USAID Rhetoric or Reality

I was not able to attend the Partnering for Global Health Forum on June 27, the third in a series organized by Bio Ventures for Global Health (BVGH) and held in conjunction with the big biotech-fest, BIO 2011, in Washington, DC.  The Forum has a laudable aim (“creating new market-based solutions that speed the development of drugs, vaccines, and diagnostics for the world’s poorest,” BVGH What We Do), but after attending previous two meetings,  I noted room for improvement (my postings of 5/6/10 and 5/11/11).  To catch up, I have been viewing the video archive of the meeting , thanks to BVGH ( PGH Webcast Recordings), and started with the pre-lunch remarks by Dr. Rajiv Shah, the relatively new administrator of the USAID,  due in part to the major role the USAID has in implementing the US global health-related projects (budgeted at about $10 billion in 2010-11), and in part because he seems like the right person given his background and statements, for example, to get the USAID “to focus our efforts on facilitating a continuum of invention and innovation from bench to bush” (Barmes Lecture 2011).

Last year in my posting of 4/1/10 (and reprise posting of 6/2/11), I reviewed a speech Dr. Shah gave at a Life Science Innovation meeting in which he implied that the USAID would be promoting innovation and global health product development.  I recommended the agency do so by putting out requests for proposals (RFPs) for applicants (especially companies) to develop and  deliver needed products with an attached advance purchase commitment, specifying desired performance, quantity and price.  In this way, the USAID, as a buyer of global health products, would create financial incentives, an attractive market for prospective suppliers.  So I was disappointed in his remarks at the Forum in that he was addressing an audience that included representatives of biotech, diagnostic, and medical device companies looking for funding or investment for global health products, but made no mention of the role of companies in his agency’s global health mission.  The closest he came was to say that the USAID wants to “build markets” and “accelerate the introduction of new technologies,” but was shy on specifics.

Dr. Shah did mention specifically one program sponsored by the USAID, Saving Lives at Birth:  A Grand Challenge for Development (SLB), which has as one of its three goals the promotion of the development of new technologies (the others are finding ”new approaches to provide high-quality care at the time of birth” and “empowering and engaging pregnant women and their families”).  Maternal health is a major need (and a Millennium Development Goal) and that need has inspired many new, but apparently mostly uncommercialized, technologies (e.g., there are about 120 listed in the Innovation Index maintained by the company, Maternova, MN Index).  So how does the SLB intend promote the invention of new technology or better yet apply those that exist?  Apparently, the most ineffective way:  a grants program that gives money away to those who have a good grant-writing staff.

The SLB has some good aspects:  a fast turn-around time between application and award (4-5 months), a substantial amount of money to work with ($16.25 million in 2011-12, USAID RFA), longer term commitment (5 years and a total of $50 million (SLB Press Release), and at least the intent to fund the commercialization (use) of products, i.e., projects involving the “transition to scale of integrated innovations” (SLB Grants).  Not-so-good aspects are:

  • three (rather than one) overarching goals;
  • five international sponsors who may not be on the same page all the time;
  • limits to the amounts awarded to “seed” project (no more than $250K) and “transition” projects ($2 million);
  • review of applications by staff unfamiliar with the innovation process (the reviewers are not identified);
  • no intent to encourage grantees to coordinate their projects, when justified; and
  • no statement about performance measurements (maybe this is in the application).

An alternative to the grant approach is the model adapted from the venture capital industry by venture acceleration “contests,” for example, the Mass Challenge (MC).  Applicants, typically young people who have caught the entrepreneurial bug, pitch their start-ups to a experienced and skeptical business-types with the awards being a mix of money, incubation space, coaching, and professional services.  Successful “pitchers” are those with unique ideas, a shot at customers (someone who thinks their product or service has value), and a realistic plan (time and money) for execution.  The aim is not necessarily to create new companies, although that does happen, but to invest in people who want to innovate, that is, create something that has value (products, services) from nothing.  Unfortunately, the cash involved is enough to give the venture founders some momentum but is not sufficient as seed capital.

If Dr. Shah really wants to figure out how to accelerate technology development for global health, he needs to hang out more with entrepreneurs and founders and mangers of small companies.  After his remarks, one questioner asked what his agency could do to bridge the valley of death- the critical period when a small company is trying to get sufficient proof of the value of their core technology and/or its first customers- and his response was that he was trying to make the USAID easier to work with and to increase “deal flow” which will help companies with products to sell but not those with products in development.  In his Barmes Lecture on Global Health earlier this year, Dr. Shah said:  “We will develop at USAID a center of excellence to accelerate product development and field introduction, bringing in industry experts and academic fellows to inform our thinking and investing seed capital in promising ideas wherever they’re found. … There’s been a huge amount of progress in the last decade in the knowledge of how to aggressively scale new interventions and technologies and we want to capture and harness that.  We will work with firms to make sure their biomedical products can reach the poorest people in the poorest countries. And we will leverage our commodity procurement systems to prioritize buying new technologies so that we can get volumes up and prices down in more creative and innovative ways.”  Got it; when?

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