Incentives and innovative financing
To create and deliver new global health products, a diverse group of stakeholders needs to engage in the research and development (R&D) continuum, from the initial spark of basic scientific research to final distribution of products to populations most in need. Private biotechnology and pharmaceutical companies, nonprofit groups such as product development partnerships (PDPs), academic partners, and public research institutes all play important and distinct roles in advancing global health product development. However, new global health products are primarily needed in low-resource countries, where many patients and providers have limited ability to pay for these health tools. Commercial incentives—the traditional drivers of health research and product development for the biotechnology and pharmaceutical industry—are therefore insufficient to spur medical innovation for global health from these private-sector partners. This ultimately leaves a major gap in the financing, expertise, and capacity to conduct R&D for new global health tools.
To address this problem, experts in global health and economics have designed strategies to stimulate and fund innovation for global health products. These strategies—incentives and innovative financing mechanisms—aim to encourage all stakeholders to invest in global health R&D. Incentives and innovative financing mechanisms can leverage expertise and resources for multiple sectors and players, particularly when combined with global health research investments from the US Government and other donors. These mechanisms often align with US priorities because in many cases, they provide a potentially cost-effective and entrepreneurial way of spurring innovative thinking to address longstanding health and development problems, while also engaging a wide array of stakeholders.
Incentive mechanisms generally reduce the risk and uncertainty associated with investing in global health R&D by encouraging private industry to invest through measures known as “pull” mechanisms. Innovative financing mechanisms identify new ways of raising and allocating funding to stimulate global health R&D across all sectors, in what are known as “push” mechanisms. It is critical that the US Government consider and invest in both push and pull mechanisms in order to help address gaps in the global health product development process. Indeed, many of these mechanisms have been implemented in the United States and other countries, and include priority review vouchers (PRVs), small business innovation awards, procurement pools, tax credits, and patent pools. In addition, several governments and donors launched a pilot Advance Market Commitment (AMC) to accelerate delivery of pneumococcal vaccines to millions of children worldwide.
The United States has long played a critical role in advancing incentives and innovative financing for global health research. Indeed, a range of stakeholders within the US Government has been involved in the discussion and/or implementation of these mechanisms, including the United States Agency for International Development, the Department of the Treasury, White House Office of Science and Technology Policy, Patent and Trademark Office (USPTO), National Institutes of Health, Food and Drug Administration, and Congress. Because of the diversity of stakeholders, the US Government should ensure that its activities are coordinated. For example, the Department of State’s successful efforts to engage other agencies within the US Government around maternal health through programs such as the Mobile Alliance for Maternal Action could serve as a model for inter-agency collaboration on incentives and innovative financing activities. In addition, because many of these mechanisms are new, it is important that the United States continue to assess its investments in order to ensure they are effective and cost-efficient. For instance, there have been several recent indications that incentive mechanisms such as the FDA’s PRV program (see “Spurring global health product development”), the pilot AMC, and prize mechanisms can work to develop and deliver critical global health tools—information that can guide US policymakers on the best investments for global health R&D.[57-60]
Fortunately, the US Government is not alone in its support for global health incentives and innovative financing mechanisms. In fact, there has been significant traction and interest at the global level in spurring global health product development from a range of partners, including other world governments, multilateral organizations, and donors. The United States plays a strong leadership role in international development, and would be well served by engaging in global discussions on incentives and innovative financing. By participating in these efforts, the US could help ensure progress in developing lifesaving global health products, and advance US interests in the design and implementation of these strategies. US policymakers have the opportunity to build on the achievements of the last year and ramp up its presence in stimulating global health R&D.
Spurring global health product development
Over the past year, a range of stakeholders in the United States has moved on key global health incentives and innovative financing measures. These include:
In September 2011, a bipartisan group of representatives introduced the Creating Hope Act of 2011 in the House of Representatives. Reps. Michael McCaul (R-TX), G. K. Butterfield (D-NC), Sue Myrick (R-NC), and Chris Van Hollen (D-MD) introduced the bill, which would make key changes to the FDA’s priority review vouchers (PRV) program. The PRV program aims to spur R&D for neglected diseases. The bill quickly gained support in the House, and had 90 co-sponsors as of December 2011. A companion bill in the Senate was introduced in March 2011 by Sen. Robert Casey (D-PA).
In August 2011, the United States Agency for International Development (USAID) and its partners awarded $US14 million in prizes to health innovations aimed at saving the lives of mothers and children around the world. The awards were part of Saving Lives at Birth: A Grand Challenge for Development, an incentive program launched in March 2011 and led by USAID in partnership with the Government of Norway, the Bill & Melinda Gates Foundation, Grand Challenges Canada, and the World Bank. The program provides prize grants to spur innovative prevention and treatment approaches for pregnant women and newborns in rural, low-resource settings., In early January 2012, USAID released for comment a draft for the second round of the Saving Lives at Birth challenge, with the goal of releasing the final document in early February. In this round, USAID anticipates awarding up to 25 seed grants and 5 transition-to-scale grants, with a maximum of $US13 million.,
Also in August 2011, the Office of Management and Budget (OMB) issued guidance for US agencies on the America COMPETES Act. The act gives all federal agencies the broad authority to use prizes and challenges to foster innovation, and the OMB guidance is a key tool to encourage US agencies to use prizes and challenges for issues like global health research and innovation.
The World Intellectual Property Organization (WIPO), WHO, eight of the world’s leading pharmaceutical companies, and BIO Ventures for Global Health announced in October 2011 a partnership to launch WIPO Re:Search, a new R&D database to share intellectual property for neglected disease licenses. Partners involved in the database include the NIH and USPTO; private-sector groups; foundations; and nonprofit groups such as the Drugs for Neglected Diseases initiative, Medicines for Malaria Venture, PATH, and the Sabin Vaccine Institute. The database was launched to spur R&D for developing countries by finding common ground between the mission of the global health community and the needs of private companies. This database is just one example of several efforts to facilitate increased sharing of intellectual property for global health diseases, and the US Government should encourage and engage in this broader effort.
At the same time that US stakeholders have made progress on incentives and innovative financing mechanisms at a national level, there has been significant activity at the global level on a number of measures, including WHO’s Consultative Expert Working Group on Research and Development: Financing and Coordination, as well as global efforts to implement a financial transaction tax for global health and development., It is critical that the United States engage in the global discussion around these incentives and innovative financing mechanisms.