The report starts with the good news that, in many of developing countries, immunization programs are in place and are preventing disability and death in millions of people for a good number of diseases:  tuberculosis, polio, measles, diphtheria, tetanus, pertussis, Hepatitis B, Haemophilus influenza type b, rubella, mumps, and yellow fever.  The less-than-good news is that the primary buyers of basic vaccines, the ministries of health of the low- and middle-income countries and the primary international financing authority, the Global Alliance for Vaccines and Immunization (GAVI), have been affected by the global economic depression and will not be able to meet the growing need.  GAVI (Global Alliance for Vaccines and Immunization), is projected to be under-funded in the near term, in part due to declining donor income and in part to its commitments to purchase the newer pentavalent (diphtheria, tetanus, pertussis, hepatitis B, and Hib disease), pneumococcal, and rotaviral vaccines.  The result is that GAVI will be supporting fewer purchases, and its goal of serving as a “pull” to encourage more companies to develop vaccines for global markets will be compromised.

For the biopharma industry, the good news is that, although public sector purchasing will be constrained, sales of vaccines in the low- and middle-income, “emerging” market, countries (LMIC) is projected to increase at 10% over the next five years (GEN article) and therefore will be an increasing part of the overall world market which is estimated as $34 billion in 2012.  The report notes the major biopharma players (the multinational vaccine companies, GlaxoSmithKline [GSK] and Sanofi, and the new-comers, Merck, Novartis, and Pfizer) have a major challenge in creating pricing strategies that are both affordable to LMIC buyers and have returns-on-investment sufficient to support product innovation (and investor expectations).  The current strategy is to have different prices in different countries (high in high-income countries to low in lower-income) and for large purchasers like GAVI and the Pan American Health Organization’s Revolving Fund which purchases vaccines for Central and South America.  My reading of the report is that the healthy competition from LMIC vaccine companies and an increase in pricing information will drive the major companies to be more creative in both their pricing and their business development.  In the latter category, the multinational vaccine companies may:

• partner with LMIC vaccine companies to gain local manufacturing capacity and regional market access (Sanofi’s $1 billion investment in India, FierceVaccines article);
• participate in the donor-supported vaccine product development programs to defray development costs of LMIC products (like GSK’s participation in the Malaria Vaccine Initiative, GSK press release);
• use corporate venture funds to buy into possible game-changing technologies specific to LMIC products (like adjuvants to stretch doses and products that do not require refrigeration), and
• participate in efforts to advance regulatory harmonization and strengthen national or regional regulatory authorities.

For other players, I read the report as a basis for more deal-making.  The LMIC vaccine manufacturers may:

• build technical capacity, especially for multivalent vaccines and manufacturing, through sponsored/joint research with biotech companies, in addition to investing in internal R and D, and
• bid on public sector tenders to increase competition.

For the biotech companies, the advice is to:

•  look for out licensing and collaboration opportunities with the LMIC companies; and
•  join vaccine PDPs for visibility and possible funding.

For US universities and research institutions:

• use more open licensing policies and aggressive marketing to facilitate technology transfer to multiple innovators and suppliers especially in the LMIC; and
• work with other institutions to set up IP pools and technical advisory groups to enable licensing and technology transfer of vaccine-related technologies.

With the goal being lower costs for existing vaccines and new and better vaccines, the three-point shot is to increase competition, expand markets  through public sector procurements and transparency, and innovate with better technology transfer and development.

So it was with interest that I read the latest Better World Report with its stated aim of showing “how academic research and technology transfer have changed people’s way of life and made the world a better place” and specifically the section on “Technologies to Improve Health” (there are also sections on technologies to restore the earth, enhance food sources, further the green movement, and replenish water supplies).  Given the Report’s emphasis on The World and the section’s lead photo of a mother and child not likely taken at the local mall, I expected to learn about products that were making the lives of the people, especially those not lucky to be US citizens, better.  Nine technologies were profiled:

• Device for knee-pain sufferers from the École de technologie supérieure (Montreal)- not relevant to ROW health;
• Insect catcher for researchers from Emory University- not relevant to ROW health (intended for use in research not public health);
• DNA microarray from the Lawrence Berkeley National Laboratory- products made by licensee, Second Genome (Second Genome), are used primarily in academic research, so not relevant to ROW health;
• Device for a chronic bladder condition from Massachusetts Institute of Technology- not relevant to ROW health;
• Diagnostic for brain injuries from University of Florida- not relevant to ROW health;
• Topical wound cleaning solutions from University of Georgia- products are made by licensee, Molecular Therapeutics LLC (Molec Pharma), and may be relevant to ROW health, if low-priced and distributed outside of US (current distribution is apparently through nine independent agents);
• New drugs for malaria from University of Nebraska Medical Center-  a lead drug candidate is in late stage human trials by the licensee, Ranbaxy, the Indian generic drug maker (and since 2008 a division of the Japanese pharma company, Daiichi Sankyo Co. Ltd.), and may have a significant impact on ROW health (a great story that I wrote about in my post, A Long Strange Trip, 11/18/11);
• Diagnostic test for Cryptococcus Neo-formans infection (an opportunistic fungal infection of immuno-compromised individuals) from University of Nevada- a prototype test developed by the licensee, Immuno-Mycologics Inc. (IMMY), is used or under evaluation in the US, South Africa, Thailand, Vietnam, India, Kenya, Uganda, Rwanda, Zimbabwe, Tanzania, Guatemala, Argentina, Brazil, and Mozambique and is likely to have a significant impact on ROW health;
• Microchip diagnostic for HIV monitoring from University of Toronto-  a portable cytometer is under development by the licensee, ChipCare Corp. (U of T News) so while relevant to ROW, it will have competition especially if priced at $5-10,000 per reader as indicated (e.g., Daktari Diagnostics has said its reader will be $500, Daktari).

