BIO Commends New Effort to Bring Biomedical Miracles To Developing Nations
WASHINGTON, D.C. (April 7, 2005) -- The following keynote speech was delivered by Scott Whitaker, senior vice president of the Biotechnology Industry Organization, at an event marking the release of “Making Markets for Vaccines: Ideas to Action," the report of the Advance Purchase Commitment working group convened by the Center for Global Development. For information on the report, visit the center’s Web site at www.cgdev.org. For information on the biotechnology industry’s initiative to foster biotech solutions to global health, visit BIO Ventures for Global Health, www.bvgh.org.
We’re here today to talk about potential solutions to a global health crisis bigger than cancer, bigger than heart disease, bigger than diabetes. Most of you are familiar with the “90/10” problem, the frequently invoked estimate that only about 10 percent of biomedical research and development dollars are directed toward the infectious diseases that constitute 90 percent of the global disease burden.
For the world’s poorest, infectious diseases exact a devastating toll:
· Malaria kills a child every 20 to 30 seconds.
· HIV/AIDS afflicts 25 million people in Sub-Saharan Africa – including 7.5 percent of adults aged 15 to 49.
· Tuberculosis infections, many of them drug resistant, are soaring after decades of decline. Already in Russia, the iron lung has returned.
· Impoverished nations continue to be racked as well by diarrheal diseases, pneumonia, and tropical ailments such as leishmaniasis, dengue fever, sleeping sickness, elephantiasis, and schistosomiasis.
· Third-world conditions have in recent years given rise to outbreaks of such history-book diseases as leprosy, polio and even the bubonic plague.
The top five diseases alone—lower respiratory infections, HIV/AIDS, diarrheal diseases, malaria and tuberculosis—cost more than 10 million lives each year and disable tens of millions more.
What do those kinds of numbers mean in human terms? As the former Secretary of Health and Human Services—and my former boss—Tommy Thompson has put it, “As overwhelming as the statistics are . . . the tragedy . . . is brought into terrible focus when you sit down face to face with a woman suffering from AIDS, see a small child who has lost both parents to AIDS, and meet with health care workers who lack the necessary tools to combat the spread of the disease.”
In some of these societies, Mr. Thompson said, “children are not just losing their parents—businesses are losing their workers; communities are losing their teachers, doctors and farmers; entire countries are losing their next generation of leaders.”
The biotechnology industry, which BIO represents here in Washington, cannot solve the third world healthcare problem, but we can help. Disease is a biological problem and biotechnology offers biological solutions. Genomics and proteomics allow us to understand bacteria, viruses and parasites, as well as human responses to these invaders. Biotechnology can create highly targeted approaches to preventing or treating infections, such as recombinant vaccines and antibodies. Many biotech companies are developing drug delivery technologies that that can eliminate the need for cold storage, needles other infrastructure requirements that make it difficult to bring vaccines and medicines to the poor.
In 2002, BIO brought together companies developing these technologies with nonprofits and U.S. and international health agencies to discuss the global health crisis and how biotechnology could help. Out of those discussions emerged BIO Ventures for Global Health. As BIO’s executive vice president, I am very grateful for the assistance of the Bill and Melinda Gates Foundation in getting this unique organization off the ground, and to BIO Venture’s executive director, Wendy Taylor, a former BIO employee who created the organization in response to the demand from the biotechnology industry for new solutions and new approaches to global health.
BVGH has treated global health as a business from the outset and sought ways to create market-based business models that would foster global health R&D. Because BVGH grew out of BIO, they know the business of biotechnology.
Allow me to tell you a little about that business. The biotechnology industry consists of more than 4,000 companies worldwide, all of which are chasing a limited pool of investment capital. More than half of these companies employ 50 or fewer people, and more than 90 percent have yet to bring a biomedical product to market.
These small businesses are doing big science, developing therapies and vaccines at a cost of hundreds of millions of dollars per product. Along the way, they—and their investors—are taking huge risks. Only 8 percent of drugs that enter clinical testing are ultimately approved.
To attract capital, biotech companies have to show investors their financial risk will be rewarded with high returns if a product succeeds. As in the movie business, only a handful of funded projects will ever turn a profit and even fewer will become the blockbusters that keep investors coming back. The challenge for biotechs interested in the developing world is that the market for successful products is too small, even for diseases that afflict millions, like malaria, tuberculosis, diarrheal diseases and pneumonia.
According to Leighton Read, former head of a vaccine company and now a venture capitalist, companies “only kick into gear when there’s market pull—you can’t push the olive out of the bottle, you have to pull it out.”
In the developing world, there is simply no market pull. The world’s least developed nations spend $17 per capita per year on health. Other low-income countries spend an average of $36. High-income regions like Europe and Japan spend, on average, more than 60 times as much.
Fortunately, vaccines are relatively cheap, given the benefit they provide. The United States contributed $32 million to the 1970s effort to erase the scourge of smallpox from the earth. According to work cited by the Institute of Medicine in the late 1990s, that investment has yielded a return of $32 million every 26 days. Every dollar spent on measles, mumps and rubella vaccines was found to save $21, while a dollar spent on diphtheria, tetanus and pertussis vaccine saved $29.
Yet, vaccine research all but died in the United States in the 1980s and 1990s, and production of existing vaccines fell so sharply as to result in shortages. Even the Defense Department has had difficulty obtaining vaccines for tropical diseases and has toyed with the idea of building its own manufacturing facilities.
Pharmaceutical companies fled the vaccine business in part because governments and international agencies had set prices for existing products too low.
