GSK Splashes Away

Most of the big pharma companies are taking a toe-in-the-water approach to selling (and inventing) affordable medicines for the rest-of-the-world (ROW) markets, due to uncertain of revenue sources and, for new drugs, the long time frame and upfront investment needed.  While all the top twenty companies are slowly improving their performance in making affordable medicines accessible to the rest of the world (see the Access to Medicines Foundation’s [AMF] biannual review, the 2012 Index), GlaxoSmithKline plc (GSK) has stood out as pursuing an explicit global market strategy since 2008.  Under the leadership of its CEO, Andrew Witty (Sir Andrew as of 2012), GSK has increased its non-US and non-EU sales to now about one-third of total revenue and has implemented a long list of policies and practices to improve its market share in the mid- and lower-income countries.  Several of these, as summarized by the AMF’s GSK Profile, are:

  • Forming a Developing Countries and Market Access Unit that has a business model that includes both commercial and social objectives such as giving grants to strengthen the healthcare infrastructure in the lowest income countries ($6 million in 2011);
  • Reducing the prices of its patented products in the lowest income countries to no more than 25% of the products’ UK price;
  • Not enforcing patents in the lowest income countries, issuing 11 non-exclusive voluntary licenses for anti-retrovirals to generic manufacturers, and committing to licensing its antiretroviral portfolio royalty-free; and
  • Committing to making no political contributions in the countries where it operates.

Also to stimulate research and ultimately drug development for the “orphan” diseases of the ROW like TB and malaria, in 2010 GSK set up and funded a “Tres Cantos Open Lab Foundation” (TCOLF) with $8 million.  Researchers from non- and for-profits can propose projects for funding and “gain access to the available resources and facilities and work alongside the scientists” at GSK’s Tres Cantos research facility in Spain.  This “open innovation” strategy is intended to consolidate effort, tap GSK’s drug development expertise, get funding to researchers at less-well-endowed institutions, and generate results that are available to anyone to develop without requiring licensing.  This latter sticky wicket of intellectual property is handled by the TCOLF requesting but not requiring the grant recipients agree to the guiding principles of WIPO Re:search, a larger EU-based program (TCOLF agreement template).  Unfortunately, while well-intentioned, the TCOLF has the same flaws of WIPO Re:search about which I wrote in a post in 2011 (“Window Dressing”).  In my opinion, the primary problem with the TCOLF is its orientation to funding basic research at non-profit institutions as opposed to product development by low/no-profit companies which is much more sorely needed (since it is products that will change health outcomes not publications).  The TCOLF governing board is mostly academics and all but one of the 12 projects funded so far are at academic institutions (TCOLF Projects), although some projects are aimed at finding drug candidates (e.g., that of Michael Pollastri at Northeastern University).

The good news is that GSK has doubled its support of the TCOLF to $16 million (still a modest amount when compared to the cost of drug development, see below).  The better news is that the Wellcome Trust, a long-time supporter of global health efforts, announced last week that it recognized the need for more product-oriented work and donated $8 million to the TCOLF expressly to tackle “the next phase of drug development with the aim of turning promising active compounds into high quality experimental drugs” (Joint press release).  More funding for preclinical drug development is good but it needs to be accompanied by additional TCOLF advisers and staff who know and can direct drug development.  Especially important is the selection of experiments that may yield data to support and attract additional funding and interest in commercial development (for more, see my post, “Open Source Sesame” ).  And for the TCOLF to become more company-friendly.

Speaking of GSK’s CEO, Andrew Witty made another splash in March at a conference when he said the oft-cited $1 billion cost for developing a drug tag was “one of the great myths of the industry,” since it was an average figure that includes development costs for drugs that fail in trials (Reuters article).  More importantly, he said that the way to decrease costs and reduce prices is to improve the efficiency of drug development and that GSK was starting to do that.  Improving efficiency is an on-going struggle for the industry and ideas and technologies abound but best practices have yet to immerge.  Maybe GSK could start an open innovation initiative for that nut.  And from an interview April (Philly.com blog), he addressed what GSK is doing at the delivery end of health care:  “We don’t want to be simply a supplier of medicines into a system. We recognize the whole health-care challenge is complex. There are areas where our expertise can really add something. It is about trying to add more value into the system through expertise. If you look at what we’re doing in Africa, India and America, all are different. America is in a different universe compared to these other countries. But they all have different sorts of challenges. By working with local communities, it is amazing how often we find it might be as simple as acting as a catalyst to get the right groups together. The Health Communities initiative is a good example, where we get people together to talk about what is needed. That might guide us through some of our donations.  If I look at India in terms of creating health-care facilities in slums, if I go to Africa where we’re training 10,000 health-care workers through our donation program, they are all about how we use our expertise and knowledge and some money. But it’s often not about money. It very often is about expertise and human capital, to try to create a better solution. What’s crucial is that it’s the right solution for each country because they are all different.”

You go, Sir Andy.

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