It’s NIGH Time

Last week, the Global Health Technologies Coalition (GHTC), a Gates Foundation-funded “advocacy” organization based in Washington, DC, added to the pile of reports on the US government global health policy by releasing “Saving Lives and Creating Impact” (GHTC report).  The GHTC represents a group of 40 nonprofit organizations “working to increase awareness of the urgent need for technologies [i.e., products such as therapeutics, vaccines, and diagnostics] that save lives in the developing world.”  This is a worthy goal but I can’t help but wonder about the effectiveness of an organization that purports to advocate for more products for improving health in the developing world and for “incentives to encourage private sector investment” in creating those products, but has no private sector (for-profit) members or advisors (Members and Steering Committee).  Unfortunately, the authors of the report start with two premises from the conventional wisdom of the non-profit global health advocacy field:

-“the US government has long played a [meaningful, substantial, important?] role” in the development of new global health products; and

-there is “insufficient commercial market to attract private industry” to develop global health products.

So, not surprisingly, they arrive at the conclusion that the solution is for the US government to do more of what’s it is doing now, especially in funding non-profits like academic researchers, non-profit product development groups (PDPs), and advocacy groups.  I read the report and came to a different conclusion.

To their credit, the authors do a good job in gathering together all the bits of the wide-ranging US government’s global health technology development effort.  Many agencies are involved in some way (hey, it’s the government where coordination and cooperation are not rewarded), primarily, USAID, FDA, DoD, CDC, and NIH.  Of the approximately $1.6 billion spent annually on global health research and development, the majority is doled out the by NIH (87%) and is spent at the early stages of development (66% preclinical and 20% on clinical) and mostly on the big three global diseases (HIV/AIDS at 57%, tuberculosis, 12%, and malaria, 10%), leaving 21% for the remaining twenty or so neglected (hence the name) and noncommunicable diseases.  The authors also do a good job in providing details on the sponsorship of the development of 43 products applied to global health between 2000 and 2010 (Table 1), and I counted US government involvement of any type in 24 (56%).  In the report’s text, four products are highlighted to demonstrate the importance of the governments role:  a vaccine for meningitis, a diagnostic system for finding drug-resistant TB infections, next generation HIV preventatives (microbicides), and improved TB drugs.

Since I wrote posts on the first two products, I think I am reasonably well-informed about their development, and, unlike the authors, my take is the that government role, while important (all help is important), was an participant, not as a leader or a catalyst.  Specifically, in the development of the meningitis vaccine (called MengAfrVax), FDA licensed a method of conjugating or attaching the basic parts of the vaccine together to the vaccine developers (the Meningitis Vaccine Project led by the non-profit, PATH) and transferred the technology to the manufacturer, the for-profit Serum Institute of India who committed to a low-priced final product (Watch Out Big Pharma? 12/16/10).  This was helpful, but the FDA expertise is regulation, not manufacturing, and the technology may have been available elsewhere.  I wrote about the TB diagnostic system in three posts (ReDux 1/6/11, ReDux Part II 1/13/11, TB Dx:  Getting There 3/1/12) and noted that the NIAID was involved by funding a university team that discovered the markers of drug resistance (in this case, DNA sequences), but the core of the product was the diagnostic platform developed by the company, Cepheid.

While the report’s authors mention the involvement of for-profits (companies) in product development, they don’t note the extent of involvement, which is greater than the US government’s (I counted 39 products or 84% of the total in Table 1) or attempt to figure out why in these cases, there was no “market failure.”  The authors also mention two programs in which the government can and does directly fund product development with companies, the Small Business Innovation and Research or SBIR program and the Cooperative Research and Development Agreement or CRADA program), but state, without support, the lack of company involvement is due to a lack of incentives and that SBIRs are “poorly suited” to stimulate company participation.  Interestingly, the authors mention that 40% of all SBIRs result in products, leading me to wonder if the percentage of SBIR awards leading to global health products is higher or lower.  I gave my opinion on the role of SBIRs in global health product development in one of my earliest posts (SBIR Drop in the Bucket 11/5/09) and argued that the government is not using this effective tool enough and that the funding can fill an important gap in supporting prototype development.  Maybe the authors may have benefited from more research on and input from the private sector.  Also interesting is their mention that there are more than 360 global health products in development and US government involvement in about half; I would have appreciated the same analysis they applied to existing products to these pre-products.

