For the past decade the World Health Organization has debated how to boost R&D funding for diseases of developing countries. The latest WHO committee to tackle the issue has whittled down a slew of proposals to a few it believes are most feasible.

The ideas that made it on the list include open source and open access projects; pooled funds; direct grants to companies; milestone prizes; and patent pools. The proposals are included in a report by WHO’s Consultative Expert Working Group on R&D: Financing and Coordination (CEWG), which was released April 5. The World Health Assembly is scheduled to discuss the report at its annual meeting in Geneva May 21-26.

The report brings WHO member states closer to implementing projects that could save many lives in developing countries. It is also important for the pharmaceutical industry since the proposals would shift the burden of funding the development of medicines for neglected diseases to governments.

“Essentially, what is positive is that for once the fundamental conclusion is that governments should take responsibility for the R&D pipeline for the developing world,” said Paul Herrling, chair of the Novartis Institute for Tropical Diseases (NITD) and the sole representative of the pharmaceutical industry in the WHO working group.

In a recent interview with “The Pink Sheet” in New York City, Herrling discussed the CEWG report and NITD’s progress in developing a typhoid vaccine and new anti-malaria compounds (see related story, Also see "Novartis Typhoid Vaccine Seeks Partner After Securing Clinical Trial Site" - Pink Sheet, 21 May, 2012.).

The CEWG report, “Research and Development to Meet Health Needs in Developing Countries: Strengthening Global Financing and Coordination,” assesses the proposals of a previous WHO committee against several criteria: public health impact, technical feasibility, financial feasibility and implementation feasibility.

Prices Of Medicines Must Be Delinked From R&D Costs, Report Says

The 22 members of the CEWG were selected by WHO member states. Switzerland chose Herrling, who has advocated his own proposal for a pooled fund for research in neglected diseases (FRIND). The fund would support projects originating from academic institutions, public-private partnerships or pharmaceutical companies. In return for the fund’s financial support, the innovator would grant the fund an exclusive license to the final product in the targeted diseases and the fund would make the medicines available for free or at cost to patients Also see "Novartis Pitching New Product: A Fund For Tropical Disease Research" - Pink Sheet, 13 April, 2009..

Herrling said the working group adopted ideas in the FRIND proposal. The report does not give an opinion about FRIND specifically but supports pooled funds generally.

The report notes that the proposals on pooled funds differ on how they will deal with intellectual property; some have all rights accruing to the fundee while others have provisions on licensing back to the funder (e.g. exclusive licensing under FRIND) or completely open licensing. The report says the potential value of the proposals depends on such conditions as how IP management, capacity-building and technology transfer are organized and defined.

The committee also advocated the development of an R&D treaty. One of the principles to be included in the treaty is the delinking of the prices of medicines from the costs of R&D and the involvement of all governments in setting priorities and coordinating and funding R&D efforts.

“We view the proposals not as a replacement for the existing intellectual property rights system, but as a supplementary instrument where the current system does not function to meet the R&D needs of developing countries,” the report states.

The report also backs direct grants to small and medium companies in developing countries. It says such grants could have a positive effect on capacity building and technology transfer, particularly if they are combined with assistance in commercialization and technology transfer.

The committee also reviewed prize proposals, particularly milestone prizes, and concluded that they could meet many of its criteria. The report says a central purpose of the prizes should be delinking the costs of R&D from product prices and suggests that a series of pilot projects may be a useful way to proceed.

Sen. Bernie Sanders, I-Vt., is advocating a $3 billion prize fund for HIV/AIDS drug development. He introduced a bill last year that would eliminate exclusive rights to market HIV/AIDS treatments and instead provide manufacturers prize payments for medical innovation. The prizes would be funded with appropriations from the U.S. Treasury and an annual fee imposed on health insurance providers. The legislation is unlikely to go anywhere. Sanders is the sole sponsor and was the sole Senator present at a May 15 hearing on the measure, S. 1138.

However, witnesses at the hearing of the Senate Committee on Health, Education, Labor and Pensions said such an experiment was needed to increase access to HIV drugs and boost incentives for research on innovative treatments. Jamie Love, director of Knowledge Ecology, said of the 15 largest-selling HIV products in the U.S., 13 were registered by FDA before 2003 and most are minor variations of existing drugs.