My grade:  C-.  Of the nine profiled technologies, only one (the Cryptococcus diagnostic) is in use to improve ROW health and three others may result in products which will improve ROW health.  With a good portion of the NIH’s 2012 $30 billion budget going to these institutions (note two of the profiled institutions are Canadian), there is room, and money, for improvement.  TTOs should be more active, first, in identifying, designing development plans for, and subsidizing the technologies that may result in ROW health products, and, second, in finding and motivating entrepreneurs, start-up and established companies, and non-profits like the product development organizations to license the technologies and develop products.  To lower barriers and costs, I recommend that the TTOs:

• rather than granting exclusive world-wide licenses, license non- or semi-exclusively by indication, geography, price, or national origin of the proposed licensee;
• grant multiple time-limited, no-cost options to interested parties to generate competition and proof-of-concept data;
• seek out entrepreneurs interested in creating no/low-profit ventures (tap alums if needed) as opposed to chasing venture capital firms (who aren’t interested in global health markets anyway);
• pool patents with other institutions to create patent packages needed for product development and make them easily accessed through standardized licenses;
• stop patenting methods for drug and vaccine discovery or at least stop licensing them exclusively;
• provide internal funding for proof-of-concept research on global health-relevant technology (some universities already have technology development funds to add value to early-stage research);
• review all existing licenses for global-health-relevant applications and try to force renegotiation that requires licensees to develop ROW products;
• know that, in addition to the “neglected diseases,” chronic conditions like cardiovascular disease, diabetes, and cancer are major contributors to mortality in low-income countries and therefore negotiate licenses for technologies for these indications that favor ROW products; and
• dissuade their administrations from measuring TTO performance solely on revenue and persuade them that licensing for social good is a duty of a publicly-funded university.

Some of the members of AUTM are aware that more needs to done and the organization has a Global Health Initiative (AUTM GHI).  Unfortunately, the momentum of the initiative’s launch in 2009 seems to have faded.  The number of institutions endorsing the Initiative’s Statement of Principles and Strategies for the Equitable Dissemination of Medical Technologies has dropped from 13 per year to zero (Principles Endorsement), and at the upcoming annual meeting only one of 70 sessions is related to global health (Meeting Program).  I note though the plenary presenter will be Christie Hefner (“the chief steward of the iconic Playboy brand”) who will talk about “how to expand and extend a brand in the virtual world including providing tips for defending against global counterfeiters, choosing trustworthy licensing partners and more.”  While the Better World report is a good way for AUTM to document the pubic benefits of federally-funded research, AUTM should also be honest in assessing those benefits, how they were achieved, and figure out how to technology transfer successfully.  A better world?  How about a better way?

For my admittedly superficial revisit I looked at PATH’s website, most recent annual report (2010 Annual Report), and its required report to the Internal Revenue Service (2010 Form 990).  PATH reported that it received $280 million in grant and contract revenue in 2010 making it well-funded compared to most global health technology development groups.  The five others I checked have less than one-fourth as much:

As I noted before, PATH does a lot of subcontracting ($67 million passed through to other organizations) and has a de-centralized structure (lots of programs, and departments) and generous compensation.  PATH’s 990 reported $76 million in salaries and benefits and that Christopher Elias, president and CEO, received $550K in compensation and the average of the compensation of fifteen managers was $267K (another eleven are listed).  PATH also seems to have a large stash of capital in that it has assets $318 million in “pledges and grants receivable” and owns $248 million in publicly traded securities, mostly corporate and government bonds, purchased with grant funds.  The latter seems unusual to me and with my limited accounting knowledge, I wasn’t sure how liquid are these assets or if they represented restricted (obligated) grant funds.

