Thailand Law Journal 2009 Spring Issue 1 Volume 12

HOW TO UNDERSTAND PRODUCT DEVELOPMENT: PUBLIC-PRIVATE PARTNERSHIPS AS VEHICLES FOR INNOVATION IN COMBATING NEGLECTED DISEASE [FN1]

Nathaniel Lipkus [FNa1]

Introduction

In downtown Accra, the freshly paved streets bustle with the optimistic gaits of a populace forging an identity on the emerging African stage. With GDP growth trending at ten percent for the past five years, residents of Accra have slowly begun to accept that the scourges of poverty and disease may have ceased and that fortune may indeed be on the horizon. Ghana has emerged as a low-cost pharmaceutical manufacturing location and a world-class fruit exporter, with its workforce consequently growing at twice the rate of its population of twenty-five million. One of many promising emerging markets across Africa, Ghana has experienced broad-based growth, all but eliminating the tragedy of a population most of which once lived on less than a dollar a day.

Of course, none of the above even remotely resembles the world we or the people of Accra know. In Accra today, the entrepreneurial spirit of women often requires them to become prostitutes amid a “grazing” male community largely responsible for exacerbating widespread AIDS. Forty five percent of the Ghanaian population lives on under one dollar a day. Over 200,000 orphans roam the streets, too traumatized and too plentiful for the meager social welfare infrastructure intended to benefit them. It is estimated that 3.6 percent of the population is infected with HIV/AIDS, malaria accounts for forty percent of all outpatient visits and twenty-five percent of all under-five mortality rates, and the annual risk of infection with tuberculosis is roughly between one and two percent. [FN2]

Furthermore, Ghana is viewed as a relative success among African nations and other poor regions of the world. Across the globe, we currently face an annual death toll of 5.6 million associated with AIDS, tuberculosis, and malaria. [FN3] However, just as alarmingly, these and lesser known diseases including leishmaniasis, African sleeping sickness, and schistosomiasis leave nearly one billion people living in poor regions with lifelong debilitating illness and deformity. [FN4] Indeed, the loss of life associated with the proliferation of neglected diseases in the developing world far exceeds that generated from any acute world crisis-be it the war in Iraq, the middle-East conflict, or ethnic cleansing in Sudan. Still, though $250 billion have been committed to the wars in Iraq and Afghanistan, only $15 billion have been targeted at combating the HIV/AIDS epidemic. [FN5] Furthermore, the fifteen million children orphaned by HIV/AIDS around the globe embody a crisis dynamically different from any the world has ever seen. [FN6]

In response to the catastrophe unfolding in the Southern hemisphere, one might expect significant funds being allocated for research and development of safe and efficacious drugs to combat neglected third-world diseases. However, the rewards associated with such investment are meager, as inhabitants of developing countries, which constitute eighty percent of the world's population, collectively comprise only twenty percent of the $466 billion spent worldwide on pharmaceuticals. [FN7]

Due to this relative illiquidity, and the informational asymmetries associated with developing world problems, neglected disease drug discovery and development investment is severely deficient. Between 1975 and 1999, only 16 of 1393 new chemical entities registered were targeted explicitly at neglected diseases. [FN8] At the same time, lucrative developments in molecular biology and biotechnology, including recombinant DNA engineering in the 1970s and the recent mapping of the human genome, threaten to exacerbate the drug gap which bifurcates developed and developing country markets. [FN9]

Abject poverty in the developing world has been met by a pharmaceutical market equilibrium which insufficiently addresses the public health need to eradicate infectious disease. Government failures in overcoming an inadequate market have brought the pipelines for drug development to a halt, with increasing resistance within third-world communities to decades-old malaria and tuberculosis drugs. In the wake of public and private failure has emerged a newly-created organizational design: the Product-Development Public-Private Partnership (PD-PPP). These PD-PPPs are typically not-for-profit private organizations that operate as social venture capitalists, allocating funds toward the development of products-pharmaceuticals and vaccines-which offer the prospect of safer and more effective treatment of neglected diseases.

There does not exist a wealth of literature regarding how to think about PD-PPPs. The purpose of this paper is to evaluate the role these entities play in the pharmaceutical research and development landscape. These organizations, employing a “virtual R&D” business model, must best leverage the resources and capabilities of pharmaceutical and biotechnology firms, contract research organizations, academic scientists, international agencies, non-governmental organizations, governments, and private foundations. However, in order to determine the appropriate mechanisms for success, these PPPs must be carefully understood as emanations of the very public and private failures which they seek to remedy. It is by surmounting these market and government failures, through their structure and function, that product development PPPs may realize and capture the value which they represent.

[FN1]. The citations to this article have been prepared using the Canadian Guide to Uniform Legal Citation, 5th ed. (Toronto: Carswell, 2002). The author would like to thank the lawyers and staff at Gilbert's LLP for sponsoring and facilitating this work; Professors Richard Owens, Jillian Cohen, and Jonathan Putnam for their invaluable counsel; and Dr. Joachim Oehler for sharing his PPP experiences at Concept Foundation in Bangkok, Thailand with me. Responsibility for any errors rests with the author alone.

[FNa1]. Nathaniel Lipkus received his Honours Bachelor of Commerce, Juris Doctor, and Masters in Business Administration from the University of Toronto.

[FN2]. Beatrice Ayala Ostrom, “Increasing Access to Medicines: Health Systems Issues, Ghana Desk Based Consultancy,” (July 2003) DIFID Health Systems Resource Centre.

[FN3]. Mary Kay Kindhauser, WHO Communicable Diseases 2002 Progress Report: Global Defence Against the Infectious Disease Threat, (Geneva: World Health Orgnaizaiton, 2003) WHO/CDS/2003.15. online: <http://www.who.int/infectious-disease-news/cds2002>.

[FN4]. Ibid.

[FN5]. Stephen Lewis, “John R. Evans Lectureship” (2nd Annual Global Health Research Conference: Mobilizing Research to Action: A Canadian Contribution, May 2004) Toronto, Ontario.

[FN6]. UNAIDS, 2004 Report on the Global AIDS Epidemic, (Geneva: UNAIDS, 2004) UNAIDS/04.16E. Available online: http:// www.unaids.org/bangkok2004/GAR2004_html/GAR2004_00_en.htm.

[FN7]. Medicins sans Frontieres, Fatal Imbalance: The Crisis in Research and Development for Drugs for Neglected Diseases (2001). Available online: <http:// www.msf.org/source/access/2001/fatal/fatal.pdf>. For a global pharmaceutical market estimate broken down by region, see <http://www.ims-global.com// insight/news_story/0403/news_story_040316.htm>.

[FN8]. P. Trouiller et al., “Drug Development for Neglected Diseases: A Deficient Market and a Public Health Policy Failure” (2002) 359 The Lancet 2188-2194.

[FN9]. A. Daar et al, “Top Ten Biotechnologies for Improving Health in Developing Countries” (2002) 32 Nature Genetics 229-232.

This article is published with the kind permission of Nathaniel Lipkus. The article originally appeared in Michigan State University Journal of Medicine & Law, Spring 2006 issue.