[afro-nets] Orphan drugs

[Claudio Schuftan <aviva@netnam.vn>]

Orphan drugs
------------

Philanthropic, Globalised Keynesianism?

At a recently concluded conference in Penang (February 6-7,
2004) organized by Medecins Sans Frontieres (MSF) and the Drugs
for Neglected Diseases Initiative (DNDi), John Sulston, the No-
bel laureate in medicine or physiology (2002) declared that the
problem of neglected diseases was not so much a market failure
as the absence of a market which could bring into existence the
required medical armamentarium.

This was more than a semantic quibble, indeed it captured quite
succinctly the two strategic postures which lay dormant through-
out much of the conference (in truth, a continuum rather than
two polar opposites), but occasionally erupted in robust ex-
changes between such personalities as US-based James Love (Con-
sumer Project on Technology) and representatives of big Pharma
(most notably Novartis).

The tension of course was between non-market approaches vs. re-
forms to "make the market work better".

Alex Matter, founding director of the Novartis Institute for
Tropical Diseases in Singapore (est. 2002) revealed that Novar-
tis had committed an establishment and operational budget of
US$122 million for the first five years to carry out research on
neglected tropical diseases, and that "in those developing coun-
tries where these diseases are endemic, Novartis AG intends to
make treatments readily available and without profit" (Novartis
ITD website).

After some inconclusive discussion on the meaning of "non-
profit" in relation to the accounting details of variable and
fixed costs (most importantly, R&D) in the product development
and marketing of drugs, some participants were left wondering as
to whether this was an expensive PR exercise for Novartis.

The less cynical however drew attention to the potential markets
which could be created by the Global Fund for Aids, TB and Ma-
laria (GFATM), the Bill & Melinda Gates Foundation, UK-DFID, and
Advance Purchase Commitments (APC). The latter is an incentive
mechanism for drug or vaccine R&D where success is uncertain and
effective demand does not otherwise exist.

This APC approach, which guarantees a purchase at specified
price and volume in the event that an acceptable product
emerges, is currently much in vogue at the World Bank, UK-DFID
and other international development and academic circles. It was
also the subject of a lengthy paper and critique by Oxford
economist Andrew Farlow at another session.

In the earlier panel, Ee Chee Ren, deputy director of the Genome
Institute of Singapore (GIS) described a joint-venture between
GIS and Roche Pharmaceuticals in developing a diagnostic test
that could detect the SARS coronavirus before the onset of symp-
toms and furthermore could provide results within one hour. Dr
Ren however declined to provide details on the benefit sharing
agreement between the GIS and Roche, although he did allow that
the diagnostic kit to be marketed by Roche would be priced at
about USD20 per kit.

Suerie Moon (MSF) quite correctly pointed out that SARS would
not count as a "neglected disease". With 10% of Singapore's GDP
at stake (tourism) not to mention the more distal economic ef-
fects extending as well to China and other SARS-sensitive East
Asian economies, the market for SARS diagnostic kits, vaccines,
and therapies is assured in East Asia. (In Malaysia, the tourism
sector accounts for 7% of GDP and foreign exchange earnings sec-
ond only to manufactured exports).

This is in contrast to the neglected diseases highlighted by
MSF: of the 1,393 new drugs approved between 1975 and 1999, only
16 (or just over 1 percent) were specifically developed for
tropical diseases (such as malaria, sleeping sickness, Chagas'
disease, kala azar) and tuberculosis, diseases that account for
11.4 percent of the global disease burden.

For 13 out of those 16 drugs, two were modifications of existing
medicines, two were produced for the US military, and five came
from veterinary research. Only 4 were developed by commercial
pharmaceutical companies specifically for tropical diseases in
humans.

These neglected diseases of course mainly affect poorer communi-
ties in countries of the South, which do not constitute a valu-
able enough market to stimulate adequate R&D by the multina-
tional pharmaceutical companies.

In the event that "philanthropic" Keynesianism doesn't deliver
adequate returns to the multinational pharmaceutical companies,
we can anticipate that companies like Novartis will turn to more
marketable R&D in its tropical diseases research agenda, much
along the lines of the publicly-funded, market-oriented Genome
Institute of Singapore, which currently focuses on SARS, and
perhaps avian flu and Nipah among its tropical disease research
priorities.

In short, we would be back to an intractable, fundamental di-
lemma: need vs. demand, in its neglected diseases and orphan
drugs incarnation.

Chan Chee Khoon
Citizens' Health Initiative
mailto:ckchan@usm.my