I was glad to see that PATH states it is assessing its progress in improving health (How PATH Measures Impact), and “to get a fuller picture of the performance of our organization as a whole over time, we are developing ‘cross-program indicators’- measurable steps toward interventions that improve health.”  But search the website as I may, I could find no information on the development of the indicators (what, who, when) or to what programs they have been or will be applied.  The Annual Report wasn’t much help in that it takes a very broad-brush approach to the organization’s many projects, so I tried to find a PATH publication that described or evaluated those “measurable steps,” specifically the manufacture, distribution, use, and outcome of use for any of PATH’s technologies (other than vaccines, see below) (Publication List).  I found none.  According to “PATH’s Framework for Product Introduction” document (Framework), PATH has had multiple collaborations with public, private, and commercial institutions that have resulted in the commercialization of 26 technologies, 19 of which are in use in more than 25 countries, but no details are given.  In “Technology Solutions by the Numbers” (Solutions), very brief descriptions are given for three diagnostic, two injection devices, and a vaccine monitor (which I posted on in “Technology Fix or Fixation?” 12/10/09) but no specifics are provided on who was manufacturing and distributing/selling these solutions and at what price, all very useful and relevant information for any organization or company trying to develop and introduce its own global health technology innovations.  “Together, PATH and its partners harness the efficiencies of the private sector, reaching poor and underserved populations with vital health interventions (Framework, page 3).”  If so, PATH should share the details so I can learn their approach.

To temper my rant though, I need point out that PATH’s vaccine development programs (the Vaccine Development Program, the Malaria Vaccine Initiative, and the Meningitis Vaccine Project) which account for about one-fourth of PATH’s staff and almost half of its budget, are making substantial progress in inventing needed vaccines and, in the meningitis program, have an approved vaccine in use (see my post on the Meningitis Vaccine Project, “Watch Out Big Pharma?” 12/16/10).  Under “Progress” on its Accountability page (Accountability), PATH has a link to an evaluation study of the vaccine programs done under a contract from the Gates Foundation (alert:  appearance of a conflict of interest).  I found it interesting that the study, done by the Boston Consulting Group (Vaccine Development Program Assessment), while generally praising the program’s “strong performance,” recommends that PATH increase biopharmaceutical industry representation in its advisory groups and, more to my point, integrate into its programs more “commercial considerations” like “such as modeling of cost effectiveness, impact, and projected cost of goods over the product lifecycle; anticipated acceptability among target users; and physical delivery considerations such as delivery channel capacity and cold chain requirements.”  Clearly these considerations are needed if the program’s vaccines are to be used and improve health.

More path finding PATH, please.

The PATH press release provided no clarity on what had happened and why, although it is clear OWH’s CEO, Richard Chin, is out.  But what will OWH do as an affiliate of PATH, who directs the programs and funds, does the hiring, calls the  shots?  Is the move driven by synergy?  Lethargy?  The PR language is opaque:  “By becoming a PATH affiliate, OneWorld Health will be able to scale and accelerate its successful drug development efforts,” which sounds to me like the plan will be to get rid of unproductive people and programs, which is often part of a for-profit acquisition.  OWH has always been a puzzlement to me since it called itself a pharma company but has never acted like a business, with a plan and accountability to its investors.  I reckon it is a global health product development program (so-called PDP), a grant-funded, primarily research-oriented, and academically-advised organization with a mission to develop new diagnostics or treatments for neglected diseases- a welcome addition in global health but not a company (for more on PDPs, see the DFID 2020 PDP report).

In one of my 2010 posts (“The Emperor’s New Clothes,” 6/17/10), I noted, while the OWH has been successful in garnering grants since its 2000 founding, more than $150 million primarily from the Gates Foundation and the UK’s Department for International Development, the organization had not developed and commercialized any drug (not-withstanding statement in the PATH press release, “OneWorld Health has a successful track record in developing and delivering effective, affordable drugs,”).  OWH’s lead product, an injected version of paromomycin, an off-patent aminoglycoside antibiotic, for treating visceral leishmaniasis (VL), a protozoan parasitic disease, had been approved in 2006 but its sale has been on hold pending completion of a “Phase IV demonstration program” to determine if the drug can be delivered and be effective in rural conditions.  I also noted according to the only financial data then available, a Form 990 which the IRS requires all 503(c) non-profits to file, OWH spent about $30 million in 2008:  $7 million on salaries, $3.7 million to its law firm, $1.3 million on travel, $7.6 million in contract labor and services (which, I am guessing, is for R and D), paid a “professional fee” of $2.7 million, and gave $5 million in grants yielding an uninspiring overhead rate of 50%.  In my post, I also noted that OWH had won a lot of awards and was offering two product tie-ins, a video camera and a charm bracelet charm.

I revisited the OWH website to see what has changed over the past year and half that may explain the PATH take-over.  The website is re-designed (as of June), the product tie-ins are gone, and apparently the lead drug is still in testing.  A November press release announced that OWH will be part of a new consortium with the aim of “establishing and implementing new treatment modalities as successful tools to support the elimination of VL in South Asia’s most endemic regions.” Then, “Upon completing the study, a feasibility report will be published, which will include recommendations for the private sector engagement using new treatment modalities,” more paperwork and no delivery (OWH press release).  As for financial accountability, OWH is still not doing annual reports, relying instead on the Form 990s to provide a snapshot of its finances.  The most recent (OWH 2010 Form 990) shows no financial problem:  expenses did not exceeded grant “revenue” ($27 million in and $19 million out for salaries, operations, and grants) and there is $26 million in assets “in the bank.”  And its large executive team was well-paid.  OWH also reported that CEO Chin got $400K in compensation and the top 10 salaried employees earned about $200K each.  I can’t help but note that, since the cost of treating one person with VL with the OWH drug is $20 (another OWH press release), for the cost of one its top-ten compensated employees, OWH could treat about 10,000 cases of VL, which is about 2% of the 500,000 new cases each year, possibly averting about 20% of the annual 50-60,000 deaths.

