Eve is here. This post provides compelling evidence as to why it is a bad idea to operate healthcare, especially drug development, on a market basis. You have to wonder how much prejudice leads us to ignore a deadly disease that afflicts millions of people… But in the tropics, there is a stereotype of being poor. This post explores the potential for stock investors to view life-saving drugs as far less attractive than drugs that treat diseases for the wealthy, even though they are sold in large quantities in poor countries. It is not mentioned as a factor.
by Payal Arya Postdoctoral Fellow, Center for Science and Industry Integration, Bentley University fred ledley Professor of Natural and Applied Sciences and Management at Bentley University and Director of the Center for Science and Industry Integration at Bentley University. It was first published in New Economic Thinking Institute website
World Health Organization (WHO) Estimate that 1.7 billion People around the world need measures to prevent or treat neglected tropical diseases (NTDs). In total, NTDs cause up to 200,000 deaths annually and represent an annual disease burden in the hundreds of billions of dollars. This vast unmet medical need reflects the global pharmaceutical industry's focus on developing products for the U.S. market. The U.S. market provides efficient channels for product sales and few restrictions on drug prices, giving companies the opportunity to ensure a return on their investments and profits. profit. However, the US market accounts for less than 4% of the global burden of the disease. The greatest disease burden is associated with diseases prevalent in low- and middle-income countries, where the available market is usually insufficient to justify the cost of investment. This is a classic example of market failure.
from 1975-1997, Less than 1% of new drug approvals in the US and EU were for tropical infectious diseases. 10 years later, 2000-2011, only 1% of new drug approvals (new chemical entities) are for NTDs, and 1% of all clinical trials involve products that have the potential to address this unmet medical need. Only.a new report British Medical Journal Open (BMJ Open) Industrial Fusion Research Center in bentley university This trend continued into the pre-COVID-19 decade (2010-2019), when only 1.8% of new drugs were indicated for tropical diseases. The BMJ Open study further found that half of new product approvals were for diseases that are in the top quartile of disease burden in the United States, but the number of product approvals and diseases that contribute the most to global disease burden are This indicates that there was no relationship between the two.
Classical economic theory assumes that governments play a central role in correcting such market failures through regulation, subsidies, or public investment. These interventions are variously designed to adjust the cost standards for bringing products to market or the structure of the market so that the potential benefits to the industry are sufficient to justify private investment. I am. These principles are the basis for many US policies (and similar policies in the EU) aimed at encouraging industry development of medicines with characteristics that make industry investment unattractive. These include: Orphan Drug Law Rare diseases and programs that provide them quick review A list of products for selected „serious diseases“ with relatively unfavorable development characteristics, including special „fast track“, „breakthrough“, „accelerated“ and „priority“ review programs. These programs reduce development requirements, schedules, or costs, provide tax breaks, create indirect subsidies (vouchers) to reduce the net cost of development, or increase market potential. or provide extended patent protection to increase
Orphan drugs and expedited review programs have dramatically changed the drug development landscape. They have helped create so much more. 500 products They have been approved for “rare diseases” since 2000, and nearly 60% of all approvals from 2010 to 2019 utilized at least one “accelerated” review designation.Although these policies were primarily designed to address unmet needs in the U.S. market, the FDA guidance in application One of these policies to encourage product development for NTDs is “Tropical Disease Priority Review Voucher Program” focuses directly on such diseases.
However, a critical analysis of the BMJ Open shows that despite such guidance, only modest progress has been made in developing products with the highest disease burden, and that programs for expedited review have not been implemented in practice. This does not just indicate that the situation may be worsening. The study, funded by INET, looked at 387 medicines approved between 2010 and 2019 and found that 207 of them were given 'priority review' designation. However, only seven of these specifically target tropical diseases. Equally alarming, this study found a negative association between drugs designated for expedited review and the disease burden associated with the conditions for which they were approved to treat. did. Therefore, expedited review programs may prioritize lower development costs for diseases with lower disease burdens, further reducing the attractiveness of investments to address the most significant disease burdens and further exacerbating market failures. .
