable health improvement • Accept ‘market failure’ argument • Increase in number of donors and scale of funding • Political commitments • G8, CIPIH/IGWG, Expert Working Group

7. Global ND R&D Spending George Institute for International Health. ‘G-finder neglected disease research and development: how much are we really spending?’ Feb 2008

8. Global ND R&D Spending George Institute for International Health. ‘G-finder neglected disease research and development: how much are we really spending?’ Feb 2008

9. Bilateral Support for R&D: Competing demands and challenges • Limited technical capacity • Public health not innovation backgrounds • Unfamiliar partners, activities and costs • Politics of opportunity cost • Increase coverage of existing interventions • Risk of failure – particularly if funds go to non-traditional partners

10. Bilateral Support for R&D: Competing demands and challenges • Cost-effectiveness difficult to calculate • Limited data on attrition rates • High-risk/high-impact, low-risk/low-impact etc • Impact dependent on uptake and coverage • Managing risks and timeframes • Political cycle requires quick results • Risk, money and speed trade-offs

11. Bilateral Support for R&D: Competing demands and challenges • Strategic coordination • Share technical capacity • Reduce transaction costs • Promote collaboration • Spread risk • Barriers • R&D fits with broader health ‘priorities’ • Funding instrument constraints • Biggest players aren’t traditional development partners • Weak country voices/capacity

12. 76.55% Global ND R&D Spending George Institute for International Health. ‘G-finder neglected disease research and development: how much are we really spending?’ Feb 2008

13. Global Disease Burden Mathers CD and Loncar D. ‘Projections of Global Mortality and Burden of Disease from 2002 to 2030’ PLoS Medicine Vol. 3, No. 11

14. How much is enough? • Know what is being spent but don’t know if it’s enough • Variable risk and cost structures across different technologies • Various costing exercises but very different methodologies • Focus resources or risk ‘fair’ but insufficient allocations?

15. Designing Incentives : Top down or bottom up?

16. One size fits all? • General support for innovation • Funding levels, political commitment • Policy environment • Currently - design the mechanism then fit in the innovation • Public health experts • Macro-economists • Need innovators, engineers etc

17. One size fits all? • Technology specifics and innovation: • Scientific challenges/risk profile • Target Profile – NCE or adaptation? • Entry costs and investment profile • Who has necessary skills • Regulatory and ethical issues • Capacity for research • Forecasting demand

18. Technology ChallengesHIV vax & Malaria Drugs

19. Approve & Register Demand & Use Scale-up & Manufacture Develop & Test Prescribe & Dispense Distribute Discover Procure Technology Challenges:Microbicides Academic Pharma (Comp Lib) PDPs Govt Public Soc Market Private (generic) SRH/HIV? No historic data Generic Contract Originator Formulation MoH Agent Soc Marketer etc Prescription? OTC? Gatekeepers FDA? EMEA? Other Generics?

20. Push Pull Reward Effort-focused Outcome-focused Amount of R&D Companies not invest if reward is not attractive Effective at increasing R&D Decision-maker PDP, ADIP, donor Private companies Better at getting project Started Completed Capital at risk Donor’s Private companies Recipient countries May be suspicion of private sector PDPs have credibility Push and Pull Characteristics A.Towse, Office of Health Economics 2008

21. Combine push/pull along value chain Technology specific combos DFID pushes via PDPs DFID supports pull via AMCs and GHPs (GAVI etc) Limited collaboration on: priority setting technical evaluation of best push-pull mixes performance evaluation for R&D investments Combining Push and Pull * *A.Towse, Office of Health Economics 2008

22. DFID Push - PDPs • First government donor to PDPs • IAVI (1997) • Currently fund 5 PDPs ~£25m p.a • IAVI, MMV, IPM, TB Drug Alliance & DNDi • Increase commitment to £220m over 5ys • Renewals • Expand portfolio to increase

23. DFID Push - PDPs Donor Challenge PDP Model

24. DFID Pull – AMCs and GHP • Establish viable markets in LIC/LMICs • Existing and new technologies • GAVI, GFATM, UNITAID etc already impact market (originator and generic) • AMC pilot to test pull for development • Shift risks and need to pick winners • Only pay if successful development, supply capacity and demand • Engage industry (scarce expertise) • Mobilise new donors • Pneumo vax as pilot

25. 24 AMC - Pneumo Pilot • Technical Product Profile (TPP) - www.who.int/immunization/sage/target_product_profile.pdf • $ 1.5bn- Italy, UK, Canada, Norway, Russia & BMGF • Tail price cap: $ 3.50 • Purchase price: $ 7 (tail + AMC funded price) • Demand forecast: 200M doses by 2020 • Stakeholders: AMC Donor Committee, GAVI, GAVI-countries, suppliers, UNICEF, WB, WHO

26. 25 $2.00 Country Co-pay GAVI Tail Period AMC - Pneumo Pilot • Example: • Firm A commits to supply 50M = $375M of the total $1.5B AMC • $ 375 M disbursed at a rate of $ 5.00 per dose (top up) • $375 M/$5.00 = 75M doses at $7 • 75M/50M = 1.5 years AMC period • 8.5 years of supply at $2.00 = tail period $7 Top up: + $ 5.00 AMC Envelope AMC Price Tail Price $2.00 GAVI AMC Period Tail Period Source: Tania Cernuschi, AMC Manager, GAVI

27. Companies make 10 year supply commitments Frontloading by making initial “AMC price” sufficiently high Provide limited demand assurance At the time of signature donors & GAVI commit to purchase 20, 15 and 10 % of the supplier’s dedicated capacity in years 1, 2 & 3, respectively 26 AMC Commitments and Incentives Source: Tania Cernuschi, AMC Manager, GAVI

28. 27 Pneumo AMC Cumulative Deaths Averted ($M) Serious pneumococcal diseases are the primary vaccine-preventable cause of death in children under 5. The AMC will save 900,000 lives up to 2015 & 7.7 M lives up to 2030 Source: Tania Cernuschi, AMC Manager, GAVI

29. Where Next? • Proof of concept – PDPs, AMCs etc • Bespoke incentives • Sustainable financing – WHO Expert WG • Priority setting, governance and country participation • Coordination continuum • Informed investments • Coordinated informed investments • Pooled investment

30. Where Next?Market Monopoly Paradigm • UK recognises importance of IP for R&D • Support rights of countries to use TRIPS flexibilities • PDPs, patent pools and prizes opening up uses of IP to support access • Long-term prospects for IP paradigm? • Health care costs in north • India and China development

31. Additional Slides

32. License Royalty Product Sale Intellectual Property: PatentPools Voluntary Licenses with No Pool Voluntary Licenses with Patent Pool Drug 1 Drug 2 Drug 1 Drug 2 Medicines Patent Pool Distributor 3 Manufacturer 1 Distributor 1 Distributor 2 Manufacturer 2 Manufacturer 2 Manufacturer 1 Distributor 1 Distributor 2 Distributor 3 Country 1 Country 2 (patent) Country 3 (no patent) Country 4 Country 5 (patent) Country 1 Country 2 (patent) Country 3 (no patent) Country 4 Country 5 (patent) Adapted from E. Richard Gold & Jean-Frédéric Morin, IPDS July 2007