So what’s up with the acquisition?  Maybe someone in the Gates Foundation (like Trevor Mundel, the new head of global health, see my post, “Free Advice, Trevor,” 10/6/11) realized that OWH had not much to show for the $150 million it had received, that Dr. Chin was not a good choice for a CEO, or that OWH’s administrative expenses could be cut, fewer studies done, and more could be done to get a treatment to the people with VL.  As an indirect investor in both organizations (through the tax code and government grants), I’d like to know the rationale for and the expectations of the new OWH-PATH affiliation, but, unlike the acquisitions among for-profits, they are not obvious.

Earlier in December, GE Healthcare, a division of GE with $4.5 billion in 2010 revenues, and M+W Group, a multi-billion German engineering and construction firm, announced that they had formed “a strategic alliance aimed at overcoming the lack of key biopharmaceuticals, especially in emerging nations … [and] will assist countries worldwide to become self-sufficient in the manufacture of vital biopharmaceuticals such as vaccines, insulin and biosimilars” (GE press release).  Apparently, the companies are responding to several market signals:

• governments want self-sufficiency in their vaccine supply (e.g., the concern about the H1N1 vaccine supply during the 2009 pandemic scare, MacDonald 2009);
• developing country biomanufacturers are investing in their production capacities for vaccines and biological therapeutics (like insulin);
• the big pharma vaccine companies are continuing to develop vaccines for the first world markets first and sell to the developing world second (GSK is an exception); and
• the major contract manufacturers (CMOs) are focused on securing high-margin contracts (pharmaceuticals for the developed world) although they may be in an over-capacity situation.

And hence, the GE/M+W is offering a “turn-key” solution in which they design and build the facility, provide equipment and materials, and train the personnel.  The resulting biofoundry will be cheaper, faster to get running, have lower operating costs, and be better all around than the competing options of building from scratch ($100s of millions) or buying product from big pharma or the CMOs.

Apparently GE Healthcare is serious about building its biomanufacturing business.  It has announced that research and development of new biomanufacturing technology is a key part of a five-year $1 billion plan (In-Pharma article) and has shown an interest in acquiring biomanufacturing process improvements:

•  in 2007 it partnered with Novavax on its virus-like-particle manufacturing platform (Bionity article);
• in September, GE and the French company Sartorius cross-licensed biomanufacturing technology patents (GEN article); and
• this month it partnered with G-Con Manufacturing, a supplier of modular portable flexible clean room technology (another GEN article).

GE’s biomanufacturing effort is part of its larger strategy to meet rest-of-world health care market needs with new technologies, the center piece of which is its “Healthymagination” program (Healthymagination) which includes an investment fund and about which I wrote last year (“Medtech Made Easy,” 5/20/10).

How big a role in the global vaccine enterprise the GE/M+W turnkey offering will have remains to be seen.  Their first customers are likely to be in countries with no or little capacity and healthy balance sheets, e.g., in the Mideast and South America.  And given the scale at which these companies operate, the offering may not be attractive to governments and companies that want smaller, cheaper, more flexible, and easier-to-run facilities to make small volumes of multiple vaccines and biologics.  But then I’ve found only two companies that see this latter niche as a business opportunity:  Novavax and Xcellerex.

Maryland-based Novavax (Novavax) states it “is committed to using its technology platforms to create geographic-specific vaccine solutions and is therefore involved in several international partnerships, including collaborations with Cadila Pharmaceuticals of India and LG Life Sciences of Korea.”  Novavax is licensing its platform to Cadila apparently nonexclusively, so that the company can apply it to any vaccine target (the LG deal is specific to Novavax’s H1N1 vaccine, 2011 investor presentation).  But the company hit pay dirt early this year with a multi-tens of millions of dollars, US government, Biomedical Advanced R and D Agency (BARDA) contract for the clinical testing of its H5N1 ‘flu vaccine (Novavax press release), and will likely focus on running the trials rather than overseas business development.

Closer to home, Marlborough, MA-based Xcellerex (Xcellerex), about which I have posted previously (“DIY Vaccines,” 4/8/10), has had some success in selling its FlexFactory platform outside the US.  The platform’s claims include:

• 60% reduction in capital investment;
• 40% less space needed;
• 85% reduction in water and waste;
• 32% reduction in COGS;
• 5x faster deployment (7-12 months vs. 3-5 years);
• Simultaneous multi-drug production in same facility; and
• Set-up in one place and transportable to another (Platform).

