Presentation scheme

1. Consultation with the member states on the Report of EWG on Research and Development: Coordination and Financing The Expert Working GroupMay 13, 2010WHO headquarter, Geneva

2. Presentation scheme • Objectives of the presentation • The Context—antecedents to EWG • The Report—Process, structure, findings, conclusions and recommendations to WHO DG

3. Presentation scheme Objectives of the presentation The Context—antecedents to EWG The Report—Process, structure, conclusions and recommendations to WHO DG

4. Objectives of the presentation • To present the full report of the EWG to member states for their discussion so that they can inform the WHA discussion on the subject • To outline constraints and some clarifications

5. Presentation scheme Objectives of the presentation The Context—antecedents to EWG The Report—Process, structure, conclusions and recommendations to WHO DG

7. Mandate of the Expert Working Group • 4.7 of Res. WHA 61.21 • 7.1.a of the GSPoA (Annex to WHA 61.21)

8. Terms of Reference(WHA 61.21) • “To establish urgently a results-oriented and time bound Expert Working Group to examine current financing and coordination of research and development as well as proposals for new and innovative sources of funding to stimulate research and development related to Type II and Type III diseases and the specific research and development needs of developing countries in relation to Type I diseases and open to consideration of proposals from Member States and to submit a progress report to the 62nd WHA and the final report to the 63rd WHA through the Executive Board.”

9. The mandate of the EWG Report of the CIPIH WHA 59.29 IGWG GSPoA WHA 61.21 Prioritizing R&D needs Building and improving innovative capacity IP to contribute to innovation and promote public health Promoting sustainable financing mechanisms Establishing monitoring and reporting systems Promoting R&D Transfer of technology Improving delivery and access

10. Presentation scheme Objectives of the presentation The Context—antecedents to EWG The Report—process, structure, conclusions and recommendations to WHO DG

11. Expert Working Group • Members-24 • 9F;15M • Countries represented-21 • Disciplines-Health policy; economics; politics; public health; health care; health research; financing

12. Method of work of EWG • Establishment, initial meeting-December 2008 • Face to face meetings July and December 2009-Virtual meetings throughout 2009 • Solicitation of proposals-12 govt. 13 public • Review and analysis of 94 Proposals • Web-based public hearings • Preparation of background Working Papers • Analysis of draft and preparation of final report

13. Methodologies employed • Financing • Qualitative assessment to identify missing incentive structures for production and distribution of knowledge • Coordination • Estimations of global R&D spending based on publicly available data from donor countries, organizations and industry • Qualitative research methods to review existing coordinating arrangements • Innovative financing proposals • Comparative analysis of 90 proposals based on agreed criteria

14. Presentation scheme Objectives of the presentation The Context—antecedents to EWG The Report—Process, structure, conclusions and recommendations to WHO DG Options for the way forward

15. Structure of the Report Sections • General context to development of R&D • Current coordination of R&D • Current financing of R&D • Proposals for new and innovative sources of funding to stimulate R&D • Recommendations to the DG

16. 1. Estimations: current financing of R&D for NCDs and CDs Public USA, Japan, UK, Germany, France Industry Top ten pharmaceutical companies based on their 2008 revenues Private Reviews of donor funding of health R&D

17. Total sector investment in Health R&D by disease category-percentages

18. Total sector investments in health research and development by disease category (international UD dollars, 2008) Disease category Not-for-profit organizations Public sector Private sector Total % of Total % of Total % of Total % of Total USD million USD million USD million USD million Non communicable 12 168.7 29 390.0 1 650.4 43 209.1 67.8 68.4 66.7 68.2 13 590.0 31.6 822.9 33.3 20 179.1 31.8 Communicable 5 766.2 32.2 17 934.9 63 388.2 100 42 980.0 2 473.3 100 Total 100 100

19. “Resource tracking is seen as indispensable for any attempt at monitoring financing for R&D. Currently there are increasing amounts of data on ODA and the financial flows to health, but a comprehensive system for analysis of the flows to R&D is lacking and should be established.”

