New Type of Health Organization Takes on Third-World Diseases

November 14, 2001

Third-world health activists and the global pharmaceutical industry remain sharply at odds over the role of drug patents and price in developing countries. But on one crucial point, most reluctantly agree: Little market incentive exists for drug makers to find new medicines for the diseases that plague poor nations.

Instead, a mix of public pressure and random altruism has spurred what research there is in tropical and other third-world diseases. The results aren't inspiring. Of the hundreds of drugs in the pharmaceutical industry's collective pipeline -- including eight Viagra-style treatments just for impotence -- only a dozen are aimed at tuberculosis, malaria and other tropical diseases that have become pandemic in many developing countries. "It's a market failure, plain and simple," says Bernard Pecoul, director of Medecins Sans Frontieres' Access to Essential Medicines Campaign. "Market forces are not driving new research into these drugs."

But can they? A new breed of health organization claims so. Over the past year, groups such as the Medicines for Malaria Venture, Global AIDS Vaccine Initiative and the Global Alliance for TB Drug Development have become powerful catalysts in the hunt for new treatments for neglected diseases. But they are neither advocacy groups nor charitable foundations. Backed by private and public dollars, they model themselves as virtual drug makers, contracting out research to labs and firms and licensing development rights for a portfolio of potential drug candidates.

Key to the business model is the cornerstone of the market-driven drug industry: intellectual property rights -- but with a twist. When or if new treatments emerge from their pipelines, these groups say they'll leverage their investment in the intellectual property, not for profit, but to provide access and affordable prices for the drugs.

If successful, such groups could provide a basis for treating a number of public health crises in developing countries, while sidestepping the patent-rights disputes that have erupted over AIDS drugs. "We are springing up at a time when the balance between public health and markets needs to be more carefully assessed than ever," says Maria Freire, chief executive of the Global Alliance for TB Drug Development. "We're that space in the middle."

Ms. Freire's corporate-style title is the first sign that the alliance means business. She and her colleagues call the alliance's private and public backers -- primarily the Bill and Melinda Gates and Rockefeller foundations, which have supplied $40 million in start-up money -- stakeholders. Meetings with potential new investors, complete with Power Point presentations, aren't unlike venture-capital forums.

The alliance's mission is simple but daunting. By the end of the decade, it wants to bring a new tuberculosis drug to market that not only fights new multidrug-resistant strains of the disease, but also cuts the current six-month treatment course to a third. Nearly eradicated in many parts of the world in the 1940s, tuberculosis has roared back at alarming rates in new, more virulent forms and often together with AIDS. This year alone, the World Health Organization expects 8.4 million people to develop the disease and two million to die of it, making it the world's leading cause of death from a single infectious disease.

"We're not some research group that says, 'Let's fund this and that and hope it does some good,' " says Ms. Freire, who left her job as director of the National Institutes of Health's Office of Technology Transfer to run the alliance this year. "We've got a laser-sharp focus. We need a drug by 2010."

The alliance is currently in negotiations with a handful of academic labs, drug makers and public institutes for five separate drug compounds. But alliance officials concede they are at the beginning of the mine-filled path of drug discovery and development. One of the biggest challenges will be to convince companies of an economic payoff in becoming its research and development partners. To aid its cause, it has just completed an economic analysis of the market for tuberculosis treatments. Released Thursday, the study contains some surprising results.

For one, it puts the current market at $450 million, compared with normal estimates of less than $150 million -- and projects that it is set to grow to $700 million by 2010. Because a new, two-month treatment would lower the cost of a single regiment and raise treatment-completion rates, it would likely capture at least half of the market, the study estimates. At the same time, the study calculates the cost of developing such a drug at about $100 million, including the costs of failures but not discovery costs.

"Industry wants something to show for what they're putting up and this finds some focus," says John Horton, director of clinical strategy for developing world diseases at GlaxoSmithKline PLC and an advisor to the alliance. "Companies are used to assessing blockbusters, where, if it works, the returns are apparent. This is much different."

Still, many in the pharmaceutical industry say such figures will do little to persuade companies to become involved. "My feeling is that if you have to make a deep study to find if there is a market, there probably isn't," says Daniel Vasella, chief executive of Novartis AG, which last week announced it would set up its own tropical-disease research institute in Singapore. Rather, he says, companies will commit to such research to create goodwill and because they can invest money made from more profitable markets. "If you're going to enter markets for the payback, TB isn't one of them."

Global Alliance officials say the company doesn't expect its analysis to convince major drug makers that tuberculosis research could yield a blockbuster. But it may give smaller players an incentive to get involved at certain parts of the research and development process. More importantly, the report provides critical data every business, including partnerships like the alliance, needs to know about its market.

"We want to know how this tiger looks and acts so when we do our deals and form partnerships, we know exactly where we're going," says Ms. Freire.