Although Xcellerex has not licensed any vaccine manufacturers in the lowest-income developing countries, in the past year the company has announced that it is working on a deal with SK Chemicals Co., one of South Korea’s largest industrial groups (Xcellerex press release) and sold a 2000L plant to the Russian pharmaceutical company, R‐Pharm (Business Wire article).  Interestingly, Xcellerex may be interested in developing vaccines for under-served markets using its technology.  In April, it published results of a Phase I study of its yellow fever vaccine (Business Wire) and has stated its interest in licensing candidate biotherapeutics or vaccines after Phase I/II trials (Xcellerex Partnering).  My suggestion is that Xcellerex lower the bar/increase the risk and take on earlier stage opportunities to prove its technology, especially those big pharma is overlooking.  More grease is always helpful.

• “This Little Piggy” (5/12/11) about an emerging consensus among a number of governments in Asian countries on using insurance and no/low/for-profit contractors to provide health care;
• “Missing the Boat” (8/18/11) about successful biotech exec and investor, Christoph Westphal, lamenting the tough times for entrepreneurs but missing the ROW opportunity;
• “Generics Play” (9/15/11) about whether the multinational pharmas will see the value of the global market for “affordable” drugs; and
• “Beyond the Band-Aid” (10/13/11) about involving small and medium sized enterprises (SMEs) in global health.

Which of these were popular with my readers is hard to say since I rarely get any comments ; according to Word Press, my blog has about 60 “viewers” per week whom I assume are also readers but apparently not commenters.  But as an exercise in self-education, blogging has been fun.

I’d be remiss though (and not have enough to write about this week) if I did not point out that in my last post of 2010, I made some predictions for 2011.  Not about who would win the World Series or if the world would end (that’s 2012) but about vaccines and global health.  Here were my guesses on big vaccine stories in 2011 and what actually happened:

“Novavax and Avimex Laboratories, their local partner in Mexico, announce positive clinical results from a Phase IIB pivotal study of a H1N1 pandemic influenza vaccine thus clearing the way for Mexican registration of the first Virus-Like Particle (VLP) vaccine, potentially a fast and cheap route to vaccines;” not so, Novavax reported the publication of the Phase II results but not the ongoing Phase IIB (Novovax press release).

“Archivel Farma S.L. of Badalona, Spain announces successful Phase II results for its therapeutic TB vaccine in individuals with or without concomitant HIV infection in South Africa;” did not happen, in fact Archivel issued no press releases in 2011, not a good sign (Archivel).

“The Global Polio Eradication Initiative announces that it is on track for success in 2012 after 22 years of effort;” no such announcement, but the trend is in the right direction with about 30% fewer than the 874 deaths last year (GEPI).

“After more than seven years and several major ‘awards’, Medicine in Need, a non-profit research organization spun out from Harvard University and funded by at least $11 million of Gates Foundation money, announces it will start a human trial of its nanoparticle TB vaccine …;” nada, apparently MEND has done nothing in more than a year except work on its burn rate (MEND News).

“Somewhat speculatively, after the 2010 success of its Advanced Market Commitment call for a pneumonia vaccine (Vaccine AMC), the Global Alliance for Vaccines and Immunizations (GAVI) announces an AMC for a ‘pediatric super-vax’ to cover diphtheria, tetanus, pertussis (whooping cough), all known subtypes of hepatitis B virus, and poliomyelitis caused by poliovirus Types 1, 2, and 3;” nope, but then the pneumo vaccine AMC has been a roaring success with Pfizer and GlaxoSmithKline recently increasing their commitment of low-cost product by 50% through 2023 (AlertNet) and GAVI had a good year for raising funds (GAVI press release).

“Even more speculatively, the US government decides to donate the excise tax it collects on vaccines each year ($0.75 to 3.75 per dose, maybe about $50 million?) to GAVI for its new AMC and inspired by this largess, the American Pediatric Society, US branch of UNICEF, and concerned persons start a campaign to ask parents to donate a dollar when getting their kid vaccinated, raising another $10 million;” wrong again, but I still think it’s a great idea.

Needless to say, I’m making no predictions for 2012.  Wishing you a happy and healthy next year.

CHMI recently released its first annual report (Highlights:  2011), and I was pleased to find that one of the highlights was the launch of a Reported Results Initiative (Initiative).  The strengths of the initiative are that the performance measures are well-thought out (they include decreasing costs, increasing access and quality, achieving a health output, even “sustainability,” see the self-reporting Template) and that the database’s results category is featured on the home page.  But its weaknesses are that participation is voluntary, complete answers are not required (the most complete are apparently from publications or reports to donors), and evidently, CHMI is trying to figure out what to do with the data.  From the Highlights report, page 24:  “[while] it is also important to understand which programs are actually ‘working’- improving the access, quality, and affordability of privately delivered health care for  the poor … [the results of the] initiative will inform [sic] longer term activities such as the development of program performance metrics and the facilitation of formal program evaluation.”  How?  When?

