Developing drugs for developing countries

Health Affairs

Volumn 25, Issue 2, 2006, Pages 313-324

  Ridley, David B ^a   Grabowski, Henry G ^b   Moe, Jeffrey L ^c  

^a DUKE UNIVERSITY   (United States)

^b DUKE UNIVERSITY   (United States)

^c Health Sector   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

ANTIINFECTIVE AGENT; ANTIPARASITIC AGENT;

DEVELOPING COUNTRY; DRUG APPROVAL; DRUG INDUSTRY; DRUG LEGISLATION; DRUG MANUFACTURE; ECONOMICS; FOOD AND DRUG ADMINISTRATION; HEALTH CARE DELIVERY; HUMAN; LEGAL ASPECT; MARKETING; PATENT; PROGRAM DEVELOPMENT; REIMBURSEMENT; REVIEW; UNITED STATES;

ANTI-INFECTIVE AGENTS; ANTIPARASITIC AGENTS; DEVELOPING COUNTRIES; DRUG APPROVAL; DRUG INDUSTRY; HEALTH SERVICES ACCESSIBILITY; HUMANS; LEGISLATION, DRUG; MARKETING; ORPHAN DRUG PRODUCTION; PATENTS; PROGRAM DEVELOPMENT; REIMBURSEMENT, INCENTIVE; UNITED STATES; UNITED STATES FOOD AND DRUG ADMINISTRATION;

EID: 33645680700     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.25.2.313     Document Type: Review

References (46)

