New financial modelling mechanisms and tools
The TDR report, Health Product R&D Fund: a proposal for financing and operation, proposes a range of new financial modelling tools and mechanisms, some of which will be published later in 2016, to guide the fund’s operation and create a fairer system of R&D.
Proposed new financial modelling tools and mechanisms:
- The Portfolio-to-Impact (P2I) model: a new robust financial modelling tool estimates minimum funding scenarios.
- A compendium of Target Product Profiles: a new online resource would be housed in WHO and collect and map health product pipelines in a standardized manner. There is currently no universally agreed format, so this is suggested as a new standardized approach for a Scientific Working Group (SWG) convened by TDR to review and adapt.
- Operational mechanisms have been developed for efficient and transparent management of the fund as well as the portfolio of health product R&D projects.
A framework of incentive mechanisms is being provided to determine which financial incentives are the most effective for which types of development. These include direct grants, prizes, procurement guarantees, vouchers, and R&D tax credits.
The SWG would use the framework to evaluate R&D priorities across three areas: the level of market failure; the R&D gap, and the R&D player responsible for the project e.g. multinational, academic institution, small biotech and R&D partnership, such as a Product Development Partnership (PDP).
Portfolio to Impact (P2I)
TDR has developed a novel financial modelling tool called the Portfolio to Impact (P2I) model which can for the first time estimate the minimum costs and timeline for R&D from preclinical through to Phase III trials. P2I was developed to analyse and visualize how different funding options would assist in reducing R&D gaps and to bring new products to market for diseases of poverty.
The P2I model was also designed to estimate the health impact of new interventions launched (in terms of global disease burden reduction or disability-adjusted life years - DALYs - averted), and the associated economic benefit.
It presents options on the minimum funding needed for the R&D of health products; the number of projects which must be initiated per year to achieve the final product goal, and a timeline to develop these products.
P2I provides a strong incentive for commercial R&D and will be published as a global public good. It accounts for in-kind contributions from public, not-for-profit and industry partners and excludes the costs associated with facilities and human resources. P2I provides an overview of the finances and project portfolio options with different product archetypes, such as “quick wins” or “focused innovation”.
It estimates how many products, either new or “repurposed”, might be developed under such a fund. P2I can estimate annual spending and the number of projects in the pipeline from 2017 to 2030 and presents a range of funding scenarios and what they can deliver. This is the first time such a tool has existed.
Although developed specifically for use with Type III and II diseases, the P2I model is flexible and robust and can also be used in the context of emergency preparedness or anti-microbial resistance (AMR).
Diseases qualifying for the fund
The diseases of poverty that would qualify for the fund are those that mostly affect developing countries and have little or no market and limited or no health products. They are:
- Type III diseases found mostly in developing countries (e.g. Chagas disease, leishmaniasis, malaria, schistosomiasis);
- Type II diseases that are in all countries, but the disease burden is greatest in the poorest (e.g. dengue, Hepatitis B, HIV/AIDS, tuberculosis); and
- Type I diseases that occur in all countries but where the R&D needs in developing countries are not being met.
Diseases can be grouped in the following categories according to their potential future commercial market:
- Meaningful commercial markets exist in the developing world: Diseases with relatively larger pipelines because industry is incentivized to invest in R&D, thus also benefitting low and middle-income countries (LMICs), (e.g. HIV/AIDS and hepatitis C).
- Global public health mechanisms creating a commercial market: Donor organizations such as the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) and Gavi, the Vaccine Alliance (GAVI), provide funding for (or directly procure) products for these diseases. This creates visible demand once a product is developed (e.g. drug development against TB and malaria or malaria vaccines) and incentivizing innovative research (development of meningococcal A conjugate or pneumococcal conjugate vaccines).
- Global public health market mechanisms and middle-income country interest: Some commercial assets have been developed through a combination of middle-income country self-financing and interest (e.g. dengue or other vaccines common across global immunization schedules such as diphtheria and pertussis).
- No commercial market or market mechanisms exist: Most other Type III and II diseases with limited R&D investment have very few assets in the development pipeline, e.g. neglected tropical diseases (NTDs) such as schistosomiasis and hookworm disease.
Global prioritization in coordination with WHO
There are no universally approved funding priorities for R&D of health products and currently no one approach that has been agreed to identify and fund R&D based on a global assessment of disease burden.
R&D for diseases that have a high disease burden but little or no commercial market is limited or non-existent, consequently there is a significant lack of drugs, diagnostics and/or vaccines for these diseases.
Although governments, philanthropists and industries invested over US$3.4 billion in R&D for 35 neglected diseases in 2014, it is unclear whether funding will continue to fill the pipeline gaps for those diseases.
Thus, there is a call for a change in approach to stimulate product development to reduce the disease burden of diseases of poverty.
The proposal is for decisions about what the pooled fund would finance to come from the WHO Prioritization Mechanism based on data collected by the WHO Global Observatory on Health Research and Development.
A world-class Scientific Working Group (SWG) managed by TDR would select from these priorities in a clear and transparent way the most suitable product development projects to fund.
Disease-endemic and donor countries would form part of the governance structure of the fund, opening the door to “new” funders and accessing new sources of funding.
The involvement of all WHO Member States and TDR’s governing bodies in the governance mechanism of the fund would ensure transparency and further encourage coherent policy development both at the national and global level.
This global priority setting as well as the focus purely on R&D makes the financial mechanism unique among R&D financing initiatives that tend to be more regionally focused and centred on capacity-building.
Facts and figures
Over 1.4 billion people in low- and middle-income countries, including 500 million children, are affected by a range of diseases of poverty. These include malaria, tuberculosis, dengue, Ebola and Zika viruses.
US$ 3.4 billion was invested in R&D for neglected diseases in 2014, but the increase of US$150 million in funding that year was almost all for Ebola R&D, and funding for all other neglected diseases was essentially unchanged (down US$14 million or 0.4%).
The outbreaks of Ebola in 2014 and the Zika virus in 2016, and a dramatic rise in microbial drug resistance have highlighted the critical gaps that still exist in the R&D of health products for diseases of poverty.
There are funding bottlenecks throughout the development pipeline for drugs, diagnostics and vaccines for diseases of poverty, in particular for translational research and expensive Phase III clinical trials.
R&D financing needs differ by disease, with diagnostics more critical for some diseases and new treatments or vaccines for others.
HIV/AIDS has larger pipelines due to higher incentives to invest in R&D. TB and malaria have more visible, predictable demand because of donor funding assistance, which incentivizes research. But even diseases with larger pipelines, such as HIV/AIDS and malaria, have serious and specific unmet needs.
Diseases such as malaria, tetanus, HIV/AIDS, tuberculosis (TB) and Hepatitis B have larger pipelines than “truly” neglected diseases such as trichuriasis, rheumatic heart diseases, or ascariasis, which have very few assets under development.
Approximately 1.23 billion people in 58 countries worldwide live at risk of being infected by lymphatic filariasis and need preventive treatment on a huge scale.
More than 40 million people are treated for river blindness in a single year.
Ebola killed more people in a single outbreak in 2014 than in all other outbreaks combined. It spread from rural West Africa to cities in a matter of weeks.
In 2016, WHO declared Zika to be a “public health emergency of international concern”.