I visited the database and used the nice browsing tools to check out the programs that reported their results and noted:

• only about 10% of all programs reported results (about 100 out of 990);
• very few of the reports are complete;
• the average operational age of reporting organizations is about nine years, which looks longer to me than the larger group’s average;
• 14 of the 100 are actually geographic variations of the same program (which implies to me that it is a successful franchise and any other programs offering similar services should emulate it);
• there are nine private, for-profit organizations but none seem to be reporting typical measures of for-profit success (revenues, investors, etc.);
• most are dependent on donors (45/100), a slightly smaller percentage than the overall group (515/909);
• other than donor support, nine are supported by membership fees, three by “other third party (e.g., debt, equity),” and 23 by revenue; and
• only six provided “evidence of sustainability,” I guess, an implied admission of unsustainability by organizations supported by grants or government appropriations.

The majority of the Highlights report summarizes the data in various ways (by location, type, health focus, funding, and organization) and, of interest to me, reports on the way in which 200 of the organizations provide financing for health care, either for their operations or to their customers.  CHMI identifies five methods:

• government health insurance;
• micro and community health insurance;
• cross-subsidization (redirecting revenue from wealthy patients to cover those unable to pay);
• vouchers; and
• government contracting.

Also of interest to me is the chapter on “Five Innovative Models” which, since it is not stated, I take to mean “five organizations whose operations are worth emulating.”  Three organizations/programs are profiled in each category, and, briefly, they are:

• low cost retail pharmacies (all are for-profit);
• affordable primary care clinic chains (all for-profit);
• voucher programs (two are public-private, one government);
• telemedicine outfits (two non-profit, one for-profit); and
• health hot lines (all for-profits).

It looks to me like these may be models for successful health care businesses.

Clearly, CHMI is gathering a vast amount of potentially useful information about the ROW health care markets, that is, those outside the overly-exploited and -expensive markets of the “developed” countries.  I’ll be using it for business planning purposes and hope others do, too.  And, as I recommended in my first posting, CHMI may also consider adding someone with business experience to their panel of advisers, or even hiring someone with a business background, to facilitate and accelerate the identification, emulation, and growth of those programs that work and are self-sustaining.

Of course, improving pediatric health is not a problem of the US only.  In developing world, in addition to the dangers of birth (the main cause) and inadequate nutrition causing children’s mortality, infectious diseases like pneumonia, diarrhea, HIV/AIDS, malaria, and rabies take their toll resulting in about 8 million children under the age of five dying each year (Global Health Council summary).  Aarthi Rao summarized the problem succinctly in a recent post (Center for Global Health Policy Assessment blog, “But What About the Kids,” Rao post), noting three needs:  access to and application of existing tools and methods (a problem in health care delivery), adaptation of existing technology and treatments for pediatric use (e.g., development of pediatric dosing and safety data for drugs, see WHO’s Essential Medicines for Children, WHO Meds for Kids), and development of new technologies specific to kids.  NGOs, international agencies, and foundations are focused mostly on the first area and somewhat on the second, and so I see a need and an opportunity for companies in the third, applying technology to improve ROW (rest-of-world) pediatric health.  Here are a few specific needs I have noted:

• Tuberculosis diagnostic: since children cannot cough up enough sputum for an adequate standard diagnostic sample, a better method is needed (Rao above and WHO Fact Sheet);
• Diagnostic to differentiate fever:  sick kids have fevers but proper treatment requires knowing the cause, so a diagnostic that can differentiate between malaria and pneumonia, for example, is needed (see BVGH IQ Prize Case Statement);
• Pulse oximetry and oxygen delivery:  studies have shown that a reliable system of measuring blood oxygen and delivery of oxygen as needed can reduce child mortality from pneumonia by 35% (Duke et al 2009) and some simple oximeters have been prototyped (e.g., Zaman lab);
• Sickle cell treatment:  as I mentioned in a previous posting (“A Really Neglected Disease,” 7/29/10),  underlying sickle cell disease in children in Africa is likely a contributing factor to upwards of 250,000 deaths per year, so a treatment will be life-saving (see All Africa article); and
• Vaccines:  some infectious microbes have serotypes that are specific to kids whose developing immune systems make them vulnerable, so new vaccines are needed (e.g., bacterial meningitis and dengue).

But getting new technology development funded is the rub.  In the pediatric disease field there are huge donor-funded programs to improve health care delivery (as there should be), but few funders who understand the risks and rewards of technology development.  The Bill and Melinda Gates Foundation is one of the few foundations that is trying to and recently announced that one of its Grand Challenges will be for “scientists, innovators and entrepreneurs to seize the opportunity to contribute to the field of family health through the discovery and development of medicines, medical devices, diagnostics and other lifesaving tools.”  It will be funded at $35 million (Gates press release) and I hope will have advice from successful entrepreneurs.  There are currently small grants are available through the Grand Challenges Explorations program in which Round 6 included maternal and infant health as a goal (Explorations), but as I have noted previously the grantors favor academics.  Also recently the Gates joined USAID, the governments of Norway and Canada, and the World Bank to launch the Saving Lives At Birth Grand Challenge (Saving Lives) to fund innovations in both delivery and technology.  Of 19 finalist organizations under consideration for a share of $14 million in funding, seven have a technology component (Finalists), and if a few of these receive adequate funding and help from experienced product developers, one may actually create something that saves lives at birth.