The report’s authors conclude with several recommendations that the US government:

  • maintain or increase its funding of global health technology development [why not redirect, especially away from the already well-funded diseases of the wealthy and away from basic research and toward organizations that are product-oriented?];
  • focus on more translating research into products [like on product development, testing, and maybe also manufacturing and distribution]; and
  • increase funding of the PDPs [some do a good job and others don’t, see posts Too Big To Flail 1/5/12 and Commercialization a Going Concern 5/27/10]; and
  • as a bone to the for-profits, “review programs that support industry translation  for their suitability for companies working on global health products” [why didn’t the authors review these programs themselves?].

My recommendation is that the GHTC advocate for the formation of a National Institute for Global Health (NIGH) funded by a proportional re-allocation of the funding of the other NIHs.  The NIGH will also have a healthy SBIR program (about 50% rather than the standard 2% of its budget) and will take the lead in “guiding” other government agencies involved in global health technology development toward supporting more product development.  I also recommend that the GHTC get more input from those who developing global health products and putting them into commerce where they are accessible to the people who may benefit from them.

A Day Late and a Dollar Short

Thanks to the FierceBiotech newsletter, I learned yesterday that the director of the NIH, Francis Collins, is lobbying Congress for a $500 million fund that would support clinical trials of drugs for neglected diseases being developed by start-up biotech companies, up to $15 million per company (FierceBiotech article).  The writer cites an interview by Bloomberg (Bloomberg interview), but this link generates a 404 error, and my search of the Bloomberg site found no such interview.  But I’m an optimist and welcome this much-needed proposal by the NIH, unverified as it is.

Much needed because, in my view, the only path for new ventures developing novel diagnostics and drugs for the neglected diseases (alternatively known as the diseases-for-which-there-is-no-reimbursement-of-treatment-costs-by-the-insurance-companies [watch out, middle Americans and retirees, your afflictions could be next]) is for them to start with a seed round of “traditional” (personal, friends, and family) funding or with grant support (thank you a little bit, Bill and Melinda).  This funding is used for proof of concept studies and then, in a pseudo-A round, avoiding the vulture capitalists (although Daktari Diagnostics demonstrated that equity investment is possible if the slices are small enough), if a diagnostics company, the start-up gets an NIH/NIAID contract to develop the next prototype or, if an therapeutics company, it partners with a PDP or with an academic researcher with an NIH grant for clinical testing.  Then the company hopes for clinical success and for an established MNC (multinational company) to license the major market rights for big bucks and an established generic to license the ROW rights.  In about ten years, hey presto, affordable diagnostics or drugs for the public-sector markets and for the coming the price-contained major markets.

Also much needed because, as I’ve noted in a previous posting (February 4, 2010), the NIH neglected disease initiative, called the “Therapeutics for Rare and Neglected Diseases” program (TRND) is wanting  in funding, leadership, and implementation.  The May 2009 announcement of its initiation drew applause but the $25 million FY 2009 funding was called “a drop in the bucket,” a “rounding error” compared to the costs needed to develop a drug, and hopefully “a down payment” (Scientific American blog). Also, lumping rare and neglected diseases together was odd (the program is part of the NIH’s Office of Rare Diseases Research).  I’m not sure I see the rationale for the NIH promoting drug development for “rare” diseases.  Research on many of these diseases is NIH-funded, many have strong lobbies, and there is corporate interest in carrying the drug development ball.   Genzyme has been a wildly profitable company for years, and recently Pfizer and  GlaxoSmithKline announced, in June and February, respectively, that they are starting rare disease research efforts (FierceBiotech article).  The TRND program seems moribund in that its website has not been updated and has no news of awards or progress,  although the first-mentioned FierceBiotech article notes that AesRx (AesRx), a new biotech located near the end of the trolley line in nearby Newton, MA, received TRND funding for trials of its drug to treat sickle cell anemia, which, with 99% of its sufferers outside the US and Europe, is a neglected disease.

