Research Project on Neglected Diseases

The “neglected disease” expression points out a problem of insufficient innovation in medicines, particularly to tackle diseases that mainly affect developing countries. Infectious diseases kill over 10 million people each year, more than 90 percent of who are in the developing world. More than 1000 million people are affected by neglected tropical diseases (WHO Health Statistics 2010).

While some governments are providing incentives, and there are a number of foundations’ and private firm initiatives, the fact remains that there is insufficient funding for biomedical innovation to address the global burden of disease that disproportionately affects developing countries. By many measures (public and private expenditures, patents, new drugs developed), the current research and development on drugs addressing diseases such as malaria, tuberculosis and specific forms of HIV is negligible relative to the burden of these diseases as well as in comparison with the amount of resources allocated to diseases which are predominant in rich countries. Under current institutions, potential vaccine developers have incentives to pass up socially valuable research opportunities.

There has been, however, an increase in global investment for health research, up to US$ 160.3 billion in 2005 (Global Forum for Health Research 2008). In contrast, just over US$2.5 billion was invested into R&D of new neglected disease products in 2007, mainly by public and philanthropic donors, who collectively invested US$2.3 billion or 90% of the total funding in 2007, focusing on HIV/AIDS, tuberculosis and malaria (Moran et al 2009).

Around 23% percent of donors’ funding for R&D in neglected diseases is routed via a form of public-private partnerships (PPPs) known as ‘product-development partnership’ (PDP), that reallocate funding to industry and academic partners, rather than being granted directly by donors to recipient organizations (Moran et al. 2009). PPPs are not-for-profit organizations that support and coordinate R&D for neglected needs. It is important to recall that PPPs were a policy experiment that did not have a spelt-out rationale from the perspective of the economics of innovation. In fact, the only economist who at the time was seriously working on the economics of neglected disease R&D - Michael Kremer - was arguing in favor of a fundamentally different model the so-called “advanced market commitment mechanism involving ex-post incentives) (Kremer, 2001).

This is why there is a lack of research to understand the role of PDP initiatives, how they are currently operating and being supported, their limitations, as well as understanding the role of other alternative means to stimulate biomedical R&D on a priority needs basis. Now that PPPs have been around for 10 years or more, enough time has lapsed to both empirically evaluate whether the experiment has worked and to think conceptually about why it seems to work pretty well

We have devised a research program consisting in two different projects

Project 1 - It will be firstly very useful to get more insights about the efficiency of such a mechanism before trying to explain how the model works. Therefore a first project will involve measuring the outputs of these PPPs (new drugs/vaccines, success ratios in clinical trials, generating a pipeline of promising candidates) and the inputs (funds invested by donors); and compare that to for-profit pharma firms.

Project 2 – The second project deals with the economics and organization of PDPs for neglected diseases in order to better understand whether it is an efficient mechanism in the economics of R&D for neglected diseases and how policy should support and enhance the formation and sustainability of PDPs as an efficient institution. This project is structured by six propositions to be tested and developed. All these propositions are actually hypothesis that could be used to explain the potential efficiency of the mechanism. Each of them will be tested through case studies and surveys so as to identify eventually what really and strongly matters in terms of organizational structures and coordination mechanisms to explain the performance of these PDPs and to create ultimately a model for future replication.