One would think that companies with global health corporate responsibility programs would have an interest supporting technology development for neglected pediatric disease.  Two candidates are Alere, an international diagnostics company that has donated HIV/AIDS diagnostics (Alere), and Laerdal Global Health, which sells maternal and neonatal health products and training (Laerdal).  As for the big corporations, in 2010, the Johnson and Johnson Company made a five-year but unspecified dollar commitment to the WHO’s “Every Woman, Every Child” program (JnJ press release).  Although the press release mentions research and development of new medicines as a goal, the program website does not (Every Woman).  This month the General Electric Foundation provided Jhpiego, a Johns Hopkins University affiliate, with $1.6 million to “develop low-cost, lifesaving technologies that can transform health care for women and children in developing countries” (Jhpiego press release).  That is generous but limited to JHU and not much money for the intended “early-stage innovation and then, for selected projects, field-testing and product introduction.”  Bottom line:  cultivation of the corporate sector is needed.

Meanwhile back at the  Institute for Pediatric Innovation,  there is one project with a global health slant which is to perform a “detailed review of the medical anthropology” to “help advance pharmaceutical reformulation for children by sensitizing drug developers and marketers to important cultural and social issues” (Evaluating Global Reformulation Needs, IPI project).  I’m unclear on the concept and the results are still forthcoming.  My suggestion to Don to have a bigger impact on global pediatric needs:  review the IPI technology portfolio for opportunities that have global health relevance, write-up development, funding plans, and strong arguments to convince potential licensees that products for kids can have profit margins, and start knocking on doors in the for-profit world.

According to the WHO, about 20 million people are bitten by suspect rabid animals each year, 40% of whom are children under 15 years of age and more than 55,000 of whom die (WHO Fact Sheet).  In most of the developed world, widespread and mandatory immunization of dogs has greatly reduced rabies incidence, e.g., in the US there are fewer than 40,000 annual exposures and very few deaths (Up To Date entry on rabies).  In the developing world, rabies is another neglected disease.  India has the highest number of exposures, about 5 million per year, and deaths, about 20,000 or 2/100,000 population at risk (the highest per country), and in Africa there are 24,000 annual deaths or about 4/100,000 population at risk (WHO Fact Sheet).

Unlike some neglected diseases though, the neglect does not involve the lack of a safe and effective vaccine.  For example, in India there at least six vaccines on the market, made by both international and domestic vaccine companies (Economic Times article 1):

• Rabipur made by a Novartis/Aventis joint venture with a 60% market share (as measured by dollars not doses);
• Verorab by Sanofi-Aventis, 24% share;
• Vaxirab by Zydus Cadila, 15% share;
• Indirab  by Bharat Biotech;
• Rabivax by Serum Institute; and
• Abhayrab by Indian Immunologicals Ltd.

But the challenges to delivering effective PET in India and elsewhere are multiple:

• PET needs to start immediately after suspected exposure;
• The vaccination process requires multiple injections (2 to 8 depending the route and the vaccine) on each of 4-5 days over a 30-day period;
• The vaccines require “cold chain” storage and distribution (40-45 to 8 degrees F);
• To be most effective, PET should include a local injection of rabies antibodies to bind up the virus until the body can respond to the vaccine and make its own (WHO Use of RIG); and
• Since the current antibodies are derived from equine or (rarely) human sources, their quality and availability vary.

On the plus side, the vaccine manufacturing process is proven and cell-based (leading to a low barrier to entry, competition, and lower prices) and the vaccine be stored for three years (allowing bulk purchasing by public sector agencies).  Also on the plus side for India and possibly the rest of the developing world is that one large, not-for-profit biotech company, Indian Immunologicals Ltd. (IIL), has developed its own vaccine and is using a franchise model to distribute it to under-served rural and semi-urban populations.  IIL is a wholly-owned subsidiary of the Indian government’s National Dairy Development Board (NDDB) and is one of India’s largest biotech companies with sales of $52 million in 2010 (Economic Times article 2).  IIL was created in the 1980s to develop and provide low-cost animal vaccines to Indian agri-business, moved into human vaccines, specifically a rabies vaccine, in the late 1990s, and has as its tagline, “immunity made affordable” (IIL Mission).  According to a recent study of the IIL franchise system (Masum et al 2011), IIL sells about 1 million doses each year through its franchisees (about 4% of the total sold in India) while selling 3.3 million doses to government hospitals and clinics generating revenue of $16.2 million (2009 data).  IIL’s franchise physicians are in 3000 locations, and IIL supplies them with vaccine to be sold at a set price (about 10-30% lower than other vaccines) and refrigerators for storage.  While the authors note that they did not have access to the financial data needed to determine the profitability of the franchise business, they report that IIL had “indicated” a profit margin of 15% for it.  Further, the authors note the franchise approach has allowed for lower distribution costs and direct-to-consumer marketing and that IIL plans to expand the line of vaccines offered to include its products for tetanus, measles, and diphtheria/pertussis/tetanus (see also Abhay Clinic presentation).