Fran Collins and his team apparently have been listening to the global health advocacy groups and realized that the proposed fund would allow the NIH to make good on all the billions they have poured into the US academic research industry, an effort that has resulted in many expensive treatments that Americans apparently demand but not much for the rest of the world.  So what is standing in the way of creating the fund?  According to the report of the interview, one barrier is the current Congressional posturing about deficit spending (where were all these deficit hawks during the years when we were running an $80-billion war “off the books”?).  The other bar is the general concern (fear) of the academic research industry of a diversion of “their” money into companies.  The FierceBiotech article quotes Greg Petsko, an experienced medicinal chemist and researcher who I’ve know over the years:  “If he [Collins] is going to dip into the pool that supports investigator-originated grants, that’s a huge mistake.”  As much as I agree with making the pie bigger rather than the slices smaller, the only source of NIH money to support drug development for neglected diseases (other than the TRND) has been the SBIR set-aside which, based on my review of 2009 data, is pretty tepid.  Of the $24 billion of NIH funding, $700 million went into SBIRs, of which $15 million went into neglected disease research, or about .06% of the total (my posting of November 5, 2009).

So Fran, how may I help in your lobbying effort?

Official US Government Global Health Program

Is there one?  One would hope so given our superpower status (at least until China cashes in the US treasuries it holds).  Obviously many government agencies, branches, and departments have some role in affecting the health of the rest (majority) of the world’s population.  Prominent are the USAID, USDA, and the departments of Defense and State, and less prominent are the Peace Corp, FDA, CDC, and NIH (e.g., the new NIH Therapeutics for Rare and Neglected Diseases).  Last May (2009), one of our national think tanks (image of brains floating in a vat), the Institute of Medicine (sister to the National Academies of Science and Engineering, IOM), released a report advocating for a national program on global health (IOM Report).  Called “The US Commitment to Global Health- Recommendations to the New Administration,” it followed a similar report in 1997 (the recommendations of which apparently had no effect), was funded by multiple government agencies and five foundations (Gates, Google, Merck, Wellcome Trust, and Rockefeller), and had esteemed authors and reviewers.  Just to note, all the authors and reviewers were from academia, NGOs, or PDPs (product development programs); not one from a for-profit or corporation except for two reviewers (Pepsi and ExxonMobil).  I suspect that the biotech/pharma industry would have something to contribute (Not interested?  Not invited?)

The report had a stirring bottom line:  that the US needs to “live up to its humanitarian responsibilities” and “highlight health as a pillar of US foreign policy” (page 1).  It states this highlighting should include:

– creation of a White House level interagency group chaired by a senior official [a “global health” czar?];

-doubling the US’s global health-dedicated spending from $7.5B in 2006 to $15B in 2012; and

-allocation of this budget across programs supporting the 2000 Millennium Development Goals (MDG) and non-communicable diseases (most would be applied to HIV/AIDS, malaria, and TB).

While it would be nice to have some high level coordination, visibility, and advocacy, is the recommended spending in proportion to the problem and to the potentially available resources?  As noted in the report, although the US government spends the greatest absolute amount of any country on global health aid, it is at the bottom of the developed countries in terms of percentage of gross national income (0.16% compared to an average of 0.45%) and does not spend close to the MDG target of 0.54% of GNI.  And the US effort is more narrowly focused than that of the Gates Foundation’s whose spending of $1.7B per year demonstrates a greater breadth, depth, and inventiveness, the last not a strong point of the government (my posting of November 24).  Perhaps funds could be found by re-programming some of the budget for new weapons like the Joint Strike Fighter which has a current estimated procurement cost of $250B (about $100M per plane).

I was also amazed that the report didn’t mention some of the innovations in the funding, delivery, and research in global health and use them as exemplars for the US effort.  Specifically,

– the success of the Global Alliance for Vaccines and Immunization in increasing childhood immunization rates funded through the International Finance Facility for Immunizations (my posting of January 21);

– the progress in health care delivery using profit incentives (my posting of December 17)

– the potential for emerging pharmaceuticals market (my posting of October 20); and

– the Gates Foundation’s efforts to stimulate innovation through small grants with simplified applications and rapid review (for academic researchers at least, my posting of November 24).

Moreover, the report only mentions a possible role of for-profits in addressing global health; the strongest statement is on page 6:  “Through new models of collaboration, the private sector is responding to pressures and opportunities to apply technology and business acumen to enduring social problems.”  No specifics are offered on what the global health czar should do or say to involve the private sector in the government effort or what the government could do to aid their response.