20. 1. Coordination of R&D R&D coordination exists in many initiatives through • Governance arrangements with wide representation • Technical expert groups, TACs • Informal networks of researchers sharing information through various platforms, physical and virtual • There has been more progress in policy coordination for R&D, mapping initiatives regional networks for innovation • Analysis of coordination by disease, health area or by product could elucidate examples in each

21. Coordination of R&D • Fragmentation • There is no overall coordinating mechanism of R&D for diseases generally and less so for Types II and III • Justification for creating a global and or regional coordinating arrangements is strong

22. A global health research and innovation coordinating and funding mechanism • Provide support for R&D for new drugs vaccines, diagnostics and intervention strategies against priority health conditions of the poor • Support research including health policy and health systems research • Enhance innovation in LMIC • Operate a health research observatory-monitor and track R&D resources

23. 3. Current financing of R&D • The current problem: health R&D for the problems of the poor is deficient because the current incentives to produce and diffuse innovations required by the poor are inadequate • The key purpose of the analysis was to explore where incentives could stimulate R&D and access in the light of market and policy failures in the production and diffusion of knowledge

24. Framework to identify missing incentive structures for the production and distribution of knowledge Demand Challenges 1 -Resource pooling -Bulk purchasing -Demand challenges -IP driven prices 2 -Resource pooling -Bulk purchasing -Market segmentation & diff. pricing Knowledge exists -No incentives, no capacity -Urgent need, -Potential for high Social Impact 4 -AMC -Tax credits -Orphan drug legislation -Demand challenges -IP driven Prices -Sc. & Tech dev 3 -Resource pooling -Bulk purchasing -Differential patenting Knowledge does not exist Knowledge applicable both in poor and other countries Knowledge applicable only in poor countries

25. 4. New and innovative sources of financing for R&D

26. Which proposals were reviewed? • Public hearing • 25 proposals submitted: 12 from Member States, 13 public proposals • Draft inventory of 90+ R&D funding proposals compiled from: • The EWG submissions • Related working groups, commissions and projects: • CIPIH • World Bank Taskforce on Innovative Financing for Health Systems • Brookings Institute analysis of Innovative financing for global health • Literature searches • Draft inventory submitted to public consultation • Inventory finalised based on public input

27. Proposals • Grouped into two categories • Funding proposals (to raise funds for R&D) • Allocation proposals (to allocate funds to R&D) included: • All known proposals to delink R&D cost from price • All novel proposals designed to change the status quo • All proposals within the status quo • Proposals that have already been implemented (e.g. Orphan Drug legislation)

28. Evaluation criteria (1) • Originally 17 criteria • Substantially amended in response to input from a public consultation • Final evaluation tool: • 3 major criteria: DC impact, financial, operationality • Close to 100 detailed criteria reflecting the Global Strategy and Plan of Action • Including multiple criteria for access, affordability, pro-poor intellectual property management, support for generic manufacture, open sharing of information, technology transfer to developing countries and DC capacity building

29. Evaluation criteria (2) • Public consultation to determine which criteria were most important to stakeholders • DC impact and operationality given a higher weighting based on the public consultation feedback from: • Governments (Western and DC) • Funders (public and philanthropic) • Products developers (PDPs, industry, academic) • Civil society

30. Screening • All screened proposals were reviewed in the same way against the same criteria • No proposals received more or less attention than others • No proposals were treated differently

31. Interviews with stakeholders • Additional interviews with those who would have to fund or use the proposed mechanisms: • Western and DC governments • Philanthropic funders • Public health PDPs (product development partnerships) • Pharmaceutical companies • Interview feedback did NOT change the screening scores: included as text notes only • Interview feedback was used to determine: • Which groups were likely to use which recommended proposals (the reality test) • Whether some proposals that had been excluded due to low-scores or major data gaps (mostly novel de-linking IP proposals) should be included based on a high level of interest

32. Final review • Final review to ensure the collective approaches offered: • Good coverage of the R&D field • Reasonable balance between public and private risk • Broad solutions for many diseases and products • Identification of any gaps

33. Overall results • A short-list of recommendations that: • Triple R&D funding for Type II and III diseases (to est. $7.5 bill per year) • De-link R&D cost from price (4 proposals) • Cover ALL Type II and III diseases and products • Cover ALL R&D stages from basic research through to procurement • Cover ALL types of developers (large and small companies, DC and Western, PDPs, academic and public) • Identification of gaps • NO high-scoring proposals to address IP issues for Type I diseases • Very few proposals took into account growing DC R&D capacity

34. Coverage and gaps

35. Findings (1) • Fundraising mechanisms to triple neglected disease funding (4) • Allocation mechanisms to allocate this funding (10) • Recommended approaches (5) • Promising proposals (5) • Included four mechanisms to delink R&D cost from price: • Prize fund for low-cost rapid diagnostic tests for TB • Health Impact Fund • UNITAID patent pool • Open source R&D • Efficiency approaches to increase output for each dollar invested (2)