What may be next for IIL and its vaccine franchise distribution system?  Putting on my BD hat and using what little data I have and an excellent presentation by SK Dash from the Fifth Annual World Vaccine Summit 2011 (Dash 2011), here are my suggestions:

• Expand to more locations, especially urban, to sell both prophylactic and therapeutic vaccines at competitive prices (the current market private-pay market is about $50 million [Dash 2011] and the current price is about $6.75 per dose [Hello Ap post]);
• Expand the product line to include other companies’ vaccines, going with the lowest-priced products and passing on the savings;
• Add a PET antibody product preferably one made by cell culture either by IIL or another company (e.g., the Serum Institute of India is working with MassBiologics, itself a public entity, on a monoclonal rabies antibody [University of Massachusetts press release 2010)];
• Use the system to distribute a rabies vaccine for dogs which is the best way to prevent the disease (see Ilona Otter blog, for a discussion of the economics of canine vaccination);
• Through a tie-in with an insurance provider, use the clinics to offer rabies insurance for the cost of PET; and
• Help other countries set up similar vaccine franchise systems (according to Masum et al., the government of the Philippines started its version in 2007).

Other ideas?

So I noted the announcement last week of an “action plan” from the Commission to the European Parliament, which I learned is the executive branch of the European Union, to tackle anti-microbial resistance, a plan that had the endorsement of the European big pharma trade group, the European Federation of Pharmaceutical Industries and Associations (EFPIA) and GlaxoSmithKline (Fierce Biotech story and Reuters story).  Hoping to find a novel initiative that would connect the over-abundance of publicly-supported biomedical research and the drug discovery and development expertise of companies and with substantial financial incentives to encourage companies to trade off some profit margin for societal benefit, I read the Action Plan (Plan) and was disappointed.  The Plan is to be implemented over five years (I guess that’s bureaucracy in action) and has twelve aims, ten that deal with regulation of anti-microbial use, monitoring, policy, and education and two of which address R (mostly) and D for new drugs.  The R and D centerpiece is a new program to be added into existing EU public-private collaboration, the Innovative Medicines Initiative (IMI) which started in 2006 and is jointly funded by 1 billion euros in cash from the EU and 1 billion euros in-kind support from the EFPIA (IMI).  The problem is that the IMI primarily funds a wide variety of research projects into tools and models for drug R and D, and not drug discovery or development (IMI Scientific Research Agenda).  The authors of the Action Plan may have recognized this problem since they call for “unprecedented collaborative research and development efforts,” “unprecedented open sharing of knowledge,” and “an overarching framework agreement with the industry, defining objectives, commitments, priorities, principles and modes of action for public-private collaboration in a longer term perspective.”  But then to make the task even harder, the new drug program of the IMI effort will also address speeding up drug approval and “the establishment of adequate market and pricing conditions for new antibiotics,” which are important but policy, not R and D, objectives.

So if the Commission asks me (unlikely) what their Antimicrobial Resistance Action Plan should include, what are my ideas?  Here’s a quick sketch:

• expand the program to include any/all infectious microbes, not just those that may afflict the wealthy world, since the early stage of anti-infective drug discovery is about (anti-) biological activity and the ultimate target organisms aren’t known;
• push the “open sharing of knowledge” obligation as late as possible in the process, e.g., through Phase I to allow for better valuation of the opportunities by potential licensees;
• require IP owners to register products in all markets or, alternatively, license by indication, geography, and market (insured, self-pay, and public) at affordable, even no-cost, terms (see my post on non-exclusive licensing, “Starting Uphill,” 1/27/11);
• fund a wide range of unconventional, non-small drug approaches, like mRNA interference and therapeutic vaccines;
• award grants that start small but increase with progress and with matching by potential licensees;
• include start-ups and growth-stage companies;
• require minimum resource commitments based on the size of the participant and grant awarded;
• require participants to grant mutually non-exclusive licenses (or sign on to a mutual non-assert agreement) for all IP except specific drug product composition and synthesis;
• build a database of low-cost discovery and development tools and vendors; and
• require participants to “re-fund” grants when a product’s sales reach a threshold.

As for the financial incentives, there seem to be several out there that have been discussed and implemented to fund and incentivize “unattractive” products:  advanced market commitments by governments wanting to create emergency stockpiles, tax credits, and regulatory vouchers (see Kettler presentation).

For a successful, although overly-long, example of a public-private collaboration that succeeded in getting a drug for a neglected disease to market (almost), see my posting of last week about Ranbaxy’s new malaria drug (“A Long Strange Trip,” 11/18/11).  If there is an opportunity to influence and speed up the Action Plan, I’d like to know.  Happy Thanksgiving, y’all.