I am clearly not an expert on government policy (I’d need at least a PhD and a government grant to be one), but here are several of my wild-and-crazy suggestions:

– the NIH SBIR and STTR programs could have set-asides for global health product development (my posting of November 5);

– the TRND, now funded at $24M for both rare and neglected disease therapeutic discovery, could be more generously funded and offer no-cost screening services to all PDPs;

– the current r and d tax credits could be amplified in some way for companies developing global health products, and the credits could be transferable to generate income for companies with no tax liability;

– the FDA’s much-lauded priority review voucher program could be extended to include the granting of priority review “options” to companies whose products reach pre-approval milestones;

– the FDA could grant drugs for neglected diseases some type of  exclusivity for US markets similar to that granted orphan drugs;

– recipients of Federal funding could be required to provide no cost licenses to Federal inventions to companies developing global health products (my posting of November 12); and

– the USAID could ramp up its support for innovation in diagnostics and services by streamlining and making more competitive its grants and contracting process and hold the recipients accountable for delivery of results.

Unfortunately, the IOM report and recommendations seem to me to be more of the status quo and therefore disappointing.  I am not sure if the authors intended irony by using as a preface a quote from the philosopher/poet/scientist Johann Wolfgang von Goethe:  “Knowing is not enough; we must apply.  Willing is not enough; we must do.”  But it’s ironic to me.

The SBIR Drop in the Bucket

The capital to start or grow a company developing products for global health may come from several sources which are, in order of rapidly decreasing likelihood:  the founder’s pocket, foundations and their pass-through surrogates, the federal government, venture capital firms, and angel investors.  One would think that federal government policies would favor direct aid to global health-oriented companies given the potential for social benefit and improvement in US prestige.  After all, since 1982, the Small Business Innovation and Research (SBIR) program has required Federal agencies with extramural research and development budgets over $100 million to use an annual set-aside of 2.5% of that budget for small companies “to conduct innovative research or research and development (R/R&D) that has potential for commercialization and public benefit” (SBIR Program).  For health-related research, the National Institutes of Health, the primary agency for health-related research, has  a 2009 extramural research budget of about $24 billion in 2009 and, therefore, an SBIR set aside of about $600 million ($672 million was spent in 2008, NIH SBIR).

Through it’s SBIR program, the NIH is a relatively small investor in biotech/pharma/medical product development (the venture capital investment in biotech companies was $8 billion annually pre-crash), but SBIR money is in the form of a grant (non-dilutive of ownership), is relatively free of constraints, and is renewable, and therefore ideal for a company’s higher-risk projects (like products for global health).  Despite that fact that the initial grant is small ($100-300,000), the program is popular with more than 4000 applicants annually and about 30% of first-timers getting funded.  And although some in the research community would argue that the SBIR program is a diversion of “their” money,  it funds work that is a step closer to a tangible benefit than most NIH-funded projects (and recipient institutions’ overhead costs).

Thanks to a new reporting tool (NIH Research Portfolio Online), one can get an idea of the extent of SBIR funding overall, and an estimate of the amount going into global health product R and D.  The institute most likely to fund global health product development is the National Institute for Allergy and Infectious Disease, and in 2008, it spent about $100 million in SBIR grants, the second highest after the National Cancer Institute (NIH Databook).  This money funded about 385 projects (new and re-funded) on topics ranging from new vaccine delivery methods to preclinical testing of novel antibiotics.  Using the WHO list of neglected diseases (leishmaniasis, schistosomiasis, onchocerciasis, lymphatic filariasis, Chagas disease, malaria, leprosy, African trypanosomiasis, tuberculosis, and dengue) plus diarrheal illnesses, I looked for projects that seemed related to developing global health treatments or diagnostics and identified 59, about 15% of the total and therefore about $15 million in funding.  Malaria and tuberculosis were most popular (about 12 projects each), and filariasis and trypanosomiasis the least (1 each).

The good news is that these 59 projects represent about 50 companies that think they can make money (some day) by inventing products for neglected diseases.  The less good news is that $15 million spread over about 60 projects (or $250,000 each) does not buy much r and d.  But since many small companies cobble together multiple sources of funds and are boot-strapping themselves to a product, the money is helpful.  And any drop in the bucket for neglected disease product development is good.  But for a country that each year puts $24 billion of public money into “health research,” $700 million of which is set aside for companies doing product-related work, $15 million looks paltry.