What efforts are needed to rectify this situation? public-private partnership (PPP) emerged to address this unmet need.These include several product development partnership (PDP) is explicitly focused on developing medicines, vaccines, or diagnostics for conditions that are prevalent in low- and middle-income countries. Examples of such partnerships include: Global Alliance for Tuberculosis (TB Alliance), Malaria treatment drug venture (MMV), and Drugs for Neglected Diseases Initiative (DNDI). These companies primarily raise capital through government funding and philanthropic donations, and typically rely on partnerships and contracts with the private sector for product development.
Survey on research funding for products for neglected diseases Policy cures research It confirmed that from 2007 to 2022, total funding for product development related to „neglected diseases“ (not including coronavirus) was more than $60 billion. Contrary to the common perception that these initiatives are driven by private philanthropy, data shows that 66% of funding comes from public institutions (government), 20% from philanthropic sources, and 13% from industry. It is shown that it was provided by the world.
This funding supported $13.7 billion in basic research on neglected diseases. $13.6 billion for new drugs. In this 16 year period his $21.5 billion has been spent on vaccines. Nevertheless, the BMJ Open study identified only two new drug approvals for tropical diseases sponsored by his PDP in the period from 2010 to 2019. One is Pretomanid, which was approved in 2019 and was developed by the TB Alliance. The other is moxidectin, which was approved in 2018. Drug development for global health. (Please note that the BMJ Open study does not include vaccines.)
This leads to an important question. Can the nonprofit sector provide the firepower needed to address the global burden of disease?
Overall study Within the global nonprofit sector, the late Lester Salamon and his collaborators defined the „broad nonprofit sector'' as consisting of „organizations that are formal organizations with an institutionalized character.'' Did. Constitutionally independent from the state and self-government. Non-commercial distribution. It also includes some level of volunteer work,” documenting growing financial resources, employment, and impact. This study shows that the growth of the nonprofit sector in recent decades means that many social services could be provided more efficiently and effectively through partnerships with the private sector (including both for-profit and nonprofit organizations). I believe this is due to the widespread adoption of the „neoliberal consensus'' that there is. Importantly, this study shows that, contrary to popular belief, the nonprofit sector is not primarily supported by philanthropy, and that financial support for nonprofit enterprises worldwide is significantly higher than that of governments or markets alone. It also showed that only 11% were provided (data from 22 countries, 1995). Revenue from commercial activities provided 49% of financial support, and the government provided his 40%.
A number of nonprofit organizations working to address the global burden of neglected diseases through advocacy, education and research, health services, or social services related to neglected diseases have signed on to work with Salamon. is well within the mainstream of traditional nonprofit activities identified by Some argue that his PDP, which focuses on the discovery, development, and commercialization of novel medicines, is conceptually no different from other nonprofit organizations involved in the commercialization of goods and services in the medical and educational fields. Masu. But the question is: Can nonprofit business models really correct the market failures that have led to shortages of products for neglected diseases?
In our view, the key characteristic of nonprofit organizations is not the absence of profits, but rather the fact that the distribution of cash resources to shareholders is prohibited as a characteristic. Since 2010, publicly traded (for-profit) biopharmaceutical companies have distributed approximately $1.6 trillion in cash to shareholders through dividends and stock buybacks, representing approximately 16% of total revenue and The amount is slightly larger than net income). Therefore, the absence of cash distributions to shareholders may contribute to lowering drug prices and realizing investment returns, but the magnitude of this effect is unclear. Putting all that money back into research may not lead to breakthroughs in producing the medicines that the world's poor most urgently need.
Nonprofit companies are more likely than for-profit companies to attract philanthropy to support product development and treatments. However, available data suggest that philanthropic donations account for only a small proportion of the capital resources needed to address neglected diseases. There is also no evidence that nonprofit organizations derive significant profits from discounted or donated goods and services, or that nonprofit companies can systematically develop new products more efficiently or at lower cost than for-profit companies. there is no.
Nonprofits can also face unique challenges. Because most PDP activities are likely to be tax-exempt, nonprofit initiatives may not benefit from government incentive programs that offer reduced corporate tax liability or tax credits, unless such benefits can be sold. There is a gender. Therefore, it is unclear whether the financial model of nonprofit enterprises can actually address market failures in the face of neglected diseases. The fact that two of the seven tropical disease drugs listed in the recent BMJ Open paper were developed by non-profit organizations (TB Alliance, MDGH) underscores their business models and the role they can play in addressing tropical diseases. This suggests that further research is needed to understand. The global burden of human disease.