Today, the entire global market for vaccines—the products with the most potential impact on poor countries—is about $6 billion, about 1.5 percent the amount spent on pharmaceuticals. And the total developing-world market for vaccines is only $500 million a year.
Given a limited pool of talent and investor capital, biotech companies cannot devote their resources to diseases for which there is in effect little or no market.
For biotech CEOs like Russell Howard at Maxygen, work on neglected diseases is “always on the side.” His company has worked on vaccines for dengue, malaria and HIV, but progress has been slow, funded with a patchwork of grants and nonprofit partnerships because investor money has to be directed to programs with large markets.
Advance Purchase Commitments
Today the Center for Global Development is unveiling a new model for breaking the impasse at Maxygen and dozens of other companies. The report released today offers a template for industrialized countries to create markets for global health products through airtight advance purchase commitments.
The commitments must be airtight, because it takes 10 to 15 years to develop a vaccine or drug. Biotech and pharmaceutical companies must be certain that if a product succeeds 10 years from now, the offer to purchase it will still be good.
The commitments outlined today are realistic. The $3 billion per disease that’s been proposed here creates a real market while offering real value and cost-effectiveness to funding countries—less than $500 per life saved.
Moreover, just as in other markets for healthcare products, the advance purchase commitment plan pays only for success: a product that works and earns regulatory approval.
Of course, an idea is only the beginning. The next step will be making the case for participation to industrialized countries. In an era of tight budgets and aging populations with growing healthcare demands, many lawmakers may ask why they should spend precious research dollars on diseases that don’t directly affect their constituents.
Well, first and most obviously, are the humanitarian reasons. Americans, Europeans, the Japanese and others have a history of rising to the occasion when there’s an emergency, and these diseases are an emergency. Just the top five diseases alone take a toll equivalent to 50 tsunamis every year.
Secondly, there’s self-interest at play. With 2 million people crossing international borders every day, and more than 1 million each week traveling from developing to developed nations, our illusion of immunity to infectious diseases is just that: an illusion. In recent years, we’ve seen malaria return to the shores of the United States, and the West Nile virus, which has spread across the Eastern seaboard in just a few years, is a reminder of how quickly a new disease can establish itself.
In fact, since 1973, at least 30 new infectious disease agents have surfaced, while more than 20 have expanded their geographic reach. That none of the most deadly new diseases have also been easily transmissible is the result of a combination of luck and a very aggressive international public health response to emerging diseases such as SARS.
Industrialized nations, especially the U.S., also care deeply about stability and security. Countries ravaged by disease falter economically and families fall apart, breeding discontent, social upheaval and potentially terrorism.
As former secretary of State Colin Powell has said of AIDS in particular, it “is not just a compelling moral issue, it is not just a humanitarian issue. . . It is a security issue. It is a destroyer of nations. It is a destroyer of societies. It has the potential to destabilize regions, perhaps even entire continents.”
According to the head of the UN AIDS program, three strategically and economically vital countries—India, China and Russia—are “perilously close to a tipping point” in HIV/AIDS cases that could lead to a “generalized explosion” of the epidemic, with no country on earth left unaffected.
Humanitarianism, the risk of disease spread, national and economic security: These are all powerful arguments for members of Congress and their counterparts in Europe, Asia and Australia.
But Congress and other legislatures will not only be asking why they should make advance purchase commitments, but whether the policy will work. Although the idea is relatively novel, we have some indications that it could succeed:
· With a commitment to purchase 18 million doses, the United Kingdom spurred three companies to develop meningitis C vaccines in the 1990s.
· Biodefense is a similarly challenging market, but VaxGen has agreed to supply 75 million doses of a new anthrax vaccine to the U.S. government with a guarantee of $877 million.
· Moreover, the advance purchase commitment model outlined today was designed through extensive consultation with industry, nonprofits and world health officials. While more discussions are needed with industry as purchase commitment proposals are advanced, this model represents the best thinking of many of the key players needed to make it work.
Finally, lawmakers will demand to know whether biotechnology is up to the task. After all, this is a big problem, and biotech companies are, as I’ve said, small businesses. But these small companies have a long track record of success:
· They have developed more than 200 drugs and vaccines that have helped more than 800 million people worldwide.
· These products have had a powerful impact on multiple sclerosis, rheumatoid arthritis, genetic disorders, heart attacks and strokes, a number of cancers, and many other conditions.
· Biotech companies are adept at targeting smaller, difficult markets. They are developing two-thirds of the drugs in development for rare diseases.
· Biotech companies are already developing products for malaria, tuberculosis and HIV/AIDS, as well as for lesser-known developing world diseases such as leishmaniasis, dengue and Chagas disease.
The bottom line is that biotechnology companies are up to the formidable challenge the advance purchase commitment creates.
Persuading other countries and ensuring the individual purchase commitments are sufficient to attract industry investment are important next steps.
Already, the United Kingdom has committed to malaria and possibly HIV vaccines. As chair of the G-8, the U.K. is also urging creation of an international financing facility with up to $50 billion in international development funding, including an immunization initiative with vaccine procurement funding.
As the U.K. and many of you here today move forward, the case you have to make is powerful. Most of us have seen the miracles biomedical research can effect: kids with cystic fibrosis playing soccer, terminal cancers and disabling diseases tamed. Today, you’re sending a powerful message, that it’s time to bring those miracles to the developing world, that it’s time to square our shoulders instead of shrugging them.
About BIO
The Biotechnology Industry Organization (BIO) represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 states. BIO members are involved in the research and development of health-care, agriculture, industrial and environmental biotechnology products.
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