1. Calculation using Table 3 of World Health Organization, World Health Report 2004: Changing History, 2004, http://www.who.int/whr/2004/en (accessed 21 December 2005).
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3. R. MacDonald, "Prioritising Neglected Diseases Related to Poverty," British Medical Journal 331, no. 7507 (2005): 12.
4. WHO, World Health Report 2004.
5. The neglected diseases were identified independently by the International Federation of Pharmaceutical Manufacturers Association (http://www.ifpma.org) and by a Médecins sans Frontières (http://www.accessmed-msf.org/ dnd/) working group. FDA approval is a conservative requirement, because the FDA might reject a vaccine that would not pass a risk-benefit test in the United States but would pass in a developing country. See M. Kremer, "Pharmaceuticals and the Developing World," Journal of Economic Perspectives 16, no. 4 (2002): 67-90.
6. Some developers will not hold all patent rights, but the voucher creates a financial incentive for the patent holders to negotiate. John Walsh and colleagues found little empirical basis for daims that patent thickets impede biomedical research. J.P. Walsh, C. Cho, and W.M. Cohen, "View from the Bench: Patents and Material Transfers," Science 309, no. 5743 (2005): 2002-2003.
7. The voucher would grant the bearer the same treatment as other priority drugs, so review time would be six months, on average, but not guaranteed.
8. Pharmaceutical R&D Policy Project, Wellcome Trust-LSE, "Fast Track Options as a Fundraising Mechanism to Support R&D into Neglected. Diseases," January 2005, http://www.lse.ac.uk/collections/ LSEHealthAndSocialCare/documents/PRPP/FastTrackOption(FTO%20January2005.pdf (accessed 21 December 2005).
9. WHO, World Health Report 2004.
10. With little revenue at stake, most manufacturers forgo patent protection for essential drugs in developing countries. A. Attaran, "How Do Patents and Economic Policies Affect Access to Essential Medicines in Developing Countries?" Health Affairs 23, no. 3 (2004): 155-166.
11. The World Health Report 2004 (p. 157) classifies the following countries as developed: all countries in Europe (including Israel and Turkey), parts of North America (Canada, Cuba, and the United States), and parts of the western Pacific (Australia, Brunei, Japan, New Zealand, and Singapore).
12. See J.O. Lanjouw, "Opening Doors to Research: A New Global Patent Regime for Pharmaceuticals," Brookings Review 21, no. 2 (2003): 13-17.
13. H. Grabowski, "Encouraging the Development of New Vaccines," Health Affairs 24, no. 3 (2005): 697-700.
14. C. Milne, K. Kaitin, and E. Ronchi, "Orphan Drug Laws in Europe and the U.S.: Incentives for Research and Development of Medicines for Diseases of Poverty," Commission on Macroeconomics and Health Working Paper no. WG2: 9, http://www.cmhealth.org/docs/wg2_paper9.pdf (accessed 21 December 2005);
15. and H. Kettler, "Narrowing the Gap between Provision and Need for Medicines in Developing Countries" (London: Office of Health Economics, 2000).
16. Kettler, "Narrowing the Gap."
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18. H.E. Kettler and S. Marjanovic, "Engaging Biotechnology Companies in the Development of Innovative Solutions for Diseases of Poverty," Nature Reviews: Drug Discovery 3, no. 2 (2004): 171-176.
19. "Foundation," Economist, 27 January 2005.
20. E.R. Berndt et al., "Advanced Purchase Commitments for a Malaria Vaccine: Estimating Costs and Effectiveness," NBER Working Paper no. 11288 (Cambridge, Mass.: National Bureau of Economic Research, May 2005);
21. and E.R. Berndt and J.A. Hurvitz, "Vaccine Advance-Purchase Agreements for Low-Income Countries: Practical Issues," Health Affairs 24, no. 3 (2005): 653-665.
22. Kettler, "Narrowing the Gap."
23. Detailed calculations are provided in a technical appendix, available online at http://content.healthaffairs.org/cgi/content/full/25/2/313/DCl.
24. D. Dranove and D. Meltzer, "Do Important Drugs Reach the Market Sooner?" RAND Journal of Economics 25, no. 3 (1994): 402-423.
25. Adrian Gottschalk, associate director, Biogen, provided data on median review times under PDUFA-II. See also E.R. Berndt et al., "Industry Funding of the PDA: Effects of PDUFA on Approval Times and Withdrawal Rates," Nature Reviews: Drug Discovery 4, no. 7 (2005): 545-554.
26. Moving the launch date forward by one year moves the patent expiration forward by one year for most drugs. Under the Hatch-Waxman Act, most drugs are eligible for compensatory increases in effective patent life equal to the time lost in regulatory review. H. Grabowski and J. Vernon, "Effective Patent Life in Pharmaceuticals," International Journal of Technology Management 19, nos. 1/2 (2000): 98-120.
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28. R. Katz, "How a Band of Technical Renegades Designed the Alpha Chip," Research Technology Management 36, no. 6 (1993): 13-20;
29. and S. Stern, "Do Scientists Pay to Be Scientists?" Management Science 50, no. 6 (2004): 835-854.
30. J.A. DiMasi, R.W. Hansen, and H.G. Grabowski, "The Price of Innovation: New Estimates of Drug Development Costs," Journal of Health Economics 22, no. 2 (2003): 151-185. The out-of-pocket cost per new drug is $403 million (2000 dollars), and capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11 percent yields a total preapproval cost of $802 million.
31. J.A. DiMasi, R.W. Hansen, and H.G. Grabowski, "The Price of Innovation: New Estimates of Drug Development Costs," Journal of Health Economics 22, no. 2 (2003): 151-185. Ibid.
32. M.S. Smolinski, M.A. Hamburg, and J. Lederberg, eds., Microbial Threats to Health: Emergence, Detection, and Response (Washington: National Academies Press, 2002), 184;
33. WHO, "Genomics and World Health: Report of the Advisory Committee on Health Research," 25 November 2002, http://wwwwho.int/gb/ebwha/pdf_files/ EBlll/eebllll2.pdf (accessed 30 January 2006);
34. and J.A. DiMasi, H.G. Grabowski, and J. Vernon, "R&D Costs and Returns by Therapeutic Category," Drug Information Journal 38, no. 3 (2004): 211-223.
35. Kremer, "Pharmaceuticals and the Developing World."
36. P.J. Neumann et al., "Are Pharmaceuticals Cost-Effective? A Review of the Evidence," Health Affairs 19, no. 2 (2000): 92-109.
37. Consumer surplus is equal to half of producer surplus if the demand curve is linear and marginal costs are constant. This method of calculating consumer surplus applies when the manufacturer has market power. In the case of the drug for neglected diseases, we assume that the drug is available as a generic, so the price would be near marginal cost, and consumer surplus would be much greater.
38. C.M. Morel et al., "Health Innovation Networks to Help Developing Countries Address Neglected. Diseases," Science 309, no. 5733 (2005): 401-404.
39. A. Towse and H. Kettler, "Advance Price or Purchase Commitments to Create Markets for Treatments for Diseases of Poverty: Lessons from Three Policies," Bulletin of the World Health Organization 83, no. 4 (2005): 301-307.
40. Kremer, "Pharmaceuticals and the Developing World."
41. K.J. Arrow, "New Antimalarial Drugs: Biology and Economics Meet," Finance and Development 41, no. 1 (2004): 20-21.
42. Berndt et al., "Industry Funding of the PDA."
43. M.K. Olson, "Are Novel Drugs More Risky for Patients than Less Novel Drugs?" Journal of Health Economics 23, no. 6 (2004): 1135-1158.
44. Tufts Center for the Study of Drug Development, "Drug Safety Withdrawals in the U.S. Not Linked to Speed of PDA Approval," Tufts CSDD Impact Report 7, no. 5 (2005): 1-4.
45. D.B. Ridley et al., "Spending on Postapproval Drug Safety," Health Affairs 25, no. 2 (2006): 429-436.
46. S. Lueck, "'Bioshield' Drug-Patent Plan Draws Fire: Generics Makers Fight Extending Exclusivity Protection to Areas Outside Biodefense," Wall Street Journal, 1 April 2005.