Priority Review Vouchers Rejected By WHO Committee

The WHO committee also concluded that open approaches to R&D and innovation – including open innovation, open source and open access publishing, as well as precompetitive R&D platforms and equitable licensing – had great potential. Committee members favor open and collaborative approaches that could also help to reduce duplication in research and widen the pool of researchers.

Patent pools also met many of the committee’s criteria although the report notes that they do not directly address the R&D financing problem.

The proposals that were nixed by the committee include orphan drug legislation; tax breaks for companies; priority review vouchers; transferable IP rights; green IP; and purchase or procurement agreements.

With regard to priority review vouchers, the report says that the experience with the one voucher awarded to date “casts come doubt on its likely effectiveness as a powerful incentive for companies to devote more resources to R&D to meet developing country needs.”

Novartis is the sole company to have been awarded a priority review voucher by FDA. It received the voucher in 2009 following the approval of its antimalarial Coartem (artemether/lumefantrine). Under FDA’s program a company may chose any product for a six-month priority review if it has a drug approved to treat a neglected tropical disease. Novartis redeemed the voucher to get a priority review of Ilaris (canakinumab) for treatment of gout. FDA’s Arthritis Advisory Committee gave the gout indication a negative review last year Also see "Novartis Gambles Priority Review Voucher On Ilaris Gout Indication" - Pink Sheet, 27 June, 2011..

Herrling said it is too early to know if the voucher program will be a success. He added that if there is a market for vouchers they could help product development partnerships finance research.

For example, he said, say a voucher is worth $300 million. If the Global Alliance for TB Drug Development in New York gets a tuberculosis drug registered at the FDA they could receive a voucher and sell it to Pfizer for $300 million and then use the money to finance nonprofit clinical or research studies.

However, Herrling said the vouchers pose an ethical problem for industry vouchers since they could potentially divert FDA resources to me-too products or medicines that do not involve a significant medical advance. He said the problem would not be solved by requiring vouchers to be used only on important breakthroughs since FDA would provide priority review in these situations anyway.

Data Exclusivity Could Be Eliminated, Committee Concludes

The WHO working group also considered a proposal to remove requirements for data exclusivity, which prohibit someone from using an originator’s test data for a specific period of time. Many countries have passed laws mandating data exclusivity.

“We considered that there was no evidence that data exclusivity materially contributes to innovation related to Type II and Type III diseases and the specific R&D needs of developing countries in relation to Type I diseases, and therefore we concluded that its removal where it existed would not adversely affect innovation incentives for these diseases and also would contribute to reduced prices for affected medicines,” the report says. Type I diseases have about the same incidence in both developed and developing countries, Type II diseases occur mostly in people living in developing countries, and Type III diseases occur overwhelmingly or exclusively in developing countries.

The report added that the removal of data exclusivity might enable generic companies to innovate incrementally on products, which they could not do without access to test data.

The pharmaceutical industry would disagree. It has advocated that data exclusivity be included in trade agreements and criticized countries for failing to provide adequate protection for pharmaceutical test data Also see "Data Exclusivity Remains A Top Issue In USTR's 2011 Special 301 Report" - Pink Sheet, 4 May, 2011..

The report also addresses the potential sources of funding for R&D projects. It suggests taxes as an option, including taxes on financial transactions and tobacco, and proposes that a proportion of any tax be earmarked for R&D to meet the needs of developing countries.

In addition, the report calls for countries to commit to spending a percentage of their gross domestic product on government-funded R&D. It proposes that developing countries aim to commit 0.05-0.1% of GDP and developed countries aim to commit 0.15-0.2% of GDP to government-funded health research.

WHO’s search for new, innovative and sustainable sources of funding began in 2003 when the WHO secretariat presented an information document to the World Health Assembly. The Commission on Intellectual Property Rights, Innovation and Public Health was established the following year and issued a report in 2006. An expert working group released another report two years later, which Herrling said was criticized by some who felt the process was not open enough and that some proposals had not been given sufficient consideration. The CEWG report is a follow-up to that publication.

This time around the committee members sought consensus and measured ideas against specific criteria. Herrling said one crucial criterion was whether a proposal could help build capacity in the regions where medicines are needed.

The report now heads to the World Health Assembly, which may take it under review for another year.

“The worse that we can get is that this is so controversial that it gets rejected again, thrown away, and then patients will continue to die essentially,” Herrling stated. The task now is to talk to our governments and explain that this is “an occasion to make one step in the right direction.”

R&D For Diseases Of Developing Countries Could Be Driven By Pooled Funds

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