36. The 4 Fundraising Mechanisms • A new indirect tax • e.g. UNITAID airline levy, financial transactions tax, digital tax, and taxes on tobacco, arms, oil • Voluntary contributions from businesses and consumers • e.g. voluntary donations or contributions on airline tickets, mobile phone use, income tax payments, credit card transactions, consumer products, internet use • Taxation of repatriated pharmaceutical industry profits (Brazil’s proposal) • Funds to be devoted to R&D for DCs by firms working in partnership with DCs • New donor funds for health research and development • e.g. recruitment of new donors, additional funding from existing donors ~ Est. $4.6bn per annum additional (Nearly tripling current neglected disease R&D spend to $7.5 bn per annum)

37. The 5 recommended approaches (1) • Provide funding through Product Development Partnerships (now have 143 neglected disease projects in development) • 3 proposals (FRIND, IRFF, PDP-FF) • Direct grants to Western or DC small companies, and for DC trials • Multiple proposals in each sub-group: • International grants to SMEs in DCs • Domestic grants to SMEs in DCs (e.g. India’s SBIRI) • International AIDS Vaccine Innovation Fund • Domestic grants to SMEs in developed countries (e.g. US SBIR) • EMEA initiative for SMEs • Cash end prizes (to delink R&D cost from price) • 2 proposals • Rapid diagnostic test for TB (includes multiple other elements, including milestone prize, open information reward etc) • Simple end-prize

38. The 5 recommended approaches (2) • “Milestone” prizes (to de-link R&D cost from price) • 4 proposals: • InnoCentive (pure milestone prize fund) • Rapid diagnostic test for TB (possibly 10% of the total prize is for milestone prizes but this is not clear) • Chagas disease prize fund (includes an unspecified milestone prize amount) • Priority medicines and vaccines prize fund (milestone prizes make up 20% of total prize fund) • Purchase or procurement agreements (multiple products now ready for purchase including vaccines for pneumonia, meningitis & rotavirus, malaria drugs etc) • 4 proposals: (AMFm, AMC, Min vol guarantees X 2)

39. The 5 promising proposals • Open source product development (delinks R&D from price) • Need to determine likely level of developer participation • Need another funding proposal to develop leads discovered • Patent pools - UNITAID model (delinks R&D from price) • Need to determine if could be expanded outside HIV • Need to determine if patent-holders will donate sufficient IP to the pool • Need another funding proposal to conduct development of the pooled IP • Health Impact Fund (HIF) (delinks R&D from price) • Need to simplify measurement of impact/ link to rewards • Priority Review Voucher (PRV) • Need to substantially improve DC impact and access • Orphan Drug Legislation • Need to substantially improve DC impact and access

40. Efficiency approaches • Two efficiency approaches were shortlisted based on the analysis • Regulatory harmonisation (focusing on DCs) – multiple ideas • Precompetitive R&D platforms • Need further in-depth research to determine which is the best proposal or combination of proposals within each approach

41. If agreed could deliver …. • Near tripling of funding for neglected disease R&D • Final list of several implementable mechanisms to stimulate R&D for: • All Type II and III diseases • All products for these • All developers of these (DC and Western/ public and private) • Current products developed/ in dev’t will continue at maximum speed • Outcomes within 2-5 years (e.g. African meningitis vaccine rolled out)

42. Presentation scheme Objectives of the presentation The Context—antecedents to EWG The Report—Process, structure, conclusions and recommendations to WHO DG Options for the way forward

43. Recommendations • As part of WHO’s technical cooperation • develop and disseminate information on the incentives for knowledge production….tool to address health problems in the developing countries • Examine relation between research and funding and disease burden, which disproportionately affects developing within the context of reducing health inequities

44. Recommendations ctd. 3) Support resource tracking R&D 4) Support creation of a Global Health Research and Innovation Coordination and Funding Mechanism….operate health research observatories with regional ownership 5) Develop locally suited public policy choices…bring together public private sectors to generate missing knowledge

45. Recommendations ctd. 6) Facilitate regional approaches to research collaboration and funding in the developing countries …..harness potential of innovative developing countries …break new grounds in collaboration …establishment of partnerships (eg PDPs) …..and and translational research

46. Recommendations ctd. 7) Following up on the work of the EWG • In-depth examinations of proposals … • Mobilizing groups…testing acceptability • Matching revenue streams to allocation • Coordinating mechanism for funding • Which • Developing country access issues which require different solutions in addition to R&D

47. Recommendations ctd. 8) Promoting a suite of approaches • Financing proposals Indirect consumer tax Voluntary and individual business contributions New donor funds • Funding allocation proposals PDPs Direct grants Prizes Purchase or procurement agreements • Efficiency proposals Regulatory harmonization Pre-competitive R&D platforms

48. 9) Examining other promising proposals in their contexts, Open source products, Patent pools, Health impact fund, priority review voucher scheme, orphan drug legislation